GlobeNewswire Inc | Nov 10, 2020 04:05PM EST

November 10, 2020

SAN DIEGO, Nov. 10, 2020 (GLOBE NEWSWIRE) -- Exagen Inc. (Nasdaq: XGN),an organization dedicated to transforming the care continuum for patients suffering from autoimmune diseases, today reported financial results for the quarter ended September30, 2020.

Third Quarter Highlights:

-- Generated total revenue of $10.8 million for the quarter ended September30, 2020, an increase of 20% over the quarter ended June 30, 2020 and 3% over the quarter ended September 30, 2019. -- Delivered 26,201 flagship AVISE CTD tests, including AVISE Lupus, in the third quarter 2020 despite reduced patient visits resulting from the COVID-19 pandemic. -- Number of ordering healthcare providers was 1,665 in the third quarter, with a record 600 adopters, and sequential quarterly retention rate of approximately 99% among adopting healthcare providers from the prior quarter. -- Added to covered lives following the agreement with Humana TRICARE East to make AVISE testing covered and in-network for approximately 6 million lives, and an agreement with Provider Network of America making AVISE in-network for 8 million lives. -- Continued to expand our suite of comprehensive testing solutions for rheumatologists, launching AVISE Vasculitis AAV.

We're very pleased with our results in the third quarter, as our core testing business performed well in an environment where patients continued to have challenges visiting their healthcare providers due to the COVID-19 pandemic. Despite these headwinds, our testing volumes have approached the level of Q1 2020 volumes which were only marginally affected by COVID-19. Meanwhile, our co-promotion agreement with Janssen continues to supplement our top line and enhance our gross margin," said Ron Rocca, President and Chief Executive Officer of Exagen. "Throughout the quarter we continued to position Exagen as a premier autoimmune company. Our world-class R&D team launched a new product to build upon our already robust portfolio. We continued to expand access to our AVISE franchise through payor and provider contracting. The Exagen team delivered strong operational execution during the quarter and took concrete strategic steps to strengthen the business for long-term sustainable success."

Third Quarter 2020 Financial Results

Revenue for the three months ended September30, 2020 was $10.8 million, compared with $10.4 million in the third quarter of 2019. Testing revenue was $9.5 million for the third quarter of 2020, compared to $10.0 million in the third quarter of 2019, due to lower testing volumes attributed to COVID-19 impacts and a decrease in average reimbursement per test. Our SIMPONI co-promotion efforts contributed $1.3 million in the third quarter of 2020, compared to $0.4 million in the third quarter of 2019. Gross margin was 60% in the third quarter of 2020 compared to 54% in the third quarter of 2019, benefiting from an increase in SIMPONI revenues and a decrease in royalty costs associated with the expiration of a royalty on our CB-CAPs technology.

Operating expenses were $14.6 million in the third quarter of 2020, compared with $12.6 million in the third quarter of 2019, due to increases in employee related expenses, including stock-based compensation, and public company expenses.

For the third quarter of 2020, net loss was $4.3 million, compared to a net loss of $3.1 million for the third quarter of 2019.

Cash and cash equivalents were approximately $61.4 million as of September30, 2020.

Conference Call

A conference call to review third quarter 2020 financial results and to provide a business update is scheduled for today November 10, 2020 at 4:30 PM Eastern Time (1:30 PM Pacific Time). Interested parties may access the conference call by dialing (877) 407-3982 (U.S.) or (201) 493-6780 (international). Additionally, a link to a live webcast of the call will be available in the Investor Relations section of Exagen's website at http://investors.exagen.com.

Participants are asked to join a few minutes prior to the call to register for the event. A replay of the conference call will be available until Tuesday, November 17, 2020 at 11:59 PM Eastern Time (8:59 PM Pacific Time). Interested parties may access the replay by dialing (844) 512-2921 (U.S.) or (412) 317-6671 (international) using passcode 13711892. A link to the replay of the webcast will also be available in the investor relations section of Exagen's website.

About Exagen

Exagen is dedicated to transforming the care continuum for patients suffering from debilitating and chronic autoimmune diseases by enabling timely differential diagnosis and optimizing therapeutic intervention. Exagen has developed and is commercializing a portfolio of innovative testing products under its AVISE brand, several of which are based on our proprietary Cell-Bound Complement Activation Products, or CB-CAPs, technology. CB-CAPs assess the activation of the complement system, a biological pathway that is widely implicated across many autoimmune and autoimmune-related diseases, including systemic lupus erythematosus, or SLE. Exagens goal is to enable rheumatologists to improve care for patients through the differential diagnosis, prognosis and monitoring of complex autoimmune and autoimmune-related diseases, including SLE and rheumatoid arthritis, or RA. Exagens model of integrating testing products and therapeutics positions Exagen to offer targeted solutions to rheumatologists and, ultimately, better serve patients. For more information, please visit www.Exagen.com.

Forward Looking StatementsExagen cautions you that statements contained in this press release regarding matters that are not historical facts are forward-looking statements. These statements are based on the companys current beliefs and expectations. Such forward-looking statements include, but are not limited to, statements regarding: the expected impact of COVID-19; the potential benefit of the company's testing products and promoted therapeutic for patients and physicians in autoimmune disease treatment; the potential to position the business for long-term sustainable success; and the availability and use of AVISE tests through Humana TRICARE East and the Provider Network of America network. The inclusion of forward-looking statements should not be regarded as a representation by Exagen that any of its plans will be achieved. Actual results may differ from those set forth in this press release due to the risks and uncertainties inherent in Exagens business, including, without limitation: the COVID-19 pandemic may continue to adversely affect our business, financial condition and results of operations, including as a result of shutdowns of our facilities and operations as well as those of our suppliers and courier services, impeding patient movement and interruptions to healthcare services causing a decrease in test volumes, disruptions to the supply chain of material needed for our tests, our sales and commercialization activities and our ability to receive specimens and perform or deliver the results from our tests, delays in reimbursement and coverage decisions from Medicare and third-party payors and in interactions with regulatory authorities, and delays in ongoing and planned clinical trials involving our tests; the companys commercial success depends upon attaining and maintaining significant market acceptance of its testing products and promoted therapeutics among rheumatologists, patients, third-party payers and others in the medical community; the companys ability to successfully execute on its Dx/Rx strategy, including its promotion efforts for SIMPONI; third party payers not providing coverage and adequate reimbursement for the companys testing products or promoted therapeutics; the companys ability to obtain and maintain intellectual property protection for its testing products; regulatory developments affecting the companys business; and other risks described in the companys prior press releases and the Companys filings with the Securities and Exchange Commission (SEC), including under the heading Risk Factors in the companys Annual Report on Form 10-K and any subsequent filings with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and Exagen undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date hereof. All forward-looking statements are qualified in their entirety by this cautionary statement, which is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

CONTACTS:

InvestorsWestwicke PartnersMike CavanaughMike.Cavanaugh@westwicke.com646.677.1838

CompanyExagen Inc.Kamal Adawi, Chief Financial Officerkadawi@exagen.com760.477.5514

Exagen Inc.

Unaudited Condensed Statements of Operations(in thousands, except share and per share data)

Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 (Unaudited)Revenue $ 10,775 $ 10,439 $ 29,307 $ 30,173 Operating expenses: Costs of revenue 4,341 4,783 12,224 14,217 Selling, general andadministrative 9,202 7,306 27,104 20,787 expensesResearch and 1,018 507 2,403 1,610 development expensesTotal operating 14,561 12,596 41,731 36,614 expensesLoss from operations (3,786 ) (2,157 ) (12,424 ) (6,441 )Interest expense (647 ) (909 ) (1,913 ) (2,720 )Change in fair valueof financial ? (200 ) ? 267 instrumentsOther income, net 125 125 985 264 Loss before income (4,308 ) (3,141 ) (13,352 ) (8,630 )taxesIncome tax benefit ? ? 118 ? Net loss (4,308 ) (3,141 ) (13,234 ) (8,630 )Accretion ofredeemable ? (338 ) ? (4,640 )convertible preferredstockDeemed dividendrecorded inconnection with ? (13,601 ) ? (13,601 )financingtransactionsNet loss attributableto common $ (4,308 ) $ (17,080 ) $ (13,234 ) $ (26,871 )stockholdersNet loss per share, $ (0.34 ) $ (11.29 ) $ (1.05 ) $ (48.70 )basic and dilutedWeighted-averagenumber of shares usedto compute net loss 12,644,348 1,513,189 12,626,259 551,730 per share, basic anddiluted

Exagen Inc.

Condensed Balance Sheets(in thousands, except share and per share data)

September December 30, 2020 31, 2019 Assets (Unaudited) Current assets: Cash and cash equivalents $ 61,434 $ 72,084 Accounts receivable, net 9,297 5,715 Prepaid expenses and other current assets 1,824 3,451 Total current assets 72,555 81,250 Property and equipment, net 1,758 1,380 Goodwill 5,506 5,506 Other assets 174 174 Total assets $ 79,993 $ 88,310 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 2,454 $ 1,476 Accrued and other current liabilities 5,820 4,419 Total current liabilities 8,274 5,895 Borrowings-non-current portion, net of discounts and 26,453 25,854 debt issuance costsDeferred tax liabilities 147 264 Other non-current liabilities 645 638 Total liabilities 35,519 32,651 Commitments and contingencies Stockholders' equity: Preferred stock, $0.001 par value; 10,000,000 sharesauthorized, no shares issued or outstanding at ? ? September30, 2020 and December 31, 2019Common stock, $0.001 par value; 200,000,000 sharesauthorized at September30, 2020 and December 31,2019; 12,652,113 and 12,560,990 shares issued and 13 13 outstanding at September30, 2020 and December 31,2019, respectivelyAdditional paid-in capital 222,297 220,248 Accumulated deficit (177,836 ) (164,602 )Total stockholders' equity 44,474 55,659 Total liabilities and stockholders' equity $ 79,993 $ 88,310