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Cgix profile 20131010
Cgix profile 20131010
Cgix profile 20131010
Cgix profile 20131010
Cgix profile 20131010
Cgix profile 20131010
Cgix profile 20131010
Cgix profile 20131010
Cgix profile 20131010
Cgix profile 20131010
Cgix profile 20131010
Cgix profile 20131010
Cgix profile 20131010
Cgix profile 20131010
Cgix profile 20131010
Cgix profile 20131010
Cgix profile 20131010
Cgix profile 20131010
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Cgix profile 20131010

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Cancer Genetics, Inc. Research Profile - 102013

Cancer Genetics, Inc. Research Profile - 102013

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  • 1. Cancer Genetics, Inc. (NasdaqCM: CGIX) October 10, 2013 Target Price: $26.75 Recent Price: $16.98 Watch Fox Business Interview with CEO Panna Sharma Market Data Fiscal Year Industry Market Cap Price/Earnings (ttm) Price/Book (mrq) Price/Sales (ttm) EBITDA (ttm) ROE (ttm) Institutional Ownership Shares Outstanding Float Avg. Daily Vol. (3 mos.) As of October 10, 2013 December 31 Healthcare $101.3M N/A 13.8x 18.9x ($7.3M) N/A 0.3% 6.0M 3.8M 126,841 Income Snapshot Revenue Gross Profit Gross Margin TTM $5.4M $1.0M 18.6% Balance Sheet Snapshot Cash Debt *ProForma takes into account net proceeds of approximately $13.5 million from common stock offering ProForma $12.7M $6.1M On October 8, 2013, CGIX filed an S-1 to raise up to $46 million in common stock. We view this as positive, as a large capital raise would provide funds that can be used to accelerate growth of CGIX’s proprietary genomic tests, leading to increased revenue and potentially reducing the time needed to reach profitability. With a larger cash reserve, CGIX can accelerate investment in sales and marketing, achieving faster market penetration and expand geographic coverage to establish a national footprint. Establishing a national footprint enables CGIX to better compete with Foundation Medicine (FMI), as CGIX can offer a more complete set of oncology Dx services than FMI. CGIX is already receiving reimbursements for its proven, proprietary tests, and additional cash will allow the Company to expand and deepen relationships with third-party insurers. Additionally, CGIX can take advantage of expected volume increases due to the Patient Protection and Affordable Care Act, which is extending coverage to approximately 32 million previously uninsured people. Higher capacity utilization will yield increases in gross margins. This raise also provides funds (up to $6 million) for OncoSpire Genomics, its joint venture (JV) with the Mayo Clinic. This JV has the potential to provide cutting-edge IP through the development of next-generation sequencing based oncology testing panels. We believe the decrease in stock value on October 9 was unwarranted, and also point out that the selloff was on volume of 291,100, less than the average volume over the past 14 days of 435,352 (Volume Weighted Average Price (VWAP) over the last 14 days is $19.50). Our original valuation had already taken into account additional dilution; as such we maintain our price target of $26.75 and year end 2016 shares outstanding estimate of 9.6 million. Even taking into account a conservative capital raise price of $17.00 per share (equal to the VWAP over the past thirty days) would result in a maximum increase in shares outstanding of 2.7 million, giving the Company total shares outstanding of only 8.7 million. Analyst: Thomas Pfister Email: Thomas@redchip.com Phone #: 407-644-4256
  • 2. 2 Cancer-focused, commercial stage personalized medicine and diagnostics company with robust pipeline is set for rapid revenue expansion and global growth Cancer Genetics, Inc. (CGIX) is an emerging leader in DNA-based cancer diagnostics and services some of the most prestigious medical institutions in the world. The Company’s tests target cancers that are difficult to diagnose and predict treatment outcomes. These cancers include hematologic, urogenital and HPVassociated cancers. CGIX also offers a comprehensive range of non-proprietary oncology-focused tests and laboratory services that provide critical genomic information to healthcare professionals as well as biopharma and biotech. Its stateof-the-art reference lab is focused entirely on maintaining clinical excellence and is both CLIA certified and CAP accredited and has licensure from several states including New York State. CGIX has established strong research collaborations and agreements with major cancer centers such as Mayo Clinic, Memorial SloanKettering, The Cleveland Clinic and the National Cancer Institute. The Company has also established high-profile clinical trial partnerships with Roche and Gilead Sciences through its SelectOne program. Investment Highlights CGIX has groundbreaking tests in combined $15 billion global market for hematologic, urogenital, and gynecologic cancers. Cancer Genetics has developed groundbreaking molecular diagnostic tests for cancer that are improving patient diagnosis and enabling personalized treatments based on cancer analysis at its most basic genomic level. Current cancer diagnostics are based on routinely used sample examinations that tend to be subjective and erroneous, and it is estimated that only 25%-30% of initial cancer treatments are currently successful. Molecular diagnostics allows for patients to receive faster and more accurate diagnosis, as well as more personalized oncology care. It allows payors and vendors to enjoy cost-savings when oncologists receive the right information at the right time and it helps pharmaceutical companies to see the high value in personalized medicine by acknowledging that targeted therapeutics require companion diagnostic tests. The Company estimates the U.S. hematological, urogenital, and gynecological cancer markets to be worth $2.2 billion, $3.5 billion, and $1.0 billion, respectively, giving CGIX an addressable market of $6 billion in the U.S. ($15 billion including ROW). Five proprietary oncology tests launched, proving ability to launch and gain test approval; Eight tests in development provide diversification and risk reduction. With five market-leading tests launched and eight more being developed, we believe that CGIX is poised to experience strong revenue growth over the next few years. Having a larger portfolio of tests reduces the dependence on any one test for success, thus reducing risk to investors. REDCHIP RESEARCH PROFILE
  • 3. 3 Proprietary tests provide more accurate risk assessment and improved treatment options. As an example of this, the Company’s MatBA®-CLL/SLL test for chronic lymphocytic leukemia and small lymphocytic lymphoma reported many additional genomic aberrations and was much more accurate in determining the recommended treatment aggressiveness. Sub-types of leukemia and lymphoma have gone up significantly over the last 30 years (according to Genzyme & Nature, there were 12 sub-types of leukemia & lymphoma 30 years ago, compared with 89 sub-types 2 years ago). In spite of overall advances in medicine, survival rates remain well under 10% and have shown minimal improvement over the past 30 years. Given the lack of treatment progress, effective genomic profiling seems to be vital in improving patient prognosis and treatment plans. The test indicated an 8% increase in unfavorable treatment outcomes (these patients will need aggressive treatment as their prognostic outlook is poor), and was able to distinguish between a favorable or an intermediate prognostic outlook, which the FISH test was unable to do (favorable outlooks can often have a wait and see approach, while an intermediate outlook would require a more aggressive approach). Additionally, reporting greater amounts of genomic aberrations helps to better identity specific cancer sub-types, which can lead to better diagnosis and treatment protocols. The Company’s new MatBA® – DLBCL (Diffuse Large B-Cell Lymphoma) test has strong potential, as Diffuse Large B-Cell Lymphoma makes up approximately 60% of all aggressive lymphoma cases and has genetic mutations, such as double hit lymphoma, that carry less favorable prognoses. This test is the first of its kind on the market. REDCHIP RESEARCH PROFILE
  • 4. 4 CGIX currently has the largest array of proprietary tests available for mature B-cell neoplasms, as evidenced by the chart below: The Company’s UroGenRA™-Kidney Panel allows a diagnosis based only on a single needle biopsy, thus preventing the need for costly, invasive, time-consuming, and sometimes dangerous surgeries. Typical fine-needle aspirates are inconclusive approximately 30% of the time, while CGIX is able to increase conclusive test results from 70% to near 100%, representing a strong value proposition to hospitals and physicians by shortening the time to treatment and improving diagnostic accuracy. Urogenital cancers represent the largest potential market for CGIX, with a $3.5 billion overall U.S. market and over 380,000 new cases in the U.S. per annum. Estimated New U.S. Cases for 2013 Estimated U.S. Deaths for 2013 Leukemia 48,610 23,720 Non-Hodgkin Lymphoma 69,740 19,020 Multiple Myeloma 22,350 10,710 Kidney 65,150 13,680 Prostate 238,590 29,720 Bladder 72,570 15,210 Cervical 12,340 4,030 Ovarian 22,240 14,030 Endometrial 49,560 8,190 Total Addressable U.S. Market 601,150 138,310 CGI Addressable Markets Source: American Cancer Society, 2013 CGIX has also recently launched its FHACT (HPV-Associated Cancer) test. With regards to FHACT for cervical cancer, this test can allow for doctors to detect chromosomal instability without performing a colposcopy (approximately 90% of low-grade cervical lesions regress), which can help to reduce costs. This test is currently being used in emerging markets that lack a quality gynecological infrastructure and need more cost-effective testing (India, Eastern Europe, Mexico). Worldwide, there were 530,000 cases of cervical cancer in 2008, with a death rate of approximately 52%. Over 85% of new cervical cancer cases and 88% of deaths occur in developing countries (Source: Globocan 2008 Cancer Fact Sheet). Five proprietary tests have been launched to date, and CGIX plans to launch at least another two tests by the end of 2013. In total, the Company has currently launched/is developing 12 proprietary tests (five for hematologic, three for urogenital, and four for gynecologic cancers). Supreme Court ruling on human genes is a positive; CGIX’s patented algorithms will remain protected. The primary value of CGIX’s patents is in algorithms that interpret gene activity and events and provide specialized diagnostic and prognostic data. This is shown in the trial on MatBa®-CLL/SLL, which uses algorithms to discover various genomic aberrations, which are then interpreted to provide specific prognostic information. The Company’s slide on its MatBA® tests shows the range of information that its patented algorithms provide. REDCHIP RESEARCH PROFILE
  • 5. 5 The supreme court ruling should also help CGIX in two ways: 1) Market uncertainty related to the decision has been removed and 2) Biomarkers are no longer patented, meaning that CGIX can now include these biomarkers in their tests, thus improving their algorithms; and the Company does not need to pay royalties on patented genes anymore, which should provide a small improvement to gross margins. Expand DX™ targets over 4,000 U.S. community hospitals & laboratories; CGIX estimates there is a $600,000-$800,000 revenue testing opportunity on average per hospital. Expand DX™ is an initiative outreach program intended to expand regional laboratories’ pathology services through collaboration with CGIX. Expand DX™ represents an important future growth driver as 85% of all U.S. cancer patients are initially diagnosed in community hospitals, and hospitals would like to capture a greater proportion of this revenue stream. If CGIX can capture 10% of the potential market, this represents a revenue opportunity of over $240-$320 million. This program represented 46% of revenue in FY12. Market entry acceleration from the Company’s recent agreement with MultiPlan. MultiPlan contracts with 900,000 healthcare providers and has an estimated 57 million consumers using their products. CGIX’s average reimbursement per test is currently in a wide range (approximately $1,000 to $5,000 per test), and we believe that collaborating with MultiPlan will bring this total closer to the industry average of $2,500 to $3,500 per test, causing increases in average revenue per test and gross margins. Closed clinical trial contracts increased from $0.2 million at the end of 1Q12 to $7.2 million at the end of 1Q13. CGIX’s Select One™ has two high profile clinical trial partnerships to date with Roche and Gilead Sciences. Closed clinical trial contracts have increased substantially over the last year, underscoring the increasing importance of companion and biomarker diagnostics in the development of oncology treatments. According to Company data, cancer drugs with associated biomarkers are expected to increase from 21% in 2011 to 55% in 2016. Increases in the amount of oncology drugs associated with biomarkers, along with these drugs advancing to later stage clinical trials, should drive impressive growth in this program. DNA probes being sold to emerging markets; recent manufacturing move to India better positions the Company to serve Asian markets while lowering costs. Recently, the Company has moved manufacturing for DNA probes to India in order to be able to offer low-cost, high-quality testing to emerging markets. Such measures indicate CGIX’s ability to target international markets, which currently make up about 9% of CGIX’s revenue. Outside of selling DNA probes to emerging markets, the Company has also expanded internationally through partnerships with Nikon Instruments (selling into the Italian market) and CGIX has stated that it is currently pursuing other large international partnerships. REDCHIP RESEARCH PROFILE
  • 6. 6 Development partnerships with premier research organizations help ensure a robust pipeline of advanced molecular diagnostics tests. In May 2013 CGIX and Mayo Clinic announced a 50/50 joint venture called OncoSpire Genomics. Initial focus will be on hematologic and urogenital cancers, with a final goal of commercializing diagnostic cancer tests using next-generation sequencing. Mayo Clinic chose to partner with CGIX due to CGIX’s proven ability to create premier cancer tests for hematologic and urogenital cancers. CGIX has partnered with other premier research organizations to develop tests; and validate the existing portfolio with thought leaders. These relationships include: Multibillion dollar M&A activity is taking place in molecular diagnostics. Big pharmaceutical companies have demonstrated relevant interest in diagnostic companies, such as CGIX. Cancer Genetics’ market-leading testing portfolio in three different multibillion markets (hematological, urogenital, and gynecological cancer), potential to give value both during patient diagnosis and pharmaceutical development, and development partnerships with leading research organizations could make the Company a strong acquisition candidate. Target Verinata DeCode Genetics Gen-Probe Genoptix Celera Dako Clarient Acquirer Illumina AmGen Hologic Novartis AG Quest Diagnostics Agilent Technologies GE Healthcare REDCHIP RESEARCH PROFILE Deal Value $450 Million $415 Million $3,700 Million $470 Million $344 Million $2,200 Million $580 Million Date Jan-13 Dec-12 May-12 Jan-11 Mar-11 May-12 Oct-10
  • 7. 7 Market Molecular Diagnostics (MDx) is a new class of diagnostic tests that identify nucleic acids or proteins to test the status of a disease. These nucleic acids or protein, which belong to individual patients or foreign organisms, help determine a specific therapy, the risk of developing a specific disease, or other health conditions. MDx is the fastest growing segment within the in-vitro diagnostics (IVD) space, driven by accuracy, high sensitivity, fast turnaround time, easy workflow, and cost-effective testing. According to Kalorama, the market for MDx is estimated to have crossed $9.7 billion in 2012, and has an expected compounded annual growth rate of 13% in the next five years, reaching $17.6 billion. United Healthcare estimates that national spending for genetic and molecular diagnostics will reach between $15 and $25 billion by 2021. According to United Healthcare, as of 2010 clinical laboratory tests influenced about 70 percent of health care decisions, but only eight percent of spending from clinical laboratory services is currently used on genetic and molecular diagnostics. However, genetic and molecular diagnostics are expected to make up a greater percentage of this going forward. A white paper by Rina Wolf of Dark Daily estimates a 10% increase in new molecular diagnostic tests offered per year, along with a 20% increase in annual utilization, which compares favorably to the 1-3% per year growth expected for non-genetic diagnostic tests. The key growth driver in MDx is oncology. These high value tests command premium pricing but provide critical information to help physicians make relevant clinical decisions, which ultimately leads to both lower overall treatment costs and higher quality treatment decisions. With the potential to reduce overall health care costs, high value MDx tests are growing in popularity, hence driving spending on IVD. Currently, Roche, Qiagen Netherlands, and Becton Dickinson are the three largest molecular diagnostics companies (based on 2012 revenues), but numerous companies are entering the market by offering more complex and expensive tests with greater accuracy and predictive prognostic capabilities. While competition in the space continues to increase, CGIX’s tests are, in many cases, the first of their kind in their respective oncology field. This first mover advantage should allow the Company to create strong relationships with community hospitals and cancer care centers as these tests are introduced to the market. The lifecycle for the development of a cancer molecular diagnostic assay through the different stages of regulatory scrutiny typically takes four to five years, approximately half the time required to bring a new drug to market. Given that the process is twice as fast, and it only involves a fraction of drug development costs, there is a significant incentive for MDx companies to innovate and bring new tests to market. This also lowers the risk involved with a MDx development company, relative to a biotech firm. REDCHIP RESEARCH PROFILE
  • 8. 8 The geographical distribution of MDx is centralized around industrialized countries; however, emerging markets, in particular the BRIC nations, are growing rapidly. While we don’t believe that CGIX’s proprietary tests will be cost effective in most emerging markets, the Company has recently moved the manufacture of its lower cost FISH probes to India. This should provide a combination of low cost manufacturing and a geographical location that will provide excellent logistics to emerging Asian economies. The FDA has made progress in forming a path and encouraging biomarker discovery and development. With FDA interest increasing, it may become more common in the future for the FDA to prefer that clinical trials be performed in conjunction with biomarkers, thus increasing the value of genetic testing. Additionally, the FDA is increasing the use of biomarkers to test for toxicity, which signals that the industry is on the rise and of increasing interest in the pharmaceutical industry. The use of MDx is becoming particularly important for clinical trial design and development, and a report by Global Industry Analysts states that they believe clinical development will represent the fastest growing segment of the global biomarkers market, representing a 26.5% CAGR from 2012-2017. The discovery and following of biomarkers, particularly detectable by the use of molecular diagnostics, allows for a more in depth study during a clinical trial process. Companion diagnostics are assays intended to assist with treatment decisions based on the efficacy and/or safety of a specific compound or class of compounds for specific patient populations. According to Next Generation Pharmaceutical, if widely adopted the use of companion diagnostics could significantly alter both the drug development process and the factors governing the successful commercialization of specific therapeutics. Particularly in oncology, the use of biomarkers could improve the rate of success in late-stage clinical trials (up to 70% of cancer drugs that pass phase 2 clinical trials fail to pass phase 3). The FDA has approved multiple cancer treatments that required a companion diagnostic test for a patient to take the drug (a few examples of these are vemurafenib, combined with the BRAF V600E mutation test for metastatic melanoma, and crizotinib, combined with the ALK gene rearrangement test for late-stage non-small cell lung cancer). Roche is recognized as one of the industry leaders in molecular diagnostics, and Paul Brown, CEO of Roche Molecular Diagnostics, indicated the importance of having companion diagnostics during clinical trials in a 2011 interview with Biotech SF: “Internally, between diagnostics and pharma, we have about 160 projects now where we have companion diagnostic or biomarker with a project. It’s basic to the structure having these two pieces under the same umbrella.” Valuation Conclusion CGIX has a robust pipeline of proprietary cancer tests that should continue to grow and improve over time, both through the Company’s internal R&D and its REDCHIP RESEARCH PROFILE
  • 9. 9 partnerships such as the joint venture with Mayo Clinic, OncoSpire Genomics. The molecular diagnostic tests that CGIX currently has out on the market have been proven through clinical testing to be superior to the current standard of testing. In addition to this, the Company has been expanding their sales pipelines through multiple partnerships that allow it to sell to community hospitals and laboratories in the United States, pharmaceutical and biotech companies in clinical trials, and various developed and emerging countries around the globe. The molecular diagnostic testing market is projected to increase substantially over the next few years, and CGIX is poised to take advantage of the growth both through the development of new therapies using biomarkers and hospitals and doctors attempting to make more accurate decisions while saving time and lowering costs. In addition to this, strong M&A activity in the industry should ensure that CGIX trades at a healthy P/S multiple, and this should persist as big pharmaceutical and biotech companies look to acquire molecular diagnostic companies, given the growing importance of biomarkers in both treating cancer and developing new and improved therapies. To determine a revenue ramp for CGIX, we believe the best two comparables to be Genomic Health (Oncotype DX Breast Cancer test) and Genoptix (acquired in January 2011 for $470 million, blood and bone marrow cancer tests). Both of these companies exhibited similar revenues to CGIX in 2005, and subsequently ramped up their revenues rather significantly following the launch of their proprietary cancer tests. Genoptix Inc. (GXDX) Net Revenue Selling and Marketing Exp. YOY Revenue Growth Rate 2005 $5.19 $4.23 2006 $24.02 $6.26 363% 2007 $59.33 $11.65 147% 2008 $116.17 $20.07 96% CAGR 117.51% 2005 $5.20 $15.35 2006 $29.17 $24.63 461% 2007 $64.03 $36.46 119% 2008 $110.58 $46.67 73% CAGR 114.72% Source: Company filings, in millions Genomic Health Inc. (GHDX) Net Revenue Selling and Marketing Exp. YOY Revenue Growth Rate Source: Company filings, in millions We believe that CGIX has the potential to match the above revenue ramp, with one caveat being that achieving this sales ramp is likely dependent on receiving sufficient financing. This will be needed in order to spend additional funds on sales and marketing; a lower budget will likely result in lower revenue growth. Based on our discussions with management, we believe that CGIX will look to keep costs under control, and thus we believe that CGIX’s spending on sales and marketing will more closely resemble GXDX rather than GHDX. However, relative to the above companies, CGIX has a larger portfolio of molecular diagnostic tests, giving the potential for larger test volume sales. Additionally, international sales should exhibit strong growth, driven by its partnerships with Nikon Instruments and rapidly increasing demand for molecular diagnostic tests in emerging economies. Also, the rapid increases in the use of companion diagnostics in clinical trials gives CGIX a REDCHIP RESEARCH PROFILE
  • 10. 10 stronger additional revenue stream that was not available to GXDX and GHDX from 2005-2008. Our revenue projections for CGIX up through 2016 are listed below: Cancer Genetics (CGIX) Net Revenue Selling and Marketing YOY Revenue Growth Rate 2012 $4.30 $1.40 2013E $7.53 $2.50 75% 2014E $18.81 $7.50 150% 2015E $46.09 $14.50 145% 2016E $101.40 $27.20 120% CAGR 88.15% Source: Company filings, RedChip estimates, in millions Ticker Name Price Market Cap P/E P/S P/B Revenue (ttm) Rev/Share (ttm) TROV TROVAGENE INC 7.13 134.4 N/A 247.5 N/A 0.54 0.04 EXAS EXACT SCIENCES CORP 9.83 695.0 N/A 167.7 4.5 4.14 0.07 ROSG ROSETTA GENOMICS LTD 3.21 31.5 N/A 91.9 1.1 0.29 0.04 ATOS ATOSSA GENETICS INC 2.04 31.8 N/A 44.6 3.8 0.71 0.05 FMI FOUNDATION MEDICINE, INC 30.42 826.6 N/A 42.7 15.4 19.34 1.14 GNMK GENMARK DIAGNOSTICS INC 12.04 394.1 N/A 12.7 8.4 31.01 0.97 GHDX GENOMIC HEALTH INC 29.70 909.5 519.4 3.7 6.5 245.86 7.83 SQNM SEQUENOM INC 2.55 294.2 N/A 2.3 N/A 129.87 1.13 517.0 44.7 5.5 N/A 18.9 13.8 5.37 0.92 Median CGIX CANCER GENETICS INC 16.98 101.3 Source: Bloomberg, Company Filings, As of October 10, 2013 While the P/S multiple is heavily skewed by companies that only generate limited revenue, we believe that the multiples of more developed molecular diagnostics companies (SQNM, GHDX, GNMK) provide a good proxy for acceptable trading multiples. We have decided to take near the median P/S from those 3 companies (4.0x) to value CGIX. Since there is strong M&A activity in the industry we also turn to recent transactions to better estimate a P/S multiple: Target Acquirer EV/Revenue Enterprise Value of Deal Ttm Revenue at time of Acquisition Gen-Probe Hologic Inc. 6.4x 3,757.47 586.58 Genoptix Novartis AG 1.6x 318.09 196.35 Celera Quest Diagnostics 2.7x 340.84 128.14 Clarient GE Healthcare 4.1x 447.08 110.12 Source: Bloomberg, dollar values in millions While the transaction multiples also encompass a wide range, we believe that given the strengths for CGIX that we have noted throughout the report, the Company deserves to be valued at a 4.0x P/S multiple. We apply this to our 2016 revenue estimate of $101.4 million. Discounting this total by 20% per year and applying a 4.0x P/S multiple, we derive a 2016 fair company value of $257.1 million. Research by Benchmark Co., LLC assigned a 25% per annum discount rate to CGIX comparable Exact Sciences (EXAS); given that CGIX has a large portfolio of cancer REDCHIP RESEARCH PROFILE
  • 11. 11 tests (EXAS only has one test for colorectal cancer), and CGIX also receives revenue from clinical trial services (EXAS does not), we believe that CGIX deserves a lower discount rate. We also understand the possible need of financing the Company is likely to encounter in the coming years as the Company continues to expand its product line. If CGIX completes its proposed $15 million equity raise with Aegis, its shares outstanding should increase to approximately 5.6 million. Given the probability that CGIX may complete additional equity raises in the future to support increase in sales and marketing and R&D expenses, we estimate total year-end 2016 shares outstanding of 9.6 million. This gives us a final near-term target price per share of $26.75. In addition to the above revenue projections, we believe that investors can receive further upside from the Company’s 50% ownership in OncoSpire Genomics. The joint-venture’s goal is to develop diagnostic cancer tests using next-generation sequencing; as this JV is further developed with Mayo Clinic, the potential for cutting-edge IP could make this an attractive buyout target for a large pharmaceutical, biotech, or medtech firm. This upside is not currently reflected in our target price. Management & Board Raju S.K. Chaganti, Ph.D., Founder & Chairman Dr. Chaganti is the Company’s founder and has served as the chairman of its board of directors since inception. Dr. Chaganti is an internationally recognized leader in cancer cytogenetics and molecular genetics. He is a co-discoverer of patents for the cloning of two genes rearranged in lymphoma translocations, BCL6 and BCL8, and an additional two patents for the detection of translocations for the FISH classification of kidney cancers. Dr. Chaganti currently is the incumbent of the William Snee E. Chair at the Memorial Sloan- Kettering Cancer Center, where he is on the faculty of the Department of Medicine and Cell Biology Program. He is a professor at the Gernster Sloan- Kettering Graduate School of Biomedical Sciences at Cornell University Medical College. He was the chief of Memorial SloanKettering Cancer Center’s cytogenetics service, which he established in 1976 as one of the earliest genetically-based cancer diagnostic services in the country. Dr. Chaganti received a Ph.D. in biology (genetics) from Harvard University Graduate School of Arts and Sciences and completed his post-doctoral training at the Medical Research Council of Great Britain. Additionally, he completed a sabbatical in the Department of Tumor Biology at Karolinska Institute Stockholm, focusing on experimental murine and tumorgenesis as well as immunology. Dr. Chaganti is American Board of Medical Genetics certified in medical genetics, with a subspeciality in clinical cytogenetics. REDCHIP RESEARCH PROFILE
  • 12. 12 Panna Sharma, Director, President & CEO Mr. Sharma became a member of the Company’s board of directors and its Chief Executive Officer in May of 2010. Mr. Sharma was at TSG Partners, a specialty life sciences consultancy and advisory company, from 2001 to 2010, where he was the Managing Partner and founder. At TSG he led the development of strategic initiatives, corporate growth strategy and corporate turnarounds for both public and private companies. He also led over 70 buy- and sell-side transactions for life sciences, healthcare and biopharma companies. At TSG, he established the Global Diagnostics Index, the Global Biotools Index and several other life science capital markets indices that are still used today. Prior to founding TSG, Mr. Sharma was the Chief Strategy Officer for iXL Enterprises, Inc. (“iXL”), a public e-business consultancy where he led strategy development and acquisitions activity and was part of the management team that aided in taking the company public in June 1999. At iXL, he also managed the specialty e-business strategy practices group that grew from under $4 million in revenue in 1998 to over $75 million in 2000. From 1996 to 1998, Mr. Sharma was a partner at Interactive Solutions, Inc., a marketing and strategy consultancy focused on health care and financial services in Cambridge, Massachusetts, that was sold to Omnicom, Inc., one of the largest global market analysis and marketing companies. Prior to that time, Mr. Sharma served as a consultant to Putnam Investment Management, LLC and Bank of America Corporation. Mr. Sharma has also served on the board of directors of EpicEdge, a health care and government focused IT services firm, from 2001 to 2003 and as chairman of the Advisory Board for EndoChoice, a global leader for the gastrointestinal treatment market from 2008 to 2010. Mr. Sharma attended Boston University from 1987 to 1992 in the University Professor’s Program. Elizabeth Czerepak, CFO Ms. Czerepak brings 18 years of pharmaceutical industry experience and nine years of venture capital experience to Cancer Genetics. Elizabeth co-founded Bear Stearns Health Innoventures (BSHI), a $212 million venture capital fund that led investments in 13 biotechnology companies, seven of which she served as a board member. Concurrent to BSHI, she held the position of Managing Director of Bear, Stearns & Co., and later JPMorgan, where she was an NASD Registered Representative. Earlier, Elizabeth held senior positions in licensing, business development, and finance at BASF Pharma, Hoffmann-La Roche, and Merck & Co., where she led or supported over 30 licensing and M&A transactions, including Roche’s acquisition of PCR technology from Cetus, and the licensing of the P53 gene from Johns Hopkins University. Elizabeth holds an MBA from Rutgers University and a B.A. magna cum laude from Marshall University and is a member of the Licensing Executives Society. REDCHIP RESEARCH PROFILE
  • 13. 13 Jane Houldsworth, Ph.D., VP of R&D Dr. Houldsworth came to CGIX in 2007. She has a long standing interest in the biology and genetics of lymphoma and male germ cell tumors, with over 20 years’ experience in translational research. Dr. Houldsworth has published more than 50 peer-reviewed papers and 15 chapters. She continues to consult on academic research projects and is a reviewer for multiple scientific journals. She is an active member of the American Society of Hematology and American Association for Cancer Research. Dr. Houldsworth was awarded several grants from the National Institutes of Health, Lance Armstrong Foundation and other private foundations. In 2005, Dr. Houldsworth attained her New York State certificate of qualification as a laboratory director for oncology, molecular and cellular tumor markers. Before coming to CGIX, Dr. Houldsworth was an Associate Attending Geneticist and an Associate Laboratory Member at Memorial Sloan-Kettering Cancer Center in Dr. Chaganti’s laboratory. Lan Wang, M.D., Medical Director Dr. Wang came to CGIX in 2007. Her career focus is in diagnostic hematopathology, centered on lymphomas and leukemias. Dr. Wang is an active member of the Society of Hematopathology, United States and Canadian Academy of Pathology and the College of American Pathologists. Her work has been published in numerous peer-reviewed publications. Dr. Wang is certified by the American Board of Pathology in Anatomical and Clinical Pathology, as well as Hematopathology. In New Jersey, Dr. Wang holds a Medical License and Bioanalytical Laboratory Director License from the Board of Medical Examiners. She also has a Certificate of Qualification from New York State as a Laboratory Director in Histopathology, Cytopathology, Hematology, Immunohematology, Oncology-Molecular and Cellular Tumor Markers, and Cellular ImmunologyMalignant Leukocyte Immunophenotyping. Dr. Wang holds the position of Staff Pathologist/Hematophathologist and serves as a cancer liaison physician at Chilton Memorial Hospital in New Jersey. Weiyi Chen, Ph.D., HCLD (ABB), Molecular Diagnostics Director Dr. Chen came to CGIX in 2005. Her scientific focus has been on the identification and characterization of genomic alterations in B-cell lymphoma and their prognostic implications using modern molecular techniques, including microarrays. While at MSK, she was trained in the Molecular Diagnostic Laboratory at the New York Presbyterian Hospital and Memorial Sloan-Kettering Cancer Center. Dr. Chen is certified as a High-complexity Clinical Laboratory Director (HCLD) from the American Board of Bioanalysis (ABB), and holds a certificate of qualification as a laboratory director from the New York State Department of Health. She is an active member of the Association of Molecular Pathology. REDCHIP RESEARCH PROFILE
  • 14. 14 Pal Singh-Kahlon, Ph.D., FACMG, Cytogenetics Director Dr. Singh-Kahlon joined CGIX in 2010 and brings more than 30 years of experience in clinical cytogenetics. He has over 20 years of experience in director positions, including seven years in cancer, at leading commercial cytogenetics laboratories, LabCorp and Genzyme, and earlier at the University of California School of Medicine in San Francisco. Dr. Singh-Kahlon is an active member of the American College of Medical Genetics, American Society of Human Genetics and the Association of Molecular Pathology. Cory Hickmon, Director of National Clinical Sales Mr. Hickmon brings over 23 years of oncology sales and sales leadership experience to CGIX. His focus for the past 21 years has been the esoteric oncology testing market, with much of his career devoted to building and leading successful sales teams in the rapidly growing genetic and genomic space. Mr. Hickmon began his career with Impath, a recognized leader in the area of oncology and pathology esoteric testing. After several promotions, he became the Midwest Regional Manager in 1998, where he was in charge of all sales activities for one third of the U.S. market. In this role, he was involved in one the earliest targeted therapy marketing campaigns in the country, the launch of Her-2/neu which qualified patients for Herceptin therapy. In 2004, Impath was acquired by Genzyme Genetics, and Mr. Hickmon was promoted to Southwest Regional Director. In this role, he oversaw two unique sales forces; one focused on oncology, the other in the growing area of reproductive genetic and molecular testing. His skills in building out sales teams were used as Genzyme went through rapid expansion during this time. In 2010, Genzyme Genetics was purchased by LabCorp. Cory graduated from the University of Houston with a B.B.A. in Finance. Edmund Cannon, Director Mr. Cannon is founder and President of the Clinical Research Center of Cape Cod, which specializes in finding institutional review board approved, consented specimens for the diagnostics and pharmaceutical industries, and in setting up studies to support FDA submissions for pharmaceutical and biotechnology companies. Previously, Mr. Cannon was a marketing and operations consultant for Franey Medical Labs. Mr. Cannon also formerly had the most national sales for Pharmacia Diagnostics Inc., and was a vice president and co-founder of Alletess, Inc. Mr. Canon has a degree from Boston State College and attended a Master’s program at Providence College. Keith Brownlie, CPA, Director Keith Brownlie, CPA has been a director since July 24, 2013. Mr. Brownlie currently serves as a member of the Board of Directors of Epicept Corporation, a REDCHIP RESEARCH PROFILE
  • 15. 15 publicly traded, specialty pharmaceutical company focused on the clinical development and commercialization of pharmaceutical products for the treatment of cancer and pain, a position he has held since April 2011. From 1974 to 2010, Mr. Brownlie worked with the accounting firm of Ernst & Young LLP where he served as audit partner for numerous public companies and was the Life Sciences Industry Leader for the New York metro area where he was involved with over 100 public and private financings and M&A transactions. Mr. Brownlie received a BS in Accounting from Lehigh University and is a Certified Public Accountant in the state of New Jersey. Mr. Brownlie co-founded the New Jersey Entrepreneur of the Year Program and was Vice President and Trustee of the New Jersey Society of CPAs. In addition, he served as accounting advisor to the board of the Biotechnology Council of New Jersey. John Pappajohn, Director Mr. Pappajohn is a pioneer in the venture capital industry. In 1969, Mr. Pappajohn founded Equity Dynamics, Inc., a financial consulting entity, and Pappajohn Capital Resources, a venture capital firm, both in Des Moines, Iowa. Mr. Pappajohn has been involved in over 100 start-up companies and has served as a director of over 40 public companies, many in the bioscience and health-related industries. He currently serves on the boards of the following public companies: American CareSource Holdings, Inc., since 2004, ConMed Healthcare Management, Inc. since 2005, and CNS Response, since 2009. Previously, Mr. Pappajohn served on the boards of PharmAthene, Inc., from 2007 until July 2011, Careguide, Inc., from 1995 until 2010, and SpectraScience, Inc., from 2007 until 2009. Mr. Pappajohn has a BSC degree in business from the University of Iowa. Andrew Pecora, M.D., Director Dr. Pecora currently serves at the John Theurer Cancer Center at Hackensack University Medical Center as Chief Innovations Officer, Professor and VP of Cancer Services. From 2001 to 2011, Dr. Pecora served as the Chairman and Director of the John Theurer Cancer Center. Since 1996, he has been Managing Partner of Northern New Jersey Cancer Associates, which is a private physicians practice group affiliated with Hackensack University Medical Center. Since August 2011, Dr. Pecora has served as Chief Medical Officer of NeoStem, Inc., which acquired Progenitor Cell Therapy, LLC in 2011. Prior to the acquisition, Dr. Pecora had served from 1999 to 2011 as Chairman, CEO and Chief Medical Officer of Progenitor Cell Therapy and as a member of the board. Dr. Pecora has also been a Professor of Medicine at the University of Medicine and Dentistry of New Jersey since 2004. Additionally, Dr. Pecora is a scientific advisor for numerous state, national and international organizations. He is a Diplomate of the American Board of Internal Medicine, subspecialty of hematology and subspecialty of oncology, a member of the National Blue Cross and Blue Shield REDCHIP RESEARCH PROFILE
  • 16. 16 Quality Centers for Transplant Experts Panel, a fellow of the Academy of Medicine of New Jersey, a fellow of the American College of Physicians and a member of the American Society of Bone Marrow Transplantation, American Society of Clinical Oncology and American Society of Hematology. Dr. Pecora co-founded and served as Chairman of Amorcyte, Inc., a biotech company developing cell therapies for cardiovascular disease. He serves as chairman of the board of Tetralogics, Inc., a company developing small molecules to treat cancer. He has served on the board of directors of the American Society of Bone Marrow Transplant and Cytotherapy and was a member of Accreditation Committee of the Foundation for Accreditation of Hematopoietic Cell Therapy. He has been a member of several National Heart, Lung and Blood Institute/National Cancer Institute state of the science meetings in transplantation and stem cell therapies. Dr. Pecora is actively involved as principal investigator and coinvestigator in many national research studies. He has been invited to present his work at various scientific meetings and continues to contribute to the published literature. Dr. Pecora received his medical degree from the University of Medicine and Dentistry of New Jersey. He went on to complete his medical education in internal medicine at New York Hospital and in hematology and oncology at Memorial Sloan- Kettering Cancer Center. He is board certified in internal medicine, hematology and oncology. Franklyn Prendergast, M.D., Ph.D., Director Dr. Prendergast is the Edmond and Marion Guggenheim Professor of Biochemistry and Molecular Biology and Professor of Molecular Pharmacology and Experimental Therapeutics at Mayo Medical School and the director of the Mayo Clinic Center for Individualized Medicine. From 1994 to 2006, he served as a director of Mayo Clinic Cancer Center. He has held several other teaching positions at Mayo Medical School since 1975. Dr. Prendergast has served for the NIH on numerous study section review groups; as a charter member of the Board of Advisors for the Division of Research Grants, now the Center for Scientific Review; the National Advisory General Medical Sciences Council; and the Board of Scientific Advisors of the National Cancer Institute. He held a Presidential Commission for service on the National Cancer Advisory Board. Dr. Prendergast also has served in numerous other advisory roles for the NIH and the National Research Council of the National Academy of Sciences, and he is a member of the board of directors of the Translational Genomics Research Institute and the Infectious Disease Research Institute. Dr. Prendergast has served on the board of directors of Eli Lilly & Co. since 1995 and is a member of the board’s science and technology and public policy and compliance committees. He also currently serves on the boards for DemeRx, Inc., a private drug development company, and Ativa, a diagnostic technology company. Dr. Prendergast obtained his medical degree with honors from the University of West Indies and attended Oxford University as a Rhodes Scholar, earning an M.A. degree in physiology. He obtained his Ph.D. in Biochemistry at the University of Minnesota. REDCHIP RESEARCH PROFILE
  • 17. 17 Tommy Thompson, Director Mr. Thompson is the former Health and Human Services Secretary of the United States and served as the Governor of Wisconsin for four terms. Mr. Thompson is building on his experience as Health and Human Services Secretary to develop innovative solutions to the health care challenges facing American families, businesses, communities, states and the nation as a whole. From 2005 until 2009, he served as a senior advisor at Deloitte & Touche and the founding chairman of the Deloitte Center for Health Solutions, which researches and develops solutions to some of our nation’s most pressing health care and public health related challenges. Since 2005, Mr. Thompson has served as a senior partner at the law firm of Akin, Gump, Strauss, Hauer, & Feld LLP. Mr. Thompson has been chairman of the board of Logistics Health, Inc. since January 2011, and served as president from February 2005 to January 2011. He also serves on the board of directors of the following public companies: CareView Communications, Inc., as chairman since 2005, Centene Corporation, C.R. Bard, Inc., since 2005 and United Therapeutics Corporation, since 2010. Mr. Thompson was formerly a director of AGA Medical Corporation, CNS Response, PURE Bioscience, SpectraScience, VeriChip Corporation and Voyager Pharmaceutical Corporation. Mr. Thompson received his B.S. and J.D. from the University of Wisconsin-Madison. Additional Information Recent press releases SEC filings REDCHIP RESEARCH PROFILE
  • 18. 18 About RedChip RedChip Companies, an Inc. 5000 company, is an international small-cap research, investor relations, and media company headquartered in Orlando, Florida; with affiliate offices in San Francisco, Seoul, Hong Kong and Singapore. RedChip delivers concrete, measurable results for its clients through its extensive global network of small-cap institutional and retail investors. RedChip has developed the most comprehensive platform of products and services for small cap companies, including: RedChip Research(TM), Traditional Investor Relations, Digital Investor Relations, Institutional and Retail Conferences, "The RedChip Money Report"(TM) television show, Shareholder Intelligence, Social Media and Blogging Services, and Webcasts. RedChip is not a FINRA member or registered broker/dealer. None of the profiles issued by RedChip Companies, Inc., constitute a recommendation for any investor to purchase or sell any particular security or that any security is suitable for any investor. Any investor should determine whether a particular security is suitable base d on the investor's objectives, other securities holdings, financial situation needs, and tax status. RedChip Companies, Inc., employees and affiliates may maintain positions and buy and sell the securities or options of the issuers mentioned herein. All m aterials are subject to change without notice. Information is obtained from sources believed to be reliable, but its accuracy and completeness are not guaranteed. Cancer Genetics, Inc. ("CGIX") is a client of RedChip Companies, Inc. CGIX agreed to pay RedChip Companies, Inc., a monthly cash fee for twelve (12) months of RedChip investor awareness services. Investor awareness services and programs are designed to help small-cap companies communicate their investment characteristics. RedChip investor awareness services include the preparation of a research profile(s), multimedia marketing, and other awareness services. Additional information about the subject security or RedChip Companies Inc. is available upon request. To learn more about RedChip’s products and services, visit http://www.redchip.com/visibility/productsandservices.asp, call 1 -800-RedChip (733-2447), or email info@redchip.com. Company Contact Info: Cancer Genetics, Inc. 201 Route 17 North, 2 nd Floor Rutherford, NJ 07070 (201) 528-9200 www.cancergenetics.com Investor Contact Info: RedChip Companies, Inc. 500 Winderley Place, Suite 100 Maitland, FL 32751 (407) 644-4256 www.redchip.com REDCHIP RESEARCH PROFILE

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