Response Genetics, Inc. Reports Third Quarter and Year-to-Date 2008 Financial Results

Response Genetics, Inc. (Nasdaq:RGDX), a company focused on the development and commercialization of molecular diagnostic tests for cancer, today announced its consolidated financial results for the three and nine months ended September 30, 2008.

"This quarter, we are very pleased with the commercial introduction of our ResponseDX: Colon™ and ResponseDX: Lung™ tests and the implementation of our national sales strategy,” said Kathleen Danenberg, president and CEO of Response Genetics. "With the new updates to the NCCN guidelines, which recommend determining KRAS gene status for all patients diagnosed with metastatic colorectal cancer, our goal is to increase awareness of the ResponseDX™ tests and their potential benefit to physicians and their patients. ResponseDX™ tests include KRAS mutational analyses and other proprietary gene tests predictive of the outcome of chemotherapies that are used with or without the KRAS-dependent EGFR-directed therapies. Although our ResponseDX™ tests were only recently launched, we are encouraged by the rate of acceptance and at the reorder rate by physicians. Based on this initial data, we anticipate that revenues from ResponseDX™ sales will have a positive impact on our results in 2009.”

Third Quarter 2008 Results

Total revenues for the third quarter decreased to $2.0 million, compared with $2.2 million in the third quarter of 2007. This decrease was primarily due to the timing and quantity of samples received from pharmaceutical clients. Cost of revenue for the third quarter of 2008 was $1.0 million, compared with $0.9 million for the third quarter of 2007. Research and development expenses were $0.4 million for the third quarter of 2008, compared with $0.6 million for the same period in the prior year. General and administrative expenses were $2.8 million for the third quarter of 2008, compared with $1.8 million for the third quarter of the prior year. Total operating expenses for the third quarter of 2008 increased to $4.2 million, compared with $3.3 million for the same period last year. The variances in operating expenses for the third quarter of 2008 were primarily due to increased personnel-related expenses to support the company’s growth, costs associated with marketing the newly commercialized ResponseDX tests, costs associated with the full operation of a laboratory in Scotland, an increase in stock-based compensation expenses for stock options issued to key employees during the third quarter and costs associated with being a public company.

Response Genetics’ net loss for the third quarter of 2008 was $2.2 million, or $0.21 per share, compared with a net loss of $0.9 million, or $0.09 per share, for the third quarter of 2007.

Year-to-Date Results

Revenues for the nine months ended September 30, 2008 increased to $5.7 million, compared with $5.4 million for the same period in 2007. Cost of revenue for the nine months of 2008 was $2.8 million, compared with $2.9 million for the nine months of 2007. General and administrative expenses for the nine months of 2008 were $7.5 million, compared with $5.0 million for the comparable period in 2007. Research and development expenses in the nine months of 2008 totaled $1.7 million, compared with $1.9 million for the same period in 2007. Total operating expenses for the nine months of 2008 were $12.1 million, versus $9.8 million for the comparable period in 2007. The variances in operating expenses for the nine months of 2008 were primarily due to costs associated with the operation of a laboratory in Scotland, which began in April 2007; personnel-related expenses to support the company’s growth; legal fees primarily related to maintaining the company’s intellectual property portfolio and strategic focus; and costs associated with marketing the newly commercialized Response DX tests.

Response Genetics reported a net loss for the nine months ended September 30, 2008, of $6.1 million, or $0.60 per share, versus a net loss for the comparable period in 2007 of $4.6 million, or $0.78 per share.

Cash and Cash Equivalents

Cash and cash equivalents as of September 30, 2008, were $12.3 million, compared with $17.0 million as of December 31, 2007.

Corporate Development Highlights

Highlights since the second quarter include:

• National Sales Strategy – Response Genetics announced in September an agreement with NeoGenomics Laboratories and the formation of its own sales team as part of its sales strategy to offer its ResponseDX: Colon and ResponseDX: Lung tests nationwide. ResponseDX: Colon and ResponseDX: Lung are proprietary PCR-based tests that analyze the expression of key genes – such as KRAS and ERCC1 – in tumors to help physicians make therapeutic treatment decisions for patients with non-small cell lung cancer (NSCLC) and colorectal cancer (CRC).
• NCCN Guidelines Update for Colorectal Cancer – On November 3, 2008, the National Comprehensive Cancer Network (NCCN) announced updates to its guidelines on colorectal cancer, recommending that KRAS gene status be part of the pre-treatment work-up for all patients diagnosed with metastatic colorectal cancer. Guidelines also recommend that epidermal growth factor receptor inhibitors be given only to patients with tumors characterized by the wild-type KRAS gene. The ResponseDX: Colon test assesses KRAS mutational status, along with ERCC1 gene expression and TS gene expression.

About Response Genetics

Response Genetics, Inc. ("RGI”) (the "Company”) (Nasdaq: RGDX) is engaged in the research and development of pharmacogenomic cancer diagnostic tests based on its proprietary and patented technologies. RGI’s technologies enable extraction and analysis of genetic information from genes derived from tumor samples stored as formalin-fixed and paraffin-embedded specimens. In addition to diagnostic testing services, RGI generates revenue from the sales of its proprietary analytical pharmacogenomic testing services of clinical trial specimens to the pharmaceutical industry. The Company was founded in 1999 and its principal headquarters are located in Los Angeles, California. For more information, please visit www.responsegenetics.com.

Forward-Looking Statement Notice

Except for the historical information contained herein, this press release and the statements of representatives of RGI related thereto contain or may contain, among other things, certain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995.

Such forward-looking statements involve significant risks and uncertainties. Such statements may include, without limitation, statements with respect to the Company’s plans, objectives, projections, expectations and intentions, such as the ability of the Company to analyze cancer samples, the potential for using the results of this research to develop diagnostic tests for cancer, the usefulness of genetic information to tailor treatment to patients, the ability of the Company to expand its ResponseDX: Lung™ and ResponseDX: Colon™ test availability, and other statements identified by words such as "projects,” "may,” "could,” "would,” "should,” "believes,” "expects,” "anticipates,” "estimates,” "intends,” "plans” or similar expressions.

These statements are based upon the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties, including those detailed in the Company’s filings with the Securities and Exchange Commission. Actual results, including, without limitation, actual sales results, if any, or the application of funds, may differ from those set forth in the forward-looking statements. These forward-looking statements involve certain risks and uncertainties that are subject to change based on various factors (many of which are beyond the Company’s control). The Company undertakes no obligation to publicly update forward-looking statements, whether because of new information, future events or otherwise, except as required by law.