IMDX US Equity☆

Item 1A. Risk Factors 23

Item 1B. Unresolved Staff Comments 40

Item 2. Properties 40

Item 3. Legal Proceedings 40

Item 4. Mine Safety Disclosures 40

Part II. Other Information

Item 6. Selected Financial Data 41

Item 7A. Quantitative and Qualitative Disclosures about Market Risk 53

Item 8. Financial Statements and Supplementary Data 55

Item 9A. Controls and Procedures 93

Item 9B. Other Information 93

Part III.

Item 10. Directors, Executive Officers, and Corporate Governance 94

Item 11. Executive Compensation 94

Item 14. Principal Accounting Fees and Services 94

Part IV.

Item 15. Exhibits, Financial Statement Schedules 95

Signatures 99

PART

I

Certain

statements contained herein are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act

of 1995, including, but not limited to, statements pertaining to future financial and/or operating results, future growth in research,

technology, clinical development, and potential opportunities for Oncocyte, along with other statements about the future expectations,

beliefs, goals, plans, or prospects expressed by management constitute forward-looking statements. Any statements that are not

historical fact (including, but not limited to statements that contain words such as “anticipate,” “believe,”

“can,” “continue,” “could,” “estimate,” “expect,” “intend,”

“may,” “plan,” “project,” “seek,” “should,” “strategy,”

“target,” “will,” “would”) should also be considered to be forward-looking statements. Forward-looking

statements involve risks and uncertainties, including, without limitation, risks inherent in the development and/or commercialization

of potential products, uncertainty in the results of clinical trials or regulatory approvals, need and ability to obtain future

capital, and maintenance of intellectual property rights. Actual results may differ materially from the results anticipated in

these forward-looking statements and as such should be evaluated together with the many uncertainties that affect the businesses

of Oncocyte, particularly those mentioned in this Report under “Risk Factors”. Except as required by law, Oncocyte

undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

The

forward-looking statements include, among other things, statements about:

● the timing and potential achievement of future milestones;

● our plans to pursue research and development of diagnostic test candidates;

● our assumptions regarding obtaining reimbursement and reimbursement rates;

● our intellectual property position;

● the impact of government laws and regulations;

● our competitive position.

Unless

the context otherwise requires, all references to “OncoCyte,” “we,” “us,” “our,”

“the Company” or similar words refer to OncoCyte Corporation, together with our consolidated subsidiaries.

The

description or discussion, in this Form 10-K, of any contract or agreement is a summary only and is qualified in all respects

by reference to the full text of the applicable contract or agreement.

DetermaRxTM,

DetermaIOTM, DetermaTxTM, DetermaMxTM and DetermaDxTM are trademarks of OncoCyte Corporation regardless of

whether the “TM” symbol accompanies the use of or reference to the applicable trademark in this Report.

INDUSTRY

AND MARKET DATA

This

Annual Report (“Report”) on Form 10-K contains market data and industry forecasts that were obtained from industry

publications, third party market research and publicly available information. These publications generally state that the information

contained therein has been obtained from sources believed to be reliable. While we believe that the information from these publications

is reliable, we have not independently verified such information.

This

Report also contains estimates and other statistical data made by independent parties and by us relating to market size and growth

and other data about our industry. We obtained the industry and market data in this Report from our own research as well as from

industry and general publications, surveys and studies conducted by third parties, some of which may not be publicly available.

Such data involves a number of assumptions and limitations and contains projections and estimates of the future performance of

the industries in which we operate that are subject to a high degree of uncertainty. We caution you not to give undue weight to

such projections, assumptions and estimates.

Item

1. Business

Development

of Our Business

Oncocyte

is a molecular diagnostics company focused on developing and commercializing proprietary tests, initially offered as laboratory-developed

tests (“LDTs), to serve unmet medical needs across the cancer care continuum. Our tests aim to provide actionable information

to physicians and patients at critical decision points to optimize treatment decisions, including the selection of immunotherapy,

improve patient outcomes, and reduce overall cost of care. During the early years of our cancer LDT development efforts we explored

the development of non-invasive, liquid biopsies, for a variety of cancers. We subsequently determined to focus our resources

on the development of a non-invasive confirmatory blood test for lung cancer that we called DetermaDxTM intended for use

to clarify whether a potentially cancerous lung nodule is suspicious or likely benign.

To

diversify and grow our business while DetermaDxTM was in development, we completed two strategic asset and business acquisitions

during 2019 and early 2020 that transformed Oncocyte from a single product company to a company with a broader menu of laboratory-developed

tests that physicians may use at different critical decision points in cancer diagnosis and treatment to support their decision-making.

We believe that our effort to provide clinically actionable tests for certain key decision points along the continuum of diagnosis

shown below will mitigate the inherent risk of being a single product company and should lead to greater revenue opportunities

in rapidly emerging markets in lung cancer and beyond.

As

part of the new strategy to become relevant in the broader diagnostic continuum of lung cancer, our first strategic transaction

was an investment in Razor Genomics, Inc. (“Razor”) during September 2019 through which we acquired an equity position

in Razor and a sublicense to complete development and to commercialize Razor’s test for early stage lung cancer management.

This test, which we call DetermaRxTM, is the first and only test to predict a post-surgery patient’s risk of cancer

recurrence and their response to chemotherapy in early stage lung cancer, and is our first test to be commercialized and reimbursed

by Medicare. DetermaRx serves an unmet clinical need given 30-50% mortality rates in these patients in the absence of timely chemotherapy

treatment. During February 2021 we acquired all of the outstanding shares of Razor common stock and it is now a wholly-owned

subsidiary of Oncocyte.

In

January 2020, we acquired Insight Genetics, Inc. (“Insight”) which significantly expanded our product pipeline by

adding DetermaIOTM, a proprietary gene expression assay with promising data supporting its potential to help identify

patients likely to respond to checkpoint inhibitor drugs. This new class of drugs modulate the immune response and show activity

in multiple solid tumor types including non-small cell lung cancer (NSCLC), and triple negative breast cancer (TNBC). Insight

also has an existing revenue generating pharma service business that offers pharmaceutical companies comprehensive, multi-analyte

test development and clinical trial services at its CLIA laboratory. The breadth of expertise at our Insight facility includes

DNA and gene expression (RNA) test development, analysis and clinical testing for clinical studies and trials across multiple

platforms including polymerase chain reaction (PCR) and next generation sequencing (NGS) including whole transcriptome analysis

at the RNA level and whole exome analysis at the DNA level for tumor mutational burden (TMB) and genomic profiling for treatment

selection.

On

the pharmaceutical services side, there are approximately 3,000 PD-1/PD-L1 ongoing clinical trials that are expected to recruit

over 500,000 patients over the next 5 years. This represents a potential $1 billion market opportunity for immune-therapy clinical

trial services alone. It is well established that multi-analyte testing is more sensitive than testing a single analyte. Our multi-analyte

testing capabilities combining DNA and RNA should make us an attractive service provider to biopharmaceutical companies for biomarker

discovery and companion diagnostic development compared to DNA based testing alone.

We

discontinued the development of DetermaDxTM during the second quarter of 2020 after findings from a clinical validation study

demonstrated that the performance of DetermaDxTM did not meet the predetermined endpoints for the study. The primary clinical

validation study endpoint for the commercial launch of DetermaDxTM was to achieve a statistically significant improvement

over and above the clinical factors being utilized by physicians today to help with the diagnosis of intermediate risk lung nodules,

particularly those in the 0.8 cm to 2.2 cm size range. Since discontinuing DetermaDxTM we have focused our efforts on maximizing

the opportunities for our two most advanced commercial LDTs, DetermaRxTM and DetermaIOTM.

During

February 2021, we and our newly organized wholly-owned subsidiary CNI Monitor Sub, Inc. entered into an Agreement and Plan of

Merger (the “Chronix Merger Agreement”) pursuant to which we plan to acquire Chronix Biomedical, Inc. (“Chronix”)

through a merger of Chronix with our subsidiary. By acquiring Chronix, we will add Chronix’s TheraSureTM-CNI Monitor

to our diagnostic test pipeline. The CNI Monitor, which we plan to market as DetermaCNI, is a patented, blood-based test for immunotherapy

monitoring utilizing a copy number index or CNI that relies on the property of cancer to modify the normal genome of cells by

accumulating mutations and variation in the number of copies of genes in the genome. The CNI Monitor test quantitatively measures

the amount of that copy number variation present in blood that has been shed by dying tumor cells. Monitoring the change in the

CNI over time for a patient on immunotherapy may allow a physician to monitor their patient’s response to the immunotherapy

treatment or the progression of the disease and to adjust treatment accordingly. Our initial focus will be to offer the CNI Monitor

to the pharma industry for research use and pharma trials in lung cancer and other solid tumor types treated by immunotherapy.

Our ultimate goal will be to develop the CNI Monitor for clinical use as a blood-based immunotherapy monitoring test.

In

addition to the CNI Monitor, Chronix has certain organ transplant technology. Chronix has laboratory operations in Germany that

can support the continued development and commercial launch of the CNI Monitor and other tests, including our DetermaRxTM

and DetermaIOTM, in Germany and other EU member countries after completion of the merger.

We

expect to complete the Chronix merger during April 2021 if the conditions to the merger under the Chronix Merger Agreement are

met.

The

Cancer Care Continuum

The

cancer care continuum that is the focus of our business be divided into three important components of information that physicians

require to manage their patients through the full term of cancer care:

1. Diagnosing cancer, including the type of cancer.

2. Determining the best course of treatment for the patient.

This

three-component continuum represents a large unmet total available market or TAM in the United States and the rest of the world

as reflected in graphic below. Oncocyte’s mission is to address the second and third components of the continuum after cancer

has been diagnosed, with the goal of ensuring that each patient has the best chance for disease free survival.

Since

the advent of genomic scale characterization of cancer, oncologists have strived to apply genomic targeted testing to improvement

in selection of treatment and management of disease progression. We are initially applying a comprehensive targeted approach to

lung cancer where management paradigms are most mature and believe a similar approach will have utility across solid tumors grounded

in their common features in responding to immune therapy. Our first indication for commercialization is lung cancer which remains

the leading cause of cancer death in the United States and the rest of the world, making it one of the largest molecular diagnostic

market opportunities.

While

our sales efforts current focus on physicians managing patients with lung cancer, the pipeline of tests we plan to offer in the

future will expand to all solid tumors and, strategically, our clinical studies and trials with pharma companies will not be limited

to lung cancer given the early success of our test in other solid tumors. Our proprietary diagnostic tests are focused on the

interrogation of RNA signatures, the coding component that converts DNA code into actual protein production within a cell, from

tumor tissue or peripheral blood samples and target key clinical questions that are critical to better management of cancer, from

treatment through monitoring of therapeutic efficacy and recurrence of certain cancers. As we expand the scope of our test offerings

towards the goal of addressing more key clinical decision points in lung and other cancers, we remain technology agnostic, and

aim to continue to identify tests that allow us to reduce to practice the findings from large scale genomic profiling leading

to the best approach that addresses the needs of patients and physicians in a manner consistent with the need for rapid turnaround

time and judicious use of precious tumor tissue or blood samples while delivering good health economic outcomes.

Our

primary growth engines are tests that are novel and proprietary. Through our strategic acquisitions, we have added significant

bioinformatics expertise in algorithm development and validation that we can use to analyze functional gene expression and other

biological data in order to develop tests that address significant clinical challenges that have not been successfully addressed

by currently available technologies. At the same time our tests are run on instruments with a high global installed base enabling

decentralization of testing to labs worldwide.

Business

Strategy

Why

Treatment Selection in Cancer

Approximately

1.8 million people were diagnosed with cancer in 2020 in the United States, and an estimated 17 million worldwide, according to

the American Cancer Society. Despite the advancements in therapeutics, cancer remains the second leading cause of death in the

United States. Biomarkers are playing an increasingly important role in helping pharmaceutical companies and oncologists identify

and select patients for established and new therapies to ensure the right patient gets the right treatment as early as possible

post-diagnosis, in order to best improve patient outcomes.

We

are building Oncocyte to be a “one stop lab” for treatment decisions for every patient diagnosed with a solid tumor,

by delivering to the treating oncologist proprietary biomarker testing that offers incremental information to inform patient treatment

and monitor response to therapy, in combination with the current standard of care testing they order today. Since DetermaRx and

DetermaIO would only be offered by Oncocyte, our goal is to become the preferred lab for physicians for both our proprietary tests

and more traditional tests otherwise offered by many different labs that we can perform in our CLIA laboratories. An example of

this testing would be for a patient diagnosed with lung cancer, for whom standard of care targeting information on EGFR, ALK,

PD-L1 would be offered, plus DetermaIO our proprietary test for informing immune therapy decisions, all using the same patient

tumor or blood sample. This would allow informed selection of targeted immune-therapy and potentially the need for additional

cytotoxic chemotherapy. For the course of treatment, we are developing blood based monitoring tools to detect non-response or

progression on therapy to inform timely treatment changes.

This

“one-stop” approach offers several practical advantages. Today, the testing needs of physicians managing cancer patients

are met by several specialty reference labs, meaning the physician or hospital must split the sample and send portions to several

different labs to complete the various tests needed to accurately diagnose the cancer type and select a therapy. Not only does

this process consume a large amount of sparse patient biopsy sample risking depletion of the sample before completing all testing,

but also the process can take up to three weeks for the compilation of all the results to make it back to the treating physician

to inform therapeutic decision making. All too often in the existing paradigm, patients are committed to a therapeutic approach

before all the information is returned from the different clinical labs. Oncocyte’s consolidation of testing modalities

will allow the judicious use of limited patient biopsy samples and deliver results to the ordering physician within a more expeditious

time frame for optimizing the treatment regimen. Our survey of cancer physicians indicates a significant demand for the attributes

of consuming a minimal portion of patient biopsy sample and faster turnaround of testing results.

Our

Laboratory Tests — Strategically Addressing Unmet Clinical Questions Across the Cancer Care Continuum

We

are developing molecular LDTs that provide physicians information to enable the timely diagnosis and treatment of cancer with

the ultimate goal of transforming this deadly cancer to a curable or chronic disease. We believe that the proprietary tests in

our product pipeline will allow Oncocyte to be relevant in the early stage of decision making giving us unique access to the sample

“tumor block” from the beginning of the diagnostic process, thus allowing us to offer other follow up tests without

physicians needing to send patient samples to another laboratory. Although we may sometimes refer to our tests as “diagnostic

tests,” our laboratory-developed tests are intended to support and help inform physician decision-making, but are not themselves

diagnostic or prescriptive of treatment decisions.

DetermaRxTM

– Treatment selection in early stage lung cancer

Oncocyte’s

first commercially available laboratory-developed test is DetermaRxTM, the only predictive molecular test for early

stage adenocarcinoma of the lung. This gene expression-based test provides information that a physician can use to help identify

early-stage, surgically resected patients with Stage I and IIA non-squamous non-small cell lung cancer (NSCLC) who are at high-risk

of recurrence and may benefit from chemotherapy.

NSCLC

of the lung is the most common type of lung cancer accounting for 80% to 85% of incidence. Survival rates for patients diagnosed

at an early stage are significantly higher than those for patients whose lung cancer is diagnosed at an advanced stage such as

Stage III or Stage IV. Surgery is the standard of care for patients diagnosed with early stage (Stage I and Stage IIA) lung cancer.

Yet even after complete surgical resection, between 30% to 50% of those early stage patients have a recurrence of the disease.

Trials of chemotherapy treatment in early-stage disease have been inconclusive as to whether the early stage treatment improves

outcomes in un-stratified patients. Current guidelines suggest risk stratification and use of adjuvant (post-surgery) chemotherapy

in “high-risk” patients. However, the recommendations for assessment of risk are subjective and lack clinical studies

that validate their usefulness in informing the use of chemotherapy.

DetermaRxTM

is a 14-gene molecular stratification test performed on surgically resected tissue and is indicated for patients with Stage I

and Stage IIA NSCLC to help determine who may benefit from adjuvant chemotherapy. Typically, thoracic surgeons or medical oncologists

order the test after surgical resection. These surgical samples are processed as formalin fixed and paraffin embedded (FFPE) tissue

samples. We receive blocks or scrolls of FFPE samples for testing in our CLIA-certified laboratory. A test report is generated

classifying patient risk of recurrence and returned to the ordering physician, generally within 10 business days. This turnaround

time enables the treating physician to have the report in time for discussion of a treatment plan with the patient, usually a

month after surgery.

The

results from the prospective study published in Clinical Lung Cancer 2018 and presented at the North American Lung Conference

(NA IASCLC) in 2020 were compelling. Patients who were identified as “high risk” and treated with double platinum

chemotherapy had a 3% recurrence rate compared to a 30% cancer recurrence rate in high risk patients who declined chemotherapy.

We

believe that there is an annual U.S. market opportunity of approximately 40,000 patients or approximately $140 million for DetermaRxTM

based on our reimbursement levels approved by CMS in 2020. This market is expected to grow as high-risk screening recommendations

are adopted, resulting in more patients being screened through Low Dose CT (LDCT) scans and diagnosed at an early stage. The European

market presents a similar number of patients per year, while China represents the largest patient population with over 250,000

early stage lung cancer cases per year.

DetermaRxTM

has been validated in three independent cohorts with close to 1,400 patients and test data has been published in top-tier

peer reviewed publications including Lancet Oncology, JAMA, and the Journal of Thoracic Oncology. Importantly, the impact of the

use of chemotherapy in high-risk patients was demonstrated in a paper published in Clinical Lung Cancer in 2017. We have also

initiated a prospective definitive clinical trial randomizing molecular high-risk patients to adjuvant chemotherapy or surgical

intervention alone in order to gather the highest level of evidence supporting the predictive information of DetermaRx. If successful,

this study will strongly support access to the entire global market, including countries whose regulatory entities require the

most stringent evidence for test reimbursement or marketing.

DetermaIOTM

– Immunotherapy treatment selection

For

patients diagnosed with cancer, immunotherapies, particularly immune checkpoint inhibitors (ICI’s) targeting PD-1 and PD-L1,

have emerged as a novel drug class that helps recruit the body’s immune system to attack the growing tumor. Pharmaceutical

companies are investing heavily in this space, with hundreds of clinical trials ongoing, and a number of drugs approved by the

FDA for all solid tumors, including pembrolizumab (KeytrudaTM), nivolumab (OpdivoTM), and atezolizumab (TecentriqTM).

Through

the acquisition of Insight in January 2020, Oncocyte has expanded its portfolio to include a novel gene expression-based

test called DetermaIOTM, which is being developed to identify patients most likely to respond to immunotherapy drugs. Current

predictive biomarkers, including PD-L1 and Tumor Mutational Burden or TMB, have shown only limited ability to accurately predict

which patients will respond to an immunotherapy. For example, according to published literature, more than half of PD-L1 positive

patients do not respond to immune- checkpoint inhibitors, and 1 in 6 patients who will respond are missed (referred to as a “false

negative”).

While

ICIs represent a significant advancement in treatment options for patients diagnosed with advanced solid cancers, the response

rates have been modest, based on treatment directed by the current standard of care biomarker PD-L1 immunohistochemistry. Depending

on the solid tumor type, only approximately 15% to 40% of PD-L1 positive tumors respond to ICIs, while a significant number of

PDL-1 negative patients do respond. Another issue with ICIs is that although ICI treatments can be highly effective in the right

patients, ICI’s also have significant side effects which include exacerbation of latent autoimmune disorders. There is a

compelling medical and health economic unmet need for a biomarker that can provide three improvements to the use of ICIs: (1)

the identification of additional patients who may respond to the treatment and missed by the existing biomarkers, (2) enable additional

or alterative treatment options for the 60% to 85% of patients who may receive these expensive drugs without benefit but while

still facing the risk of side effects associated with ICIs, and (3) inform the use of ICI’s in combination with traditional

cytotoxic chemotherapy to enhance response rates.

DetermaIOTM

represents an opportunity to enter a very large market to help identify patients who will respond to immune therapy, with

more than 750,000 U.S. patients eligible for ICI therapy annually and growing with expanding indications for this

type of treatment. As depicted in the image below, analyst predict the ICI spend in the US alone will exceed $125 billion by 2025

meaning the healthcare system will deploy well over $60 billion on drug therapies that will offer no benefit to many of the patients

who would receive ICI therapy.

DetermaIOTM

is a proprietary molecular test that has proven in clinical studies to date to provide incremental utility beyond the current

tests being used to identify patients who will have a response to ICIs, and represents a solid opportunity to provide better information

for patient management leading to better patient outcomes as well as saving the healthcare systems in the US significant cost.

We completed the CLIA validation of DetermaIOTM in April of 2020 and launched the test for research use through our Pharma

Services operations to enable pharmaceutical and biopharmaceutical companies to utilize it in clinical studies of ICIs that they

are developing. There are approximately 3,000 PD-1/PD-L1 targeted therapy clinical trials ongoing that are expected to recruit

over 500,000 patients. This represents a potential $1 billion market opportunity for immune-therapy clinical trial services to

pharma companies developing ICIs which could be addressed by our Pharma Services operations. The test currently is only available

as a research product for pharma studies, but there are currently several studies that have been submitted for publication that

include clinical data to support use of DetermaIO as in clinical practice to predict which cancer patients are likely to respond

to immunotherapies. Assuming successful publication or presentation of these studies, including the clinical data, at the upcoming

American Association of Cancer Research (AACR) in April, the American Association of Clinical Oncology (ASCO) in early June and

European Society of Medical Oncology (ESMO) in September, we expect to be able to launch DetermaIO in the clinical market in the

late third or early fourth quarter of 2021.

We

also believe, based on our projected reimbursable pricing model, that the clinical use of DetermaIO will address a potential $3

billion TAM opportunity. The actual TAM for DetermaIOTM in medical practice will depend upon a variety of factors including

our ability to demonstrate the efficacy and clinical utility of the test, the extent of physician acceptance of the test, whether

the test will be approved for Medicare reimbursement, and, if reimbursement is approved, the actual approved reimbursement price.

How

DetermaIO May Inform the Choice of Therapies

Despite

the potential benefit of immunotherapy, those therapies are associated with high cost and toxicity, making it very important to

accurately identify both responders and non-responders to reduce overall morbidity and mortality. DetermaIOTM was developed

for that purpose. The test measures the expression levels of 27 genes and algorithmically computes a quantitative score that incorporates

information from the immune inflammatory infiltrates within and around the tumor combined with information from the wound response

surrounding the tumor. An established threshold is used to classify patients as likely responder or likely non-responder which

has now been validated in several independent clinical studies in multiple cancers. Initial data using DetermaIOTM as an

immune therapy response predictor in NSCLC was presented at the 2019 Society for Immunotherapy of Cancer (SITC) conference that

suggested the test may offer incremental utility beyond PD-L1 and TMB alone in identifying responders to checkpoint inhibitors.

Similarly, data presented at the 2020 American Society of Clinical Oncology annual meeting (ASCO) demonstrated superiority to

PDL-1 IHC in predicting pathologic complete response in neoadjuvant treated triple negative breast cancer.

The

diagram below reflects the importance of the biology of the tissue immune micro-environment and explains why we believe DetermaIO

is an important breakthrough complimenting the current therapy decision process for physicians considering immune checkpoint inhibitors.

The figure depicts that every individual forms tumor cells during their lifetime, but our immune system recognizes these abnormal

cells and attacks and removes them keeping them from growing into a clinically relevant cancer. When the immune system is over-active

and reacts to normal cells, it results in autoimmune disorders. The balance between killing these near normal tumor cells and

normal cells is called immune homeostasis and is largely governed by biologic systems called immune checkpoints. When tumors cells

disrupt these checkpoints and overwhelm the immune system, a cancer develops. One mechanism by which tumor and the immune system

regulate the intensity of immune surveillance is through modulating expression of PD-1 and PD-L1 that together regulate the activity

immune effector cells. ICI therapeutics have been developed that block these receptor sites and allow the immune system to once

again “see” the tumor and attack and restore the immune system’s ability to kill cancer cells. Because these

drugs work on immune cells regardless of their targets, the side effects of these drugs can be enhanced autoimmunity. Unfortunately,

response rates to ICI’s are only approximately 15% to 40% depending upon tumor type. However, responses are often durable

although resistance does evolve during treatment in some patients. The early success of these drugs has stimulated deeper investigation

into the mechanism by which tumors evade the immune system which has revealed a complex interplay between tumor evasion strategies,

the activity of immune effector cells and the tissue repair mechanisms that modulate anti-tumor activity. The balance between

signal from the tumor, signals from the inflammatory cells invading the tumor, and signals from the wound response are now understood

to account for resistance to ICI’s and are the target of second-generation therapeutic strategies to overcome resistance.

DetermaIOTM

was developed to measure the status of the immune system in immune and wound response tissue surrounding tumors. It incorporates

measurement of the complete microenvironment including activity of genes expressed in immune effector cells, genes expressed in

activated wound response cells, and in some cases, genes expressed by the tumor itself. It is the combination of measurement of

these three signals that we believe distinguishes DetermaIOTM from most other approaches. Current biomarkers being

used to assess the likelihood of immune response have shown only modest ability to predict responses to ICI’s. PDL-1 immunohistochemistry

looks at the presence of PDL-1 receptors and tumor mutation burden (TMB) at the number of mutations (neoantigens) in the tumor

genome. We believe DetermaIO is a direct measure the status of the immune microenvironment and as such identifies those tumors

poised to respond to the addition of ICI’s. We believe and now have data to support that the integration of the signal from

the “Hot” component of the tumor with the “Cold” immune repressive features, and in some cases the exclusion

of immune cells altogether, the immune desert, is superior to measuring any of these physiologies alone.

The

ability to accurately determine response to immunotherapies has important implications for both the patients themselves and the

healthcare economy as a whole. For the patients that are likely to respond to immunotherapies, these drugs can be a much more

effective and less toxic treatment option than standard chemotherapy. For the patients who are unlikely to respond, opting for

a different course of treatment would eliminate exposure to potentially serious side effects such as autoimmune diseases, and

could save payers in the healthcare industry use of extremely costly therapy regimens. The market continues to seek a test that

is predictive, uses very little tissue, and can be performed rapidly. We believe DetermaIOTM meets all the important criteria

for a precision medicine test that can be routinely use.

The

origin of the gene expression classifier used in DetermaIOTM was work done to better classify triple negative breast cancer

(TNBC) into four tumor cell subtypes that could be modified by the immune classifier. It started with a greater than 2200 gene

unsupervised classifier that recognized both the physiological differences between tumor types within TNBC, and the activated

immune and stromal signatures characteristic of advanced cancers. The original development team from Insight had success reducing

the large gene signature to a 101-gene panel for classification of TNBC, and then recognized that the only twenty-seven RNAs from

the tumor could provide the appropriate classification of the immune environment that has now matured into DetermaIOTM, our

CLIA certified PCR test for immune response classification. Since this immune classifier relies upon gene expression signatures

derived primarily from inflammatory cells and activated stromal cells, there is no reason to assume that DetermaIO’s immune

classification function would be limited to only these tissue types. This prompted our work in lung cancer where the unmodified

classifier performed very similarly to breast cancer. We are working to validate the classification function and classifier threshold

using publicly available gene expression datasets and testing the classifier as a predictor of response to ICI therapy in other

solid tumor types. DetermaIOTM is now offered as part of our Pharma Services business as a CLIA validated PCR test,

and can be assessed for clinical studies in whole transcriptome RNAseq data. In addition, the original 101-gene TNBC tumor classifier

is advancing in studies elucidating its association with different targeted or cytotoxic chemotherapy treatment regimens in TNBC.

We plan on investing in further studies to elucidate and validate the role of DetermaIO and the TNBC classifier in managing immune

therapy in other tumor types and TNBC respectively.

Blood

Based Monitoring Opportunity

The

next emerging opportunity in cancer diagnostics is in the area of therapy response monitoring and recurrence monitoring. Analysts

have estimated a worldwide TAM ranging from $5 billion to $10 billion for monitoring for therapeutic efficacy and disease recurrence.

There are an estimated 15 million people “living with cancer” and over one million people diagnosed with a solid tumor

each year in the US alone. Monitoring is a “repeat” testing opportunity and given the limitations of current standard

of care, CT/MRI imaging, there is an emerging and potentially large market for a blood based test that can inform a treating physician

that a tumor is becoming resistant to a patient’s current treatment protocol before an imaging technique can detect whether

there is shrinkage in a tumor. Our mission is to provide relevant, high value information from our menu of tests to treating physicians

throughout the “patient journey” for people with lung cancer and other solid tumors. DetermaRx and DetermaIO were

developed to help physicians choose the right therapy, and our entry into blood based monitoring is a natural addition to our

test menu to help physicians understand whether their therapeutic choice is working for their patient and to help them make appropriate

changes to a patient’s protocol if the tumor is non-responsive. Once the patient’s tumor resolves and they become

“Disease Free”, monitoring for recurrence 3 to 4 times a year using a simple blood test could become a way to help

turn cancer into a chronic disorder versus a deadly disease, an important part of our corporate mission.

Most

approaches to blood based detection and quantitation of tumor load involve genome scale sequencing of a patient’s tumor

to identify “personal” mutations in the tumor and then develop a custom NGS panel assay to monitor for those mutations

in each patient’s blood. This process requires significant investment in time and money upfront and complicated infrastructure

to manage these “tumor informed” personalized custom panels. We believe there is an opportunity to develop tests that

do not require this personalization and therefore eliminate the burdensome tissue requirement and shorten the time to initiate

therapeutic monitoring. If we complete our planned acquisition of Chronix, we will add to our test pipeline their Therapy Monitoring

solution, TheraSure CNI, which we expect to market as DetermaCNI. This new monitoring test does not require tumor sequencing prior

to blood testing therefore is intended to be an alternative to the tumor informed approach that requires a tissue biopsy. Chronix

will also bring to Oncocyte a world class assay development team with deep experience and a portfolio of intellectual property

in the field of digital-PCR based detection of DNA in blood that will be the foundation for development of our next generation

tumor monitoring products.)

Pharma

Services

Our

acquisition of Insight expanded our laboratory offerings to include a CLIA-certified laboratory that has been accredited by the

College of American Pathologists (CAP). The lab is ISO 9001 201 and 21 CFR Part 820 compliant which allows it to support the key

delivery of services to the pharmaceutical and biotechnology industry for biomarker discovery, clinical trials, and product development.

Our pharma service business offers pharmaceutical companies comprehensive, multi-analyte test development and clinical trial services

at our Nashville, Tennessee CLIA laboratory. The breadth of our expertise includes DNA and gene expression (RNA) test development,

analysis and clinical testing for clinical studies and trials across multiple platforms including polymerase chain reaction (PCR)

and next generation sequencing (NGS) including whole transcriptome analysis at the RNA level and whole exome analysis at the DNA

level for tumor mutational burden (TMB) and genomic profiling for treatment selection. We currently provide the following services:

● Custom drug target discovery services

● Assay design, development and validation services

● Clinical trial and other testing services

Pharmaceutical

companies investing millions of dollars in clinical trials may benefit from developing predictive biomarkers that can help identify

the subset of patients most likely to respond to their drugs. This patient stratification approach may enhance the success rates

of their clinical trials by allowing the pharmaceutical company to identify which patients to include in the trials. We believe

that it is now well understood that a multi-analyte approach combining DNA, RNA, and protein expression and epigenomic markers

will deliver the highest level of treatment response prediction compared to DNA based testing alone.

The

quality credentialing and the multi-analyte capabilities described above enable our laboratory to provide end-to-end services

to biopharmaceutical companies from discovery of a predictive biomarker, to its validation in clinical trials, and finally to

the United States Food and Drug Administration (“FDA”) stage for approval of the biomarker as a “companion diagnostic”

to be utilized in conjunction with the therapy to identify patients eligible for the drug.

Commercialization

of our Molecular Diagnostic Tests

Our

first commercial diagnostic test is DetermaRxTM which we began to commercialize in 2020. We are presently performing the

DetermaRx tests at our CLIA certified laboratory in Brisbane, California. We are in the process to completing construction of

a new laboratory at our facility in Irvine California which will be the home of our west coast CLIA operations and certain administrative

functions. We expect to complete construction and certify the Irvine laboratory by June of 2021, after which we plan to decommission

the Brisbane laboratory. We will then have a west coast CLIA lab in Irvine and an Eastern US CLIA lab and Pharma Services lab

in Nashville, Tennessee that will serve as our Immune Diagnostic Center of Excellence, and at the close of the Chronix merger,

we will acquire and operate our Blood Based Monitoring Center of Excellence from Gottingen, Germany.

In

January 2020, we hired our first six sales representatives and trained them for the market launch of DetermaRxTM all

of whom have extensive experience selling high value oncology molecular tests, and a medical educator who is a board-certified

genetic counselor. The product was launched to seven Early Adopter Sites in February to establish and test our CLIA lab

protocols and workflows, gain customer feedback on the final patient report and validate our logistical plan for sample transport.

The decision was made to enter a full market launch in late February after successful validation of our processes, and full engagement

started in early March. To expand our customer base for DetermaRxTM, we have hired a limited sales force in focused regions

of the country to identify and target hospitals and physicians that perform a high volume of surgical resections, which include

large group practices (LGPs), as well as National Comprehensive Cancer Network (NCCN) and NCI cancer centers. Our primary call

point is thoracic surgeons because they manage most early-stage lung cancer patients, and refer patients to medical oncologists

for further treatment post-surgery as needed. Our sales representatives also call on medical oncologists who make the chemotherapy

treatment decision for patients identified high-risk by the test. These are complimentary call points as often decisions to adopt

a test are made by a multi-disciplinary team. Unfortunately, the world was facing the emergence of a pandemic of a Novel Coronavirus,

called SARS- CoV2, which ultimately led to the COVID pandemic that severely impacted our sales forces’ ability to engage

new accounts and surgeons in person at the critical early phase of full market launch. In late March 2020, our medical education

team pivoted to a virtual training program and began to offer Medical Education events over virtual calls and video meetings which

allowed our sales representatives to set up virtual presentations to educate physicians about DetermaRxTM. We believe

the program was successful because through the end of 2020, the virtual programs had reached over 3,000 healthcare professionals.

As of the filing of this Annual Report, we continue to rely on the virtual programs since our sales professionals have limited

in person access to hospitals and surgical or oncologist’s offices.

Since

our broad commercial launch in March 2020, DetermaRx has now been made available at more than 80 hospitals in the United States

including multiple prestigious National Cancer Institute (NCI) and NCCN cancer centers and large community practices where most

cancer is treated. The strategy we are pursuing to market DetermaRxTM is likely to be replicated in large measure for the

market launch of our other cancer tests as we complete test development.

We

are investing in physician education to drive demand for DetermaRxTM. A central pillar of our physician education efforts

is our Key Opinion Leader-led speaker program that is focused on peer-to-peer engagement. Several community and academic speakers

have already been enrolled as speakers. Our marketing and physician education efforts also include participation in lung cancer

focused national and regional medical meetings and symposia, and grant support of accredited continuing medical education (CME)

events.

Market

Access – Reimbursement

Billing,

Coverage, and Reimbursement for our Diagnostic Tests

Currently

DetermaRxTM is Oncocyte’s only commercialized clinical test. We expect that revenues from our clinical laboratory

for this test will be derived from several different sources:

In

August 2020, CMS delivered a final coverage and pricing decision, which is important for commercialization because approximately

70% of patients for whom the test is indicated are eligible for Medicare coverage. However, in the absence of reimbursement by

a health insurance plan or Medicare, patients who would be candidates for the use of our tests may decline to use our tests, and

physicians may be reluctant to prescribe our tests, due to the cost of the test to the patients. Because of this patient cost

factor, revenues from any new cancer test that we market may experience slow growth until the test is approved for reimbursement

by larger payer plans which cover many patients.

Medicare

For

cancer diagnostics, Medicare or CMS reimbursement approval is critical. CMS relies on a network of Medicare Administrative Contractors

(“MACs”) to make Local Coverage Decisions approving a test for reimbursement. The Molecular Diagnostics Services (“MolDx”)

Program was developed by Palmetto GBA (the previous MAC for California) to identify and establish coverage and reimbursement for

molecular diagnostics tests. The program has developed guidelines for the level of evidence of efficacy required to be obtained

through clinical trials. Palmetto, which contracted with CMS to administer the MolDx, issues Local Coverage Determinations that

affect coverage, coding, and billing of many molecular tests and the current MAC for California, Noridian Healthcare Solutions,

LLC, has adopted the coverage policies from Palmetto. MACs also serve as the primary operational contact between the Medicare

Fee-For-Service program, for paying Medicare claims, and approximately 1.5 million health care providers enrolled in the program.

Private

Third-Party Payers

In

addition to seeking Medicare reimbursement approval, we will seek reimbursement approval from private payers such as health insurance

companies and HMOs. Private payers generally will determine whether to approve a diagnostic test for reimbursement based on the

published results of clinical validity and clinical utility studies, and may base their decision on whether to cover a test, and

at what level to reimburse, on the MAC’s local coverage determination. Obtaining private payer medical coverage generally

takes twelve to twenty-four months from the time that sufficient evidence is demonstrated. In the interim we will bill commercial

payers and appeal any denials using the published clinical evidence supporting the utility of the test.

Reimbursement

rates paid by private third-party payers can vary based on whether the provider is considered to be an “in-network”

provider, a participating provider, a covered provider, an “out-of-network” provider or a non-participating provider.

Currently, we are out-of-network with all commercial payers. These definitions can vary among payers. An in-network provider usually

has a contract with the payer or benefits provider. This contract governs, among other things, service-level agreements and reimbursement

rates. In certain instances, an insurance company may negotiate an in-network rate for our testing. An in-network provider may

have rates that are lower per test than those that are out-of-network, and that rate can vary widely. Rates vary based on the

payer, the testing type and often the specifics of the patient’s insurance plan. If a laboratory agrees to contract as an

in-network provider, it generally expects to receive quicker payment and access to additional covered patients. However, it is

likely that we will initially be considered an “out-of-network” or non-participating provider by payers who cover

the vast majority of patients until we can negotiate contracts with the payers.

We

cannot predict whether, or under what circumstances, payers will reimburse for patients for our tests. We have a rigorous process

for prior authorization and appeals to overturn denials and to get contracted with commercial payers. Full or partial denial of

coverage by payers, or reimbursement at inadequate levels, would have a material adverse impact on our business and on market

acceptance of our tests.

Billing

and Collection

Where

there is a private or governmental third-party payer coverage policy in place, we will bill the payer and the patient in accordance

with the established policy. Our efforts in obtaining reimbursement based on individual claims, including pursuing appeals or

reconsiderations of claims denials, could take a substantial amount of time, and bills may not be paid for many months, if at

all. Furthermore, if a third-party payer denies coverage after final appeal, payment may not be received at all.

Where

there is no coverage policy in place, we will pursue reimbursement on a case-by-case basis. In some cases, if not prohibited by

law or regulation, we may bill physicians, hospitals and other laboratories directly for the services that they order. However,

laws and regulations in certain states prohibit laboratories from billing physicians or other purchasers for testing that they

order. Some states may allow laboratories to bill physicians directly but may prohibit the physician and, in some cases, other

purchasers from charging more than the purchase price for the services, or may allow only for the recovery of acquisition costs,

or may require disclosure of certain information on the invoice. An increase in the number of states that impose similar restrictions

could adversely affect us by encouraging physicians to perform laboratory services in-house or by causing physicians to refer

services to other laboratories that are not subject to the same restrictions.

Corporate

Information

We

were incorporated in September 2009 in the state of California. Our principal executive offices are located at 15 Cushing, Irvine,

California 92618. Our telephone number is (949) 409-7600. Our website is www.Oncocyte.com. Information contained on, or

that can be accessed through, our website, is not, and shall not be deemed to be, incorporated into or be considered a part of

this Report.

We

are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012. We will remain an

“emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual

gross revenues of $1.07 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the first sale

of our common equity securities pursuant to an effective registration statement under the Securities Act of 1933, as amended (the

“Securities Act”); (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the

previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the Securities

and Exchange Commission, or the SEC. We refer to the Jumpstart Our Business Startups Act of 2012 herein as the “JOBS Act,”

and references herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.

As

an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable,

in general, to public companies that are not emerging growth companies. These provisions include:

● Reduced disclosure about our executive compensation arrangements;

We

may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company.

Competition

Our

industry is highly competitive and characterized by rapid technological change. Key competitive factors in our industry include,

among others, the ability to successfully complete clinical studies, the ability to obtain any required regulatory approval, average

selling prices of competing tests, CLIA laboratory capacity and costs, intellectual property and patent rights, and sales and

marketing capabilities. We are an early stage company with a limited operating history and many of our competitors have substantially

more resources than we do, including financial, technical and sales resources. In addition, many of our competitors have more

experience than we have in the development and commercialization of diagnostics. We are also competing with academic institutions,

governmental agencies and private organizations that are conducting research in the field of diagnostics. Our competition will

be determined in part by the potential indications for which our lead test candidates are developed and ultimately marketed. Additionally,

the timing of market introduction of our diagnostic tests or of competitors’ tests may be an important competitive factor.

For

the DetermaRxTM test, Oncocyte is not aware of any other diagnostic test currently on the market for the treatment stratification

of patients with surgically resected Stage I and IIA NSCLC, therefore we do not believe there is a direct competitor to our DetermaRxTM

test. Guidelines established by the NCCN include criteria for identifying patients at high risk of recurrence for resected Stage

I and IIA NSCLC, but these criteria, to our knowledge, have not been validated to demonstrate accuracy or clinical benefit.

The

DetermaIOTM test competes with multiple biomarkers already in clinical use or in development for predicting response to immunotherapy.

The most commonly used clinical tests employed in the immunotherapy response market are PD-L1 expression testing and TMB. We believe,

however, the current standard of care for PD-L1 testing has important limitations. According to published literature, more than

half of PD-L1 positive patients do not respond to immune- checkpoint inhibitors, and 1 in 6 patients who will respond are missed

(referred to as a “false negative”). Furthermore, data presented at recent oncology medical conferences suggests that

TMB is not a reliable predictor of immunotherapy response. Further, data presented at SITC (discussed previously), suggested that

DetermaIOTM outperformed both PD-L1 and TMB in predicting response to checkpoint inhibitors in patients with NSCLC. We are

planning additional studies to confirm these results in a larger patient population for clinical use and reimbursement.

Certain

Razor Agreements

During

February 2021 we acquired all of the shares of Razor common stock from its shareholders. Razor is now a wholly-owned subsidiary

of Oncocyte. Razor holds an exclusive worldwide license from a state university under certain patent rights applicable to DetermaRxTM.

The license agreement includes certain royalty payment, sublicense revenue sharing, and test development and commercialization

milestone provisions. If the development and commercialization milestones are not met in a timely manner UCSF could convert the

license into a non-exclusive license. Royalties payable to the licensor will be in a mid-single digit percentage range depending

on the source of revenue. The license agreement will remain in effect until the expiration or abandonment of the last of the licensed

patent rights, but would terminate earlier if Oncocyte were to become subject to bankruptcy proceedings or if Oncocyte fails to

perform or violates any term of the license agreement and does not cure the breach within the time allotted.

During

September 2019, we entered into a Sublicense and Distribution Agreement (“Razor Sublicense Agreement”) with Razor

and its then principal shareholder Encore Clinical, Inc. (“Encore”) pursuant to which Razor granted us exclusive worldwide

sublicenses under certain patent rights applicable to DetermaRxTM for purposes of commercialization and development of DetermaRxTM.

Although we have since acquired all of the shares of Razor from its former shareholders, Oncocyte remains obligated on the Razor

Sublicense Agreement to pay all royalties and all revenue sharing and earnout payments owed by Razor to certain third parties

with respect to DetermaRxTM revenues, including the licensor of the patent rights, but those payments will be deducted from

gross revenues to determine net revenues for the purpose of paying royalties to the Razor shareholders. Total royalty and earnout

payments to the Razor shareholders, the licensor, and other third parties will be a low double-digit percentage, and in addition