Response Genetics, Inc. (Response Genetics) has reported net revenues of $7.1 million for the year-end 2008, down 9%, compared with the net revenues of $7.8 million in the previous year-end. It has also reported a net loss of $9.5 million, or $0.93 loss per share, for the year-end 2008, compared with the net loss of $5 million, or $0.78 loss per share, in the previous year-end.

“Response Genetics continues to make great strides as a company. During this past year, we successfully launched our ResponseDX: Lung and ResponseDX: Colon genetic tests; brought the promise of personalized medicine within reach of today’s physicians and cancer patients; tripled the size of our sales force to cover major national oncology markets; and signed agreements with GlaxoSmithKline and Roche Diagnostics,” said Kathleen Danenberg, Response Genetics president and CEO. “Sales of our ResponseDX diagnostic tests are off to a promising start in 2009 with around 500 tests processed in the first quarter compared to around 300 tests processed in the fourth quarter of 2008 – a 60% increase in tests processed. For the coming year, we look forward to a continued increase in sales of our ResponseDX diagnostic tests and further development of our pipeline.”

Corporate Development Highlights

ResponseDX Launch – Response Genetics launched its ResponseDX: Lung and ResponseDX: Colon genetic tests to select medical institutions in the Southern California market in March 2008. As of March 2009, the company has deployed its own national sales force covering major oncology markets in the United States, which is complimented by an additional external sales force per the company’s agreement with NeoGenomics Laboratories. Since the launch, the company has processed more than 1,000 ResponseDX tests with a reorder rate of around 90%.

Amended and Restated Master Service Agreement with GlaxoSmithKline Naming Response Genetics as a Preferred Provider – In December 2008, Response Genetics signed an amended and restated master service agreement with GlaxoSmithKline, Ltd., extending the existing agreement between the companies for an additional two-year period. Response Genetics was named as the preferred provider of genetic testing services to GlaxoSmithKline and its affiliated companies.

Agreement with Roche Diagnostics to Support Cancer Test Development – In February 2009, Response Genetics signed a nonexclusive license with Roche Diagnostics for the use of Response Genetics’ patented PCR analysis to assess human epidermal growth factor type 2 (HER2) gene expression. The accurate measurement of HER2 gene expression can assist physicians with treatment decisions for patients with cancers in tissues such as breast.

Laboratory Consolidation – On February 9, 2009, Response Genetics announced it was closing its United Kingdom facility in order to consolidate operations at its CLIA-certified laboratory in Los Angeles. The company has eliminated all of its employees in the United Kingdom, a total of nine positions and the reduction of workforce will be completed substantially by March 31, 2009. As a result of this action, Response Genetics expects to realize annual savings of around $2.0 million once the consolidation is completed.

Eight Studies Presented at ASCO 2008 – At the 2008 American Society of Clinical Oncology meeting, Response Genetics announced results from eight studies utilizing the company’s proprietary technology. Four of the studies presented support the validity for the use of molecular markers found in the ResponseDX: Lung and ResponseDX: Colon panels. Four additional studies were presented to support the validity of molecular markers found in diagnostic tests that are under development by the company in ovarian, pancreatic and gastric cancer.

Financial Results for the Year Ended December 31, 2008

The decrease in total revenues was primarily due to a delay in the receipt of clinical samples from pharmaceutical clients, which the company anticipates receiving in 2009 through 2010.

Cost of revenue for the year ended 2008 was $3.6 million compared with $4.0 million for the year ended 2007, a decrease of 13%. Research and development expenses were $2.2 million for the year ended 2008, compared with $2.5 million for the same period in the prior year. General and administrative expenses were $7.9 million for the year ended 2008, compared with $5.2 million for the same period in 2007. Total operating expenses for the year ended 2008, excluding costs related to the operation of the company’s United Kingdom lab increased to $13.6 million, compared with $11.7 million for the same period last year. The primary reasons for the incremental increase in total operating expenses are costs related to the launch of the company’s ResponseDX tests and its sales force expansion. Costs related to the operation of the United Kingdom lab for 2008 were $2.5 million of operating costs and $0.9 million of property and equipment costs.

Financial Results for the Fourth Quarter Ended December 31, 2008

Total revenue decreased by 41% to $1.4 million in the fourth quarter of 2008, compared with $2.4 million in the fourth quarter of 2007. This decrease was primarily due to a delay in the receipt of clinical samples from pharmaceutical clients, which the company anticipates receiving in 2009 through 2010.

Cost of revenue for the fourth quarter of 2008 was $744,873, compared with $1,129,473 for the fourth quarter of 2007. Research and development expenses were $436,756 for the fourth quarter of 2008, compared with $566,293 for the same period in the prior year.

General and administrative expenses of $2.3 million for the fourth quarter of 2008 increased from $1.3 million for the fourth quarter of the prior year. Total operating expenses for the fourth quarter of 2008, excluding costs related to the operation of the company’s United Kingdom lab increased to $3.5 million, compared with $3.0 million for the same period last year. Costs related to the operation of the United Kingdom lab for the fourth quarter of 2008 were $537,859 of operating costs and $893,326 of property and equipment impairment costs.

Cash and Cash Equivalents

Cash and cash equivalents at December 31, 2008 were $9.5 million compared to $17.0 million at December 31, 2007. As previously announced, Response Genetics completed an amended master service agreement with GlaxoSmithKline, Ltd. in December 2008. On January 5, 2009, the company received payment of $1.3 million from GlaxoSmithKline related to the amended agreement.

Response Genetics is a US-based company engaged in the research and development of its clinical diagnostic tests for cancer based on its technologies.