Response Genetics, Inc. Reports Second Quarter 2009 Financial Results Driven by 70% Increase From ResponseDX(TM) Molecular Diagnostic Cancer Test Revenues

"We are pleased to see that ResponseDX revenue is beginning to show a positive impact on our overall business. Our ResponseDX(TM) revenue increased 70 percent over the first quarter 2009, with a current run rate of more than 1200 tests per quarter. Furthermore, the expansion of our lung panel to include EGFR mutation analysis will approximately double its reimbursement rate," said Kathleen Danenberg, Response Genetics president and CEO. "Reception of Response Genetics' personalized medicine products and services was overwhelmingly positive at the recent World Conference on Lung Cancer. By demonstrating clear value to physicians and therapeutic benefit to their patients, we look forward to expanding our market to help ensure that the right therapy is given to each patient the first time."

Recent Corporate Development Highlights

-- ResponseDX(TM) Test Sales Continue to Ramp - More than 950 ResponseDX(TM) genetic tests were ordered in the second quarter of this year, with a reorder rate of approximately 90 percent. Revenue recorded from ResponseDX in the second quarter was approximately $446,000. Based on generally accepted accounting principles, the company continues to record revenues primarily on a cash basis from certain insurance providers until collection patterns are better determined. Cash collections continue to increase and the cash associated with the majority of the tests processed during the second quarter of 2009 will be collected in the third quarter of 2009.

-- $4 Million Private Placement - On July 22, 2009, Response Genetics entered into an agreement with funds managed by Lansdowne Partners Limited Partnership whereby approximately $4 million was raised from a private placement of newly issued shares of its common stock. These funds are expected to be used by the company to facilitate its sales goals and to expand its ResponseDX(TM) product offerings.

-- Expanded ResponseDX(TM) Test Panels - To further assist physicians in improving outcomes and reducing risk for the more than 200,000 Americans diagnosed with lung cancer and 160,000 diagnosed with colon cancer each year, Response Genetics expanded its ResponseDX: Lung(TM) genetic test panel to include analyses for epidermal growth factor receptor (EGFR) mutation, a determinant of sensitivity to tyrosine kinase inhibitors (TKI), and thymidylate synthase (TS), a gene associated with sensitivity to pemetrexed. These drugs are currently used to treat non-small cell lung cancer (NSCLC). The company's ResponseDX: Colon(TM) genetic test panel was expanded to include EGFR gene expression, a additional test for sensitivity to the widely used chemotherapy combination irinotecan, fluorouracil and folinic acid (FOLFIRI). Analysis of a BRAF mutation, the presence of which is associated with a lack of response to anti-EGFR therapy, and vascular endothelial growth factor receptor-2 (VEGFR-2) gene expression, a gene associated with clinical outcome to FOLFOX/BV therapy in metastatic colorectal cancer patients were also added.

-- Positive Data Presented at 2009 ASCO Annual Meeting - At the annual meeting of the American Society of Clinical Oncology (ASCO) in Orlando, Response Genetics announced the results of studies identifying genes associated with positive chemotherapy outcome and tumor recurrence. These data provide the foundation for developing a new diagnostic test for improving a) chemotherapy response for bladder cancer patients; and b) defining new gene combinations that may help predict clinical benefit from chemotherapy of colorectal cancer, specifically the association between KRAS status, gene expression levels of VEGFR-2, ERCC1 and EGFR with clinical outcome to chemotherapy combination 5-FU, oxaliplatin and bevacizumab (FOLFOX/BV) therapy in patients with metastatic colorectal cancer; and c) showing that VEGF and VEGFR1 gene expression levels may predict tumor recurrence risk in colon cancer patients and help identify patients likely to benefit from adjuvant chemotherapy.

-- Positive Data Presented at the 13th World Conference on Lung Cancer (WCLC) - At the WCLC in San Francisco, Response Genetics announced the results of separate analyses of KRAS gene mutations and TS and RRM1 gene expression in non-small cell lung cancer (NSCLC). These results, which were presented by Dr. David R. Gandara, University of California, Davis Cancer Center, and Dr. Philip Mack, University of California, Davis, provided insights into which patients are most likely to benefit from the commonly prescribed chemotherapies pemetrexed and gemcitabine.

Second Quarter 2009 Results

Total revenue increased by 4% to $1.9 million for the second quarter ended June 30, 2009, compared to $1.8 million for the same period last year. Revenue from our ResponseDX genetic tests increased 70% over the prior quarter to approximately $446,000. Based on generally accepted accounting principles the company continues to record revenues primarily on a cash basis from certain insurance providers until collection patterns are better determined. Our pharmaceutical client revenue decreased 20% to $1.5 million compared to the second quarter of 2008. As previously announced, this decrease was primarily due to a delay in the receipt of clinical samples from one of our major pharmaceutical clients, which the Company anticipates receiving in subsequent quarters in 2009 through 2010.

Cost of revenue for the second quarter ended June 30, 2009 was $1.3 million, compared with $0.9 million for the same period ended 2008. Research and development expenses were $0.4 million for the second quarter of 2009, compared with $0.7 million for the same period in the prior year. General and administrative expenses were $1.4 million for the second quarter ended 2009, compared with $1.9 million for the same period in 2008. Selling and marketing costs primarily related to the expansion of our ResponseDx tests totaled $1.0 million. Operating costs for our United Kingdom Lab decreased to $0.2 million for the second quarter of 2009 compared to $0.6 million for the same period in 2008. Total operating expenses for the second quarter of 2009 were $4.3 million, compared with $4.1 million for the same period last year. The primary reasons for the increase in total operating expenses were costs related to the launch of the Company's ResponseDX tests and its sales force expansion, which totaled $1.0 million for the second quarter. These expenses were offset by lower costs for the operations of our United Kingdom lab due to the closure of that facility.

Response Genetics' net loss for the second quarter ended June 30 2009 was $2.4 million or $0.19 per share, compared with a net loss of $2.2 million, or $0.21 per share, for the same period last year.

Six months ended June 30, 2009

Total revenue decreased by 8% to $3.4 million for the six months ended June 30, 2009, compared to $3.7 million for the same period last year. Revenue from our ResponseDX genetic tests totaled approximately $0.7 million. Based on generally accepted accounting principles the company continues to record revenues primarily on a cash basis from certain insurance providers until collection patterns are better determined.Our pharmaceutical client revenue decreased 27% to $2.7 million. As previously announced, this decrease was primarily due to a delay in the receipt of clinical samples from one of our major pharmaceutical clients, which the Company anticipates receiving in subsequent quarters in 2009 through 2010.

Cost of revenue for the six months ended June 30, 2009 was $2.5 million, compared with $1.8 million for the same period in 2008. Research and development expenses were $1.0 million for the six months of 2009, compared with $1.3 million for the same period in the prior year. General and administrative expenses were $3.1 million for the six months of 2009, compared with $3.5 million for the same period in 2008. Selling and marketing costs primarily related to the expansion of our ResponseDx tests totaled $1.8 million for the six months of 2009. Operating costs for our United Kingdom Lab decreased to $0.6 million for the six months of 2009 compared to $1.2 million for the same period in 2008. Total operating expenses for the six months of 2009 were $9.1 million, compared with $7.9 million for the same period last year. The primary reasons for the increase in total operating expenses were costs related to the launch of the Company's ResponseDX tests and its sales force expansion, which totaled $1.8 million for the second quarter. These expenses were offset by lower costs for the operations of our United Kingdom lab due to the closure of that facility.

Response Genetics' net loss for the six months ended June 30, 2009 was $5.6 million or $0.49 per share, compared with a net loss of $3.9 million, or $0.38 per share, for the same period last year.

Cash and Cash Equivalents

Cash and cash equivalents at June 30, 2009, were $7.0 million, compared to $9.5 million at December 31, 2008. As previously announced, Response Genetics completed a private placement of approximately 3.1 million newly issued common shares at a per-share price of $1.30. The Company received net proceeds of approximately $4.0 million from this private placement on July 22, 2009.

The Company intends to file a Form 12b-25 with the Securities and Exchange Commission that extends the due date for its quarterly report on Form 10-Q for the second quarter to August 21, 2009 because additional time is needed to complete the filing.

About Response Genetics, Inc.

Response Genetics, Inc. ("RGI") (the "Company") (Nasdaq: RGDX | Quote | Chart | News | PowerRating) is focused on the development and sale of molecular diagnostic tests for cancer. 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 defining, targeting and individualizing therapies for cancer patients, , the ability of the Company to continue to ramp sales of its tests and to continue to expand its test panels, BRAF mutation analysis having predictive value, VEGFR2 gene expression as a predictive biomarker, EGFR mutation analyses as a determinant of sensitivity to TKI ,TS as a predictive biomarker for personalizing therapy, 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.

RESPONSE GENETICS, INC.
CONSOLIDATED BALANCE SHEETS
                                                                     December 31,            June 30,
                                                                     2008                    2009
                                                                                             (Unaudited)
ASSETS
Current assets
Cash and cash equivalents                                            $      9,545,000        $     7,041,875
Accounts receivable, net                                                    2,119,496              790,864
Prepaid expenses and other current assets                                   399,612                401,324
Total current assets                                                        12,064,108             8,234,063
Property and equipment, net                                                 1,414,842              1,344,622
Other assets                                                                69,103                 69,102
Total assets                                                         $      13,548,053       $     9,647,787
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable                                                     $      545,971          $     927,574
Accrued expenses                                                            513,868                774,191
Accrued royalties                                                           526,712                709,771
Accrued payroll and related liabilities                                     154,185                291,180
Deferred revenue                                                            2,580,498              2,801,026
Total current liabilities                                                   4,321,234              5,503,742
Deferred revenue, net of current portion                                    2,355,948              397,742
Total liabilities                                                           6,677,182              5,901,484
Commitments and contingencies
Stockholders' equity
Common stock, $0.01 par value; 50,000,000 shares authorized;                102,393                122,393
10,239,276 and 12,239,276 shares issued and outstanding at December
31, 2008 and June 30, 2009, respectively
Additional paid-in capital                                                  36,805,932             39,289,484
Accumulated deficit                                                         (29,805,729 )          (35,451,090 )
Accumulated other comprehensive loss                                        (231,725    )          (214,484    )
Total stockholders' equity                                                  6,870,871              3,746,303
Total liabilities and stockholders' equity                           $      13,548,053       $     9,647,787

RESPONSE GENETICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                                                        Three Months                         Six Months
                                                        Ended June 30,                       Ended June 30,
                                                        2008              2009               2008              2009
Revenue                                                 $  1,823,443      $  1,898,239       $  3,726,379      $  3,435,465
Operating expenses:
Cost of revenue                                            905,134           1,278,546          1,824,099         2,470,743
Selling and marketing                                      -                 1,031,538          -                 1,824,162
General and administrative                                 1,867,010         1,398,346          3,495,916         3,147,957
UK operating expenses                                      588,873           136,784            1,233,440         444,265
UK redundancy costs                                        -                 5,735              -                 202,234
Research and development                                   705,159           433,107            1,308,544         1,007,527
Total operating expenses                                   4,066,177         4,284,056          7,861,999         9,096,888
Operating loss                                             (2,242,733 )      (2,385,817 )       (4,135,620 )      (5,661,423 )
Other (expense):
Interest expense                                           (93        )      (2,412     )       (2,969     )      (5,839     )
Interest income                                            90,124            5,196              243,296           21,901
Other                                                      (19,048    )      -                  (1,426     )      -
Net loss                                                $  (2,171,750 )   $  (2,383,033 )    $  (3,896,719 )   $  (5,645,361 )
Unrealized gain (loss) on foreign currency translation     768               39,367             (5,270     )      17,241
Total comprehensive loss                                $  (2,170,982 )   $  (2,343,666 )    $  (3,901,989 )   $  (5,628,120 )
Net loss per share -- basic and diluted                 $  (0.21      )   $  (0.19      )    $  (0.38      )   $  (0.49      )
Weighted-average common shares -- basic and diluted        10,239,276        12,239,276         10,239,276        11,576,293

SOURCE: Response Genetics Inc.

Trout Group 
Investor Relations: 
Peter Rahmer, 646-272-8526 
or 
Fleishman-Hillard 
Media Relations: 
Barry Sudbeck, 415-318-4261