Business Overview and Basis of Presentation

9 Months Ended

Sep. 30, 2013

Business Overview and Basis of Presentation

Business Overview and Basis of Presentation

1. Business Overview and Basis of Presentation

Business Overview

Trovagene, Inc (“Trovagene” or the “Company”) is a developer of cell-free molecular diagnostics that is leveraging its innovative, non-invasive cancer monitoring technology to detect and quantify oncogene mutations and genetic variations in cancer patients.  Trovagene’s technology applies ultra-sensitive droplet digital PCR and high-throughput next generation sequencing techniques to analyze cell-free nucleic acid specimens obtained from urine samples.

When medical professionals utilize targeted cancer therapies, it is crucial that they monitor patients for the presence or emergence of oncogene mutations that are indicative of either responsiveness or resistance to the respective treatment. Changes in oncogene mutation frequency can provide clinically actionable information about treatment response, disease progression, or disease recurrence. Monitoring patients throughout the course of their cancer may also reveal mutational changes that occur under the pressure of treatment, or if the tumor metastasizes.

For most patients, the presence or absence of clinically relevant mutations is determined at diagnosis through a tissue biopsy.  However, a growing body of evidence suggests that, due to the heterogeneity of tumor tissue, a given biopsy sample is not necessarily representative of a patient’s oncogene mutation status. Cell-free nucleic acids overcome this limitation. While cell-free nucleic acids can be obtained from blood samples, oncogene mutations are often rare events and the volume and sampling frequency restrictions associated with blood samples represent practical limitations. In contrast, urine sampling does not require the assistance of a healthcare professional, and samples can be obtained frequently and in large volumes, overcoming the restrictions associated with blood and enabling better detection.  Trovagene has pioneered the discovery of cell-free nucleic acids in urine and developed proprietary technologies to extract, purify, detect, and quantify such cell-free nucleic acids from urine samples. The Company operates a CLIA-certified (under the regulations of the State of California and accredited by the College of American Pathologists (CAP) high complexity molecular diagnostic laboratory in San Diego, CA.

Clinical studies are underway to establish the clinical utility of the Company’s platform for monitoring tumor dynamics as well as individual responses to both targeted and non-targeted treatments.  Further expansion of our monitoring capabilities will include additional mutational markers with known clinical utility, as well as known genomic alternations that indicate resistance to therapy.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Trovagene, which include its wholly owned subsidiary Xenomics, Inc., a California corporation (“Xenomics Sub”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany balances and transactions have been eliminated. Certain items in the comparable prior period’s financial statements have been reclassified to conform to the current period’s presentation. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements as of December 31, 2012 and December 31, 2011 and for each of the two years ended December 31, 2012 and from inception (August 4, 1999) to December 31, 2012 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013.  The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at September 30, 2013, and for all periods presented herein, have been made. The results of operations for the periods ended September 30, 2013 and 2012 are not necessarily indicative of the operating results for the full year.

On May 24, 2012, the Board of Directors approved a 1-for-6 reverse stock split of the Company’s issued and outstanding common stock effective on May 29, 2012. All the relevant information relating to number of shares and per share information contained in these consolidated financial statements has been retrospectively adjusted to reflect the reverse stock split for all periods presented.