Benzinga | May 25, 2021 12:31PM EDT

VNRX: Revenues from Nu.Q Vet cancer screening test are ramping up; Silver One expected to generate revenues in 2021

By Steven Ralston, CFA

NYSE:VNRX

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VolitionRx (NYSE:VNRX) is engaged in multiple epigenetic projects based on company's proprietary Nu.QTM platform that has developed numerous blood-based clinical assays. Several corporate initiatives are generating or are expected to produce revenues in 2021/22, namely Nu.QVet cancer screening tests, the Silver One production facility and Nu.Q NETs disease monitoring tests.

Expected Milestones During 2021

Expanding Nu.QVet assay into national distribution either organically or through licensing agreement(s)

Beta launch of the Nu.Q Vet in Asia and/or Europe.

Generating revenues from products and services from Silver One: recombinant nucleosomes, antibodies, reagents and supply kits, along with laboratory services and/or contract research (branded as Nu.Q Discover) for external parties

Filing of FDA 510(k) submission for Nu.Q NETs disease monitoring tests

Completion of 1,200-subject lung cancer study in Asia (Taiwan)

Filing of first FDA 510(k) submission for Non-Hodgkin's Lymphoma (NHL)

Publishing several abstracts and peer-reviewed scientific papers

two additional papers on Nu.Q Vet clinical studies

Nu.QVet Assay

Management's front-burner commercialization project is the Nu.QVet assay for cancer detection in canines. The Nu.QVet assay was launched on November 30, 2020. This beta launch has been supported by brochures, leaflets, videos and Veterinarian educational efforts. Over 700 tests have been conducted through the first quarter of 2021. The company is fine-tuning the beta launch by addressing nuances of the process, from pricing to packaging. The Nu.Q Vet cancer screening test is the company's first commercial product.

The development of the Nu.Q Vet platform most likely will be geographical expansion throughout the United States, either by means of in-house efforts or through licensing with established companies in the veterinary space. There is also the potential of licensing arrangements for international expansion, particularly in Asia and Europe.

Silver One

VolitionRx acquired and opened 10,000 square-foot building (dubbed Silver One) in 2020. Located in Namur, Belgium in close proximity to the company's R&D center in Isnes, the facility is now producing recombinant nucleosomes for in-house use and is expected to be producing antibodies in the very near future. Later in 2021, Silver One will be in a position to produce additional components, such as reagents, along with supply kits. In addition, the company is pursuing opportunities to provide laboratory services or to act as a contract research facility (branded as Nu.Q Discover) for external parties, such as pharmaceutical companies, bio-tech companies and academic researchers.

Nu.Q NETs (disease tests for sepsis, COVID-19 and influenza)

The research program continues for the use of Nu.Q(tm) technology, specifically Nu.Q H3.1 assay, for NETosis the over-production of NETs (neutrophil extracellular traps) that is triggered by the body's immune response to pathogenic stimuli. The Nu.Q assay is being studied for monitoring the progression of diseases associated with NETosis, initially COVID-19 and sepsis, in order to determine the efficacy of treatments since the level of nucleosomes appears to be closely correlated to the severity of the disease. Later studies are expected to target other diseases associated with NETosis, such as pneumonia and influenza.

For sepsis, animal studies have been competed that have demonstrated Nu.Q NETs can effectively monitor the progression the disease progress and can determine the efficacy of treatments. Human studies are currently underway at a UK hospital.

Concerning COVID-19, during the first wave in 2020, studies demonstrated that the level of nucleosomes is strongly correlated with disease severity and mortality. During the second wave, serial testing studies are being conducted at UK hospitals in order to determine the predictive value of the Nu.Q H3.1 assay. The data is expected to be presented at upcoming conferences.

The company is laying the groundwork for a large U.S. FDA trial and/or FDA 510(k) study which could potentially lead to market approval for Volition's Nu.Q H3.1 assay for various diseases associated with NETosis, such as sepsis, COVID-19 and influenza. Management is expected to announce further details once the specifics of the projected process have been determined.

On-going Large-scale "Marquee" Study for Lung Cancer in Asia

In May 2019, VolitionRx signed a formal contract with the National University of Taiwan to conduct a large-scale lung cancer study. The study includes 1,200 participants receiving Low-Dose CT (LDCT) scan, 1,000 of which have lung cancer. Collection commenced in the summer of 2019, but the COVID-19 pandemic impacted the sample gathering process. However, by May 2021, the target number of patient cohorts had been collected. The Nu.Q H3.1 assays are expected to be processed and the analysis finalized over the upcoming months. Management is hopeful that this large 1,200-subject lung cancer study should be completed in 2021 and that the findings will be presented at conferences later in 2021.

In the meantime, an abstract on Nu.Q performance in lung cancer detection was presented at the International Association for the Study of Lung Cancer's (IASLC's) World Conference on Lung Cancer (WCLC) conference in January 2021. The presentation, which was based on an interim analysis of a subset of 220 subjects, indicated that the Nu.Q H3.1 assay could help identify non-cancerous nodules following a LDCT scan. As a result, up to 32% of the subjects that were LDCT positive could avoid unnecessary follow-up biopsies.

If the study's data continues to be positive, management plans to initiate aFDA 510(k) regulatory study in the U.S. for lung cancer.

On-going Large-scale "Marquee" Study for Colorectal Cancer (CRC) in the U.S.

The U.S. EDRN study for colorectal cancer (6,000 subjects) has been on pause since May 2020 due to the challenges encountered in collecting samples during the COVID-19 pandemic.

On-going Clinical Trial for Diagnosis of Non-Hodgkin's Lymphoma (NHL) in the U.S.

In November 2020, Volition engaged Diagnostic Oncology CRO LLC (a contract research organization) to conduct a program that will lead to multiple FDA 510(k) submissions for Nu.Q assay(s) that will assist physicians in distinguishing five of the most common forms of Non-Hodgkin's Lymphoma (NHL) from common conditions. At a cost of approximately $2.9 million, the effort will include a 1,500-subject clinical trial and data analysis, along with the preparation of regulatory and reimbursement submissions. The trial is planned to be conducted across 10 major U.S. healthcare institutions. The pandemic has slightly delayed the collection of samples.

Management's Conceptual Business Development Model

Management's commercial strategy has been fine-tuned into four pillars composed of Nu.Q Vet, Nu.Q NETs, Nu.Q Capture and Nu.Q.

Nu.Q Vet pursue full commercialization of the current beta-launched Nu.Q Vet blood assay in the United States, Asia and Europe

Nu.Q NETs research program to bring the Nu.Q H3.1 assay to commercialization for monitoring the progression of diseases associated with NETosis, such as sepsis, COVID-19 and influenza

Nu.Q Capture advance sample enrichment platform that enhances samples using mass-spectrometry and/or sequencing in order to be able to better identify new biomarker targets for the purpose of detecting tumors and other mutations

Nu.Q Cancer ongoing human studies in hematological, lung and colorectal cancers

Management is also looking to quickly advance its market opportunities by expanding and dominating each specific market by driving aggressive volume growth through attractive pricing.

2021 Financings

As of the end of the first quarter of 2021 (March 31st), VolitionRx was at its strongest-ever financial position with cash and cash equivalents of approximately $33.06 million. During the first quarter, approximately $20.3 million was obtained by the issuance of shares through an underwritten public offering in February and through an ongoing at-the-market facility.

On February 12, 2021, VolitionRx closed a public offering of 3,809,524 sharespriced at $5.25 per share. Net proceeds are estimated to be approximately $18.87 million, which will be used for continued product development, clinical studies, product commercialization, working capital and general corporate purposes, including potential strategic acquisitions. The offering was pursuant to a shelf registration statement, and Cantor Fitzgerald & Co. was the sole book running manager.

Also, in early January 2021, VolitionRx was awarded a cash grant of $1.3 million and $2.7 million in loans from the Walloon Region and Namur Invest, Belgium. This non-dilutive funding brings the total amount awarded from agencies from the Walloon Region to approximately $13 million.

The company's current cash burn rate is approximately $2 million per month.

Significant Equity-Related News

VolitionRx was included into two Russell Microcap Indexes in June 2020. The iShares Russell 2000 ETF and the iShares Russell Growth ETF now own 823,959 shares of VNRX or 1.56% of the shares outstanding.

First Quarter 2021 Financial Results

On May 12, 2021, VolitionRx reported financial results for the first quarter ending March 31, 2021. Total revenues were $25,530, which was driven by product revenue from direct sales of the Nu.Q Vet cancer screening tests being processed by the GI laboratory at Texas A&M University.

Operating expenses increased 4.1% from $5.87 million to $6.11 million. R&D expenses declined 0.6% to approximately $3.87 million as higher personnel and laboratory expenses were offset by lower antibody costs and lower costs related the acquisition of Volition Germany (fka Octomer). G&A expenses increased 6.3% to approximately $1.81 million, primarily driven by higher stock-based compensation and legal fees. Sales and marketing expenses increased 56.0% as an increase in by higher stock-based compensation and personnel costs.

For the firstquarter, VolitionRx reported a net loss of $6.13 million (or $0.12 per diluted share) versus a net loss of approximately $5.86 million (or $0.14 per diluted share) in the comparable quarter last year.

As of March 31, 2021, working capital was approximately $28.7 million, improving over 100% above the $14.1 million on December 31, 2020. Shares outstanding increased by 8.8% to 52,871,001 shares from 48,607,017 shares on December 31, 2020.

Full Year 2020 Financial Results

On March 22, 2021, VolitionRx reported financial results for the year ending December 31, 2021. Total revenues declined 21.4% to $13,433 versus $17,096 in 2019. At this point in the company's life cycle, revenues are minimal, but with the launch of the company's first commercial product in late November 2020, product revenues are expected to increase significantly in 2021.

Total operating expenses increased 32.4% from $16.1 million in 2019 to $21.2 million in 2020 driven primarily by a 40.2% increase in R&D expenses, which was related to higher antibody, sample, laboratory and personnel expenses, particularly employee acquisition costs related to Volition Germany (fka Octomer).

For the year, VolitionRx reported a net loss attributable to shareholders of $20.35 million (or $0.45 per diluted share) versus $16.01 million (or $0.41 per diluted share) in 2019.

As of December 31, 2020, working capital was approximately $14.1 million, a $5.6 million improvement from the year ending on December 31, 2019. A healthy level of cash and cash equivalents of approximately is $19.4 million, a health amount to sufficiently fund operations for the next 12 months. Shares outstanding increased by 18.2% to 48,607,017 shares since December 31, 2019.

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