VNRX: VolitionRx Reports 2Q Financial Results; Nu.Q COVID-19 Triage Test & Nu.Q Vet Assay are on Track to Generate Revenues in 2021
NYSE:VNRX
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VolitionRx (NYSE:VNRX) is a multi-national epigenetics company with a focus on developing blood tests (assays) that can help detect a range of cancers and other diseases so that appropriate treatment may be prescribed. Blood tests are a diagnostic tool that is relatively simple to administer, convenient and cost-effective. Also, as a front line screening modality, blood tests would be the optimal approach for the diagnosis of life-threatening diseases (especially cancer), where early diagnosis is the key factor for survivability.
Management’s goal is to lead the foray and then dominate the epigenetics diagnostics space. The company has developed the Nu.Q platform, which is designed to accurately identify and measure the amount of nucleosomes (and chromatin) in the bloodstream. Each Nu.Q blood assay or panel is intended to detect epigenetically-altered, circulating nucleosomes, which are biomarkers for cancer and other diseases. The company is in the process of developing and clinically testing multiple blood assays, particularly for lung, colorectal and haematological cancers.
VolitionRx is engaged in multiple epigenetic projects coupled with several corporate initiatives. The company is involved with developing numerous blood-based clinical assays. Management also saw an opportunity to utilize the company’s proprietary Nu.QTM platform to develop a clinical assay to aid in the treatment regimen of COVID-19 patients. The company’s front-burner projects are the Nu.Q COVID-19 triage test and the Nu.Q Vet assay for cancer detection in canines, both of which are expected to start generating revenues in 2021.
Nu.Q COVID-19 Prognostic Triage Test
Management believes that Nu.Q-developed blood tests for circulating nucleosome debris and NETs production may be able to provide early insight into and predict the evolution of the severity of the disease in COVID positive patients. Volition is investigating if Nu.Q epigenetic assays are able to triage patients into those that have a higher probability of requiring higher levels of therapeutic treatment in preparation for the onset of serious symptoms (e.g. immune suppressors, hospitalization, oxygen, ventilation, intubation, etc.) versus those that do not have a likelihood of developing serious symptoms, and therefore, not needing critical care. Those patients with low levels of nucleosome could be sent home to self-isolate and be monitored. Currently, doctors wait for the onset of more serious symptoms before requiring hospitalization, wasting valuable time that could be used to treat patients sooner and more effectively in the hospital.
By detecting elevated levels of nucleosomes and Neutrophil Extracellular Traps (NETs) BEFORE the onset of serious symptoms, management believes a Nu.Q assay has the potential to identify patients that ultimately will require hospitalization. In addition, not only are these elevated levels are anticipated to precede the actual onset of serious symptoms, but also the actual level is believed to serve as a quantitative risk stratification tool. It is supposed that more timely detection would lead to earlier appropriate treatment, which, in turn, would lead to better patient outcomes. Also, effective triaging of patients would result in a more efficient use of critical care resources.
If it is demonstrated that a VolitionRx Nu.Q assay is a robust prognostic predictor of the impending severity of the disease, the Nu.Q prognostic test would be administered immediately after a patient tests positive. However, the potential market would be larger, since not only would every patient be administered the initial triage test upon testing positive, but also each patient would be subjected to a series of potentially daily assays until the patient finally tests negative.
VolitionRx is proceeding with the process to determine the prognostic potential of a COVID-19 triage test, which was developed on the company’s Nu.Q epigenetic platform.
The participants in the first proof-of-concept study were 34 PCR COVID-19 positive subjects and 50 control subjects located in Isnes, Belgium. The preliminary study revealed that PCR positive subjects exhibited elevated levels of nucleosomes relative to healthy control subjects. The AUC (Area Under the Curve) for a single Nu.Q assay was 98.7% for PCR positive COVID patients versus control subjects with a sensitivity of 100% at 94% specificity. In other words, almost everyone who tested positive for COVID-19 had elevated nucleosomes. A second Nu.Q assay also revealed promising results with an AUC of 86.2%.
A follow-up proof-of-concept study demonstrated stratification. Two independent cohorts of COVID-19 positive patients at University Hospital Liege, Belgium and at the German Heart Center in Munich, Germany, were administered quantitative nucleosome immunoassays. It was found that the highest levels of nucleosome debris and NETs production (which is a result of a ramp-up of the immune system) were found in patients in the ICU that required ventilation. In addition, both histone 3.1 variant and citrullinated nucleosomes increased with disease severity. Importantly, there was a correlation between the level of nucleosome elevation and the severity of the disease. Healthy control subjects had the lowest levels nucleosome debris.
The results of these proof-of-concept clinical studies were submitted for peer review in July. The associated article, "Circulating Nucleosomes as potential prognostic markers for COVID-19 disease severity," will be available on bioRxiv.org soon.
Management is now focused on larger longitudinal studies in order to determine the lead time between the realization of high levels of circulating nucleosome debris (and NETs production) and the onset of severe symptoms. Therefore, management believes that the demonstrated correlation implies strong prognostic and that circulating nucleosomes could serve as a biomarker for disease severity in COVID-19 positive patients. The longitudinal studies are expected to be completed by the end of 2020.
As the longitudinal studies are being conducted, management intends to complete the CE-Mark certification process in Europe. Ideally, the company could fulfill the requirements of the CE Mark and have completed longitudinal clinical studies by year-end, setting the stage for FDA approval in 2021. A novel patent has been filed already for this COVID-19 triage test.
Nu.Q Vet Canine Cancer Assay
On June 3, 2019, VolitionRx formed Volition Veterinary Diagnostics Development LLC, which will focus on the veterinarian diagnostics market. Canine cancer represents a sizeable market as approximately 6.0 million cases of canine cancer are diagnosed each year in the U.S. compared to 1.76 million human cancers. Roughly 25% of dogs develop cancer at some point in their lives, most often at an age between 8 and 10 years old. With pricing likely to be in the $100-to-$200 per test range, the canine cancer opportunity could be in the hundreds of millions of dollars.
Currently, there is a scarcity of accurate, simple and affordable cancer screening tests in veterinary medicine. In response to the initial symptoms of lethargy, lesions and/or soreness, a veterinarian grapples with a definitive diagnosis of the various possibilities (inflammation, infection, cancer etc.). For an infection, the line of treatment would be to prescribe an antibiotic and then wait-and-see if the dog’s condition improves. The screening methodology for cancer involves taking a scan or a biopsy, which is expensive and not without risk, since anesthesia is necessary, in some cases. A front-line blood test that could rule-in or rule-out cancer would aid the diagnosis process and allow for a more effective and less expensive treatment regimen.
Management’s goal is to provide all veterinarian clinics with blood tests that can help identify canine cancers early. Management intends to expand from the current one biomarker in the company's current portfolio, to several biomarkers in order to create a panel in order to increase the accuracy of a single assay.
On October 25, 2019, VolitionRx partnered with the Texas A&M College of Veterinary Medicine & Biomedical Sciences. In exchange for 12.5% ownership of the veterinary subsidiary, Texas A&M University will conduct numerous clinical studies that will test whether VolitionRx’s blood tests can detect canine cancer.
The first canine clinical study with Texas A&M University was completed in April 2020. In the proof of concept study, a single Nu.Q Vet assay detected almost 70% of two cancers (Canine Hemangiosarcoma and Canine Lymphoma, which account for almost a third of all canine cancers). At a specificity of 90%, AUCs were 84.5% and 83.1% for cancer versus healthy.
Management believes that a Nu.Q Vet test for the diagnosis of canine cancer could potentially be on the market in the fourth quarter of 2020. Initially, management plans to sell the canine cancer test through the Texas A&M College of veterinary medicine. Then, in 2021, with assistance from Texas A&M, VolitionRx will pursue registering the product with the USDA (United States Department of Agriculture). Management believes that a canine cancer test could be a relatively fast-moving program given the less-stringent USDA regulatory pathway for animal diagnostics versus FDA’s PMA or 510k. Once registered, the company intends to pursue a licensing agreement with one or more animal diagnostics companies in order to launch the product nationwide.
Second Quarter 2020 Financial Results
On August 13, 2020, VolitionRx reported financial results for the second quarter ending June 30, 2020. Total revenues were $5,194, of which $3,322 was product revenue and $1,872 were royalties.
Operating expenses increased 26.5% from $4.12 million to $5.22 million. R&D expenses increased 40.9% to approximately $3.49 million, primarily related to higher antibody costs, sample costs, laboratory expenses and personnel expenses. G&A expenses increased only 7.2% to approximately $1.51 million, primarily driven by higher legal and professional fees, which were somewhat offset by lower travel costs. Sales and marketing expenses declined 9.3% as an increase in direct marketing professional fees was more than offset by lower travel and personnel costs.
For the second quarter, VolitionRx reported a net loss of $5.04 million (or $0.12 per diluted share) versus a net loss of approximately $4.16 million (or $0.11 per diluted share) in the comparable quarter last year.
On May 22, 2020, VolitionRx closed a public offering of 5,019,750 shares priced at $2.75 per share. Gross proceeds were $13.8 million. And under an Equity Distribution Agreement, VolitionRx issued 436,372 shares under this shelf registration statement during the first half of 2020. Net proceeds were approximately $1.7 million. As a result, at quarter-end, working capital was approximately $17.7 million, 29% above the $13.7 million on December 31, 2019. Shares outstanding have increased by 13.5% to 46,658,554 shares from 41,125,303 shares on December 31, 2019. Subsequent to the quarter-end, approximately an additional 1.2 million shares were sold under the ATM. Net proceeds were approximately $4.7 million.
Coincident with reporting second quarter results, management announced the acquisition of a 10,000 square-foot building (Silver One), which is in close proximity to the company’s R&D center in Isnes, Belgium. The building is to be renovated to serve as a production hub, service lab and facility for contract research. Management expects the facility to be operational by October. As a production facility, expect to produce components (recombinant nucleosomes, reagents etc.) in house, thereby securing the company’s supply chain while simultaneously lowering costs. Potential revenues could be generated by selling the components to and by processing samples for external parties.
VNRX Added to the Russell 3000 and Russell Microcap Indexes
VolitionRx was added to both the Russell 3000 and Russell Microcap Indexes effective on the close of June 26, 2020. The Russell indexes are reconstituted annually and many mutual funds benchmark to these indices. Consequently, the shareholder base of VolitionRx will broaden, and the stock should experience greater liquidity. In addition, the inclusion of the company’s stock into these two Russell indices should expand awareness of VolitionRx among investors, both retail and institutional. Due to VolitionRx’s inclusion into two Russell Microcap Indexes, the iShares Russell 2000 ETF now owns 485,907 shares of VNRX or 1.0% of the shares outstanding.
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