VolitionRx Limited (VNRX) Earnings Call Transcript & Summary

Greetings, and welcome to the VolitionRx webinar. It is now my pleasure to introduce your host, Scott Powell, Head of Investor Relations and U.S. Chief Financial Officer. Thank you. Mr. Powell, you may begin.

Thank you, and welcome, everyone, to the VolitionRx presentation. Appreciate all of you joining virtually. And hopefully, all of you can see the Volition slide deck. I do want to point you to our forward-looking statements. I'll be making some forward-looking statements on this virtual presentation and to point to the safe harbor act. And just some highlights here about Volition. We are a diagnostics company. We're developing blood tests primarily to screen for a variety of different cancers. But for those of you who have been following our recent news flow, you'll see that we are also developing a blood test for our first non-cancer indication for the coronavirus. And I'll start with that since that particular disease is on most of our minds these days. So I'll move to Slide 3. A little bit about the virus. We were largely unaffected by the virus first for a lot of our studies are retrospective, and therefore, patients have already provided blood samples for many of our studies. And given that we are a diagnostics/health care company, we already had a lot of safety protocols and procedures in place prior to the outbreak of the pandemic. If we look specifically at our COVID-19 product development, what we are not doing is we are not developing a blood test to screen front line for the coronavirus. There are already a number of accurate tests out there that are in use to screen for the coronavirus. What doctors don't really have at their disposal is a follow-up, a reflex test to then triage, stratify risk to identify which of those patients that have the coronavirus are likely to develop mild, moderate or severe symptoms. Right now, the doctors are largely relying on patients showing the severe symptoms and then receiving medical resources such as hospitalization, intubation, oxygen, ventilators, immune suppressors, et cetera. That's often too late because when a person is already experiencing the cytokine storm, there's already damage being done to their lungs and potentially other organs, and then they're rushing to get themselves to the hospital and having to deal with checking in, waiting for a bed, having to -- waiting to see a doctor or a nurse. What is dramatically in need is the ability -- prognostic test to triage and stratify, to identify those patients that have tested positive for the virus to then try and determine which of those are likely to develop the severe symptoms. So the idea is that a patient -- a person after exposure to the virus would go in, get a coronavirus test, upon having a positive test result would then be given Volition COVID-19 triage blood test to then quantify and help determine the likelihood that, that patient will develop the severe symptoms of the virus. And if they are -- if the test result comes back very high for nucleosome debris in their blood and/or NETs production in their bloodstream, neutrophil extracellular traps, which the white blood cells inject into your bloodstream to fight invading viruses, if those results come back very high or have very high levels of NETs production, very high levels of nucleosome debris in your blood, that patient would then be flagged as high risk for developing the severe symptoms of the virus and then could be immediately given the medical resources ideally prior to them exhibiting the severe symptoms, thereby reducing the damage potentially done by the virus because they'll already be receiving medical resources and they'll be already in a place where they can receive these resources. And b, it would better allocate medical resources so it would give hospital beds, ventilators, et cetera, to patients that are likely to develop the severe symptoms and would be able to send home patients that are not likely to develop the severe symptoms for monitoring. So it's potentially a very useful test. We are currently organizing longitudinal studies to determine just how far in advance of the onset of those severe symptoms we can flag or identify these markers in a person's bloodstream. So If we are able to -- if our blood test is able to identify markers indicating high levels of NETs production and quantify the amount of nucleosome debris in their blood, 12, 24, 48 hours prior to the onset of these severe symptoms, prior to the body's hyperimmune response or cytokine storm, we have a very useful prognostic tool because the patient could then be admitted to the hospital and start receiving medical resources prior to the onset of the severe symptoms. So that's what we are organizing currently, is one or more longitudinal studies to determine just how far in advance of this hyperimmune response or this severe reaction to the coronavirus we can predict. Pricing. We haven't determined pricing yet. But if you look at some of the frontline tests out there, the Labcorp test, the PCR test, I think, is around USD 100 or USD 150. I believe the Rutgers saliva test is around the same, $110 or $125. So ideally, we could price in a similar price range in the U.S. for our triage test. We expect to have data on these longitudinal studies by the end of this calendar year. And we will work to file and receive a CE Mark for this product in Europe, simultaneous with the running of the longitudinal studies. And then upon completion of these studies, assuming that we have positive results, we would look to launch the test in Europe late this year, early next year and then approach the FDA and hopefully get the test in use in the U.S. under emergency use authorization or EUA from the FDA. So very interesting potential product that we're developing here. And again, we expect to run these studies and announce data prior to the end of this year. If we turn to our clinical work in various cancers, you can see here, many of you know us as a company developing blood tests for colorectal cancer. And let me just get to that slide. You can see here, turning to our development of blood tests to screen for various cancer types, if we look at colorectal cancer, where we have announced clinical data previously, and we currently have a number of studies underway in colorectal cancer, the usage here is slightly different for colorectal cancer. We envision our blood test being a frontline screen for colorectal cancer. Currently, the frontline screens for colorectal cancer that are in common use are the colonoscopy, which is the principal screen in the United States, a very accurate test, about 95% accurate. And outside the U.S., the countries tend to screen first with cheaper fecal tests, the fecal immunochemical test or FIT or the fecal occult blood test or FOBT, our common fecal test administered outside the U.S. They're also administered in the U.S. as well as the Exact Sciences Cologuard fecal test that many of you are probably familiar with Cologuard and with Exact Sciences. The problem with those tests, with fecal tests and with colonoscopy, is principally one of compliance. You can see from this slide here, in the United States, 1/3 of eligible adults have never been screened for colorectal cancer. This is a problem. It's a problem in the U.S. It's a problem globally. Compliance is the primary issue. We have good screens. The colonoscopy is highly accurate. Fecal tests are less accurate, although the Exact Sciences test, Cologuard, is a reasonably accurate test. The problem is people don't like these tests. They don't like the testing modality options available to them. So a lot of people just delay, delay, delay or flat out refuse to complete a fecal test because for obvious reasons, it's unpleasant, it's self-administered. A lot of people just won't do a fecal test, a colonoscopy. As other issues, it's expensive. It may or may not be covered by insurance. It's 1 day to 1.5 days out of work. Many people undergo anesthesia and some -- sorry, all people undergo anesthesia. Some have adverse reactions to anesthesia. The test is not without risk. There's a risk of infection, perforation of the colon, internal bleeding and so forth. Some people have adverse reactions to the colonoscopy. Some people die from a colonoscopy. So for all those reasons, a lot of people delay, delay, delay getting screened for colorectal cancer. And this is a big problem because colorectal cancer is a very slow-growing cancer, and it's very easily identified through a colonoscopy procedure, and it's typically treated at the same time. So if you're having a colonoscopy and the doctor or the nurse see cancerous lesions or precancerous polyps, they'll generally resect right there and clean out all the cancerous lesions and precancerous polyps unless it's a fairly advanced cancer where there will be more complicated surgical procedures required. But if people don't get screened, then -- and you have a cancer type that's asymptomatic in the early stages, so if a person turns 45, which is the screening age in the United States now, and they decided not to do a colonoscopy despite their general practitioner asking them and giving them a prescription to go in for the colonoscopy, then they turn 50, 55, 60, and they still have never done a colonoscopy or a fecal test, unfortunately, if they come down with symptoms that are associated with colorectal cancer and then they finally go for that colonoscopy to determine whether or not the symptoms are coming from colorectal cancer, if it's confirmed that the symptoms are indeed being caused by colorectal cancer, it's invariably a late stage at this point, and survivability is very poor at the late stage. So if a patient is diagnosed with Stage 1 colorectal cancer, 90% of those patients live more than 5 years. If a patient's diagnosed with Stage 4 colorectal cancer, he or she has a 93% chance of dying in the next 5 years. So compliance is the problem. We have good tools out there, but people don't like these modalities. We think a blood test solves the modality and largely solves the modality and the compliance problem because while a person may refuse to complete a fecal test, a person -- a patient may refuse to go in for that colonoscopy or may delay for years and years and years, that same patient probably would not refuse a simple blood test when that blood test could be given when he or she is going for his or her annual physical and all the battery of blood tests that are commonly administered during their annual physical. So I think there's tremendous demand for a blood test for colorectal cancer. It's really on Volition now to demonstrate accuracy, efficacy of test. I think if we can, then I think there would be tremendous demand for a blood test like this both amongst the noncompliant segment of the market, those who are refusing to get screened because they don't like the idea of a fecal test or a colonoscopy, and also for patients who are compliant with the colonoscopy or fecal test. This is a much more palatable test. This will be a much cheaper test than a colonoscopy, for instance. Patients could use our blood test as interval testing. If you have a colonoscopy at age 45 and you're clean, you're not ordered to go for another colonoscopy for 10 years until you're age 55. So 10 years is a long time. Patients could opt for an interval test at year 5 just to check. And more patients could do a blood test at age 45 instead of going in for that first colonoscopy. Prevalence rates are very low for people, for instance, between age 45 and 50. So I think a lot of opportunity for this particular product. And about some of our data, you can see from this slide on Slide 22 some of the results that we've had in colorectal cancer. And you'll also notice some results here in lung cancer, and I'll talk about lung cancer next. We -- with colorectal, we have several studies underway in Europe, in Denmark and 2 studies at National Taiwan University in Taipei, Taiwan. In lung cancer, we also have 2 studies underway at National Taiwan University in Taipei. As I mentioned for colorectal cancer, we would envision that to be a frontline test. With lung cancer, we -- and so for colorectal, that would be a PMA pathway for Volition. And outside the U.S., again, we'd be going for frontline [ position ]. With lung cancer, we are not looking to necessarily have our test be a frontline screen for lung cancer but rather as a companion diagnostic or an adjunct test. For lung cancer screening, many doctors use low-dose computed tomographies or a CAT scan to scan a patient's lungs for the identification of lung cancer. And what the doctors have to do is rely upon an image of a patient's lungs and then determine whether or not that patient should go on for more invasive diagnostic testing. And oftentimes that involves a lung biopsy where it's a surgical procedure where you're going in and taking a tissue sample from one or both lungs. And about 15% of the time, that results in a collapsed lung for the patient. So if the doctors had a second tool, a second piece of information, a second test that they could run alongside the CAT scan to provide additional information, for instance, a simple blood test from Volition, if the doctor, for instance, ran the CAT scan and weren't quite sure about what they're seeing on the scan, whether or not there are lumps or bumps or lesions that look suspicious, the doctor could order a Volition blood test. And then if it comes back positive for lung cancer, then the doctor would feel much more comfortable setting that patient on for lung biopsy or other more invasive procedures to determine whether or not the patient actually has lung cancer. And by the same token, if a doctor wasn't really sure about what he or she is seeing on the image and the Volition blood test comes back negative, the doctor would feel a bit better about having the patient wait 3 months, 6 months, a year, whatever it might be, and scanning and kind of testing again. So a blood test that acts as a companion or an adjunct test would be particularly useful for screening for this particular cancer type. And just because we're getting a bit short on time, I'll talk about our first veterinary or animal health product. And last year, we formed a wholly owned subsidiary called Volition Veterinary Diagnostics Development LLC. And we announced the partnership with Texas A&M University in College Station, Texas. We granted Texas A&M 12.5% equity ownership in our veterinary subsidiary. In return, Texas A&M will run several studies for Volition, enrolling a number of dogs to see if our blood test can detect some of the most common canine cancers. And you can see, some of the statistics here are pretty interesting. 25% of all dogs will develop cancer at some stage of their lives. In the U.S. alone, 6 million canines are diagnosed with cancer annually. That compares to 1.7 million human diagnoses. Pricing around $100 to $200 per test is what Texas A&M is telling us. And back in May, we announced some initial data from our first study with Texas A&M. And using a single biomarker, we were able to detect about 70% of 2 common canine cancers. And so that's just using one of our proprietary biomarkers. What we will likely do next is expand to create a panel of 2 or 3 or 4 of our proprietary biomarkers and see if that improves upon the already good accuracy for detecting some of these common canine cancers. And ideally, we'd be able to expand that beyond the 2 common canine cancers. So in terms of time lines, we expect to have some additional data hopefully by the end of this year using an expanded panel of proprietary Volition biomarkers. And if the results are good, if we're showing strong accuracy, strong predictive power, we will then likely have our blood test for canines sold initially through Texas A&M's Veterinary College of Medicine. And then we would work with Texas A&M to approach the U.S. Department of Agriculture to register our product with the USDA. So one of the advantages of an animal health product is we don't have to go through the FDA. This is a U.S. Department of Agriculture product. And ideally, we'd be able to register that product sometime next year with the USDA, and then that would allow us to launch our product nationwide. So again, a lot going on at Volition, the COVID triage test, the blood test that we're working through for lung cancer and colorectal cancer in humans and the veterinary work that we're doing with Texas A&M to develop a blood test to screen for common cancers in canines. So again, a lot that we're working on. I will just turn to our financial snapshot slide and then open it up for Q&A because I think we're down to probably just a few minutes. So wrapping up, we're listed on the NYSE American Stock Exchange. Ticker is VNRX. We were recently added to the Russell 3000 as well as the Russell Microcap Index. That was on June 26. Market cap has been in the $150 million to $200 million range for about a year now. Monthly burn, a little over $1 million. Cash on hand, that's as of the end of Q1. Many of you know that in May, we raised an additional $13.8 million. So we have a significant -- significantly more cash on hand than is reflected as of March 31 Q. Strong insider ownership. Management Board own about 20% of the shares, institutions own about 20%, and 5 analysts currently cover the company. So I'll stop there and open it up to questions. I think we may have a few minutes for questions. And operator and [ Keith ], just let me know when we're kind of down to the wire in terms of time.

So I'm just going to refresh to see if any questions have come in. I'm not showing any questions on my dashboard. So if anyone would like to quickly ask a question, I think we have a couple of minutes left. [Operator Instructions] So one last time. Anyone -- if anyone would like to ask a question, feel free. I don't see any questions in the queue. And I think we probably have a minute or 2 left. I'll give it another 30 or 45 seconds. It looks like one question has come in. Main inflection point, what is the main inflection point investors should look for? Good question. And it's a lot of what we discussed. We expect to have -- in terms of 2020 inflection points, I think it's hopefully having coronavirus data from the longitudinal studies and hopefully having some veterinary data between now and year-end. So I think those are potential inflection points for the company depending on how the data is. And next year, again, we're expecting to have data from lung cancer, colorectal cancer, additional vet progress, potentially moving the veterinary blood tests and the COVID blood test into commercial stage next year. And we've also -- I didn't mention this on the presentation, but we've also had some good results in hematological cancers. So we expect to have some additional data in those blood-borne cancers going forward. So those are some of the inflection points. We have a good cash position. So we're comfortable in terms of our current cash position, which allows us to focus on clinical data, clinical trials and commercialization opportunities. Thanks for that question. I don't see any other questions, and I think we're pushing up against the hour. So I believe that will be the conclusion of my presentation. And again, thank you all for joining the Volition presentation today. If you have any further questions, my contact information is at the bottom of our press release and then also on our website at www.volition.com, V-O-L-I-T-I-O-N.com. Thank you all for attending. Have a great day.

Thank you. This concludes today's webcast. You may disconnect at this time. Thank you for your participation.