VolitionRx Limited (VNRX) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to your VolitionRx Limited conference call. It is my pleasure to turn the floor over to your host, Scott Powell. Sir, the floor is yours.

Thank you, and good afternoon, everyone. Thank you all for joining the VolitionRx Limited Corporate Presentation. I'm Scott Powell. I'm the Head of Investor Relations and the U.S. Chief Financial Officer. Before I begin, I would like to point you to our forward-looking statements and disclaimer slide I'm sure you're all familiar with. And we pointed to Slide 6 here. Our mission is simple. We want to save lives. And what Volition is doing is, we are a diagnostics company to move developing blood tests to screen for different diseases, primarily various cancer types, but we've also been looking at some non cancer diseases as well. And I'll talk about those matters as we go through the presentation. [indiscernible] our office building and laboratory in Belgium. We have offices in Austin, Texas, London, Belgium or South of Brussels, where our corporate headquarters in LA this year pictured in this slide. And office, [indiscernible] as well. This is a 20,000 square foot R&D center and office that we purchased several years ago. Now go to Slide 11, you can see some corporate highlights here. And let's talk first about our intending product launch. This is our first product which we expect to launch on November 30, so in less than 2 weeks. It is a blood test in for cancer in canines. So I will -- before talking about that, I'll just point you to our intellectual property. You can see from this slide, we have 24 patent families. We now have 9 patents granted in the U.S., 11 granted in Europe, 98 patents pending worldwide. And I will now go to our veterinary slide. And here, this is our first nonhuman health product, and this is an animal health product, and we expect to launch in the next couple of weeks. This is a blood test to screen for 2 common cancer types in canines. And a little over 1 year ago, we formed a wholly owned subsidiary called Volition Veterinary Diagnostics Development LLC. And we branded our partner, Texas A&M University, 25% equity ownership in the Volition Veterinary Diagnostics Development LLC. In return for granting Texas A&M 12.5% equity ownership, Texas A&M is arranging the clinical studies for us. They are helping us compile and present the data, helping us enroll the animals and will also help us to launch our blood test in the next couple of weeks and then work with us to register the product with the U.S. Department of Agriculture ideally sometime next year, which will allow for a wider distribution and sales of our products. Why are we looking at veterinary applications? You can see some of the statistics here. 25% of all dogs develop cancer at some stage in their lives. In the U.S. alone, there are 6 million cancer diagnoses per annum compared to 1.7 million human cancer diagnosis. So there's significant number of dogs diagnostics here with cancer. It's not because of higher prevalence rates per se. It's just simply because of the shorter lifespan of dogs versus humans. So while many humans develop cancer in the '70s, '80s, for instance, many dogs develop cancer, over 7 or 8. So that's why you have so many more diagnosis, but this is a very large total addressable market for us. And as I mentioned, we are launching in a couple of weeks intended pricing to Volition. Revenue to Volition is expected to be about $45 per blood test. And we have a cost of goods of less than $10, so have a very healthy gross profit margin at those levels. Turning to the next slide. You can see the inside of our office building there. In terms of the veterinary opportunity, there are 77 million dogs in the United States. And most dogs are at risk of developing cancer upon turning age 7. And there are about 20 million dogs in the U.S. that are age 7 or over. So a fairly large market for us to target. And initially, we can offer the test to either, a, drugs that are symptomatic. And having -- vets are having hard time diagnosing. Well, what particular element is in the dog, a lot of times, the current diagnoses are invasive and expensive and uncomfortable to the dog. It involves a lot of cans and x rays, biopsies. And oftentimes, the dogs don't have a definitive diagnosis. So a lot of times, the animal is given particular drugs and pills to take home and a couple of weeks later, the dog really isn't getting much better. So the pet owner is bringing the dog back to the vet. And there's, again, another work up of tests and things of that nature, which can get expensive, often not lead to a definitive diagnosis, cost pet owner, lots of money and unnecessary screens and also potentially harm the dog by perhaps being given drugs or pills that aren't really treating the underlying symptoms. So the vets are really in need of an additional tool, a blood test like Volition's to rule in or rule out cancer early on in the diagnosis process. And that would identify whether or not the dog has cancer earlier on, would allow for more targeted diagnosis, more targeted treatment, ideally less cost to the pet owner less cost to the health care system and better outcomes for the dog. So we're really excited about this opportunity with Texas A&M. Initially, we'll be selling through Texas A&M's GI Lab in College Station, Texas. They will assist us with selling to other reference labs with which they have relationships throughout the country. And our objective is to register the product with the U.S. Department of Agriculture sometime in 2021 for ideally for our nationwide launch. And then because we are a global company, we have offices in Europe and Asia, we will look to commence sales outside of the U.S. in the coming quarters as well. So hopefully, we will be able to begin penetrating the international market for this particular blood test. So really exciting times for us. It's a very large addressable market, as I mentioned, over 20 million dogs, age 7 and older. So we could offer this to vets for testing of dogs that come in with symptoms to rule in or rule out cancer. We could also have this test offered by vets to dogs that are asymptomatic based simply upon age because turning age 7 is a significant increase in the likelihood that the dog will develop cancer just based on age. And we did the same with human health. For instance, the PSA is generally given to men asymptomatically upon turning age 50. Colorectal cancer screening, the colonoscopy, for instance, is recommended to Americans turning age 45 asymptomatic. So there are a number of tests out there for human cancers that are based upon age because age does have a strong correlation with various cancer types. The older you are, the more likely you are to develop certain types of cancers. So really excited about this product and the impending launch. And also, as I mentioned, significant total addressable market. If we look at cancer screening in general, you can see here that really, there aren't a lot of blood tests to screen for many cancer types. We use blood tests to screen for many other diseases. You can see on the left here that test are given to screen for diabetes, cardiovascular function, kidney, thyroid function, liver functional, reproductive function, infectious disease and inflammatory disease. But if you look on the right at various cancer types, you can see that there really are not many blood tests that are used as frontline screens for various cancers. So you can see the diagnoses here are x-rays, mammography, scan, scan biopsies and colonoscopy and you can see a lot of these tests are invasive, expensive, potentially can harm the patient through radiation exposure, infection, tearing, et cetera. So we really don't have many blood tests for various cancer types. And the screens that we have for many cancer types are less than ideal. As I mentioned, some of the drawbacks earlier. Also, a lot of these tests are not as good for early-stage cancer detection as they are for later stage. And obviously, that's the inverse of where you want to be catching cancer early before it's metastasized and before it's become a larger issue, and while it's more treatable and addressable. So these are some of the advantages of being able to work in blood. And there really only is 1 blood test, which I actually mentioned earlier, that's used as a frontline screen for any cancer type of the PSA for prostate cancer from men. And there really aren't many other blood tests there in common use for other cancer types. And going to Slide 20, you can see for -- and turning to human health, you can see that for colorectal cancer, which is one of the main areas of focus for Volition in terms of our human health clinical trials and products. You can see the issue that we have here with colorectal cancer screening. It's not that we lack a good screen. From the slide I just showed you, you can see the colonoscopy as the primary screen in the United States, for colorectal cancer screening and it's a highly accurate test at about 95% sensitivity. And so investors often say, well, why has Volition 1 area of focus bet on colorectal cancer. And developing a blood test for this particular cancer type when there exist a very accurate screen already. So it's not that the current screen, the colonoscopy lacks accuracy. It's the compliance problem here, as you can see from this slide. People don't like colonoscopies. And so a significant percentage of Americans, a significant percentage of patients globally simply refuse to get screened for colorectal cancer because they don't want to do a colonoscopy. Outside the U.S., the primary screen tends to be a fecal test. People don't want to do fecal tests either. And so compliance is a big problem. You can see here about 1/3 of American adults have never been screened for colorectal cancer. And you can see here that offering patients different test options significantly increases adherence or compliance. So this is a big problem because colorectal cancer is a very slow-growing cancer. It's very easily identified through a colonoscopy, which is a highly accurate test, and treatment is performed at the same time the cancerous lesions and/or precancerous polyps or adenomas are resected at the time of the colonoscopy. Unfortunately, this is a cancer type that's asymatic in the early stages. And so unfortunately, you have Americans turning age 45, 50, 55, never going for that initial colonoscopy screen. And unfortunately, these people will go on, never having been screened for colorectal cancer. And based upon prevalence rates, a certain number of adults will develop colorectal cancer. And unfortunately, if they are 60, 65, 70, and all of a sudden they present with symptoms that could be associated with colorectal cancer. And because of the unpleasantness of the colonoscopy, the expense of the colonoscopy to the invasiveness of it. Unfortunately, they never had the colonoscopy procedure performed. If they're asymptomatic and their age 70 or 75, for instance, it's generally a late-stage colorectal cancer and the survivability is very, very low at that point. If colorectal cancer is diagnosed in Stage I that patient has over a 90% chance of living more than 5 years. If a patient is diagnosed with Stage IV colorectal cancer, that individual has a 93% chance of dying from colorectal cancer in the next 5 years. So early detection is the key. Compliance is the problem, the modality issue people don't like scopes or fecal tests and blood helps to solve in large part, that compliance problem because blood is a much preferred modality over scopes or fecal tests. So really excited about our project here in colorectal cancer in our clinical studies. You can see some of the data that we've generated from this slide. And we've had a number of smaller studies over the years. You can see that on the bubble on the left, you can see some data for lung cancer, the 2 bubbles there on the left in colorectal, blue and white bubble. The third 1 there, you can see some of the results we've gotten in colorectal cancer. And we've also had a decent amount of data in blood-borne cancer, acute myeloid leukemia and non-Hodgkin's lymphoma. We've gotten some really good results this year in some blood-borne cancers. So you should expect Volition additional clinical data coming in all 3 of these cancer types for our human health products. So with colorectal, we have studies ongoing at National Taiwan University in Taipei, Taiwan. We expect to have additional data in the first half of next year for some of our colorectal cancer studies there. The market for colorectal cancer is pretty significant. There are over 100 million Americans of screening age for colorectal cancer and over 150 million Europeans of screening age for colorectal cancer. Compliance rates in the U.S. are about 65%, compliance rates in Europe or around 50%. So about half of Europeans are not getting screened for colorectal cancer. So about 75 million Europeans are not getting screened for a very common cancer type. And in fact, one of the deadliest cancer types, colorectal cancer is in most countries, the second leading cause of cancer-related death. The only cancer type that tends to kill more people in a particular country is lung cancer. So for instance, in the U.S., about 150,000 Americans die annually from lung cancer; the #2 cause of cancer-related death is colorectal cancer, you have about 50,000 Americans dying annually from colorectal cancer. So very, very large markets. You have a cancer type that is generally screened for asymptomatically based upon edge and pricing probably around the $100 to $300 range in the U.S., a little bit less in Europe. And again, cost of goods is so much for a veterinary product at under $10 per test. So very large markets, as you can see, in veterinary health. And as we expect to launch our blood test this month in veterinary health, you can see a very large market in colorectal cancer as well. Turning briefly to lung cancer. There's an interesting issue with lung cancer. We -- while we would envision a blood test for colorectal cancer to be a front-line screen, so that is the first test that a person would take to aid in the diagnosis of colorectal cancer. With lung cancer, we wouldn't -- and therefore, would require in the U.S. a PMA application with the FDA. For lung cancer, we would envision an adjunct positioning. So intended use as in adjunct screen. So that would be one of several tests potentially administered to aided in the diagnosis of lung cancer. With lung cancer, the -- one of the common screens is a low dose computer demography or a CAT scan of the lungs. And the doctors often have a hard time interpreting that image of the CT scan. And what often happens next is if the doctors see something suspicious on a low dose computed tomography, he or she then has to decide, why not to order generally a lung biopsy or another invasive test to get a sample -- tissue sample from the lungs. While a lung biopsy, about 15% of the time causes a collapsed lung in that patient. So you can imagine a lot of doctors are somewhat reluctant to have a patient progress to that more invasive diagnostic test, lung biopsy. And so if the doctor were able to run the low dose computed tomography. You look at that image, he or she thinks that something is suspicious on that image, then before ordering that lung biopsy, the doctor could order [indiscernible] blood test and as an additional piece of information. And if that came back positive, then a doctor would feel a lot more comfortable referring his or her patient on for lung biopsy. And vice versa, if the doctor wasn't really sure about what he or she was seeing on the low dose computed tomography, he or she could order a blood test to potentially rule out cancer, and therefore, not have the patient go on for lung biopsy. So again, we have the deadliest cancer type and so much needed to adjunct test here. So what that would mean is in the U.S. And many other countries. It's -- in the U.S. We [indiscernible] pathway to FDA clearance. And in other countries, also lower bar for getting a product like this approved. And therefore, it means smaller studies, less cost to Volition and a faster path to market. And then if you look at the red and white circle on the right of your screen, you can see some results that we've gotten in blood cancer. We announced some results recently in 2 common cancer types, hemangiosarcoma and lymphoma, and we were getting results in -- generally in the 70% to 90% accuracy. So sensitivity and specificity in the 70% to 90% range using a single biomarker. So we've run some early studies using the single biomarker, we're getting very good accuracy, very good area under the curve for a couple fairly common blood cancer types. And with these blood cancers, the symptoms that a patient presents, when he or she has some of these blood cancers are often confused with symptoms from other underlying diseases. So there's a need to differentiate between what's causing certain symptoms. And so blood tests to, again, rule in or rule out various blood cancers, within the diagnosis and get a patient that identified faster with a particular form of blood cancer, and therefore, get that patient treated earlier. So really excited about these clinical studies, we're working in a variety of human health products, and we're also working on the [ Volitionary ] product and about to launch that blood test in the next few weeks. So really excited about some of the opportunities in front of us. And before I open it up to questions, I will just turn to our financial snapshot slide. Here. And again, in summary, you can see that we are VolitionRx Limited. The ticker is VNRX on the NYSE American Stock Exchange. Market cap has been in the $150 million to $200 million range for a year or a little bit more. We announced our Q3 earnings on Friday and hosted our earnings call on Friday, we have around $21 million in cash. About 44 million shares outstanding. We have 4 analysts covering the company. We have very strong insider ownership, insider own around 20% of the shares of Volition institutions have around 20%. We have very little debt. We have no convertible debt, no preferred shares. The cap structure is very clean, just common and management stock options. And as I mentioned, very strong inside our ownership and a decent cash position. So that is Volition, and you can find more contact information on the company here. Sorry, it's a little bit hard to read probably in the screen, but www.volition.com is our website. You find a lot of really good information on the website, some informational videos that go into our science and technology a bit more. Some interviews with myself and our CEO, our scientific team and a lot of good pieces of information as well as some scientific publications. So I thank you all very much for dialing in or coming in for the VolitionRx Corporate Presentation today. And I would now like to open it up to the question-and-answer session, and I believe If you go onto your dashboard, you will be able to submit a question. I think we have just a few minutes left, if anyone has any questions they would like to ask. So I will pause for maybe 30 seconds to see if anyone would like to submit the questions through their dashboard. Okay. I'm not seeing any questions come in through the dashboard. So again, I want to thank everyone for their attention today. We are VolitionRx Limited, ticker VNRX and our website is www.volition.com. Thank you all very much. Have a great afternoon. Bye.