VolitionRx Limited (VNRX) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Volition Limited Third Quarter 2022 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, November 15 2022. I'd now like to turn the conference over to Scott Powell, Executive Vice President of Investor Relations. Please, go ahead.

Thank you, operator, and welcome, everyone to today's earnings conference call for Volition Rx Limited. This call will cover Volition financial and operating results for the third quarter of 2022, along with a discussion of our recent activities and key upcoming milestones. Following our prepared remarks, we will open the conference call to a question-and-answer session. Also on our call today are Mr. Cameron Reynolds, President and Chief Executive Officer; Dr. Tom Butera, Chief Executive Officer of our Volition veterinary subsidiary; and Mr. Terig Hughes, Chief Financial Officer. Before we begin, I'd like to remind everyone that some of the information discussed on this conference call will include forward-looking statements covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  These statements are based on our beliefs as well as assumptions we have used based upon information currently available to us. Because these statements reflect our current views concerning future events, these statements involve risks, uncertainties and assumptions. Actual future results may vary significantly based on a number of factors that may cause the actual results or events to be materially different from future results, performance or achievements expressed or implied by these statements. We have identified various risk factors associated with our operations in our most recent annual report on Form 10-K, quarterly reports on Form 10-Q and other filings with the Securities and Exchange Commission. We do not undertake an obligation to update any forward-looking statements made during the course of this conference call. I'd now like to turn the call over to our President and Chief Executive Officer, Mr. Cameron Reynolds. Cameron?

Thanks, Scott, and thank you, everyone, for joining Vilition's Third Quarter 2020 Earnings Call today. We especially appreciate, as always, your time given the busy earnings call season. We will commence the call with Dr. Tom Butera, Chief Executive Officer of Vilition Vet to discuss the rollout of Vilition Vet via our global supply and licensing agreements, then to Terry, who will provide a financial report. And finally, I will provide an update on the great progress the team has been making with regards to another of our key pillars, Q-Nets, as well as a brief update on new fee cancer. So without further ado, I'll hand you across to Tom for an update on what's been an incredibly exciting time for our vet team.

Thanks very much, Cameron, and good morning, everybody. I'm delighted to say that we have continued to make very strong progress in our mission to provide an accessible and affordable screening test to aid early detection to veterinarians and pet owners around the world. Last month, we were thrilled to announce the signing of a global supply agreement with a market leader in pet health care. Through the supply agreement, we are working with a market-leading company as a worldwide provider of the new Q Vet cancer test through its extensive reference laboratory network for cancer indications in animal health. This is a breakthrough agreement. And together with our previously executed agreements means the new Q Vet cancer test will be available at a mass market level. I am absolutely thrilled that this agreement has been executed and that the teams are now working towards a product launch. I very much looking forward to providing further updates in the near future.  And speaking of product launches, subsequent to quarter end, we were delighted to announce the launch of our new Q Vet cancer test across the United States and the fourth come launch in Europe by Heska Corporation, also one of the leading global providers of advanced veterinary diagnostics through Heska's veterinary diagnostic laboratories. I just want to repeat that this is the launch via Heska's reference labs. This means that any veterinarian in the United States, the world's largest pet care market can now order the new Q Vet cancer test for their clients. Interestingly enough, this news broke the morning of the New York Vet Show, and our booth was nearby the Heska team, and we mutually enjoyed a great deal of interest and interaction with the veterinarians and vet techs attending the show. And it's not just the U.S. The test will soon be available via Skill, which is Heska's European subsidiary, thereby, we will officially launch in Europe as well. I'm here in London, England this week and at the London Vet Show so look forward to generating ongoing awareness and significant interest while attending.  Launching via Heska's reference lab network is an important achievement in our transformative work together as we move towards the launch of Heska's flagship point-of-care solution also anticipated in early 2023. I know a number of folks asked that this launch prompted payment of any of the milestones within the Heska agreement. These do not come with the reference lab launches in the U.S. and Europe, but on the schedule, which I will articulate for you below. Volition received a $10 million upfront payment on signing the agreement. This payment will be recognized as revenue over the lifetime of the point-of-care product. Volition will also receive up to $18 million based upon the achievement of near- and midterm milestones, $6.5 million relating to the first commercial sale of the point-of-care screening product; and then $6.5 million relating to the first commercial sale of the point of care monitoring for dogs' product, both of which we anticipate receiving in the first half of 2023, with the final payment of $5 million due at the publication of clinical use in cats, most likely in early 2024. In addition to these milestone payments and most likely significantly greater than these payments is the ongoing revenue that Volition expects to receive in relation to payment for kits for the reference lab market, in particular, and for the supply of key components for the exclusive point of care product that Heska will bring to the market. Please remember, every time Heska sells a test, Volition will make money, be that through the sale of a kit or from the sale of a key component. And this is a long-term deal with incredible market potential, where we expect millions of tests will be sold. So we expect the ongoing revenue for Volition to be very significant. And outside of these global providers that I spoke of earlier, we continue to make solid progress with other distributors, particularly in Europe, where the market is fairly fragmented and anticipate launching with at least one other company before the end of the year. This will bring the total to 5 either global or more local company licensees running our test, an excellent outcome and significant progress throughout this year.  I use an analogy with the team when I think about Volition. There are 12 years of hard work and where we are today and for our fellow space geeks, I think you'll like this one. Our rocket is ready. We are on the launch pad. Yes, the crawler has taken time to deliver the rocket, but we are now there. All systems go. It's a tremendously exciting and rewarding achievement for the company, and we thank our long-term investors for their belief in us. We have discussed the commercial opportunity before, but as a quick recap, just to remind you, there are approximately 84 million pet dogs in the United States. And just under 50% of those dogs will have at least 1 veterinary care visit per annum, which Volition believes will provide an incredible opportunity to screen those senior dogs over 7 years of age and breeds at risk of cancer from 4 years and upwards. And it's worth noting there are 30-plus breeds identified as high risk. Implementing the new Q Vet cancer test at annual wellness visits can help detect cancer at an early stage even before symptoms appear, allowing for a better chance of effective treatment and improved outcomes. And that's why we are all here to help save lives and improve outcomes for millions of people and animals worldwide. So that's the commercial update for New Q Vet. And perhaps before I move on to R&D updates, I might just thank the whole Volition and Volition veterinary team.  It has taken tremendous hard work and determination from each and every member of this company to get that rocket on that launch pad. Thank you again for your supportive commitment and most importantly, thank you for your innovation. From an R&D perspective, I'll keep this brief and simply highlight news out just yesterday. We were excited to have announced a clinical research study with OncoVet, a renowned veterinary referral clinic specializing in medical and radiation oncology. This study of 100 dogs and 25 cats supplements the ongoing work at Texas A&M looking at the use of new Q Vet not only in dogs, but also cats as both a screening and monitoring tool. We are excited to be adding tech and more monitoring data to our growing list of research. This noninterventional study is being led by Dr. Jerome Benoit, OncoVet's Clinical Director and will evaluate circulating nucleosomes of dogs and cats with cancer using Volition's new Q Vet cancer test.  For those of you less familiar with the veterinary space, Dr. Benoit is one of the world's leading veterinary oncologist and is currently the President of the European Society of veterinary oncologists known as SFO. So yet again, we are honored to be working with such a key opinion leader. OncoVet is well known in Europe for the design and management of veterinary clinical trials in dogs and cats, and we very much hope this is Vsimply the start of an effective long-term relationship with OncoVet as we seek to broaden the range of cancers that our new Q Vet cancer test can detect across different species. We look forward to providing further updates and sharing the results in due course. In summary, I could not be happier with how the commercialization has gone so far this year, and we are very hopeful we will get a lot of news on very meaningful product launches early in 2023. And with that, I will now hand it over to Terig for the financial report. Tarek?

Thanks very much, Tom, and thank you, everyone, for joining our earnings call today. I will now provide a summary of the key financial results for the quarter ended September 30, 2022. We ended the quarter with cash and cash equivalents of approximately $16.4 million compared with $16.7 million at the end of the second quarter and $20.6 million at the end of 2021. During this quarter, we received approximately $6.4 million in cash, net of underwriter fees and expenses through an underwritten public offering of our common stock. Additionally, we secured a further $1.5 million in non-diluted funding from the more invest capital risk in Belgium to fund an early access program for positions new fee product portfolio at key sites across the EU, U.K. and U.S. As at the end of September, we've drawn down $1 million of this funding. Just for information, during the third quarter, we made 0 sales of our common stock under the aftermarket equity distribution program. We continue to manage our expenditures carefully with net cash used in operating activities, averaging approximately $2.3 million per month in the 3 months to the end of September.  Revenue reported year-to-date 2022 was approximately $187,000 versus $76,000 for the same period in the prior year. This revenue figure excludes the receipt of an upfront milestone payment of $10 million in cash from Heska Corporation received in March. It is worth noting that while this payment has been fully received and is nonrefundable, it has not been recognized as revenue in the period and has been accounted for as deferred revenue in accordance with the relevant accounting standard. As Tom mentioned earlier, it will be recognized as revenue over the lifetime of the point-of-care product, which has not yet been launched. This was just the first of several milestone payments expected in relation to the Heska contract. We anticipate that the next 2 milestones will be achieved and payments totaling $13 million will be paid by Heska during the first half of 2023, with the final payment of $5 million due following publication of clinical news data in CAC most likely in early 2024.  Given our current balance sheet and funds expected in the short to midterm, we are confident we have the resources to deliver on our upcoming milestones and to see as for the revenue ramp, we expect to start following the worldwide launch of the vet products anticipated in 2023. As we discussed on previous calls, given the product range, we believe we can develop from our proprietary new pistol platform, we believe our addressable markets are very significant, most notably in the short term with new Q Vet and new Q Net, and I'll be happy to discuss the total addressable market in future calls should that be helpful. I'll now hand back over to Cameron for further business updates. Cameron?

Thanks, Terig, and thank you, Tom, for those comprehensive updates, great progress indeed. I will wrap up the call today with updates on 2 other product pillars, Nu. Q Net and Nu. Q Cancer. Early in the third quarter and highlighted on our last call, we sponsored a genome webinar presented by Dr. Andrew Boozary of the Somass University of Hospital, London titled, the promise of neutral axilla traps, net as biomarkers in inflammatory disease. This webinar, the second in a series, was incredibly well attended with an engaged audience. So what's on demand is at the GM Web website. Also during the third quarter, in collaboration with researchers at the University of Nomura and Poly blood in Belgium, we published a clinical paper entitled NETosis and Nutrison biomarkers in deficshock and critical COVID-19 patients and observational studies and the poster presentation entitled Evaluation and comparison of NETosis biomarkers in sepsis and COVID-19 patients at the International Society on Thrombosis and Hebiostasis, ISTH Congress in July. Subsequent to the quarter end, we also presented data at the International Symposium on infection in the critical ill patients and international receptors forum. The key findings presented are that levels of NETosis as measured by our Nu. Q Net tests are highly elevated in sepsis and moreover, that the results of our tests correlated very well with the severity of disease. The severity of disease is currently assessed using the sequential organ failure assessment SOFA score. This score is assessed on 6 separate organ functions, lung, cardiovascular, liver, kidney, the coagulation system and the brain. Our test results just a single number from a routine blood test correlated with the SOFA score with suffering of great interest to the clinicians in attendance at the forum. These conferences were a real highlight of 2022 with many of the team in attendance to develop a network of key opinion leaders in addition to starting discussions with potential licensing and distribution partners. Indeed, I'm happy to announce we have initiated commercial discussions with major actors in the NETosis space and are making great progress with our market access program.  We currently have 2 centers of excellence by actively using Nu. Q Nets with a further 2 deep and legal review of contractual terms, and we have identified a number of other sites we hope to onboard during 2023. These multiple centers of excellence will help narrow down specific indications useful to our future commercial partners and regulatory trials. And speaking of trials, during the third quarter, we appointed clinical research organization at Doro to undertake development and clinical validation studies of our NU Q product portfolio in the U.S. GoPro will conduct large-scale finding studies across multiple sites in the U.S. using Volition Q-Net and Nu. Q Cancer test to determine clinical utility in septic and cancer. I'm very happy to say they have made significant progress in setting up sites with all 3 clinical studies, and I'm delighted to announce today, we anticipate our first patients being recruited into the study in the coming weeks. We anticipate that subsequent studies will investigate the chosen intended use claims of the test with the objective to gain clearance, authorization or approval from the United States Food and Drug Administration, the FDA, and allow the test to be marketed in the U.S. These multi-site studies will help us demonstrate how our Nu. Q Nets technology can directly benefit patients and support our application to the FDA's breakthrough device program expected in the first half of next year and a presubmission also anticipated in 2023.  My great thanks to Sharon Ballesteros and the team for spearheading our research efforts in the U.S. It is fantastic to get this project underway. We're also delighted to be working with one of the world's leading cancer regas institutions, MD Anderson. As announced earlier in the third quarter, we are sponsoring research with the University of Texas MD Anderson Cancer Center to evaluate the role of neutrophil extents nets in cancer patients with sepsis. Cancer patients have weakened immune system and shockingly have a 10x higher likelihood of developing sepsis and are also more likely to die if they develop it. Therefore, it is critical for physicians to identify cancer patients at risk of sepsis early and initiate treatment quickly to improve patient outcomes. Our study with MD Anderson is an important study that evaluates the potential utility using Nu. Q Nets in the management of cancer patients at risk of sepsis, and we're delighted to collaborate on this research and look forward to sharing further updates and results in the future.  And lastly, and bringing us right up to date with the news out last week, we have been invited to participate in the government-backed prospective study to evaluate the performance of blood biomarkers in the early detection of lung cancer with hospice, Civilian, HCL, Fran the second largest university hospital. The LNAs initiative for the initiation of lung cancer screening, EIA, a wide clinical study assessing the visibility of a lung cancer screening program and the effectiveness of screening. The EIA study will evaluate the performance of Volition VQ test as a biomarker for the early detection of lung cancer when used alone and in conjunction with the CT scan over the next year. Lung cancer is tragically the most common cause of cancer deaths worldwide, with 1.8 million cases each year. We know that screening saves lives, and there's a real unmet need for lung cancer screening globally. Our colleagues at HCL have recognized the need, and we're proud to be part of their binary Gilead study in France with the Alma goal of developing a national screening program. It's expected that over 400 subjects will take part of the study over the next year, encompassing a smoking cessation and lung cancer awareness campaign, one-on-one intervention and screening opportunities. And indeed, I would like to report that the first 20 subjects have already been recruited.  So truly, an exciting quarter here at Volition for Nu. Q Net with the achievement of our EU regulatory hurdle, publishing compelling data, starting our market access program in earnest and indeed, our commercial discussions with major players in this space. It's also fantastic to get our clinical and regulatory program underway in the U.S. and commenced a government-backed study into lung cancer screening in France. After many years of hard work, the crawler has indeed delivered our rocket to the launch pad, and we're excited to have our Nu. Q Vet cancer test available or soon to be available by 5 global and local licensing and supply agreements. I'm absolutely delighted with the progress we have made in this key pillar of the business as we progress strongly from a fully research and development company for companies with wide ranging products. It is an exciting, fast-moving part of our business with clear potential to generate significant revenue for the company in terms of both milestone payments and an ongoing revenue stream, as Tom explained, for the sale of Kisan key components, not only to head cup and skill, but also to Sage Healthcare in Singapore, Texas GI lab, DNA Tech in Portugal and another global market leader in pet Healthcare recently announced.  And during this call before we're closed, I'd like to thank you all for joining us today. I, along with the rest of the Board and indeed the whole company, very much look forward to sharing further news regarding Nu. Q Vet and our other Nu. Q pillars as well as the results of our key clinical studies, publications and milestones over the coming months and quarters. I very much feel we're in an extremely strong position to commercialize our Nu. Q platform in so many areas. Volition truly is powered by Nu. Q. I could not be more positive about our work at the heart of Emergex, and I'm excited for the next phase of our journey. I'm happy to take questions. Operator?

[Operator Instructions] Our first question comes from Michael Okunewitch with Maxim Group.

So I guess, first, I'd like to get a bit more on the Iliad Study. In particular, how it differs from the lung work that you've done in Asia? And then what are the time lines for this study? Is this using one of your CE Marked assays? And could this potentially result in a commercial product if the data from that is positive? I know it's a multiparter.

So obviously, we've had very good data from Asia, which we've talked about a lot. And obviously, during the pandemic, there's been issues in all of the countries there. So it's good to have a focus in Europe, very close to our home. We're working very closely with the University in France, and they're absolutely world leaders in what they do. They've been running our tests and seeing how they work. And now they're very keen to see if we can be added to the national trial and the national screening program. So it is -- it depends on what assays they're testing a few different assays. What is the final product, but it could include a part of what is currently that, that will be determined by the study. So the study they have underway now should be finished next year, by the end of next year. And the aim, if it goes as well as they would like, would be actually added to the national screening program. They've got -- obviously, everywhere, lung cancer is a massive problem and no less in France. So the government is really trying to do something about it. So we're hopeful we've seen very good results as of day with what we do as we have in Asia and adding it to their trial, and we'll see how it goes. But very encouraging, absolutely top worldwide opinion leaders in this field, a great study, and we're really happy to be part of it. And we should have the first round are finished by the end of next year.

And then regarding the study with OncoMed, is this a program that you reached out to them to do or is this something where they saw the potential of Nu. Q and then reached out to you to conduct the study.

Michael, just to answer that, no, Dr. Benoit actually reached out to us because he was very interested in our platform and was his staff as well, has a number of Board of oncologists there as well. They were all very interested in it. So we were delighted and flattered by his outreach.

I think that's indicative and Tom can verify this from his point of view. We're doing a lot of vet shows an interest -- the inbound interest has been absolutely fantastic. Tom, do you want to speak to the inbound interest? I mean, is this a normal level of interest from people?

Yes. This is -- I mean, just one last comment, too, Mike, on Dr. Benoit. He's also the President of ESMO. That's actually where he initially made contact with us. ESMO is the European veterinary oncology group, which is similar to the American BCS group, which actually Dr. Robles is President of who's our Chief Medical Officer of Volition. So we are continuing to attend in London, obviously, this week, we're attending the London veto. We continue to spend a lot of time in Europe as well as domestically. And the interest from my veterinary colleagues, both on the oncology side as well as the general practitioner side is quite robust. Tremendous interest everywhere we go. And we are being invited, so you know. A lot of the conversations and a lot of the presentations that we're making, even the ones here in Europe right now, I'm personally being invited by Dr. Robles being invited to speak. We just spoke at the Netherlands. We're going to be going to Portugal to speak there. So these are frequently coming from invites to us personally as they were this past summer with reference to Germany and France as well. So we're delighted and again flattered by the amount of attention the test is getting.

Just one last follow-up to that question, and then I'll hop back in the queue. For that $5 million milestone from Heska once you get a publication cat, are you expecting that a publication from the OncoVET study given that, that is including cats could support this milestone?

Yes. We're reaching out, obviously, to get additional fee line as well. And also, we like the fact that we're reaching out to additional KOLs to support the research that we're doing. And we'll look to see and align that the information and the studies that they're doing aligning up with the studies that we're running in the U.S. So again, parallel studies at different locations, supporting the validation of our test in the cat is obviously going to lend a lot of additional credibility to the value of our tests.

And we strongly expect just on your last point, to get to the critical mass we need for the product really to take off. We've had fantastic partnerships with the GI lab in Texas and in Singapore, but they are relatively small labs, and there's never going to be a large amount running through them. But with the potential launches in the short term of Heska and the other very big company, I think it will generate demand, we'll generate demand and I'll support each other. And so we're launching we think, on point of care and in lab reference labs. So we'll have it all covered and the fantastic demand that the vet team has been generating, hopefully, will meet the supply from the big companies and we really expect it to start taking off once they've launched the 2 big companies, in particular, which we hope to be early next year.

And one other thing to remember is $84 million in the United States. There's close to 90 million cats, and we haven't even touched on the potential opportunity that's there. So obviously, the analytical studies we're doing on the fee line is going to be immense for us as well.

The next question comes from Bruce Jackson with the Benchmark Company.

A couple of follow-up questions on the Iliad study. Are they evaluating any other testing modalities in addition to CT and the Nu. Q test?

Not that I'm aware. No. From my understanding, and it wasn't the study I developed, but it was -- we're the only blood test and CT scan and then other lifestyle choices and areas, but -- and smoking, but we are, to my knowledge, the only blood test on there. So hopefully, we could be a very important part because I mean, as you know, there really isn't another blood test out there, certainly not something routine and can be run easily. So it's something we're very hopeful for.

And then in terms of how this plays out. So they finished up enrollment end of 2023. Tell us what happens after that in terms of the review period and what their intended plan is in terms of developing national screening guidelines and when those might be in place?

They're looking for a very comprehensive strategy. I think it was outlined a little in the press release between mitigating smoking, CT scanning, mobile centers where they can scan and test your blood, a very comprehensive program because, as you know, Bruce, lung cancer is incredibly deadly and happens all too quickly. So they're looking for a comprehensive program, and we're hopeful we'll find out after this trial has gone through to be a part of the system of what they do. So it will be the running of the trial and the data we'd expect by the end of next year. and then the government will decide what the package is, which has been the government, it can be done reasonably quickly. They've put a lot of resources behind it, and they're very keen to see how our Nu. Q platform works. Given the data we've had in lung and other cancers, they are very hopeful that we can be helpful to them. And I think it's very good now that we have a fantastic base in the best space, a very good basis now in Natosis and also very heartening to be back into the human cancer so actively in Europe now as we have been in Asia. And don't forget that the DOC study is also looking at human cancers, particularly the liquid tumors. So we've got a lot going on. And as Thomas said, the rocket on the launch pad and we've got so many things now which are ready to lift off. And we strongly expect the vet market to really take the demand really grow strongly once the big companies launch, which we expect to be seen.

And then turning over to the vet space, a question for Terig. On the Heska milestones, the original payment is being amortized. Are the upcoming milestones also going to be amortized over a certain period of time? Or would those be lump-sum payments to you?

So we will get them as lump-sum payments, which we'll be able to use as cash. But they will be treated as exactly the same as the first payments, and they'll be amortized over the life of the product from a revenue perspective.

And then with the new agreements that you've just put in place, how are those going to be coming to you in revenue?

So for the new agreement, we will get a payment every time they sell a test. So similar to the way that every time Heska sells a test, Heska -- we will get a payment every time Heska sells a test. Similarly, every time this new company sells a test, we will get paid.

One thing to make clear here, Bruce, Heska is a fantastic partner, and they got exclusive at the point of care. But what we're looking to do in the reference labs, as you can see, we've got a bunch of reference labs and we'd expect a bunch more. We really want as many companies out there selling the product as possible because we get a very large -- a very reasonable percentage of the revenue in all the deals we're looking to do. So -- but we do not expect to get large upfront payments in the nonexclusive space in the reference labs. The most important thing for us with them is that we have large coverage with the biggest companies out pushing our product because, as Tom said will point out, there's tens of millions of dogs in our target market in the U.S. alone. So we want every vet having the opportunity to run the test on as many platforms as possible. And we're looking to get a similar structure as possible for each one in how much we get paid per test. So they're very lucrative for ourselves, particularly if they reach the potential we expect them to reach.

The next question comes from Steven Ralston with Zacks.

If we could just kind of talk about Nu. Q discover. There was a -- you had multiple contracts signed that had an aggregate annual worth of $200,000, and they were expected to ramp up during the fourth -- second half of this year. Are those on schedule? You also said they tended to be lumpy.

Yes, it does seem lumpy. So it is lumpy. But to discover we had a bunch of them as inbound interest at end of last year, early this year. And as you rightly pointed out, we've now closed them all. The trials are all going very, very well, all different uses and fantastic to see our platform being used in so many different ways by different companies. We're now to use a cricketing term, we're getting on the front foot, and we're making outbound interest to get demand up. So we'd expect to see a bunch more again next year. So the bottom line is it's gone very well. The companies we've signed, the work is progressing very well in a very wide range of areas. It is lumpy, and we are expecting a lot more, and we've actually now taken on some team members who will help us to really get on the front foot and get out because there are potentially hundreds of different clients out there, we think. So we're being very active now. We expect that to really come through more next year with a range of new contracts  in the Nu. Q discovery space as well as perhaps follow up on the ones we've already signed.

Over the last few quarters, in the 10-Q, you've added quite a number of employees in certain areas. And I've noticed, at least in my model, your aggregate employee expenses, R&D and G&A are on target, but it's -- the mix is changing. I mean the G&A expenses are actually going down and the R&D expenses are going up. Is there any significance to that?

So with G&A, we do try and keep the G&A very much under control. Where we have added, it's building out the infrastructure for the future business, so the support element. In terms of R&D, we've got -- I think within that number, we've got the innovation lab, which we've been staffing up and building out. So that's one of the elements that you see there. And I think also within the R&D, you've also got the production side of things, which we've been building out. So it's basically building the infrastructure to support the business that we expect to get in the coming year.

Steven, as a company, we've been very careful to keep our administration costs as low as possible and to really hire the new people really at the front of the mind, so to speak, to make sure, as Derek said, the production, we can really meet the capacity. We expect strong demand to be rising through next year. So we want to be able to meet the supply for that. And also our teams in the marketing of the products as well as the development of the products. So we want to -- we have -- we're focused on our current products, very, very carefully, as you can tell. And we're also trying to say on the cutting edge of the genetics. So we have done some research through the nuclear capture side and other work. So we're managing to do an awful lot with not very much of a spend given how careful we are and the adaptability of our platform is truly remarkable. We're doing all the things we're doing with exactly the same platform. So I think in a lot of ways, we have a very unique proposition.

And my last question, could you provide an update on those marquee studies being conducted by the National University of Taiwan?

Yes. So we've been backing for with them quite a bit. Obviously, there has been some issues in Asia, and we've done a lot of work in Taiwan and China. We'll provide more updates as they come through. Justin has done a lot of work with them in colorectal and in lung. And once we have the updates to be finished and what the future looks like for those, we'll update. As you can see, the lung, particularly, has gone very well. That's why it's come back to Europe, and we'll fully update all those when we have more information from the conferences. But we've been very, very happy with the partnerships we've had down there. And we've been hopeful perhaps of getting some more work in Asia, but it's just starting to open up now after the very end of the lockdowns in the pandemic. So hopefully, that will be picking up a lot in different areas. But our team there has done a great job to be ahead by Jasman and keeping all going during these very difficult times due to the lockdowns of the pandemic.

[Operator Instructions] There are no further questions at this time. I would like to turn the floor back over to Cameron Reynolds for closing comments. Please go ahead, sir.

Thank you all yet again for joining our call, and I think it's going to be a very exciting next few months as we launch a range of products in the best space and make very strong progress, including the studies in the U.S. on NETosis and progress all the human cancer side. It's getting more and more exciting. And we're getting, hopefully, some very big launches soon, which would really help generate a very increasing amount of revenue. So it's going to be a very exciting time. So please keep in contact and look forward to the updates coming soon. Thank you for your time.

This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation, and have a great day.