Q3 2020 VolitionRX Ltd Earnings Call
Good morning, ladies and gentlemen, thank you for standing by.
Welcome to bullish on Rx Limited's third quarter 2020 earnings conference call on Board.
During todays presentation, all parties will be in listen only mode.
Following the presentation the conference call will be open for questions if.
If you have a question. Please press the star key followed by the number one on her touchtone phone.
If youd like to withdraw your question. Please press the star key followed by the number two the.
On a pre using speaker equipment, please lift the handset before making your selection.
This conference call is being recorded today November 13 2020.
I'd now that's true the conference call over to Scott Powell Executive Vice President of Investor Relations. Please go ahead.
Thank you and welcome everyone to todays earnings conference call for Volitionrx Limited.
This call will cover Volitions financial and operating results for the third quarter of 2020 on.
Along with a discussion on recent activities on 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.
Mr., David bands from Chief Financial Officer.
And Dr., Jason Terrell true.
Medical 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 from 1995.
These statements are based on our beliefs as well as assumptions we have used based on 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 a balance.
To be materially different from future results performance on.
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.
Other filings with the Securities and Exchange Commission we.
We do not undertake an obligation to update any forward looking statements made during the course of this call.
I'd now like to turn the call over to our President and Chief Executive Officer, Mr. Cameron Reynolds Kevin.
Thank you everyone for joining Volitions conference call today, I, especially appreciate it as always given the busy earnings calls season, and the ongoing pandemic knockdowns.
I would like you to gain to recognize the amazing commitment and hard work done by our team.
Over the past quarter during these difficult times, allowing free must progress in so many areas.
Thanks also for those that attended our recent bush from capital markets event.
On such a great reception, we shouldn't price another man in the new year.
I will start today by covering our financial and then get right down to discussing the upcoming launch of our first point on the new bit cancer screening test that were targeting for the 30 day of November exciting times.
We have strengthened our cash position this year, providing a great runway to achieve on many milestones and give us flexibility during their continuing pandemic.
We closed out the third quarter with approximately 21 million cash on cash equivalent compared with approximately 17 at the end of last year.
We continue to manage our expenses carefully and as we approached the my foundation I've been right with approximately 1.6 to 1.7 million came on which we expect to continue as we make additional investments towards our product launches and expansion of our platform.
Regarding product launches I'm delighted to announce the target date Monday November Thirtyth for launch of the new EBIT has a screening test in the U.S.
This is an extremely important milestone for the company as this first launch that we expect to be the first of many times that our platform has reached the level of reliability and reduce the ability to be launched in a completely independent lab. This test will be position for you on the animal health check of old adult.
Does that on seven years and older.
And from a cases, where there is a high suspicion of cans on it.
It may also be a complimentary to the younger dogs at high risk for developing cancer in their lifetime, such as Burmese Mountain don't.
Golden Retrievers, Rob.
Rottweiler.
Big boxes, with Harland White Terrier and setting sheikdoms.
The test will initially be available from the G.I. lab at Texas, I know from University can potentially thousands of bit across Texas and the rest of the U.S.
Further details will be released that launch, but it free.
That will draw the blood.
As for the collection instruction, and then ship it from pricing to the G. I laugh at Texas I am.
Result.
Available within three to five business day overseas.
We expect the cost of the test from the GE, our lab to be around $122.
Our average volition received approximately $45 per test.
Hi, greater than 85% margin we.
We anticipate debt to charge between 160 and $200 for the test.
Catherine Dog is widespread it is the leading cause of death in adults over the age of 10 and there are over 6 million new dog cancer diagnoses each year.
As cancer screening is not common place in animal health as it is in human health, We believe blood test life, you bet cancer screening test.
Good completely transform how manage cash in companion animals.
It really is a simple low cost easy to utilize it by screening blood test, which we believe will help streamline screening price it up to one third of malignancies in dogs, including common balance these factors lymphoma and Im angiosarcoma.
I think humans early diagnosis of cancer has the potential to improve the treatment and quality of life as relative providing valuable additional information from form the clinical decision making process.
If you've not had the opportunity to see yet I would recommend watching professor Heather Wilson robust presentation from the recent capital markets day that is available on our website.
He did a great job, bringing our first product and clinical relevance to life.
As part of our pre launch marketing you might have seen a really earlier. This week of reported Todd would I look to the future of cancer diagnostic.
On a compound contributions from some of the key opinion leaders in the vet oncology space.
It's an interesting raid and is also available to download on our website.
It was fantastic to connect with the thought leaders, who continue to support us either through on gun studies or upcoming launch activities. So watch this space.
To leverage our global team I'm also delighted to say that we've begun pre launch work in Asia led by Dr., Jasmine clay and supported by our.
Team and I'm looking forward to updating you on progress in the coming months.
Certainly we will now further details at the time of launch, but I wanted to spend a couple of minutes discussing the commercial opportunity that this initial net product represents.
The obvious Big question is what is the size of the potential addressable market.
As I said earlier, there is high unmet need in the vet market with few simple noninvasive tests currently available.
Cancer is the leading cause of death in those over the age of two and up to 50% of all dogs over the age of 10 develop cancer in their lifetime.
There are approximately 77 million dogs in the U.S. and according to the 2019 Avi in May U.S. Pet study.
We just completed every five years.
83% of all dogs visit the debt at least once per year with 75% being classified as routine preventative visits. So we believe the market is both large and accessible.
Clearly building a market takes time, but just to give you an idea of the potential market of the $77 million in the U.S.
Approximately 20 million dogs are over the age of seven and therefore on high risk of cancer.
For every $1.2 million of the $77 million in the U.S. tested using the current platform applied we would generate approximately 54 million in sales revenue and over 45 million in gross margin.
On looking at the second way, if just 10% of the older adults in the west competency here that $2 million, we would generate approximately 90 million in revenue and approximately 76 million in gross margin.
And that only 10% of the potential older dog market not to mention the additional dogs that we tested mutual suspicion of cancer or out of an abundance of caution for high risk free and a wide range from potential new tests in dogs in other animals touches cash.
In short whichever way, we look at this we believe that the huge commercial opportunity.
Our current expectations are based on your on our initial canine cancer diagnostic test and the U.S. market.
However, we plan to launch additional battery test and generate revenue outside the range in the future as well.
And in other species.
We are hopeful given the demonstrated strong accuracy about debt the market for our initial product will end up numbering in the mean attacks per year.
While recognizing the Dod to receive revenue guidance, we are unable to provide such guidance at that time as we don't know how quickly things will ramp up nor the total demand for the test.
What we do know at this stage is that we have received a first request for quote from the GE our lab for approximately $370000.
This being capacity for the first technician in the first year of the lab, we aim to announce the launch in further labs in the U.S. and across the world. Once reviewed this be to launch in the first quarter of next year.
This is just the beginning but a fantastic opportunity and we are truly excited to start commercial operations.
As discussed at the capital market day, our plan is to initially drive awareness of the new vet test with specialists oncologists at the top institutions and have an extreme extreme focus in Texas training all of the on poultry hospital specialists and have an outreach program with general practice veterinarian.
I'm really proud of how hot the whole team has worked to prepare the launch of our first clinical product is an incredible milestone for the company and we have exciting few months ahead for us for sure.
Moving on from the vet business to human cancers, where in parallel we continue to make great progress.
As was discussed at the capital markets day during the pandemic, we have focused on simplicity and in particular on our theme on paid 3.1 ethane in blood cancers.
You might ask why.
This is a product we can launch with a simple I say during the pandemic given the very similar results. We have obtained in both human and dome in these cancers with exactly the same ethane.
I think this makes a lot of sense during the pandemic to launch the same appetite for the same cancers in humans and dogs again, showing the mailing versatility of our platform.
To that end I'm delighted to announce today that we have engaged diagnostic oncology LLC otherwise known as the.
As a contract research organization, so you're right to conduct a U.S. clinical trial for non Hodgkin's lymphoma NHL.
The trial is designed to obtain multiple FDIC approved adjunct test to aid in the diagnosis of the five most common and aggressive forms of NHL.
Dick though is the largest U.S.C. arrived specializing in oncology purpose in vitro diagnostic device clinical trials we're.
We are delighted to have them on board.
NHL accounts for approximately 4% of all cancers with approximately 77000 cases diagnosed per year in the U.S. and around 700000 worldwide.
As Dr. Dror to Scott a capital markets day rapid diagnosis is essential debt can result in weak, whereas early treatment is often curative.
Diagnosis is often delayed and symptoms from NHL mimic those of common every day conditions such as Todd.
Existing guidance adjusted you will greatly I positions in distinguishing NHL from common conditions.
Fulfilling what we feel is a critical unmet clinical need which represent a major market opportunity.
The trial will roll enroll up to 1500 subjects across 10 major U.S. healthcare institutions overtime look 22 months.
This extensive program will cost approximately $2.9 million over the two years.
Assuming the completion of numerous projects and includes not only the clinical study, but also data analysis and regulatory and reimbursement submission preparation.
We anticipate that diffuse large b cell lymphoma D. L. B C L, which accounts for approximately 35% of individual cases will accrue study subject more rapidly than less prevalent sometimes.
To that end we expect.
I'd L. B L. FDI five 10-K submission will be possible approximately 10 to 12 months into the trial.
At that time, we would like to submit a d. LBC L. Five 10-K, well petition the FDA to accept subsequent parting case insufficient and it has some side sometimes numbers accrue.
The FDA approval for new Q D. L. B T O. The subsequent five 10-K can be filed utilizing post market data of an FDA approved test.
This strategy will streamline both ft, a regulatory approval and CMS reimbursement approval to minimize our time to market and hopes the time to revenue.
We're delighted to be working with diagnostic oncology LLC dxi and to get started on this pivotal study in the U.S.
Dr Trail joined us on the call today to answer any questions on this exciting trial and potential product launch in our user QNX session at the end of the management summary.
In addition to all of this we have also made great progress on the research program for the use of new technology in net hosted had a particularly on monitoring disease progression of COVID-19.
And we're looking forward to broaden this into influenza and potentially other diseases, such as sepsis County, we have several studies that have either been collected or are being negotiated in Europe, and we anticipate the nics results will be reported before the end of this year.
As announced on the last call. We're also negotiating a large if the trial for the use of Veracyte in net the COVID-19 and influence in the U.S. and we'll announce the full details once they have been finalized.
Early identification and training of patients tested positive for COVID-19, who are the most likely to deteriorate and need critical care would enable both improved outcomes for patients and a more efficient use of critical care resources for health care providers.
We believe this is still very much on unmet need worldwide in fighting the impact of the pandemic.
And.
Given the information on the vaccine many other conditions driven by Monetizes, such as influenza and sepsis.
If we continue to see positive results in the longer do two studies, we aim to have a CE mark product available on multiple platforms in the first half from Twentytwenty, one and look to launch a low cost product that could be used in any luxury worldwide as soon as possible after that.
We are yet again proud of the versatility of the new platform and the range of applications for which this product can be leveraged so on the total to a relative be newfield publishing given such positive early results. We formed a new units team provide focus and drive to the product development program.
To that end, we hope to announce the initial study in overall net and the toasters before the end of this year and are looking to use the new technology in many ways in net true diagnostic disease monitoring and as a companion diagnostic to monitor treatment response.
This once again underlines the strong breadth of the new platform technology supported by a broad intellectual property portfolio.
We plan to host another capital markets event focused on Oneq you net program early next year.
From the large cancer clinical trial perspective.
He trials I think it is fair to say that in various ways. These have now been affected by the continued pandemic either by slower or post collection will buy a host of other supply chain on trouble and communication issues.
We believe we have successfully manage those areas under our control such as I say development and running samples both on track with our milestones, but many issues obviously beyond our control.
Oh, particularly night the D.R. in study in the US where in summary, the LDR expects lower collections in Twentytwenty than originally planned and we expect this trial maybe further extended as it is currently paused.
As always I will update with further details once available.
On a better night the collection of both large accounts studies at the National Taiwan University continues with the able to complete collection by the middle of next year.
With regards to both studies, we have now completed pro discovery grade nuclear ethane and five more orthogonal biomarkers on subset of both our two national Tower on University studies, colorectal and lung.
And they are working with our collaborators on on data analysis.
As for our more rigorous process are presenting data, where we can you need a peer reviewed papers or to conferences and abstract has been accepted by the I S. L. C meeting in January where we look forward to presenting our lung cancer detection result.
The APW meeting originally planned for December.
Twentytwenty has been delayed to later next year. So we'll provide updates regarding colorectal cancer data in due course.
From an expansion point of view, we are on the final pipe work day, just for Super one the production hub for our products and components close to a lab in Belgium.
We will soon be producing several key components and plan to achieve full ISO certification next year.
We anticipate that as with our previous real estate transactions at least some of these costs will be supported through non dilutive grant and on lines from the low region.
Our plan is to produce.
Large scale raw materials, such as real comedy Nucleosomes, which act as the calibre two on you asked I in addition to everybody that.
Key elements to our branded product and indeed will manufacture our full diagnostic kits once finalized.
We expect to offer all elements for both commercial style and for clinical trial purposes, and CE marked products for sale in Europe and beyond.
We also intend to installed a service lab in the new facility, which would undertake sample processing for external parties.
The only revenue facility will not only bring manufacturer of key components in house, thereby securing our supply chain. It should also significantly reduce the cost of production of many of these elements and in turn should reduce the cost of assay development.
It's an exciting time and I could not be happier that we could find a suitable site. So closely situated to our current lab plus it's another great step forward on our roads to a diverse revenue stream.
To that end I'm also delighted to announce deployment of our first sales manager and many relative meal comp we start with the business in December.
Emmanuel brings over 25 years, the sales experience in the diagnostic field, having worked for companies such as Roche Sanofi advice recently Villa.
We believe he'll be explanation to our team with his focus to help drive revenue from our civil one facility.
I'm equally delighted to also announce on the call today that we have opened a small share debauchery at California State University in San Marcos, California. This.
This lab initially with a team of just true will be led by Dr., Terry Kelly, Our Chief Scientific Officer bullish in America.
They will focus on Blue Sky innovation, and discovery research, which we hope will help us leap from forward on some of our more cutting edge research project.
Such as new capture which our team has been very active on over the past few months as well so watch this space.
I'm sure that you will agree that we have an incredible amount of existing and new activities underway.
And so to support the runway needed for the new NHL clinical study net study, including Koby 19 opening just over one of the barge rig expansion and of course, the launch of our initial nuclear.
You bet product, we filed a take down of our existing shopper destruction type and conducted at the market equity offering ATM.
Open up from an aggregate of $25 million in shares of common stock to be sold periodically in the future.
Oppenheimer.
And Cantor Fitzgerald will act as our sales agents under the ATM.
The object for this new ATM in contrast to our existing ATM is to include more institutional investors over the life of the offering.
As you may be aware from our filings with the FCC our existing ATM has been in existence in September 2019, and we plan to utilize the available balance under the offering price of the new ATM.
And so to the future.
I'd like to reiterate our vision and what makes us so excited with our progress and us bye.
Pollution isn't Epithetic company focused on advancing the side of EPS, Derek and exploiting these advances in human and animal health.
This has been on mission since our founding and is coming to fruition with our new platform at the very heart of epigenetics.
We believe strongly in the last decade of work abolition without ever expanding team in epigenetics puts us in an extremely strong position with our expansive IP portfolio to be a significant player in this very key failed.
Overall on so many fronts with our ever growing theme and IP I'm delighted with the progress we are making and I'm excited by the momentum we have developed in the EPS XP or indeed.
Indeed, a whole team is incredibly excited by the company's future opportunities.
We aim to report through the end of this year and beyond into next year, several key milestones, including most excitingly the launch of our new EBIT screen debt.
We will focus on driving revenue in the coming quarters, where possible during the pandemic in four key areas that product.
Disease monitoring tests through net Toasters for example, COVID-19, using our new production facility to drive reagent sales and licensing of our technology for others to commercialize.
Hi, along with the rest of the board and indeed, the whole company reported to sharing the results of case studies over the coming months and years with our optimized platform.
Despite the pandemic 2020 is proving to be on most exciting again, thanks to our fantastic hardworking team.
Thanks for joining the call today I very much much appreciated given the busy earnings growth season, and the pandemic.
We're happy now to take questions operator.
Thanks, good job.
The short answer session.
Right we place from the question queue. Please press star one on your telephone keypad a confirmation.
Yeah.
You May press star true if he'd like true question probably Q.
Spencer using speaker equipment, maybe necessary to pick up your handset before price.
One moment, please while we poll for questions.
Our first question today is coming from Jason Mccarthy from Maxim Group. Your line is live.
Hey, guys, Yes question.
Good morning.
So on.
Yes.
Like.
Yeah.
The NPU studies, you mentioned that you completed 12 discovery grade assays on then to use subjects in both colorectal and lung cancer.
That's great how old dataset and should we expect to see any of that data in the near future and also are these on a plate or the beach format.
Yes.
Yes, you expect us even on the short term and very good at present on the converts is so that's in a few months in January for the long.
And then when the conference comes around and these are just subsets of the original population. So it's not the final trial, but its fantastic to get from progress during the pandemic on them. Unlike the trial in the U.S. So yes, there on the flights so as any.
Richard on the plate to now on on the magnetic base, we started with one switched over to the boat so.
A little bit on the price initially and then everything else on the beach and yes, I will be presenting that as soon as we can the eager to present them at conferences.
So it will be the belong in January in as soon as we can on the call revenue side is from.
Yes.
Thank you and then.
So I wanted to ask about the.
Kind of that data in the canines since the Nucleosomes are essentially at the same test.
Would you expect to see a similar result that you saw on dogs in the large scale human trial.
And on actually yes.
Be the same using it.
London test in at risk patients, who may not warrant a biopsy.
Yes. So the short answer is it's been remarkable the free analytics and the process has been almost exactly the same and the dogs actually the kids, we sent over whether human kits.
Thank you true CE Mark for the for the blood cancers. So yes, it's been remarkably similar as you source superb results in the animal space 97 to 97 AG sales for the two accounts is we're in the high it's invite each for the blood cancers.
And judgment on on perhaps you could go through the use of what they would be used but yes. I think it is something we'd be given to a lot of people not just those Jason you want to give a quick description of who would Uh huh.
Good day, the market being for the NHL blood test.
Yes, Hi, this is Jason.
Yeah, absolutely. So you know camera talked little bit about the prevalence of NHL just in general on that you asked mentioned that there's approximately 77000.
New diagnosis made every year.
But the the tricky thing about making a diagnosis.
All that is that the symptoms often they make.
Sometimes a very common every day illnesses.
Yes, routine interactions and auto immune disease or things of that nature. So the deep deep deep.
Symptoms patients present with are very calm and every day.
He had a patient chain by by primary care physicians were the most.
Coalesced achieve quite that you'll see that paper it take things of that nature. So.
Even though there are 77000 net cases diagnosed in the U.S. every every year the market there are patients who present with symptoms.
That could be NHL is much much larger.
And what are the most common she complaints from Edison Odyssey.
Okay. Thanks, So basically thanks that was actually one of the real important things, which we drove EPS why we're driving NHL three now so because of we can do it through a five 10-K, because it's not a screening test, it's not going to be given to everybody.
Hi, Joe can be actually quite young when you get the council. So it's kind of in between it is symptomatic people, but it's a much more broadly from dramatic as Jason said things, which could be pretty much anybody. So we don't know what the market size is going to be and that's something we'll work on ensuring the trial on work it out, but I think very much like the EBIT space.
If if we showed good data I think it's something which a lot of doctors wouldn't abusing him knows quite non specific symptoms and then the market could easily be in the millions of tests per year and nothing we charge a very similar amounts to what we do in the vet space on a very similar margin. So the addressable market is certainly in the hundreds of millions or billions of dollars a year.
What we get out of it would depend on of course will obviously on results from the trial on the rollout and everything else, but it's by no means a micro markets and it's in a very good space for the company because you don't have to do a large pmeight study lucky colorectal but.
But it's still a very very large addressable market. So I think if we can show good data it could be an excellent products and really put us on the map in the west.
And timing wise obviously.
First read out we hope to be the end of next year. So it could well be a 2022 story when we have an FDA approved products that we could expect to be a very large addressable market. So time will tell but we're very encouraged by what we can see so far.
And then I.
If you don't mind on that.
GAAP net hosted by.
No the pandemic society, because even after the code pandemic cobot likely to remain with us for some time, probably a smaller scale, but how would this product be applied in patients who do get it or for other disease like influenza, whether it be largely patients who have severe cases English on it.
Jeremy on whether they're progressing the critical.
Could you on cubit more declines.
Yes, very good question. So obviously, we got into this market net have been sort of on the cutting edge on the last few years and then they're much better understood now obviously with the pandemic there's been a huge amount of focus back on them. So during the cobot endemic the main use would be for it from the choices test we're busy site monitoring disease.
Progression you come into hospital.
We've shown from the data we presented that people with severe cold, which I have very very high levels of net in the blood measured by right. They are people, who are sick, but not very sick have medium levels and people with low level over door asymptomatic have low levels. So it can monitors getting progression we're seeing how good it is as the.
Prognostic in long detailed on samples, which will have data on very soon.
And I think yes, I think it is going to progress probably for at least a few more years, while we work through its true, but the body's immune response then the choices is.
The driver in sepsis as well in sepsis is the biggest killer in hospitals and its something which is really tricky for physicians because it's very hard to know that it's actually are underway. If you will.
So we're working on on trials now for Covidien influenza and I think obviously influence has been with us from millennium. So I think that's obviously going to continue cobot I think will continue for a bit longer but the validity of Infosys test stretches way beyond even just COVID-19ien influenza into things like sepsis, we've spoken to a lot of groups that have therapies underway.
Free for sepsis prototypes, just from sepsis cobot influenza and they all say the same thing there's absolutely no. Good companion diagnostic for the treatments, it's very hard to treat them on if you don't know if it's working well not be on some observations there.
There are some markets.
But they don't doesn't work well so we've had a lot of interest from groups to see if we can be a companion diagnostic so all of those would be multiple tests on the same person. So the potential market is absolutely huge and I think if we can prove any validity in influenza as with cobot, it's a massive on going market and of course EPS. This would just.
Be huge because there is nothing out there, which can really monitored the progression already tell you that it's true that building up on happening in.
And we expect a lot of data on that in the next six months, because we have a slight from now.
It's a very very similar to the assays, we have in a few different things weve developed so it's something which I'm were up and ready. If you will we can launch things very quickly now taking a lot of time to perfect platform, but now we couldn't be happier that it looks very useful in animals, a range of animals humans cancers and things is what is the choices.
So very good very good a year ahead of US I think and I think that prices will be a big part of us going forward and we'll have a lot more data on the short term I, we've created a new small division within the company to focus on the choices on the trials on the marketing side and expect to see a lot more data sales and we have very big expectations, what does it look like.
All right. Thanks Cameron.
Thank you have a good day.
Take a next question today is coming from Kyle makes him from Cantor Fitzgerald. Your line is alive.
Hi, Thanks, so much for taking the questions. Congrats on all the great progress here just wanted to jump just straight into the debt cancer screening addressable market camera and that was a great overview of the.
Cash market here on the $20 million I think is that what.
What kind of penetration are you expecting kind of see like early on maybe a year or two post launch on you've got to get to that point and you're kind of on site here, yes, ultimately like what's that.
Just on just one I want to get one more piece any income for the a question on this ultimately like how long you think it'll take to get to maybe mid single digit penetration the 10% or so would be really incredible, but you mentioned like him nearly that test per year, and so I want to understand how that electoral bands to get there and obviously its super early but if you could answer any of those questions for his comments.
On the different that variable.
Be super helpful. Thanks, a lot cash.
Yes, that's the million no maybe billion dollar question, we don't really know.
What that curve looks like because this is really something I mean very unique very new cancer.
Cancer screening in the U.S. is not really common in dogs purely because there isn't a test at a very high percentage of dogs go to debt every year in the U.S.
70% to 80% so.
The obvious addressable early market is the 20 odd million dogs, who geriatric, meaning over seven years old.
So and then it probably had a few million more dogs, who are high risk.
Also you probably looked at her presentation net therapy monitoring is also a part of the solution I think going forward.
So where it to zero today I.
I think that the general market as if at least I think 10 to 20 percentage addressable market, which would be two to 3 million dogs now what are the kind of looks like is that going to take two years or three or five it's very hard to tell we.
We are doing a lot of aggressive marketing on the on the good news in this population. Unlike the cancer marketing humans is there is only about just over thousand veterinary oncologists in the U.S.. So I think a large percentage of those will know who we are in the next six months.
Well, starting with Texas, because it's a very good discrete market of about 5000 investing.
We laid off the majority have been trying to Texas I am so.
There is quite a good.
Oh I think work if you will between all of those people so I think.
I think we can get a low very.
Large number of debt in Texas, knowing who we are so were attacking that if you're on the top three oncologists through the lunch and learns to key opinion leaders and they are all very positive and then were going invests in Texas. The first 5000.
And were doing a beta launch so were making the product available and then you're going from the marketing price is now which would obviously begun but then don't forget that's just just one lab on we intend to roll out a wide range of labs was suspended their own marketing. We've already started work in Asia are Dr. clay has conducted some groups.
So we would expect to get from sales in the first half of the year in Asia as well and then we'll of course, we've got a sales person starting in December 1st in Europe, the growth to start the European process.
So the short answer is it's really hard to gauge what that curve looks like but I think we have a fantastic test we have fantastic partners is 100% of laid out there from a test. This is a very very common cancer in dogs.
The price point, we're at same free very something which isn't going to be a big problem in the United States on there is always the temptation to try and charge a really large amount, but our results has always been to keep it affordable.
But to give it our accuracy I think where we are.
It is very achievable and were on a very good margins anyway. So I think it works for everyone. So we have the first order from Texas.
Texas on emanate from indicative quite for the first.
$370000 for the kids. So that's you start im not sure how long, it's going to take them to go through that but yeah, it's kicking off but it's really hard to say exactly what that looks like but we're very bullish.
Got it and that was really helpful. Thanks, a lot I appreciate the color on the sales and marketing strategy as well I guess, just turning to be on the bus assay and the channel.
Yes can you just kind of walk through the clinical and regulatory pathway for that I know you mentioned the trials and it could take 22 months, you're working with the CRL pipe.
First of all has the trial began enrollment yet I wasn't quite clear on that it or when could that start I guess on then what milestones endpoints benchmarks are you looking for free and that that first five 10-K pretty obviously al and.
I guess I'm on the day medical background here on the on the line maybe that could be helpful. Yes, Jason [laughter]. Good good idea that Jason Joe to answer your questions. Please.
Yeah, Yeah sure. So the the trial has a big on enrollment.
They were still on the startup phases with IR be approvals and.
Yes protocol drafting and things like that so it's not began enrollment that should begin.
Sometime in the following quarters, hopefully sooner rather than later.
But the strategy greater free strategy for the trial is to begin the trial on afterwards.
Enrolled about 20% of total patients that should probably be in the.
35% to 40% the.
The total of diffuse large b cell lymphomas that need to be and relative complete the study and once we have about a third of therapy sarge be sales, we will go to the FDA at a pre submission meeting.
And at that time, we'll present.
The interim data from this trial will present, all the supporting evidence we have from all of our outside the U.S. trials and I'll be retrospective studies that we've done and we'll at the FDA to grant.
Grant us approval for the five 10-K, what sufficient numbers of the diffuse large b cell had been bad So and then our hope is that we get.
The diffuse large b cell fighting K first.
Then at that point, we'll use the same test and the same trial.
Ticket affordable on the subsequent less.
Less prevalent subtype says they accrue statistically significant numbers and and pre submission meetings accordingly, as the trial progresses and gets nearer to the end.
Okay excellent that's great. That's your question Scott, Yes. Thank you.
That's great Jason.
And that can protect so actually Cameron assuming you guys do close debt silver one acquisition in the near term here could just help us think about the ramp and reagent revenue in our next year in 2022, I guess I know I know, it's Scott I just would appreciate the color there and just given the size of the facility like what do you estimate is like the biggest run rate be agent revenue operating opportunity associated with silver.
Once again I know, it's tough, but you must know like based on the size. What you know what the capacity candidates I just anything there would be helpful. Thanks a lot.
Yes.
Yes, we're looking at we're working through that now as well and its a 10000 square feet and actually a very small footprint can actually make a huge amount of products because the two key components the antibodies on the controls.
So reach out for 'em about three to 3 million a gram and he can make a low the grand Siena in a small room. So it's not a capacity issue. It just comes down to what the market is so of course, the first day.
Use for the old will be for our on products.
Now we bought Optima now bullish in Germany, we have the ability to make the controls as well as.
On bringing in house, the making the antibodies and again that goes down about 95% from the retail costs to a buying those components. So that's a huge saper from more than just the revenue. It it obviously, bringing down the cost of goods borrowed on a very good margin that will hopefully increase the margin. So there's a lot of things going on there number one make our products cheaper so that we can make a very good.
Imagine, that's something which will be doing by about the middle of next year what is certified.
We're also going to have a contract research organization now we have over a dozen different nutrisystem assays on the base, we expect to get incoming Paypal. One revenue. We had last year was from names, where we had spent 17000 euros from running a small number of samples. So it can be people that want to set up a lab and set up on machine to run a price.
Paula mucosa of assays that can be a good revenue from that point of view and then the rages themselves. If we're making them at wholesale on selling a brito you Cook times and antibodies become very profitable as well and we think as you probably know there is a huge amount of activity in the space you grow both Reight point 1 billion in Kansas City from multiple billions.
There is a real shift to the epigenetic side now even with the pharma companies. We think the demand for good actually bodies epigenetic profiling and Nutri Force and also on you captured program, which we didn't talk about on today, but is very much underway is it going to be quite considerable but I don't think it's going to be a lot in the first half of next year, we will focus.
On on making a Ryan obviously borrowing launches we want to make sure that we can make the kid ourselves and bring down the price for our products.
I would expect the first half of next year for us to be sort of bidding in getting certifications. The second half of the year, we will start to release guidance on what we think the CRM market, the new console market could be but.
But on we're not we're trying to be conservative and really know what that answer is before we give anything but I think it is going to be something which will become very very meaningful as epigenetics become very important and I think that the huge amount of work. We've now done to make our platform really robust great ingredients will really pay off in reagent sales as well as.
Alright products, but also don't forget when we license to where when speaking to groups in China and focusing on others. We don't expect this to license. We also want to sell the key reagents to supply the Chinese market with nucleus owns and controls the people running our test there was well could be a from a massive market as well, but yes, no guidance now, but we'll certainly Brazil.
On to that once the labs fully up operational on we've done the numbers ourselves on a comfortable but that's going to be anything meaningful is not going to be into a backup from next year, given the ramp up needed in the facility.
Okay. That's awesome. Thank you and then maybe just one last one for me I he actually kind of touched on this in your on your answer there on can you just kind of update us on remind us where you kind of Sam epigenetic tool box on that new capture liquid biopsy platform.
It's really interesting on.
Eric on your business and I know it's on.
Maybe on the more longer term, obviously from a commercial standpoint, just curious if you could just tell us what we should be expecting maybe in 2021 and maybe beyond thanks.
Yes, I call absolutely were unbelievably happy it's actually makes us on the severity on them.
Very excited is the true oxide the capture and we're doing a lot of work on the mass spectrometry on the sequencing.
Actually you may have noticed there was a small EBIT in my presentation. We've opened a small laboratory in California, where dr., Jerry will have an assistant and solid growth slowly through the year. So that we have a team just focusing on the capture side.
As you know southern California is the key to a lot of this area, that's where illuminas headquarters and a lot of other companies. So we thought having a footprint that really helps us to become known in this space. So.
I would expect to see we have gone back like we have any in to make sure that on the platform. We got some very good results as you probably saw and we presented last quarter, but I think to launch a product we're doing exactly what we did on the beta and the plate side Weve, just making sure everything's fully optimized because when it's not optimized you get very good results and then things to change around.
As we used to get in what we did in on on a basic formats. So we now just optimizing the platform fully so I'd expect that to be a lot more news on that in quarter, one quarter two as we go through that process because.
Because we've now optimized the the other platforms it should be quite quick and easy compared to what it used to be like to optimize this platform, but I think we should have a lot of news in the first half of next year now on second all the way through next year as we optimize the platform and just as a reminder, what we're doing is separating loan from short nucleosomes.
On the short have been shown to be where the cancer is and short DNA and domestic from a tree. We got some weve identified quite a few new biomarkers from mass spectrometry as well as.
Potentially that could be a product and so from the east to come. So we're very keen to be pushing the products. We are but we're also expanding its moving out of rapid on this blue Sky work, which I'm very much feeds off our basic work. So expect to see a lot in the next few quarters on that as well on something which could well lead to a product.
Probably in the 2022 space and if we can achieve what we are it will be a really important part of the sequencing world. If we can concentrate the way we were hoping to as a product.
Perfect Yeah, definitely an exciting time in the cancer screening.
Good strength.
On really appreciate your comments on answer all the questions and on the <unk>.
Good to hear on weren't feature here congrats on progress again, thanks a lot.
Thank you go on.
Thank you. Our next question is coming from Bruce Jackson from Benchmark Company. Your line is now live.
Hi, Thanks for taking my questions.
If we could.
You can see the the upcoming abstract presentation at the cell C. Is are these can be the same markers that you reported on previously with the the.
The plates and is the day that can be coming off of the b platform side.
So yes, the bid platform, there's a wider range of markets now obviously on the 13, we've done we've progressed some from the plates to the base and then add a lot more based on there. So it's a broader range than we had on the place that'll be fully revealed that on a fill up on that but there is a wide range available now on the on the flights so that'll be presented.
Then and it's it's been a fantastic about on work for the team to get a wide range of assays available on the platform and it's been a great. It's been quite remarkable that Tony is a managed to to collect during the pandemic so difficult winter what true.
Okay. Good and then to be perfectly clear on the FDA strategy for the DS non Hodgkin's lymphoma.
Scott is the debt. This was a denovo five 10-K that you're going after first.
Yes, yes, it will most likely be.
So most likely do another five 10-K, and then with the the ones that follow after that then you're hoping to make the first test the predicate device and then just use like a standard five 10-K process for the remaining tests is that the strategy here.
Yes, you're exactly right.
Okay, Okay, just want to clarify that.
And then with the on the new Kid capture.
Great progress.
Have you gotten any inbound interest from many one on that platform yet it's it's a huge unmet need in terms of analyzing on the cell free DNA circulating tumor DNA.
Given that there's a there's an arms race right now on the space to get the debt assays working properly on this kind of curious to know if you're getting any any interest.
Yes, absolutely we actually we've got a lot of interest in this and a lot of areas certainly becoming attention a lot of people, but I think where we are where we were I guess six months a year ago with the assays and we got some great results, but it's not a product into its very stable and you've really optimize everything fully so we've got very serious on net in the last couple of months.
Dr. Terry is that real leader in the EBIT should experience. We're really glad you came on board and to use the American home Shield Quarterbacking that now we thought it was important to have a separate focus on capture to make sure that it's fully optimized as quickly as we can.
You might have noticed in the Q were also taken on some expert help from Israel on the analysis side to make sure. We really are doing this properly and we're trying to get the best well defined samples we can't on on the to show how well. It works. So yes. The inbound interest I can talk about obviously to investment income comes a bit but.
I think.
We've had before where on the fully optimal optimizing stage to launch a product and as I said is it shouldn't take that long because of the on.
The great work, we've become very experienced at optimizing was platform and it's obviously quite a few of the key components on where you what we use for everything else.
So I'm very exciting and I think they'll be a lot more news on that over the next few quarters, but somewhere in that look the optimization stage now and then when we are ready hopefully we can get some good publications and as you say could be incredibly good true in the epigenetics field and it couldn't possibly be altered the purpose specified with about money being thrown around in the space for that so it's something we.
Again, taking very seriously.
And put some.
Power on to it and some people doing nothing else to make sure that we get it done as quickly as possible and then when we publish it can be something that can be a product very quickly because we've done the homework.
All right.
That's great. That's it from me. Thank you very much. Thanks.
Thanks have a great every day. Thank you. Thank.
Thank you as a reminder, that star one to be placed from the question queue.
Next question is coming from.
Jason Kolbert from gross.
Loss from James Your line is not a lot.
Hi, guys, Great progress I, just would like to focus in on new Q at the veterinarian level I mean, I think the real incentive to achieve market penetration for the VAT says both what is the competitive landscape. So what is this replacing at the veterinary level and how much revenue.
Could this contribute in terms of margin to the veterinary to the veterinarian himself because clearly you know a lot of veterinarians are doing in house diagnostics in house testing and so they're very very strategic about what things they adopt and how.
It will change the profitability of their practice themselves. So if you could address those issues you know it helps us understand.
The rate of market penetration in the future, it's kind of a little bit of a follow up on the direction that a doctor Accoona vetch, what's going on in the first few questions that you asked when you turned it over to Jim. Thanks.
Hi, Jamie Yes, very good questions and that's something obviously, we spent a lot of time working through.
Dr. Wilson rebels, who we can perhaps sort of a call if it could answered a lot more debt, but I can but I understand it reasonably well given where we are so currently it's there's no diagnostic blood tests, it's not that similar to humans and things like scanning is much more difficult with the dog because obviously I'm not sure. If you have a dog, but they are very tough to keep still from a few minutes from its getting machine.
So you have to lease the size from and a dog cannot speak obviously on continued having problems, which is actually one of the reasons I think there's the vet market has gone up so much during the pandemic is people home with their dogs and notice the much more debt home all day every day and that their problems. So they are taking a little bit more often so the competitive.
Okay basically is completely bereft of anything good in the screening sets for the cancers. So unlike the human field, where there are quite a few good competition areas.
Competition, and the blood cancers, a much more prevalent in dogs and humans and thats the blood cancers, where we've had fantastic results just with a very very simple product and outside.
In regards to the the doctors in different ways. It can be used at the moment. It's a lab test we're running it on flights on weekend, we plan on on progressing into the base sometime next year and then it can be a much from higher throughputs on both where we are the base the plates a fine and we're also working on a point of care, which would be a fingerprint.
Well I guess on the docks price up a pull brick a blood I'm sorry, <unk> point of care was also very post possible for the best price as you said now I'm currently the bets are very used to selling on blood to the big oncology centers like Texas item on the big Big centers on the GE, Our lab in Texas, and the seven big ones in the U.S.
And are there I think I think when I asked the jail and its potential potentially possible for 14000 beds to send it to the Texas item net relationships, we think would actually descended from them if they want to.
And we've also been very careful not to gouge, everyone. We were making a very fair profit for US we think we're.
Selling it for roughly $45 for the test the GE our lab does all the work from running the sample they look to be at about $122, but there's still a nice margin for the vet as well different net charge right different amounts, but we'd expect a you know if it's somewhere in the in the high below 100% 70 to 50% to 70% margin debt.
Charge around.
It said in the 160 to $200 range, So I think and some bets charge a lot more depending on where you are so it's something which the net I think will be encouraged to do it because the accuracy of the tests utility is a very very good I think can help them a lot to try and sort through who has cancer, but also.
Shouldn't they should make a little bit of money from it as well, which obviously everyone likes to do so I think all of that should make it a very good test flow for profitability in for the drive and we're doing a lot of marketing I think a large number of it and the rest will know about the test in the coming months, it's a reasonably large community, but originally small community in his day rate a certain number of journals and other.
Is any of this led to several thousand oncologist in the space. So I think it's something certainly a very large number of EPS will know about us a very large number of EPS could order the test if they want but thats also the reason when we were launching on one facility then to get from sort of a zone of people who know about it and then then broaden it out to the other big at the other big centers.
Then they also start marketing it they.
They will have email list of thousands of doctors they work with who are used to ordering free them. So.
It is very tough to know what the take up sort of EBITDA I think it's it's an excellent product we have excellent partners as the relayed we've incentivized ever along the way. So I guess time will tell but I think like anything we could be surprised on the upside of how well get stuck to this and very profitable I mean, the addressable market is more.
A couple billion dollars. If you if you take 22 million dogs. It's a 200 dollar test our fixed somebody's even that section of the addressable markets over billion from just from what we are and because we don't have a sales force needed because it through the vets and through that the labs with only the lab, we don't need a big sales force. So almost 80% goes straight to the bottom line. So.
It's very good price.
Potentially we'll find out.
Does it make sense to kind of explore contracting with some consolidated veterinary practices. For example, like veterinary centers of America, and other kind of such entities to establish proof of concept where.
You get it contracted at that level. Once you are instantly and 50 to 100 practices.
Absolutely Mike has discussed in this call because obviously on it we're not public with all yet, but we're looking at a lot of options. So this is the highest margin from $45 a test, but if someone can sell a large number of tests. We can certainly be part of that obviously, there's a there's two big companies involved in the space Mountain Nordics, which tend to control low to the the area as well as.
As you said a lot of consolidation going on I think on to get to if we do get into the millions or even hopefully into the high millions of numbers of tests per year, which I think is possible. If it goes moderately well we're going to have to use different groups like that to not just proof of concept, but also to rollout but.
Yeah, we're very flexible where our burn rate isn't right lots of all this revenue is incredibly meaningful.
So and this is just one we've also been in discussions with a balance sheet potential products in the cat space as well as they don't have the same regular tests of dogs as dogs day, but that's supposed to be changing.
So I think we'll be very flexible and moved very adaptable not just on on operating in the labs, but also potentially point of care, which got adopted sort of debt could do in their own a low end facility. So all that to be played pool, but at the moment, we're focusing on making the most successful in Texas.
Again, not a micro market, a seven and a half million dogs in Texas and debt.
On the 5000 bets, but I think it'll be a very large percentage of those who know who we are by the first quarter and then we'll have a good indication of how it's going on there.
Terrific. Thanks for the update.
Thank you thanks your target.
Our next question today is coming from Steven Ralston from Zacks. Your line is on life.
Hello, Thank you for taking my questions.
I'd like to concentrate on the topline.
You mentioned that the first order of for the new Q that product.
It was roughly $370000, which I calculate to be that 8000 tests.
When we record those sales on the income statement.
Sorry, just to be clear that was the indicative quite how these big universities work, it's not the first order what they do is day give the osprey quite for a.
Larger amount on their ordering right now so that it maintains the price and also go through a review system to make sure University purchasing make sure. There's no fraud and went on the low related to the person buying it will lose kind of thing. So the first order would be we'd expect that order sort of a month at a time so that will be reported in the next next following the 370000 was just the first.
Indicative quite of what the debt they are hiring one person to run the test in the first instance in that one lab and Thats about what they can run in one in one years at four or five flights a week, but that would obviously ramp up if the demand is higher and then would go through a lot of different universities and other other chains. So we would be reported net revenue.
It will be it will not be 370000 Boes a day in right now that's the indicative quite for a longer period of time, which I off quarter, but it shows a very serious they're hiring at a technician to run it just this test and Derisking as we are to really get it moving so we've got the we'll have the first order, which would be as I said the first.
Couple of weeks, the first month supply and then they just keep chipping away at that indicative quite until it's finished but its more its a mechanism for them to maintain price and make sure that.
On this everything is fully reported properly within their organization.
Thank you and looking at the silver one facility.
You mentioned that you're the first half of 2021 will be the set up of the facility and you'd expect to be able to do some contract lab services in the second half.
When would you start resumed shipping test kits.
[laughter], that's probably good question, we could turn I'll get back from were still on the prices of working Hell on certification will take and when so the cake and some key components you can actually do much quicker than that depending on who they are what they are for with the lift for research use or any sort of clinical use those.
Those are quite invoke questions and we're working through it now we're also working how much resource on extra people in this situation, but I would say by the second on for next year. It should be at a level, where we can do a very large number of things. There now the fit out is pretty close to being finished so we.
We will be doing some things in there from into this year and then on the ramp up through next year, but that's probably a question I can get offline from can turn on and his schedule as to what that looks like and you probably have a very good idea that once we fully resorts that facility, but the fit out will be finished index few weeks and.
We'll start doing work on the very sales, but the process from now by the end of next year, we will be producing around flights are on antibodies running controls the contract research facility. The curve from that now till then it's something which I guess, we'll have to really from a mix next quarter, but he's he's really running on the wall with very low. It was also this because I think from what what I was saying to Jason.
I think we might get surprised on the upside you don't get surprised on the downside with sales, but I want to be ready that if that if there is demand picks up quickly for the dog tests or the Cobra test on the doses on the blood cancers that we can really meet demand whether on facility, where we make a much better margin. So we're taking it's a really really carefully but really quickly is.
So starting.
Starting now and finished by the end of next year, but we'll be doing the first thing definitely this year in the lab.
Thank you for taking my questions. Thank.
Thank you Stephen.
Thank you we reported about a question answer session on like to turn the floor back over to management for any further or closing comments.
Thanks, everyone for being on the call is extremely exciting time for us and then I'd like to thank the entire team for working during the pandemic to make sure. We could launch on first products, it's something which we're extremely excited about and I think it could well be the first of many many products where the fantastic space, we have a fantastic team and a platform and intellectual property.
He is just fantastic. So I think 2020 one's going to be great. Yet so I'm really looking forward to reporting our actual earnings on the earnings call. The next call for the Cape. Thank you very much free time.
Thank you that does conclude today's teleconference. You may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.