Q1 2023 VolitionRx Limited Earnings Call

Good morning that essentially I mean, thank you for standing by.

All countries only shouldn't Rx Limited's first culture of change you're twenty-three earnings conference call.

During todays presentation, all parties will be in listen only mode.

Following the presentation the countries the conference call will be opened for questions.

If you have a question for you, especially the stocky Oh, that's probably the number one how do your touchtone phone.

If you'd like to withdraw your question. Please press the star key follow up asking them to choose.

If you are using speaker equipment it may be necessary.

The handset before making your selection.

This country's eastern recorded today many of you live in 'twenty two 'twenty three.

Now I'd like to turn the conference as it to Scott Powell Executive Vice President of Investor Relations.

Thank you.

Welcome everyone to todays earnings conference call, we're bullish in Rx limited.

This call will cover Volitions financial and operating results for the first quarter of 2023.

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 group Chief Executive Officer Dr.

Dr. Tom Vitara, Chief Executive Officer of our Volition Veterinary subsidiary and Mr. Terex Hughes Group 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 are 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.

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 any obligation to update any forward looking statements made during the course of this call.

I would now like to turn the call over to our President and Chief Executive Officer, Mr. Cameron Reynolds Kevin.

Yes.

Thanks, Scott and thank you everyone for joining Volitions first quarter 'twenty two 'twenty three earnings call. Today, we really appreciate your time given this is a busy earnings call season.

We will commence the coal where the financial report from our group Chief Financial Officer, Tariq Hughes before moving onto Dr. Tom Butera, Chief Executive Officer abolition veterinary for an update on the rollout of <unk> by our global supply and licensing agreements.

And finally I'll provide an update on the great progress the team have been making with regards to another of our key pillars.

Yes.

And third the highlights from the first quarter.

Without further Ado I'll hand across to Terri for the financial report.

Eric.

Thanks, very much Cameron 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 March 31st 2023.

We ended the quarter with cash and cash equivalents of approximately $10 million compared with $10 $9 million at the end of 2022.

In February we received approximately $8 million in net proceeds from a public offering of our common stock before deducting offering expenses payable by the company.

We expect to receive a further $13 million in milestone payments from Heska Corporation, and additional funding, including non diluted funding from three Belgian agencies in the coming months.

Net cash used in operating activities during the quarter was approximately $8 $7 billion and reflected the ramp up in our U S clinical trial activities.

Moving onto the P&L.

While we continue to manage our costs carefully as expected. The overall level of expenditure has increased in comparison to the first quarter of 2022.

Total operating expenses for the quarter with $9 $2 million compared to $7.8 million for the first quarter of 2022.

This increase was primarily the result of increased expenditure in the research and development function, mainly reflecting the cost of our U S clinical trials, which added $1.1 million to the cost in the quarter.

Revenue for the new cube that cancer tests grew by 381% to $124000, reflecting sales of the reference kits through our agreements with both IDEXX and Heska.

Total revenue reported in the first quarter of 2023 was approximately $150000 versus $114000 for the first quarter of the prior year.

Net loss for the quarter was $8 $9 million compared to $7.7 million for the three months ended March 31st 2022.

Gain reflecting the increased cost of our U S clinical trial activities.

As we discussed on the previous call and plan to cover in some detail without our capital markets event later today.

Given the product range, we expect we can develop from a proprietary nucleosome X platform. We believe our addressable markets are very significant most notably in the short term with new Cuvette and Youku nets, and we look forward to updating you in due course on our progress in accessing these opportunities.

And with that I'm delighted to handover to Doctor, Tom Butera, who will provide further detail regarding the exciting first quarter for volition veterinary team.

Tom.

Thanks, very much Terry and good morning, everybody.

The first quarter of 2023 has been pivotal for volition.

Our new Cuvette cancer test is now available through IDEXX as reference lab network.

A global leader in Pet health care innovation.

IDEXX launched our test in the U S. At the worlds largest veterinary conference V. M X earlier this year and is now looking to roll it out to other countries. This is an incredible step forward for us as we continue to commercialize our transformational new cube technology with the companion animal health care sector.

Our test is also now available as the Heska Ncube canine cancer screen and monitor test to Heska is veterinary diagnostics laboratory and for preorder at the point of care.

Available in the coming months it will be the first time that our new <unk> technology will be used outside of central lives laboratory testing and will provide veterinarians with rapid accurate low cost and easy to use onsite testing and the veterinary clinic to support their clinical decision making.

We are absolutely thrilled to be working with IDEXX and heska to global industry leaders and I could not be happier that the new Q vet cancer test is now available in the mainstream mass market in the United States.

There are approximately 84 million pet dogs in the United States and about 50% of U S households, bring their dog to the vet annually for a health exam.

We believe that this provides a significant opportunity for us to introduce the new Q vet cancer tests, as an accessible and affordable screen for senior dogs and at risk breeds to aid in early detection and improve outcomes.

It is a huge step forward and fantastic news for veterinarians pet owners and their pets.

I'm also happy to report that Professor Wilson robust peer reviewed paper on the use of the new Q vet cancer test for monitoring the disease was published yesterday in plus one.

The publishing of this monitoring paper achieved another very important milestone and we believe has the potential to open up a considerable new market for our existing ncube that cancer test.

As discussed in the paper findings from the study showed that nuclear zone concentrations can be a useful tool for treatment monitoring and disease progression and dogs with hemolytic cancers, such as lymphoma.

While veterinarians can already use our new cuvette cancer test as a reliable and affordable screening tool for dogs with increased risk of developing cancer.

This new research demonstrates another potentially significant utility of the test.

As an innovative monitoring tool for canine lymphoma management pre.

Providing actionable information and helping guide treatment decisions.

You can hear more about the monitoring study and findings from Professor Wilson robust at our capital markets Day event later this afternoon.

In wrapping up and looking ahead, we continue to pursue commercial deals at a global regional and local level.

To ensure a global distribution of the new Q vet cancer test.

We are also continuing to develop our feline product and extend our new Q platform into emergency medicine, specifically looking at no ptosis.

So another busy and exciting time ahead for sure and I look forward to providing you with further updates throughout the year.

And with that I'll pass back to Cameron Reynolds our group CEO .

Cameron.

Thanks, Tom and thank you Terry for those updates.

Right progress indeed, I'm delighted with the progress we have made with NICU vet, a fundamental part of the business with clear potential to generate significant revenue for the company. Our goal is to make canine cancer screening and monitoring accessible worldwide and I'm delighted that we're moving ever closer to realizing our mission.

To wrap up the call today by updating you on another key product pillar units.

Our team continues to work diligently to bring new units to market.

We are not undertaking large scale finding study across multiple sites in the U S to determine clinical utility in sepsis and support our application to the Fda's breakthrough device program. We strongly believe the Newquay nets test is a groundbreaking diagnostic aid that clinicians can use.

To detect the diseases associated with Nitto says.

Just last week, we held a webinar led by Doctor, Andy Retina, and intensive care consultant attending with extensive experience in managing sepsis in patients the.

The webinar was well attended and focused on the burden of sepsis and challenges of treatment the fundamental role <unk> plays in sepsis.

And the need for a solution like NICU nets.

It's available to watch now on our website.

Finally, and as another highlight of the quarter last month, we also sponsored a genome web webinar titled the long journey of easy at Heights, two inhibitors from imperfect tools to precision medicine.

It was led by Doctor Francesco Correa Director of research at the opening University and Doctor Francesca Leilani Medical oncologist at the University of Pisa. The session focused on he said H two inhibitors in cancer therapy, and the development of noninvasive diagnostic tools.

It also gave us the opportunity to show how volition works effectively with organizations like the open University through our innovative new you discover program again, the webinar was well attended with a very engaged audience and representation across industry and academia.

You can also watch it back on demand by visiting the genome web website.

We've also made strong progress in both our new <unk> cancer and you can capture pillows.

And I will update on those in the coming quarters to sum up I'm very proud of the progress, we're making as a team of volition.

After many years of developing and optimizing your view, which we believe is a groundbreaking nucleosome quantification technology.

We are now commercializing the platform and generating revenue.

It is a hugely exciting time for us at the company and powered by New Cube, we look forward to sharing further updates and milestones with you over the coming quarters.

We also hope you will be able to join us for our nuclear capital markets day event later today.

Where we will be joined by Doctor, Andrew Retina, Professor Wilson rivals and Doctor Sue at anytime in drawing this earnings call to a close I'd like to thank you for joining on the call today.

We very much appreciate it we're happy to take your questions.

Operator.

Thank you very much that people.

We will now be conducting a question and answer session. As a reminder, if you have a question. Please press <unk>.

On the topic number one on you touched on churn.

If you talk to it's really question piece.

Keith.

Yeah.

Keith No Tvs using speaker equipment piece.

Before making alternations.

The first question comes from Bruce Jackson.

<unk> company.

Yeah.

Good morning, and thank you for taking my questions.

On the vet side I know that you sell the test to the the vet labs and that the doctors order soft there do you have any visibility or does do they provide you with any insight into the ordering patterns of the physicians and do you happen to have any indication.

As to the repeat ordering trends.

Yeah.

Hi, Bruce Good morning. Thanks for the question, we don't have any formal data coming back from them, but we're in contact with all of our partners on the use of the test and it has been straight across the board they're extremely excited about the reception that the veterinarians are.

Utilizing our test we're in over 45 states in the United States right now and they are thrilled with it they're continuing to collect additional data and are you going to utilize that data for additional launching in the second half of 2023 as well. So we really couldn't be more excited about the.

Positive responses, they're giving us when we acquire.

Okay great.

And then just a quick follow up question on that with the with the lab ordering trends to you who should we think about it as building in sort of a linear fashion here throughout the year or could it potentially be.

That lumpy is the lab's taken orders.

Adjusted according to the end user demand.

Sure.

Yeah, so let.

Let me take that one.

It's a bit difficult to predict.

But we do expect it to be a little bit lumpy.

At this point I'm not sure whether it will.

Take off in a linear fashion exactly.

Because yeah, they will roll it out to a different la.

At different points in time, so you could see more of a.

A step increase as we go through the year.

But yeah, we don't we don't have.

Insight as to when those steps will occur, but we do expect it to increase slightly over the year.

All right.

And of course, there will also be when heska.

So that was as well that'll pick up through the back half of the year as well and we expect them both to be launching in a wide range of countries. Later this year as well so yeah, absolutely a little lumpy at the start but I think it will pick up very strongly through the end of the year and through next year.

Okay. That's.

Thank you Bruce have a great day.

Yeah.

Thank you. The next question comes from Steven Ralston shocks.

Yes.

Good morning.

Good morning, Steven.

Hum.

First of all your R&D line spiked up dramatically in the first quarter here.

37% year over year and 24% sequentially.

You alluded to that it was basically on this $1 $1 million of increased R&D on the U S. Clinical trial activities could you give a little color behind that is that all new Q nets or are there other portions of that and then in addition to that.

In the broad R&D number could you give us an idea if there's something else that spiking up there that's going to give us a better idea on the progression of your other commercialization efforts.

So the increase over last year is mainly due to the clinical trial activities in the U S. A which is focused on net and then particular sepsis.

That's that's the that's the main driver there is a little bit of increase in terms of our centers of excellence that we've been rolling out in Europe again focused on nets in Europe , but the majority of it is driven by the <unk>.

Kris and activity.

In terms of expenses in terms of cash flow.

And we yes, Q2 will be will certainly be lower than Q1, and particularly on the cash flow side why.

I would expect it to be more in line with the last year, probably somewhere in the range of.

Two to $2 5 million on the cash flow rather than what we saw in Q1.

And I think Steven it's probably important just to do a general strategy ominous as well. So obviously, we're incredibly excited would make your bets on the launches.

Theyre going.

Really well for us and it will just continue to pick up we think and we are spending quite heavily on each unit.

Very important product for us and having a human products in the U S. F. D. A approved would also be a fantastic outcome for the company. So we are spending on that but we're also spending some money on the background of epigenetics, we want to stay on the cutting edge of epigenetics and I think that's exactly what we're doing it's a fantastic and growing field. So we have also been doing a bit of back.

<unk> work on the capture side than the human cancer, which you'll probably hear about later this year and next year.

So I think we're keeping our strategy going of really focusing on the revenue and Beth and then nets, but also keeping on the cutting edge of epigenetics. So I think it's a fantastic packaging, what we'll keep doing.

Thank you I have been watching these webinars that you've been putting out I really appreciate it.

Usually don't do this but I'm going to just comment on your Ncube. That's it's what had been our I <unk>.

I can clearly say that within the last year, that's the best Webinar I've seen it was very informative and I appreciate that effort.

Lastly, if you could.

Talk about in the last conference.

Conference call for the quarter fourth quarter, you mentioned that you were that you would share the revenue update on the Heska pre sales of the point of care are you prepared to do that now.

Alright.

I didn't quite catch the question Heska for yourselves.

The Heska pretty says that we don't we're not able to provide an update at this point in time.

We'll probably be able to provide on that next quarter.

Alright, Thank you very much.

And thanks for your kind words, and the webinar I'll pass it on drought communications team. It's something we're very careful to try to do which cause knits I think is a fantastic opportunity, but something which is it takes a little time to understand so we will continue to put resources into communication and it's great to hear it's being appreciated. Thank you.

Thank you, ladies and gentlemen, just to show the remind him go back off the question Youre Welcome to press Star and then one.

The next question comes from Ross Archstone with Cantor Fitzgerald.

Hi, Good morning, everyone, Hi, and congrats on the progress.

So starting off.

When you walk through the IDEXX commercialization plan.

Separately outside of United States, you know what countries are they targeting and then as a follow up how much of a focus in Asia for you guys now for and you keep that.

The stage partnership there and obviously, it's a huge market.

I think you know to this point hasn't really contributed a material revenue.

Yes. Thanks for the question Ross there are collecting a lot of data in preparation right now for launching in the second half of 2023.

They're going to be going into Canada.

K.

There is some consideration for Asia for IDEXX at that point in time, because they have a pretty strong presence in Japan in particular.

So that is all on the on the docket for them in the second half of 2023.

And then your.

Repeat your second question again, so I can address that for you, yes, any update with the stage partnership.

Got it.

And maybe Singapore, I could be wrong, there, but.

It's been commercial I believe for.

Almost a year now and just you know just curious kind of the level of uptake there and focus for the company.

Yeah. The stage partnership has been has been very good. It's also really allowed us to be a launching pad for Asia presence and we're getting a significant amount of interest and discussions right now with other reference labs in the region, both in Southeast Asia and in Asia, and we are in active discussions with several of them at the present time. So it's been.

A real nice access and exposure for us and we're delighted with the continued inquiries, we're having and the discussions we're currently having with other labs.

Okay, great. Thank you for providing that clarity.

And then I realize its a lesser focus on the company, but any update on discover.

I think revenue was down.

In the quarter, So just curious to hear.

The level of resources devoted to generating discover contracts in servicing that business and if it makes sense to do that longer term.

Yes, very good question, so just to recap discover as other people using our technology. So there was a big boost at the start of last year. When we kind of opened it up and went through all the inbound inquiries and close them. So we're extremely happy to have that revenue this quarter last year and it was very significant for us.

And really showed great interest in our platform.

But obviously at the moment discover although it's great to have other people using it and we continue on and there's a few contracts in the pipeline the real focus and what could make it a very successful company in the short term is revenue coming in from Newquay vet and new units. So we are continuing on with it it's not getting a lot of resources, but it is something we are continue.

We need to do and we will have more contracts, but I think obviously, given the terms of vet and nets.

Couldnt swamp anything discover could do but we have had some great partnerships. We're extremely excited with the interest has been shown and we are continuing to work on discover and there will be bone contracts, but it is not our focus at the moment.

Okay makes sense. Thank you for taking my questions.

Thank you have a great day.

Yeah.

Thank you ladies and gents just a final reminder, you cannot close the question he won't stall and then one or two places to asking the question queue.

Ladies and gentlemen, with no set.

My apologies Sir.

That's one.

Thank you, ladies and gentlemen, with no further questions in the question queue. We have reached the end of the question and answer session I would now like to turn the conference over to Kevin Reynolds remarks. Thank you.

Thank you everyone I really appreciate you listening in it's an incredibly exciting time for us.

On the vet side, it's a real honor to be running a company that has a very wide range of products now in launch. So we'll keep you updated all of those and further reminder, we have a webinar. This afternoon. We're all here at the New York Stock Exchange today, and we've got some great key opinion leaders, who are even more excited with us I think about the potential.

For our products, so you'll be hearing from them and from us on other updates. So please either listening live or they'll also be available after and also the webinars we talked about over the last few weeks are also available if you want to listen to Tim from if you've missed them already I think theyre very informative as Stephen pointed out.

And really give a great background into our platform and how we're launching it in how we think we're going to become very successful on the commercial side. This year and next so thank you very much for your time.

Really appreciate it thank you.

Thank you, Sir ladies and gentlemen that concludes today's conference. Thank you for attending and you may now disconnect your lines.

Have a great day.

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