Q3 2023 VolitionRx Ltd Earnings Call

Good morning, ladies and gentlemen, thank you for standing by welcome to Volition Limited third quarter 2023 earnings Conference call.

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

The presentation the conference call will be opened for question.

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Now I'd like to turn 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 Volition Rx limited.

This call will cover Volitions financial and operating results for the third 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 groups Chief Executive Officer Mr.

Mr Terex Hughes group Chief Financial Officer.

Dr. Tom do you Tara Chief Executive Officer of our Volition veterinary subsidiary.

And Dr. Andrew Redder medical consultant to volition.

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 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 group Chief Executive Officer, Mr. Cameron Reynolds, Kevin Thanks, Scott and thank you everyone for joining Volitions third quarter 2023 earnings call today.

We especially appreciate your time given this is a busy earnings call season, we will commence the cool well the financial report from our group Chief Financial Officer, Karen Hughes before moving to Dr. Tom Butera, Our Chief Executive Officer of Volition veterinary for an update on the rollout if I need cuvette cancer test and then.

I'm delighted that Dr. Andy <unk>, who works as a hematologist and intensive care consultants at one of the Uk's, leading hospitals has prerecorded his thoughts on our progress and our NICU nets pillar.

And in particular, the result of our FDA meeting achieving a clear regulatory pathway and I'll say about recent breakthrough early cancer detection method recently presented at ESMO in October.

We'll wrap up with my thoughts and upcoming milestones and discuss our overall strategy going forward.

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

Terry.

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 September 30 of 2023.

From a revenue perspective, we recorded revenue of $165000 for the quarter, a five fold increase over the same period last year.

During the first three quarters of 2023 revenue grew 185% to $531000.

We believe these results demonstrate steady growth, but not yet the ramp in revenues that we anticipate we expect revenues to accelerate as we close out 2023 and into the early parts of 2024 separate additional distributors come online with our new Q vet test and now in UK discover pillar continues its growth.

Year on year revenue growth was primarily driven by thousands of new cube at cancer test, which grew almost fivefold over the nine months period ended September 30th 2023, as compared to the prior year period, reflecting sales of the reference kits, mostly through our agreement with IDEXX, who we are working closely with on that marketing and <unk>.

Pension plans across the U S and into international markets.

Revenue for <unk> discover for the first three quarters of 2023 with $151000, which reflects 38% growth over the comparative period in 2022.

Looking ahead as we've previously stated it is difficult in these early stages of commercialization to provide meaningful revenue guidance, but as both Tom and Cameron will cover in their updates. We are pleased with the progress we are making across a number of our product pillars.

We ended the quarter with cash and cash equivalents at approximately $10.8 million compared to $10 $9 million at the end of 2022 net cash used in operating activities. During the quarter was approximately $8 $4 million and included payments of almost $1 million related to our U S clinical trial activities in sepsis.

Which has since went down due to successful completion of the first phase.

We are working hard to keep our and as low as possible, while we commercialize our range of product and more on that shortly.

Total operating expenses for the quarter were $8 $8 million compared to $8 million for the third quarter of 2022.

This increase was primarily the result of increased research and development expenditures, mainly reflecting the cost of our U S clinical trials, which added $1 $7 million to the P&L costs in the quarter.

Net loss for the quarter with $8 $5 million compared to $7.8 million for the three months ended September 32022.

As I thought and in particular, given the current macroeconomic conditions, we remain committed to castle expenditure and tight budget control and to that end. We have recently completed a rationalization project and identified annualized savings of approximately $2 million, including the reduction in our overall head count.

It is a balance between investing in our product development and launches to ensure revenue growth and preserving precious capital.

This is a balance we are very carefully and thoughtfully trading.

To date, various European funding bodies and in particular Belgian agencies have provided the company with approximately $19 million in non diluted funding in various forms including cash grants or loans on favorable terms.

This cash is held sudden either wholly or impart our purpose built tower and D facility.

They have a manufacturing site silver one in Belgium, our innovation lab in California, the establishment of our volition veterinary subsidiary various R&D programs and most recently our centers of excellence program for new units in Europe.

Subsequent to quarter end, our balloon institutional fund and regional government bodies, if they will do in region of Belgium.

Roof, providing additional funding to the company aggregating approximately $6 million. We are also expecting further amounts from other Belgian agencies to be secured in the first quarter of 2024.

We would like to publicly thank the various government agencies in Belgium for their continued support.

We have also greatly expanded our efforts with respect to seeking non dilutive funding in the U S. Our aim is to fund some of our major programs through either non dilutive or project financing, which we anticipate could potentially be upwards of $25 million over the next two years.

Camden will outline the strategy to fund our pillars going forward later in his portion of ethical.

Looking ahead, we also expect to receive a further $13 million in milestone payments from the Heska Corporation.

Clearly these are challenging times at a macroeconomic level. However, I believe that we are well placed with our existing capital and expected near term incoming funds to execute the plan. The team had been placed for this final quarter and into 2024.

With that I will pass it over to Dr. Tom Patera CEO of our volition victory subsidiary.

Tom.

Thanks, very much Terry and good morning, everybody.

I am pleased to report that in the first nine months of 2023 revenue for the new teams at cancer test grew almost five fold over the comparable prior year period.

Reflecting sales of the reference kits to our global regional and local supply agreements.

The revenue growth demonstrates solid progress to date, and we certainly expect more growth to come as additional companies fully launch our product both in the U S and around the world.

As you will have seen in our recent announcement.

Our new Q vet cancer test is now available in the U K, Indeed, I am taking this call from London, England as the team is in town for the London Vet show over the coming days.

We were thrilled the launch of our new key test was featured in an article in the Sunday times, one of the flagship papers here in the U K.

Really terrific exposure.

The London Vet show is Europe's largest veterinary exhibition with more than 20% of U K vet attending the event. So we are looking forward to a busy few days not only in the exhibition Hall, but we also have a series of sponsored and invited talks on Friday with Doctor Sue Ettinger and back at Timmins.

There are 11 million pet dogs in the U K with 29% of the households, owning one or more dogs. So we believe that the U K market provides another tremendous opportunity to drive access to our early detection test.

We are delighted to be supplying two of the leading veterinary diagnostic providers in the U K nationwide laboratories, and veterinary pathology group, both of whom will also be promoting the new cuvette cancer test at the London Vet show.

We expect exciting times ahead on this side of the pond.

We are also making progress in our efforts to provide greater access to our new Cuvette cancer test in Asia, and we will be launching with vital genomics in early 'twenty 'twenty four in Taiwan.

And also anticipate announcing the launch and the early part of 'twenty 'twenty four with a leading veterinary diagnostic provider in Japan.

In terms of a global license and supply agreements.

IDEXX continues to ramp up the availability of the new test across the extensive U S reference Laboratory network.

IDEXX is giving up marketing efforts to drive awareness and trial of the product with U S Conference season, just around the quarter in January and February 'twenty 'twenty four.

The Mars Heska group continues to make very good progress as well and we hopefully anticipate the launch of their exclusive point of care tests, very soon which would also trigger a milestone payment to us.

From a research and development perspective under the guidance of Dr. Heather Wilson Royal Bliss Doctor, Justin Hines and Dr. Beckett Timmins, we are continuing to develop our feline product and we will be expanding our new cube platform into emergency medicine.

Specifically looking at and the ptosis and I certainly look forward to bring you more detailed updates on these two topics in the future.

That's a quick update for me given our packed agenda today I will now with great pleasure hand over to Dr. Andrew Rhetor, a hematologist in intensive care consultant at one of the Uk's leading hospitals Dr.

Dr. Redrow has provided invaluable insights and guidance to the volition team and presented at our capital markets day earlier this year and at a number of informative webinars events. The team has hosted.

Dr. <unk> will be providing his view on our progress with new key nuts as well as discussing volitions breakthrough method and early cancer detection.

Andy over to you.

Thanks, very much tell me for that introduction and good morning, everybody.

He just joined the call today and provide an update on some of the significant progress makes installations need chemo.

So tennis.

Starting first with Nietzsche net transaction, but you can tell I first was introduced to the nation.

Sepsis as you've heard me say before he's one of the leading causes of death worldwide.

<unk> million cases annually, leading tier unfortunately around a lesson many index.

There is ongoing discussion about the diagnosis and definition of sepsis.

<unk> has made significant progress this quarter, which is climate change for the fourth quarter.

September.

We hosted a key opinion leader at Roundtable event.

In Greece.

Please go ahead help held over the course of two days because it exclusively on Texas.

Central well sneaks units. It was attended by some of the worlds, leading states, including three office SC highly influential and Chris Koch sepsis trained clinical definition payback its.

Sure.

International Sepsis Forum and the current choppy ERP in sepsis Alliance and many other attendees are operating as a center of excellence within the knee Keynotes program.

Could I have first hand experience.

We desperately need new diagnostics and need tools to measure the progression of subsets.

And this may lead to new therapeutics.

The sense from a great was that need Cmos potentially that sense, Brian the biggest breakthroughs in chipsets and the management of sepsis in the last 40 years.

She would like to find out more about the Kao main thing short report was Ashish.

But in the download section at the Venetian website.

Moving forward with this great now working on our clinical review article the attention. She may catch for peer reviewed publication in first quarter of 'twenty 'twenty four.

Speaking of publications shortly after the event and subsequent to quarter end and I'll tell you back the first clinical paper from the function of accidents was published this.

This was published by Professor Gila Monterrey is great for meal.

The data published demonstrates it a mortality signal set of harvest skull, Unfortunately, more likely a patient needs to die.

Once they confirmed the correlation with Nietzsche net.

Thanks Scott.

The safest coal is the current but a little cumbersome Africa School Easter dog has amongst the sepsis.

It is mainly used in research trials as opposed to day to day practice at that site.

As a clinician the reasons at a high level of interest and Dare I say excitement about our results in Etfs.

But if we can establish a baseline and continuous monitoring a patient with a simple blood test it.

It should be much more straightforward and more.

Efficient and current practices.

It also potentially provides us with a new therapeutic target to increase the care of our patients in future.

It is fantastic to have this test paper out.

Further the data being published by sensitive accents, 'twenty 'twenty four and beyond.

However in the U S. I am pleased to report definition recently completed the Q sub process with the U S food and drug administration.

I am happy to announce that they have agreed the regulatory pathway and the traditional five 10-K call.

Any teacher can teach clinical comparison, the volition team is grateful for the opportunity to participate in the Q sub process and greatly appreciate the feedback from the FDA. These interactions are engaging and helpful. Evolution fails such discussions gave it a clear regulatory path for <unk>.

So what we hope is an exciting opportunity.

Finally from an <unk> perspective, I'm happy to say that the study at Miami Austin Gazans, Thomas's NHS Foundation Trust in London is about guidance.

<unk> is sponsoring a study and you're just funded population.

As a reminder, this is a large scale 500 patient prospective study, which will read out in the course of the next 12 to 18 months.

It's fantastic to be off and running ahead of the winter months.

I'd like to take just a few minutes to discuss volitions potentially breakthrough cancer detection.

As of May 2023, the annual Congress of the European Saatchi Medical College.

But I used to that particular interest in this topic my tie directly again to the Venetian website, where you can view a recorded weapon about this exciting breakthrough.

Cancer.

Illinois is a deadly disease.

Causing around 10 million.

Yeah.

It is also set to grow as our population ages.

And that's a 30 million cases a year.

By 2014.

Like many diseases and he got Macy's has a significant impact on the outcome.

Putting it simply the earlier, we can diagnose cancer according to chance of survival and of good quality of life for our patients early diagnosis is challenging.

Ken said developed assignment with few symptoms.

Frequently pizza diet.

When there are few treatment options available for when treatment is available it is more invasive and more aggressive indeed in the <unk> about 45% of cancers are diagnosed at stage III stage four.

At any stage cancer, it is difficult to get attacked.

Derived section 18 Cima DNA.

I Couldnt see T D N a.

T DNA in the blood may compromise Ione, North point, north of 1% of the DNA present around the background at 99.99% cell free DNA.

All right is that most of the cast of DNA has exactly the same sequence as normal DNA.

Current C T DNA detection, that's on the market and in development involves DNA extraction.

Sequencing of all the DNA in the sample thanks concept unknown.

And analysis of sequencing data using sophisticated compete toboggan informatics to tell them apart.

<unk> has developed a novel liquid.

Bob Seger involving the fast reported physical isolation classic Ciena derived C T DNA fragments forgot.

These cancer derived C. T. DNA fragments, then extrapolate after our Maysville all normal background DNA from the past.

This allows detection with a simple low cost polymerase chain reaction.

As proof of concept data was presented at ash by 2023 and demonstrates the oscillation of human derived DNA fragments from past that.

Volition tested the new method NFS small clinically experiments indicated a range of liquid and other cancers, including early stage Lyme disease.

For example, 74% of leukemias, but detected at 96% specificity.

And 77% kind of a rectal cancers detected at 92% specificity easing C. T. DNA PCR assays. These any assays developed using leukemia, either multiples to for that.

Rising Lee, we all say detected many other concepts, including kind of rectal cancer and a blood test with an accuracy approaching that that's a current FICO EMEA chemical costs.

Dr. Jane Mcauliffe, Escalations, Chief Scientific officer, known to many of you on the call today pre stated.

To date, our exciting and pave the way for a whole new class of undiscovered bond market.

Hundreds of thousands of possible targets volition is now developing a range of cancer specific cafes wishing he expects to be more accurate.

More sensitive and more specific and these preliminary results and we really look forward to sharing progress in the beginning of the first quarter of 2024 and.

Enjoying took place I'd like to express my personal excitement about the progress of the company by Sweeny key and with respect to its recent potentially breakthrough cancer detection.

Please volitions technologies will not only help with diagnostic enrichment, but I'd say with monitoring of patients disease progression and response to treatment.

Most incredibly accomplishing these goals with what should be a relatively low cost routine blood test, allowing it to be used around the world and multiple health care settings.

Very much for listening today.

I'll now pass you over to Cameron Reynolds final remarks, Thank you Cameron.

Thank you very much Dr. Andy rats for providing those insights and thanks as always to tarragon Tom for their reports.

It's a real sign of the varied expertise, we now have that volition.

2023, thus far has certainly been transformational for volition, but before I reflect on that I'd like to take a moment to elucidate a financial strategy given the current macroeconomic conditions, we are focusing on getting each pillar to support itself.

Either through product revenues milestone payments out licensing or other non dilutive funding by the end of 2024.

We are currently targeting the following.

We expect <unk> to be overall cash flow positive from that one through milestone payments and the expected revenue ramp as more patents launch and our existing partners expand into new territories.

We expect new who discover to more than double revenue in 2024 and to become profitable starting in 2025.

We're running out of time to cover discover separately on this call, but overall, we are very happy with progress with nine contracts signed already and a further 10 currently in negotiation.

Thirdly, we have begun the strategy to fund as Terry alluded to earlier, our NICU nets pillar through non dilutive and do a project funding of up to $25 million.

We have targeted a range of government agencies in the U S and Europe and also preparing the background work aimed at attracting a large player to me the out license or invest in the product directly.

Four lastly, as discussed by go for Tech, our Chief commercial officer in a recent webinar. There has been a lot of external interest in a C. T C F and Youku cancer technologies.

Our strategy is to license this out to one or more larger companies as the commercial undertaking of this size is likely beyond our current capabilities.

If successful we believe this strategy could provided us ongoing royalties and very meaningful milestone payments in 2024.

Given the current macroeconomic conditions. We believe these methods of funding the four pillars should provide us a very good basis to move forward.

To date in 2023, the commercialization of our transformational <unk> vet cancer test within the companion animals health care sector has signed up several large new players with more to come.

Given the ongoing bidding in of our existing partners and the expected launch very soon a range of others. We strongly suspect we will see very good revenue growth from Newquay vet through 2024.

I'm also delighted in the progress we made in our new Q nets pillar and in particular in determining our regulatory pathway forward with the U S. F D a K.

Milestone for the company.

Thirdly, I'm, absolutely delighted with the breakthrough C. T C F cancer detection method, which we published just last month at ESMO.

This is based on 13 years of work on the chemistry of SEC lending parameter in fragrance. We have developed what we believe is a transformational wet chemistry pathway that identifies and physically isolates crampton fragrance that we know of tumor derived from background DNA of the same sequence and then tested with a simple Pcr.

Panel to establish where the cancer is present I truly breakthrough moment, the first reported physical isolation of tumor drive circulating DNA fragments from blood.

We believe that this method, albeit expensive and time consuming DNA sequencing and bioinformatics, allowing for rapid cost effective detection in a routine blood test.

This has been a fantastic achievement by our research and development team and one which has kept the intellectual property team very busy.

As you can imagine we believe that this represents a tremendous opportunity a paradigm shift as it were for cancer detection and indeed from this preliminary data early cancer detection.

This method could become a must have technology for everyone in the liquid biopsy space.

Given its significance we are very much open to licensing this technology.

We have been very encouraged by the level of interest thus far from a range of different companies and at this stage nothing is off the table exclusive nonexclusive global regional cat specific oil pan cancer use.

Exciting times and this is exactly what we hoped for when we founded volition.

And so to sum up.

I know it has been a long road to getting to where we are today and I'm very proud of the progress we are making as a team of volition and that we have stuck with it and got to where we are today, it's an exciting time for us as a company and we look forward to sharing further updates and milestones with you over the coming quarters as we continue to adapt to the changing times and condition.

<unk> to deliver on what we believe to be revolutionary technologies enrolling this earnings call to a close I'd like to thank you all for joining the call today, we very much appreciate it.

Given how much there is to digest across all of our pillars.

We're happy to answer your questions now operator.

Thank you.

We will conduct a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

You May press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.

Once again, that's star one to ask a question at this time.

One moment, while we poll for our first question.

Our first question comes from Ross Osborne with Cantor Fitzgerald. Please proceed.

Hi, everyone. Congrats on the progress and thanks for taking our questions.

Just wanted to focus on niche you bet today, given it said Mr. <unk> near term revenue opportunity there with regards to the UK market how much coverage do you think that you reference laboratories have there.

Yes, great question Raj, Thanks for asking it.

I think we're going to have broad coverage through the UK. Both of these labs nationwide BTG have extensive coverage in the U K drought and I also BTG also has penetration into Ireland. So the answer to your question quite simply is broad coverage.

Okay, Great and then maybe turning to IDEXX would you remind us the go to market strategy. There just in terms of marketing reach and current capacity.

Yeah.

Obviously as both the domestic U S company and has tremendous international exposure as well are there currently we have been working with them on that obviously in the course of their launches January at BMS.

And they are highly engaged with us at the current time, they obviously an extremely large company.

A lot of moving parts, we had some early hiccups in the reference labs, initially, which we have now smoothed out and they are working very well and also we are extremely engaged with them in terms of collateral support and collaborative support on their educational awareness and they are planning expansion in both domestic both domestically as well as <unk>.

Nationally in 2024, so we really quite frankly, even though the ramp has been a little bit slower one has to realize this is a new concept and a new discipline, that's being brought to veterinarians cancer detection like today are highly engaged with us and we anticipate a significant ramp up over the course of 2024.

Okay, Great and then last one and I'll jump back in the queue you mentioned.

Your intention to commercialize in Japan, and Taiwan in 2024 could you just walk through the rationale for targeting those geographies specifically.

Yes ill give you an idea well first of all Japan, we're talking about.

Companion animal market of over 22 million dogs, and cats pretty significant number I mean, we're talking in the U S $84 million. So that's a pretty large number compared to the U S and <unk>.

Japan, we're talking about 11000 hospitals in the U S. We're talking about 26000 hospitals just to kind of give you. Some reference points and then we have Taiwan, who is quite frankly growing 49% growth in their companion animals over the last four years and they're up to somewhere over 2 million pets dogs and cats in the current market right now with about 1600 veterinary hospitals.

So I think between those two giving you some numbers and comparing them to the U S. You can see here very nice opportunities for us and considerable potential expansion for us in both of those countries.

Thank you for taking my questions Congrats again.

Thanks, Ross. Thank you have a great day.

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

Hi, good morning, and thanks for taking my questions.

Thank you.

So just a couple of cash flow.

Questions first on the payment from Walden is that going to hit in the fourth quarter and then how much of that goes on the cash flow statement and how much goes to the income statement.

Yeah. Good question and it will all go to the cash flow statement.

It's cash that we will get it in.

The next month.

We're also expecting more from a national level body and in Belgium.

Probably.

Early.

Q1 next year.

But these are.

In the form of.

Funding similar to what we call, where we've had $19 million of funding from the Walloon region in Belgium.

That's it.

Combination Glenn.

Soft loans and that helped us to finance a lot of the operations, including a silver one production facility in Belgium.

And we're very grateful for the support we've had from them.

Belgium, and the Walloon region.

Okay and then so.

Question for Heska, what's the timing and the amount of the milestone and then how does that flow through the income statement.

So.

Yes.

The that the milestone.

Okay.

Good launches the product.

How that flows through the income statement.

Milestone payments is similar to the first one that we received we received $10 million upfront if you recall that.

That goes onto the balance sheet as a.

Third income and has been in doubt as we make future sales.

Before we could use them all immediately on arrival, if you will for the company.

Very much.

It's all it's all cash in the bank.

So youll see that cash on the balance sheet.

It's available to us.

When we collected.

Bruce if you add it all up with the to the mouth, we expect from the regional funding in the Belgium funding as well as those milestone payments on the launches.

Well into the $20 million range over $20 million.

So obviously, a very big part of the money will lead to.

Get the milestones reached next year.

Perhaps I can add to that.

With that funding with the milestones with the money from Belgium with what we've got currently we do have line of sight on funding from the end of Q3 through the next 12 months.

Okay Super last question on the CTC S Research I think you mentioned during the last webcast that there'd be some some more data.

Coming out during the first quarter or is that still the case.

Yes, absolutely. So obviously it was very good preliminary data and we've had a lot of interest from partners, which we're very excited about it it is bigger than us. So we're very excited but of course, we're working all the time not only on more data, which is obviously very important in a range of cancers, which we aim to be presented.

At a specific congresses for those cancers as well as we are working on the it has not been optimized at all so we're going through all the things to optimize it to make it as simple and easy as routine as possible and also the optimizations should also help with the overall accuracy. So overall I think as you know Bruce I'd be very optimist.

The person but.

I'm very very happy and little surprised how quickly it's actually go into even since ESMO with the level of interest and Jake for the conference next week.

The liquid biopsy conference also in Madrid, So we're talking to a lot of other potential partners. There. So expect to see a lot of information through this year and into next year and data as we said in Q1.

Alright, great. Thank you for taking my questions.

Thank you have a great day.

Our next question comes from Tim Moore with.

Please proceed.

Thanks.

For new investors joining this call maybe you can provide some antidotes on how.

That's fine you're testing kits exciting and useful and conveying that excitement canine dog owners.

If you have any kind of interaction anecdotes or color behind that.

Rapid outcome task, but that seem to be buying into the adoption of the early cancer detection in a probably spreading the word I mean any sense of.

That awareness for this rapid testing of cancer and you think like a third of that to know about it already.

Yes. Thank you. Thank you for the question.

As I mentioned earlier in the call early early cancer detection is a new test and a new area of involvement for my veterinarian colleagues. So we are obviously going around the world in terms of conferences, where we're speaking to both general practitioners as well as oncologist and also obviously spending a lot of <unk>.

In the U S going to major meetings. So what we're actually doing there is robust interest in the cancer screening test and they are learning from us as well as our partners on how to use the test and how to communicate it to the clients and how to bring it into their normal workload and normal exam room patterns when they interact with.

With their clients and their pet owners. So consequently, the interest is significant we're spending a lot more time on how to use the test now and how to communicate it and then what to do after you get something and it comes back to normal, but so you know the overall message with a screening test is one piece of mind.

Close to 92% of the doors at good Guy 92% of the dollars are going to come back in a normal range and you have 6% to 8% potentially that are in a higher range, but unfortunately in the United States were $6 million a year. He developed cancer. It's a large number. So overall the education continues with IDEXX with our partners with <unk>.

Scott.

And also with my own team the <unk> near Volition and that is an ongoing thing that we will continue to do throughout 2024 and 2025, but the interest has been robust the usage the usage increasing dramatically and we're very excited about how our veterinary colleagues have received it.

That's great color I appreciate it my next question's about Heska and the milestone payments to possibly be received over the next several.

Over the months is it fair to just assume that you know with any companies that got taken over like tomorrow is takeover that might've slowed it slowed it down the milestone payment.

Is it possible that heska could maybe lost both screening and monitoring at the same time, you can get a double milestone payment.

Yes, I think that's a great question to answer the first part of the question with reference to the acquisition of Heska via Mars.

That really quite frankly, hasnt slowed down the optimization process that we've been doing on the point of care as I mentioned in my earlier comments.

On the video that we have done today, we're talking about a tech transfer going from a reference lab test to a point of care test, which is something that my veterinary colleagues use in their veterinary hospitals. It is a major accomplishment to do something like that and consequently, it has taken some time to do it and it's gotten a little bit longer than we anticipated.

But we're almost there and when you think about it from a 12 month period of time. When this was started to where we are now it's a tremendous accomplishment we were getting very close to a launch so that point is well taken and hopefully I understood.

That's helpful and my last question.

Screening the second part about screening and monitoring.

It had been in the field of veterinary medicine for a number of years. What you really want to do is you want to make sure that youre getting your message across to the colleagues on not too many things at the same time, we want to be very clear on our Youtube cancer screening test, which is our first test and make sure they're using it using it effectively and that is the direction we're going in.

Right now and obviously, it's out there thousands of tests had been run at this point in time and we'll continue to do that we will be entering the market with our monitoring application. We already have a peer reviewed paper that came out in may of 2022, we are talking about it with our colleagues extensively and we don't want to confuse the message we.

<unk> that the monitoring application will probably really be introduced.

Probably more like in the first quarter of 2024, and yes to your point will we get kind of a double with that between the screening and monitoring of course, because both of those tests will interact with each other and it will obviously bring even more credibility to bulk screening as well as monitoring, but we're focused on the screening first and now will continue in <unk>.

Patients the doctors on the monitoring and that will follow soon after that.

Great. That's helpful and my my last question is just what do you think might be the timing timeframe of the feline test launched is that more of a December next year and can you remind me of.

And when that does occur is that does that triggered a $5 million milestone.

Yes, the feline test right now is in its pre analytics stage, we're going through a pre analytics studies right now and then we're going to go through more clinical studies in 2020 for early part of 2024 will be producing a paper on it by the first half of 2024 and then the anticipation is in the hope is that we will have.

Cancer screening tests coming out of it that we can utilize and probably hopefully the second half of 2024. Once that is there that should trigger a payment from heska with reference to the feline program and particularly with reference to cancer into cash.

Great. Thanks, that's it for my questions.

Youre welcome.

Thank you.

The next question comes from Golf CCAR with Zacks investment. Please proceed.

Hi, good morning.

Just a quick question on the R&D expenses.

They were lower in the third quarter than the first and second quarters of 'twenty three.

Do you think that was due to the winding down of the U S clinical activities.

The expense rationalization program or was it some other factors.

So.

I think we mentioned we had about $1 million.

Cash expenses in the quarter related to the <unk> studies for the sepsis trial in the U S.

Yeah, we don't we won't see that in our in the next quarter because those are the that wound down.

We have begun.

To see some savings from the rationalization program.

But in our business.

Expenses are pretty lumpy.

It's very difficult to see smooth.

Smooth trends from one period to another.

But what I can say is intense.

The underlying cash burn.

We do expect that it's going to come down a little bit from here on.

Great.

Yes. Thank you and then just another quick one.

I think you're starting to see some clinical results.

From the efforts from the National Taiwan University.

Do you do you know when you might expect some results in the U S. <unk> study.

The prices for the lung side has been quite active on both fronts. So we've wrapped human oncology together with the transcription factors and the actual data itself I can get back to you.

So, let's say well actually.

So in terms of the pacing of the papers now being written up by the National Taiwan University Group led by Professor Chen So they're working on a clinical papers that will then be submitted for peer reviewed publication and then what we're looking to do.

Lung cancer <unk> now in terms of that specific application is a validation project, which is likely to be.

And in the market and that we haven't yet finalized that.

Eddie.

And of course, there are a lot of results coming out of France, as well and we expect the first clinical use of UQM human oncology to be in.

France early next year in lung cancer with Dr. Pads facilities. So it made progress and I think I think something we should reiterate to quite a lot as well the transcription factors incredibly exciting, but youku platform itself is still very much a.

Part of what we do I'm very active in the vet space of course.

But also it has still a strong place to the human space. So cumulative apology will be a strong mixture I think of a new platform and the transcription factor platform going forward.

Thank you very much for taking my questions. Thank.

Thank you have a great day.

The next question comes from areas with Freedom broken. Please proceed.

Yes, good morning, and thank you for taking my question.

Congrats with progress in the quarter.

Could you.

Any details on the expected regulatory path on <unk> net and yes, what steps are left to go through that.

To go through to get FDA clearance.

Yes, absolutely. Good good question. So of course, we've been very active with the FDA and just starting up it's very exciting to the rubber hit the road. If you will to be in touch active discussions with the food and drug administration is a very exciting milestone for us. So obviously, we submitted a process and what we discussed last time as routine to either get.

Our breakthrough designation status or a clear path through a five 10-K, which is potentially a very clear path and as we talked about we're very happy to say, we do have a clear path now the pass itself is that the 500 10-K pop and that takes depending on the process and what they do need but usually about two.

And a half years from start to finish to get FDA approval.

And obviously I discussed a lot we understand the conditions, we're in now and the macroeconomic environment. So we're looking to fund projects. So that we don't.

We delivered two at very minimum any dilution from the top company. So we're working on ways to finance. The next process. Obviously, we've had a lot of indulgent assistance and we've had some more coming through we're also looking for a similar funding in the U S. And also looking to package up this to get a large diagnostic companies.

One of the largest diagnostic companies, perhaps interested in sharing the development costs to get through the FDA. So we have a very clear path now, which is exciting and we will be pressing the button. Once we're comfortable with the funding route to get us where we need to get to them.

And in Europe. It is actually saleable now as you're probably aware through our IBD approval. So now we're doing market studies for.

<unk> marketing studies, if you will to get adoption, but clinical utility so that'll be coming out and we're also looking for group to help fund the IV.

Which is the longer term European approval process, which is now taking over so overall, we have a very clear path in Europe and in the U S. And we're just very mindful, we don't want to start spending a lot of money into we are located defined at FERC. It is non dilutive fashion as humanly possible and that's what we're in the process now so we should have.

More information on that through the year, but the bottom line to your question is about two to have to use from when we press that button for the FDA.

Great. Thanks Al.

Thank you have a great day.

Thank you at this time I would like to turn the call back to management for closing remarks.

Thank you everyone thought it would be taking in at the moment, there's a tremendous amount going on to the company and I think as you probably taken from everything we've said we're tremendously excited with all of the pillars, now which are really coming through but of course in this environment that excitement is tempered with the knowledge that we have to be very careful with.

Our capital, which we have been we have a lot of sites with a lot of incoming money, which we've talked about.

Also pushing for as many other ways of funding what we do.

With this as well as possible non diluted to believe so it will have a lot of information through the rest of the year. So we're looking forward to hopefully what's looking to be a strong bit ramp through next year as well as the other exciting breakthroughs that we have so thank you very much for your time and I'm looking forward to speaking to you all soon with updates in all of our pillars.

Thanks for your time.

Thank you.

Todays teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day.

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