Q3 2024 VolitionRx Ltd Earnings Call
Good day, ladies and gentlemen, thank you for standing by welcome to Volition Rx Limited's third quarter 2024 earnings Conference call.
During todays presentation, all parties will be in a listen only mode. Following the presentation. The conference call will be opened for questions. If you have a question. Please press the star key followed by the number one on your Touchtone phone. If you would like to withdraw your question. Please press the star key followed by the number too.
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This conference is being recorded today November 15th 2024.
Speaker Change: And now I'd like to turn the conference call over to Louise Bachelor Group, Chief Marketing and Communications Officer.
Louise Bachelor: Please go ahead.
Okay.
Speaker Change: Thank you and welcome everyone to todays earnings conference call. The Philly Shneur It's limited.
Speaker Change: 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.
Speaker Change: Private Securities Litigation Reform Act of 1995.
Speaker Change: These statements are based on our beliefs as well as assumptions we have east.
Speaker Change: Based upon information currently available to us.
Speaker Change: Because these statements reflect our current views concerning future events.
Speaker Change: These statements involve risks uncertainties and assumptions.
Speaker Change: Actual future results may vary significantly based on a number of factors that may cause actual results or events to be materially different from future results performance or achievements expressed or implied by these statements.
Speaker Change: We have identified various risk factors associated with our operations and all of them.
Speaker Change: Most recent annual report on Form 10-K.
Speaker Change: Quarterly reports on Form 10-Q, and other filings with the Securities and Exchange Commission.
Speaker Change: We do not seem to take an obligation to update any forward looking statements made during the course of this call.
Speaker Change: Don't tell him be Terra Chief Executive Officer, Bob Reich Mission Veterinary subsidiary well open the call today.
Adding the key highlights the new key that the third quarter and indeed, the year to date.
Speaker Change: He will then pass say that's adult Angie, let our chief Medical Officer, who will cover Austin significant Craig's last from the innovation lab R&D and clinical team.
Speaker Change: T find themselves to Cherokees will then provide the financial report and come in I know, President and Chief Executive Officer, well wrap up with a summary, and look ahead to upcoming milestones.
Speaker Change: We will then open the conference call to a question and answer session.
And with that I'll turn the call over to Tom.
Tom: Thanks, Lew and thank you everyone for joining Volitions third quarter 2024 earnings call today as Cameron always says we appreciate your time given the busy earnings season.
Speaker Change: November is pet cancer awareness month, and so I am, especially honoured to open the call today.
Speaker Change: I'm delighted to report that we've now sold over 110000, new Q vet cancer tests in the first three quarters of 'twenty 'twenty four.
Speaker Change: First is 58000 in the whole of last year 2023.
Speaker Change: You've heard me say it many times our test is a simple affordable easy to use blood screening test.
Speaker Change: It can be integrated easily into preventive care programs and used alongside other routine blood work during regular wellness visits.
Speaker Change: By detecting cancer early.
Speaker Change: We can help to improve and extend the lives of millions of dogs and keep that special member of the family with us longer.
Speaker Change: Our new Cuvette cancer test is now available in 17 countries and counting our revenue growth is accelerating quarter on quarter year to date revenue growth is 100% while in this quarter revenue was up 307% each versus the same periods of 'twenty.
Speaker Change: 23.
Year to date revenue of our veterinary catch and key components is approximately $730000.
Speaker Change: We don't have time to discuss each and every distributor of our new cube that cancer test, but this quarter I'd like to specifically mention three.
Speaker Change: First Fuji film that systems Wow, Fuji launched nationwide this quarter in July and I am delighted to say that already almost 10% of their veterinarians have ordered the new Q test a very rapid market penetration.
Speaker Change: Thanks, so much to the Fuji team and my colleague in particular Jasmine Kway.
Speaker Change: For their dedicated efforts in Japan.
Speaker Change: Next up vet lab, Poland again, a fairly recent addition to our stable also launching the test this past July.
Speaker Change: They have made a great impact in the local market, which includes a few countries. They also service around Poland. Dr. Heather Wilson roadways al Volition Vet Chief Medical Officer has been invited to speak next week on Ncube vet at Poland's largest veterinary conference, where many veterinarians will be in attendance.
Speaker Change: Vet labs website and marketing efforts are top notch, so many kudos and congratulations to them on their hard work.
Speaker Change: And last but not least heska, which is now a Mars and check company has worldwide distribution channels in numerous markets under the new brand of Amtech.
Speaker Change: ANTEC has made significant progress introducing new to vet on the element I plus in hospital instruments around the world.
It is now available in 15 countries and counting we have received some fantastic testimonials and given November is pet cancer awareness month and tech has generated a great deal of activity promoting new Qs early cancer screening test in particular.
Speaker Change: To highlight an upcoming ANTEC webinar with Dr. Sue injure a longtime world renowned veterinary oncologist and strong advocate of our new Q that cancer test Dr.
Speaker Change: Doctor and your is now the proud user of the element I plus in her own veterinary hospital.
Speaker Change: I was delighted to join <unk>, Chief Medical Officer, Dr. James Barr and other members of the ANTEC team. This week at some launch events in the U K, including multiple presentations of new Q at the London Vet show yesterday.
Speaker Change: It's a testament to our close collaboration and was a real honor. So thank you to the and tech team.
Speaker Change: I have the pleasure now handing over to Dr. Andrew Rhetor, Chief Medical officer on our human side of the business, but.
But before I do I'd like to thank Andy for joining me and meeting with the ANTEC team yesterday.
Speaker Change: Here at Volition, we are in a pretty unique position.
Speaker Change: When it comes to the critically important topic of one medicine.
Speaker Change: Which connects and shares veterinary and human clinical advancements for the betterment of the human and animal World.
Speaker Change: It was really terrific for Andy to share insights from our human research with Dr. James Barr and to discuss the ways in which discoveries across our human and veterinary pillars, not only for cancer, but including diseases, such as sepsis might help both companies in their mission to help improve and save lives.
Speaker Change: So thanks, Andy for your time, and now I'll turn the call over to you.
Andy: Thanks, Tom and thank you for the opportunity to began tech team and to extent that changes today and good morning, everybody.
Speaker Change: On the human side of the business I'm incredibly proud of the progress. He has made him an innovation scientific and clinical perspective, crosstie Sneaky nets.
Speaker Change: Tennis in recent months.
Speaker Change: Not all of this progress is public in Portugal, yet manuscripts take time. So you mentioned reviewed published than we have certainly had to chart a trend and a very meaningful way in the last year.
Speaker Change: Its interesting Tom mentioned pet cancer awareness month, and he says I'll say lung cancer awareness month in November.
Speaker Change: I'll begin with lung cancer and my update today.
Speaker Change: <unk> is the leading cause of cancer related deaths worldwide.
Speaker Change: Accounting for the highest mortality rate among men and women in the U S. It kills three times as many men as prostate cancer and three times as many women with breast cancer.
Speaker Change: Typically some categories Doc NYC deny advanced stage of treatment options are limited and limited to Palatin life Prolonging health care options.
Speaker Change: While there have been some welcome aboard seasonality detection lung cancer methods, such as latex C. T scanning have high levels of false positive results, resulting in the need for a follow up Bob <unk> and further investigation of patients and scientific timed later I see teams highly sensitive but not very specific.
Speaker Change: Simple tab is easily identify lumps and bumps on nachos, but isn't very precise at identifying where they are cats Russell benign.
Before Bob Ts are commonly used to confirm the diagnosis and detect lung cancer.
Speaker Change: They are invasive uncomfortable for patients time consuming and expensive.
Speaker Change: Therefore, there's no real need for a low cost noninvasive method to help differentiate between benign and malignant nodules.
Speaker Change: This is precisely the clinical question the team at the National Taiwan University are trying to answer and they made real progress this quarter with the submission of the manuscript to parity.
Speaker Change: Unfortunately, the papers not yet in the public domain and I'm unable to pull further details other than to say, it's a large prospective study of approximately 800 low dose C T positive high risk patients.
Speaker Change: Subsequent to quarter end and thanks to all the hard work of Jasmine Kway announces a contract has been signed for 500 patient prospective validation study taking place in the real world setting at the National Taiwan University Hospital, and the National Taiwan University Hospital campus Center.
Speaker Change: The validation study set to begin before year end and complete in the fourth quarter of 2025.
According to press the challenge Kaufmann Chief.
Speaker Change: First of all each of the inclusion of new cancer tests in the Taiwan National lung cancer screening program.
Speaker Change: What kind of implications not only for Taiwan scream at them.
Speaker Change: But potentially other programs throughout Asia and beyond.
Speaker Change: Sticking with lung cancer for amendment, but looking beyond screening disease progression.
Speaker Change: Colleagues from Leon presented an interesting place to at the European Society of clinical oncology meeting in September.
Speaker Change: As a reminder, the Leon team has a number of studies across different cancer is in different stages of cabinets.
Speaker Change: From diagnosis to treatment and response to detect minimal residual disease in the surveillance of disease recurrence.
Key findings presented as my 24, demonstrating EQ is predictive of survival independent treatment mutation status alerts on the rescue highly progression.
Speaker Change: Densify, the subset of patients who may benefit from immunotherapy.
Speaker Change: For more information please to check out and there's also a section of our website and watch this space for further clinical papers from any one team.
Speaker Change: Lastly, on an oncology perspective, the research and development team have made some significant progress on the use of <unk> in the diagnosis of a range of solid cancers.
Speaker Change: Dr. Jane Mcauliffe is busy completing the manuscript for parenting.
Speaker Change: Application timeframe on that project next time.
Speaker Change: We have had an incredibly exciting busy and productive few months Whitney Kunitz taste.
In September we hosted our second key opinion need a workshop.
Speaker Change: On the use of <unk> in sepsis extremely.
Speaker Change: Extremely fortunate to have four of the office of the seminal 73 definition paper participating shares.
Speaker Change: During the meeting data was presented from many centers of excellence together with confidential work completed by my colleagues as our innovation lab in California.
Speaker Change: Focus of the discussion help shaped our first satellite symposium meeting at the world's largest intensive care conference, Yes, ICM held last month.
Speaker Change: Symposium explore research findings from three large independent studies carried out in centers of excellence in France, Germany, and the Netherlands involving more than 14000 samples from over 3000 patients admitted to intensive care with hips F O.
Speaker Change: All three clinical studies use initiatives EQ next test to measure the hoses that accounting entry 0.1, you can find it in the bloodstream a surrogate marker of each flex head of aircraft the.
Speaker Change: The findings of feed studies summarized subsequent annual report available on our website.
Speaker Change: Clearly and consistently show elevated levels of fat accounting entry point on nukes, and sepsis effect potentially gets regulated host immune response.
Speaker Change: Hi, H viewpoint, one EQM levels.
Speaker Change: With an increased risk of mortality increase risk of renal failure increase risk of severe respiratory failure increase risk of multiple configure and strongly correlate with septic shock.
Speaker Change: As a clinician Tonight sepsis patients with an elevated 3.1 level on admission to intensive care at greater risk of deteriorating.
Speaker Change: And act fast to save lives.
Speaker Change: Santa Giulia known a world leader in the field of Sepsis management research talked about using Etfs test and measure elevated as people want nucleus and levels.
Treatable trait in sepsis management.
Speaker Change: And Hal and his opinion it could be a game changing and modifying a patients trajectory.
Speaker Change: Just to clarify in case of 10 preschool tranches nietzschean thinking he is a very practical level than EQ test could be clinically actionable as a therapeutic target.
Speaker Change: It's about a set threshold.
Life clinical decision, making.
Speaker Change: From a publication perspective, we are again, making strong progress at sprint as Hal entitled Understanding complex chromatin dynamics apartment human neutrophils doing PMA in Houston, Texas.
Speaker Change: He published and subsequent follow on paper.
Speaker Change: Speak by Kavan as Al has mix has been submitted for parity. In addition to methods pegged at Phi thought me that how Biogen research and development team.
Speaker Change: The scientific papers, demonstrating the strong validity of all what provide a firm foundation spa clinical studies and have proved to be of notable interest no telling me to the key opinion leaders and clinicians attending ash I see him, but he was saying to all potential licensing partners.
Speaker Change: Often we liked Tonight why simply.
Speaker Change: Simply what is not always enough.
Speaker Change: Lastly manuscripts to if a large studies described here are close to submission for Perkin and subsequent publication saw communication team has certainly been cats very busy in recent months.
Speaker Change: In summary, the Nietzschean nights pillar has reported an impressive data which is generated powerful advocacy.
Our oncology at atrium has also been significantly strengthened this year.
Speaker Change: Sepsis and oncology indications have suddenly January she is a great deal of interest from key industry players in the diagnostic space potential license partners, but more of an update on commercial negotiations from Kamran later months and with that thank you very much for your attention. This morning, I will now pass you over to Teri <unk> Financial report. Thank you Terry.
Teri: Good morning, everyone and thank you for joining the call today.
Teri: As previously announced our goal is to be cash neutral in 2025, meaning income matches expenditure on a cash basis and I'm delighted to report that across a range of financial indicators. We have made significant progress towards this target throughout this year.
Teri: In 2024, we have recorded $1 million in revenue in the nine months period, ending 30 September.
Teri: Growth of 96% over the same period of 2023.
Teri: To finally hit that milestone.
Teri: And positively revenue is starting to ramp up with a year on year growth rate in the quarter of 187% with revenue of $475000 recorded in the third quarter.
This was driven primarily by the sales of new Cuvette cancer test, which show growth rates of 100% year to date and 307% for the third quarter versus the prior year.
Speaker Change: As Tom said earlier, we have now sold more than 110000, new Cuvette cancer tests and test components in the first three quarters of 2024, almost double what we sold in the whole of 2023.
Speaker Change: Great effort and well done to the team and I would distributors.
Speaker Change: From an expenditure perspective, we have significantly reduced operating expenses, which were 28% lower compared to the same quarter last year as our cost reduction measures discussed previously took effect.
Speaker Change: As a result of both the higher revenues and reduced costs cash used in operating activities was $5 $4 million in the third quarter 2024 down 36% year on year.
Speaker Change: Cash and cash equivalents at the end of the quarter totaled approximately $5 $4 million and subsequent to quarter end, we received commitments of over $2 2 million of non diluted funding from agencies within the Walloon region, Belgium.
Speaker Change: As you are aware throughout the company's history, we have been successful in securing non dilutive funding on favorable terms and it is encouraging that we have already received indications that similar funding is anticipated in quarter one of 2025.
Speaker Change: So to summarize the finance report all indicators are positive this quarter revenue was up and indeed growth rates are increasing.
<unk> used in operations is significantly reduced down by 36% versus the same period in 2023, we continue to receive non diluted funding support.
Speaker Change: Our goal to be cash neutral in 2025 is progressing well supported by progress in our licensing discussions.
Speaker Change: With that I will pass over to Cameron for a commercial update.
Cameron: Thanks, Derek and thanks, Tom and Andy for your insightful reports to.
Speaker Change: The whole team has achieved a tremendous amount in 'twenty 'twenty four and the pace has really picked up across not only the financial indicators, but all the product pillars in the third quarter.
Speaker Change: Our near term focus is to secure our first licensing deal in the human clinical space and I'm pleased to report that given the strong data there is great interest and the team continues to progress discussions with multiple key industry players. The nature of these potential licensing and our supply agreements is both broad and <unk>.
Speaker Change: Implex as you can imagine there were a range of options we are discussing.
Speaker Change: Understandably the nature of all these meetings and interactions are strictly confidential in nature. So obviously I cannot provide any more detailed information until one is signed and can be made public.
Speaker Change: Suffice it to say we are advancing several active commercial discussions with significant players in the diagnostic space in human and animal health, including large markets, such as sepsis and oncology liquid biopsy.
We have accumulated a lot of expertise from our very successful licensing and supply negotiations for Newquay veg, which have helped us as we move towards commercializing some of our other technology, such as but not limited to new units, new cancer and capture P. C.
Speaker Change: It is indeed, an exciting time as we work to push our technologies up the value curve to maximize the monetization of our IP be that through payments for exclusivity milestone payments and ongoing licensing revenues.
Speaker Change: We believe this strategy will provide us with ongoing revenue and very meaningful milestone payments as we achieved in our biggest vet deal.
Speaker Change: I look forward to providing more color and details in the coming months.
Speaker Change: This is a critical next few quarters for our company I think it is very fair to say that we have now developed a technology platform that has already been a breakthrough in veterinary oncology and it looks very likely we will also make a significant contribution to both human oncology and human sepsis. We now have evidence to support the use of our platform.
Speaker Change: <unk> across a range of clinical applications with high unmet needs. It is low cost robust and reproducible.
Speaker Change: Now, we need to commercialize our technology as quickly and as well as possible to make our technology accessible worldwide.
Speaker Change: If successful this would clearly support our mission of saving lives and improving outcomes for millions of people and animals worldwide.
Speaker Change: Our strategy to achieve this has been to raise as much non dilutive funding as possible ramp revenues cut costs and signed commercial deals with large industry players.
Speaker Change: Human commercial deals are the final part of this long journey to complete our mission and we remain focused and last but certainly not least enduring our prepared remarks to a close I would like to welcome our newly appointed chair Mr. Timothy still an independent director Dr. Ethel Rubin Tuvalu.
Speaker Change: <unk>, both Tim and it'll have tremendous experience in the diagnostic sector from both a commercial and financial perspective, and I'm sure they'll both be real asset to the company.
Speaker Change: Thank you again for joining our call today, we very much appreciate it we will now take your questions operator.
Speaker Change: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad a.
A confirmation tone will indicate your line is in the question queue. You May press star two 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.
Speaker Change: One moment, please while we poll for your questions.
Okay.
Speaker Change: Our first questions come from the line of Jason Kolbert with D var or capital. Please proceed with your questions.
Speaker Change: Good morning, Congratulations the numbers look exciting can you talk a little bit about what the dynamics are on the ground in Japan, and I think you said that you.
Speaker Change: What percent of I know you've mentioned this but remind me kind of what the penetration rate is among the veterinary clinics and how big that market could be.
Speaker Change: Yeah. Thank you, Jason and we're very excited by the number two it's Terry.
Speaker Change: <unk> correctly pointed out all the indicators are going the right direction and we're very excited about the deals in the human space, Yeah, Fuji has been absolutely fantastic.
Speaker Change: There.
Speaker Change: Quite a good organization, so far as I've got the plates working incredibly well in the labs and they've been extremely good at marketing it to the vet and then by far the biggest Japanese group in the vet space. The number given was it has been ordered by 10% of debit.
Those numbers are dogs go it is a quite a big market. It's obviously not as big as the United States, but there are it would be equivalent to a state like California, or one of the bigger U S state, but they do spend a lot on their dogs, they're very organized and Japan. As you know is quite a homogenous country and a small country. So it's easy to.
Speaker Change: We've been very impressed with Fuji the ability to run the test and actually get out there proactively.
Speaker Change: So we'll see but it always does take these things one bad at the time.
Speaker Change: They are very conscientious and I've really put their shoulder into the world. So we've been extremely happy with our Japanese colleagues and I think there's a vet show coming up in Japan soon and we're presenting there as well so it's been a very close relationship and one we're very happy with.
Speaker Change: Can you talk a little bit about I know you haven't given guidance per se, but.
Speaker Change: You know we have a very modest ramp up you know, we're only looking at about modestly 6 million in revenues or new Q next year that number is starting to look low based on the ramp and where you're at any thoughts about how big this could be.
Speaker Change: That's a good question for our Chief Financial Officer, who happens to be here Derek.
Derek: Yes so.
Speaker Change: You're right the ramp looks very strong at the moment and we're very encouraged.
Speaker Change: Courage by the positive progress that we've made to date and the fact that we're in now in 17 countries and.
The progress that we've made with partners like Fuji and Glenn and Tech is very exciting.
Speaker Change: As we've said previously.
Speaker Change: Revenue can be quite lumpy at this stage and the revenue ramp so it is difficult for us to provide.
Speaker Change: Meaningful revenue guidance.
Speaker Change: Stage.
Speaker Change: Suffice to say we are.
Speaker Change: Are you happy with the progress.
Speaker Change: We also shouldn't forget about you.
Speaker Change: <unk> discover where we've also developed a very strong pipeline.
Speaker Change: With dozens of clients now and then and very large pharma companies.
Speaker Change: I think.
Speaker Change: If you go back to your question about the site.
Speaker Change: We do know that there are.
Speaker Change: $80 million and dogs in the U S. And then our target markets with a screening test is 25 million I believe.
So.
Speaker Change: The opportunity is very large.
Speaker Change: And the rest of the wells on top of the U S. The rest of the world is probably a similar amount of gain.
Speaker Change: So yes, we are looking at ultimately pay ramp this up into millions of tests a year over the next couple of years.
Speaker Change: And Jason I think one important thing to sort of mentioned so the increase in revenue ramp has been very good but it is a head to head one bed at a time, it's a very new product, we're the only product out there at the moment.
Speaker Change: In the event screening market. So I think we've got a strong position, but don't forget I think the big story in the next few months and quarters is the licensing, which if we structured a little differently would also come in as revenue and we are expecting some large payments. We are out licensing I could not be prouder of the number of companies that are interested.
Speaker Change: A large brand name companies in oncology large brand name investment diagnostic companies and also we're licensing looking to license. The I 10 in the in the vet space in dogs, which we've only license to play and the point of care. So I think a key picture the ramp is lumpy.
Speaker Change: It's going very well, so far and we expect to have a very good year next year.
Speaker Change: But there might be some quarters, which are better and some are worse.
Speaker Change: I think what's going to really hit it out of the park for US is when we find another big licensing deal and as I said, we've been around a long time, we've never really had anywhere near the interest in what we have Andy as you could hear us incredibly excited about the <unk> and our key opinion leaders about the sepsis data we're very encouraged.
Speaker Change: With all the things we're seeing in lung cancer. We're also speaking to several national screening programs. We mentioned, Taiwan. We're also looking in Europe and other ones in Asia, I think there's a possibility wherein in one or two national screening programs in the next 12 months as well. So it was a package, it's really all coming together and I think that will feed through to the <unk>.
Speaker Change: Revenue side, but it's pretty hard to say exact numbers right now but.
Speaker Change: All figures are pointing in the right direction, and we're very very happy and positive with the licensing discussions sofa.
Speaker Change: I'm sitting here with canine Luna so on behalf of canine with and I think you were very appreciative and I know you've waited a long time to get to this point, it's very exciting so I look forward to seeing the growth.
Speaker Change: Thank you Jason No. We're very excited to win we are working extremely hard to make sure. We can move towards propylene save as many dogs and humans pretend as quickly as we can.
Speaker Change: Right.
Speaker Change: Thank you.
Speaker Change: Thank you our next questions come from the line of Oh, Yes, Zubkov with freedom broker. Please proceed with your question.
Okay.
Speaker Change: Hey, good morning, and thank you for taking my question. So.
She and cash neutral in 2025, so considering you plan to be cash neutral next year doesn't mean that old business segments individually should be self sufficient in terms of financing.
Sure I mean, that's yeah, that's a good question.
Speaker Change: That is what we're aiming for is trying to get each of the pillars to support itself.
Speaker Change: One of the key things that camera, just mentioned will be the licensing agreements.
Speaker Change: The agreement that we're currently working on.
Speaker Change: The what we've said is we expect to be cash flow neutral as opposed to P&L neutral.
Speaker Change: And that's part of why we say that is because it depends on the nature of the licensing deals and how we structure those as to whether that to recognize.
Speaker Change: As as revenue as opposed to.
Speaker Change: Rick recognized over a longer period.
Speaker Change: So that is the that.
Speaker Change: Is the goal is to get.
Speaker Change: That revenue ramped up its to get licensing in the oncology portfolio in licensing in the Texas portfolio and at that point, Yes. We would then expect that each of the pillars is supporting itself from a cash flow point of view.
Speaker Change: And I think if you are exactly right, Eric and so nuclear discover.
Speaker Change: We've got a lot of I think there are dozens of groups now we've now sold to is dependent on the very good revenues come down to a few big brand name companies, who are with negotiations with to help with so I think it's a very good shape.
Speaker Change: Actually.
Speaker Change: Hello oppose it from revenue I think the same from that.
Speaker Change: The ramping and the cough, so I think that for us.
Speaker Change: Very positive just from actual sales.
Speaker Change: <unk> net and the oncology section as we talked about we've got a lot of deals in discussion. We are in front of a lot of players who've hide pharma benches on the oncology side, so those being cash flow neutral or are based on the licensing deals.
Speaker Change: We're confident given all the interests that are that it's certainly possible.
Speaker Change: And in 2025, and they're separate obviously discussions going on with a range of companies in sepsis and oncology and our technology.
A quite a while and there will come a good at the same time, so that's where the focus really is on now an organization getting some human deals are in the process and as I said, we're also looking to license the I turn to some of the big bet companies as well, which could also be a notch.
Speaker Change: Which could also bring in some money in the next few months or quarters as well. So it was a package I think it's a very reasonable target and one which we're working very strongly towards.
Yeah.
Speaker Change: Yeah. Thank you that's great color and so I see that volition is doing a good work in cash spending reduction and I'm curious if we should anticipate for the decrease in operational expenses and the engineers corners.
Speaker Change: Yeah, we're very happy with the direction that things are going at the moment.
Speaker Change: You're right, we have reduced operating expenses.
Speaker Change: We've ramped up revenues that the cash flow is down.
Speaker Change: In the quarter was down 36% compared to the prior year.
Speaker Change: We do expect that to continue to come down.
Speaker Change: Modestly between now and the end of the year and the goal is then to keep it.
Speaker Change: At at a modest rate.
Speaker Change: And so that we can achieve that goal next year of being cash flow neutral.
Speaker Change: And just on that from our Chief Executive his point of view, it's been actually it's a balance I think we've handled very well, obviously, when you're cutting 36% of expenses and a lot of personnel, it's never a pleasant or easy thing to do but it's been critical to do but I think it is organization. We've really tried to make sure that we don't cut into the bone because we're going to be success.
Speaker Change: Well not just from cutting but from being successful in the revenue ramp and licensing. So we think we've done a good job at keeping the current people, we really need onboard and making sure that we get the revenue ramp in the licensing deals and as you can tell we're riding a large amount of papers and hosting symposiums to get.
A doctor Juliana and you probably heard said this will be a breakthrough we've got to keep doing that kind of work. So it's a balance between cutting but keeping the ship moving forward.
Speaker Change: As of now I think we've done a very good job and we'll try to make sure. We continue on that through the year because.
Because we will be judged from now on the success of the revenue ramp in the licenses. So it's a balance and I think when we've done and we'll hope to keep that going the balance.
Great. Thank you very much.
Speaker Change: Yeah.
Speaker Change: Thank you. Our next question is coming from the line of Steven Ralston with Zacks. Please proceed with your questions.
Speaker Change: Yeah.
Speaker Change: Good morning.
Speaker Change: Good morning.
Speaker Change: Congratulations on the real traction you've made in the sales of the <unk>.
Speaker Change: <unk> get.
Speaker Change: Tests.
Speaker Change: Here in the third quarter.
Speaker Change: I'm trying to get a handle on the tone of the ramp up you mentioned that.
Speaker Change: You bet with Japan.
Speaker Change: And the intake is delivering into 15.
Speaker Change: <unk> 15 different countries.
Speaker Change: Are these scale basically.
Speaker Change: <unk>.
<unk> sales or do you have some sort of metric.
Speaker Change: It looks at how many.
<unk> versus how many you.
Speaker Change: The test has been processed.
Steven Ralston: So that's a good question Steven and then it's a mix.
Steven Ralston: There's some part will be stocking is.
Steven Ralston: As <unk> rolls out it's machines.
Steven Ralston: Points of Cat machine.
Steven Ralston: And some part is clearly sell through.
Steven Ralston: As we said we've had some good feedback from our distributors.
Steven Ralston: In Japan and.
Steven Ralston: Poland and some of the newer one of the newer distributors in Poland.
Steven Ralston: That's very good feedback that they're.
Steven Ralston: We're getting good uptake, but because we deal through distributors. It is difficult for us to understand exactly what the sell through is at any one point in time and that's why.
Steven Ralston: We're sort of cautious in giving guidance.
Steven Ralston: And we say that it is it can still be a bit lumpy and as you've seen this year.
Steven Ralston: That's it.
Steven Ralston: It is difficult to forecast what the next quarter is going to be.
Speaker Change: And I think Stephen that's a very good question nobody is something we've thought about a lot.
Speaker Change: There is obviously a large element of stocking it every quarter, but that goes back all the quarters. So this quarter is no different.
Speaker Change: Every quarter, we think maybe this is the one where opposes the bureau goes back a bit while they sort of selling the ones that stopped but that's been going for a few months now I'm sure one of the quarters in the next few quarters that is going to happen because there's a balance between the stocking and selling but as we said, there's a lot of different people out there selling and stocking.
Speaker Change: We're also hoping to augment it with some good revenue and you discover we've got some great very large companies using our technology on that platform as well. So there will be a pause in one of the quarters I'm sure Aurora, even a little backwards, but we will hope we fill it up with the.
Speaker Change: We discover but also what's going to be really key for us is finding some deals because.
Speaker Change: And as I said, we are potentially another one in the vet space, we're working very hard in the sepsis and oncology space. We think we've got something very special so what I think gets us out of the park is one of those getting done with a very big company and that will finally provide the validation human space that we're very much now go to the vet space. So a mixture of all of those things.
Speaker Change: It should be a very good Unix few for us.
Speaker Change: I just think continued is there the possibility. They could you just have this rolling Lumpiness as you are.
Speaker Change: Get more partners.
Speaker Change: On the distribution side, and they're constantly restocking to a certain level.
Speaker Change: And then the validity of the test comes through and it just continues that way.
Speaker Change: It could well continue that way for the next few quarters because like you said, we have now got with another 17, and what we do already distributed across 17 countries and there will be some element.
Is it accelerating and stocking and prep decelerating in some months or quarters.
Speaker Change: But the more distributors that we have out there and the more countries. We have it and I think the smooth that that trend will get so perhaps.
Speaker Change: Well, we'll have a bit more of an idea over the next six months.
Speaker Change: What that trend is going to look like.
Speaker Change: But I think just to be clear the clarity a lot of them by sort of stock for six months ahead. So it's been very good very good so far and that May continue there might be a time when one of the big one it doesn't order in the quarter. So it's lumpy, we don't know, but the trends are all going very well, it's been a lot of countries a lot of different groups. So, but that's not really a quarter to quarter is not really critical that's the critical.
Speaker Change: Is 110000 that it's moving so far has been excellent.
Speaker Change: Bennett with discover and touch wood in the short term will also augment with another big.
Speaker Change: Big licensing deal. So I think overall, it's good but they could certainly be some lumpiness in these early stages I don't think it's going to be a smooth upward curve. Although it has been football. So maybe we're wrong, but maybe it would be it's varied wanted to sort of midway through next year, but we'll find out.
Speaker Change: We're working on all these areas, we'll see how it goes but we're very happy with how it's gone so far.
Speaker Change: Moving to the cost cutting program.
Speaker Change: Obviously, you've made excellent progress here.
Speaker Change: G&A and sales and marketing expenses going down more than 30%.
Speaker Change: Could you tell us about what percentage of the $10 million cost cutting program has been implemented.
And you can kind of give a little color about that previous $2 million cost cutting program. We had in late 2023.
Speaker Change: Yes.
Speaker Change: As you recall we started.
Speaker Change: We trimmed back at the backend of last year, but we still have quite a number of large R&D projects ongoing at that point.
Speaker Change: Effective.
In Q2 of this year was when we really started.
Speaker Change: In earnest to cut costs, because we completed a lot of the work that we needed to get done in order to start these licensing discussions and so since then we've seen the winding down of a number of studies and we've been able to implement.
Speaker Change: A number of cost cutting measures.
Speaker Change:
I think we've seen probably about half of the savings come through this year.
Speaker Change: Of course next year, we've got a full year worth of those savings. So I think we're on track.
Speaker Change: To achieve that number.
Speaker Change: And.
There are still some.
Some more trimming today, where there'll be a continuous.
Speaker Change: Exercise that we go through to keep those costs under control, but we are highly focused.
Speaker Change: And it is.
Speaker Change: Got it.
Speaker Change: What are the key objectives of the teams to keep these costs down and under control. So we achieve our cash.
Neutrality next year.
Speaker Change: And I think Stephen just as a again from the chief executives point of view I think.
Speaker Change: Terry we've done an excellent job of doing the cutting and identifying it. So we're not obviously, we haven't stopped the wrap nor have we stopped the licensing nor have we stopped the papers being published and all the key opinion leaders.
Speaker Change: So we're trying to make sure that we do cut but we actually also deliver.
Speaker Change: So we have to to make sure we are.
Speaker Change: Get down to where we need to get through but we're also making sure that we have really good shape. So I'd like to thank the Orange I team. We've just had a leadership meeting inhibit two days again again, we'll go through all the strategic imperatives, and we managed to keep everything afloat and moving at a lot lower cost.
Speaker Change: Which is a real credit to the team and the dedication of all of the people who have also been taken salary sacrifices.
Speaker Change: I'm being down a half salaries I'm getting it all in stock for the last five six months.
Speaker Change: And the team has shown a great amount of effort and teamwork and sacrifice to make sure that we get all this work done and we cut the costs.
Speaker Change: I think it's been a financial success, but also be the team success and it's something which has been very important to do so we can get set up for success.
Speaker Change:
Speaker Change: Yes.
Speaker Change: Share with us how the data rooms are working it seems like the focus is on sepsis, but you also have information like for example in lung cancer.
Speaker Change: What is the size of the visits are the groups are small individuals.
Speaker Change: The length of time, they spend in the data rooms.
And how many data rooms, do you have and where are they.
Speaker Change: So I'm going to be a little careful because obviously its confidential with find a lot of India is because the big companies don't Lucky you are.
Speaker Change: So I need to call a fishing of someone else's docs.
They've reputation but.
Speaker Change: On the sepsis front.
Speaker Change: We're most interested in if a small number of very large players.
Speaker Change: I can't tell you the names, but I'm sure you know that they were targeted and I've been very responsive responded well responded by the largest of the big old when lives are players worldwide.
Speaker Change: So and we're at a very good state there.
Speaker Change: The data room, we use our program.
Speaker Change: <unk> share vote, which actually can track where people are and what they're doing.
Speaker Change: On the sepsis Ards the sepsis was a little more advanced because as Andy pointed out the data was really really good and large so we got to look at sort of a month head start on that because the data came through it was the first study we could share with sort of early to mid summer.
Speaker Change: So and being the.
Speaker Change: Sepsis side is something which is potentially very close to a product I mean very close to in the sense of that would do their own study when the machines, but that looks to be up.
Speaker Change: Our five 10-K, which is sort of 18 months plus whatever extra time. So that's something in the diagnostic world is actually a very quick time for a product the oncology side again, the large players you'd expect to know again I kind of mentioned the names without betraying confidence isn't I don't want to get them off because that's going very well, but the large companies you'd expect to see in liquid.
<unk> space.
Speaker Change: As well as some of the large diagnostic players that.
A little different because it's not one the sepsis is actually sepsis and coagulation and the large coagulation players.
The oncology as the ones you would expect.
Speaker Change: And there's three main areas, we're licensing in the oncology space.
Speaker Change: You'd capture which there are a couple of very big players who've showed very good interest with Rebecca involving with Andi.
Speaker Change: And data.
Speaker Change: As we said we've also got new key working in solid tumors very well, there's obviously some interest in some of those players in one or two of the other players.
Speaker Change: And then we have a general lung cancer work and that side is obviously licensing, but where I believe quite a good chance to be in a couple of screening for national screening programs. In the next 12 to 18 months, which is massive breakthrough to my knowledge, there's not a single liquid biopsy company in any national screening program.
Speaker Change: Worldwide the non open beta.
Speaker Change: So for us to get potentially a couple of in the sort of short to medium term I think is outstanding. So obviously, there's some interest in that as well so and none of the companies I mentioned are smaller than multibillion dollar too many hundreds of billions of dollars in valuation so certainly a big enough.
Speaker Change: So we're really pushing we're working hard at it.
Just a matter of getting it all through and getting the best deals but.
Speaker Change: We're very happy with how it's going so far.
Speaker Change: Thank you for taking my questions.
Speaker Change: Thank you David pleasure.
Speaker Change: Thank you our next questions come from the line of Bruce Jackson with the Benchmark Company. Please proceed with your questions.
Speaker Change: Hi, good morning, and thanks for taking my question.
Speaker Change: I wanted to ask about.
Speaker Change: Ceylon testing. So you got the milestone from Heska are they have they actually commercialize that yet and do you have any sense of if that's growing or not.
Speaker Change: Hi.
Speaker Change: We feel like we have not put the milestone yet we've got the $13 million in December which was a monitoring and dog screening. The feline most of it is still outstanding and we're doing a lot of work the issue with feline.
Speaker Change: However, the cat friends, a little different right doctrine.
Speaker Change: Little more cantankerous, not two thirds of our cats, but they're much less likely to go to the vet.
Speaker Change: But the main issue for us is not actually be net but we've had to optimize for different animal obviously.
Speaker Change: Cat not surprising, but until you think about it when you think about it have a lot less blood.
Speaker Change: So the sample size is obviously smaller but also we've discovered they have a lower overall level of nuclear Sims. So we've had to get our test work and go to lower <unk> limit of quantification.
Speaker Change: So in humans and dogs.
Speaker Change: Our test with fine testing 20, or above nanograms per 1000, but cat we've had to bring it down to five which is actually again shout out to our production team.
Speaker Change: Hmm.
Speaker Change: Haven't done a great job at getting all that working so what would be getting it to work and we've now got it to work on.
Speaker Change: <unk> placed and we're close on the machines as well so.
Speaker Change: So that we can measure it in cap with the process and now with the prices of working with our partners on our feline study.
Speaker Change: To get that going but we have not got the fail on yet, but we've got a lot of background work.
Speaker Change: It's not there, but it's certainly the background work now look extremely good and we now have a working you know said animal we believe.
Speaker Change: Humans dogs, and cats and now in the process of trying to show that has clinical utility, but theres no you cant start clinical utility till you prove you can actually measure nuclear phones in cats, and that's now been done and we're now in the process of the clinical utility.
Speaker Change: Does that make sense.
Speaker Change: Oh, Yeah, that's a that's a perfect.
And then one other question.
Speaker Change: Yeah, human cancers, or a number of studies that are ongoing are there going to be any data publications or presentations coming up here in the next couple of quarters.
Speaker Change: Absolutely huge.
Speaker Change: As an organization, we've always really prioritize papers, but obviously they take a lot of background work and getting their louisa.
Louise it's actually here.
Oh and then he's on the line I'm sorry, Andy.
Speaker Change: Medical Officer, Andrew Joyner answer that question.
Speaker Change: Yeah.
Speaker Change: Is India.
Speaker Change: Because you're on mute I think.
No you're good Andy you can go ahead.
Andy: Can you hear me now.
Speaker Change: If we can.
Speaker Change: Thank you.
Speaker Change: And we've got.
Speaker Change: Two large publication coming forward just about to be submitted to miss it by.
Speaker Change: Sorry, but one by end of Q4 and the bonds by beginning of Q1 and that will take it takes a while its case review process, but we're very excited by that is we started sharing some of the data that was seen a satellite symposium.
Speaker Change: You generate a lot of interest and where we are.
Speaker Change: But very excited to be taking this forward and that should lead to next opportunities around.
Speaker Change: To study that.
Speaker Change: Licensing deals with partners that Kevin and then how does it.
Speaker Change: Cummins elites Teva Peach tea on coal.
Speaker Change: I think it's really.
Speaker Change: We've done a lot of work to optimize the task and pick up one of Kevin's points as well its really close to being a product. We now 10 10 test around quickly.
Speaker Change: It doesn't seem to understand what the normal ranges and key thresholds out which is really critical but optimizing it in the clinical space and it's pretty exciting what's taking forward I hate that answer to your question, but that was sepsis Andy also oncology.
Oncology, so we got them.
We've got new tests in.
Speaker Change: In cancer, and we're working with a number of players too.
Speaker Change: To take this forward and on the licensing deal with there as well we've got what particular in lung cancer.
Speaker Change: Again, Kevin mentioned that thing to accept a screening programs national screening programs that we're taking forward.
Speaker Change: Is it close to being.
Speaker Change: Pay because it dropped it and had.
Speaker Change: Had to be cutting through the submission process at the moment.
Speaker Change: Alright got it that's it thank you. Thank you.
Speaker Change: Thank you Bruce Thanks for the questions.
Speaker Change: Thank you there are no further questions at this time I would like to hand, the call back over to Cameron Reynolds for any closing remarks.
Cameron Reynolds: Thank you everyone and thank you for listening in on the call as we said, it's a critical time for the company.
Cameron Reynolds: All indicators are going in the right direction on the financial THAAD as well as the burn in the income and it's going to be a critical few next quarters as we really deliver on the human side, we're working very closely on some licensing deals, which we're very hopeful we can we can close.
And we are aiming for them to be similar to the ones in the vet space.
Cameron Reynolds: So it's going to be very exciting time my note for our shareholders. It's been a long journey.
Cameron Reynolds: So for us of course.
Cameron Reynolds: We are absolutely managed to make our platform, which I think will change the world of diagnostics in the human space as it Hasnt event space. So we're working tirelessly to take that last step on the human licensing THAAD and hope to have a lot more updates for you in the coming quarters months and quarters. So thank you very much for your time and have a great day.
Speaker Change: Thank you. This does conclude today's teleconference. We appreciate your participation you may disconnect. Your lines at this time enjoy the rest of your day.
Cameron Reynolds: Okay.
Cameron Reynolds: Okay.
[music].
Cameron Reynolds: Yeah.
Cameron Reynolds: Okay.
Cameron Reynolds: Yeah.