VolitionRX Ltd (VNRX) 2019 Q3 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to VolitionRx Limited's third-quarter 2019 earnings conference call. (Operator Instructions). This conference is being recorded today, November 13, 2019.

I'd now like to turn the call over to Scott Powell, Executive Vice President of Investor Relations. Please go ahead.

Thank you and welcome, everyone, to today's earnings conference call for VolitionRx Limited. This call will cover Volition's financial and operating results for the third quarter ended September 30, 2019, along with a discussion of our recent activities and key upcoming 2019 milestones. Following our prepared remarks, we will open the conference call to a question and answer session.

Also on our call today are Mr. Cameron Reynolds, President and Chief Executive Officer; and Mr. David Vanston, Chief Financial Officer.

Before we begin, I'd like to remind everyone that some of the information discussed on this conference call will include forward-looking statements covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on our beliefs as well as assumptions we have used based upon information currently available to us. Because these statements reflect our current views concerning future events, these statements involve risks, uncertainties, and assumptions. Actual future results may vary significantly based on a number of factors that may cause the actual results or events to be materially different from future results, performance, or achievements expressed or implied by these statements.

We have identified various risk factors associated with our operations in our most recent annual report on Form 10-K and other filings with the Securities and Exchange Commission. We do not undertake an obligation to update any forward-looking statement made during the course of this call.

I'd now like to turn the call over to our President and Chief Executive Officer, Mr. Cameron Reynolds. Cameron?

Thank you, everyone, for joining Volition's conference call today. I'm happy to say we have great momentum and have made progress on many fronts this year: in platform development, with Nu. Q Capture, our colorectal and lung cancer work, our Asian trials, and of course with Nu. Q Vet.

Firstly, let me start by reiterating our vision and what makes us so excited with our progress and our space. Since the human genome was published in 2001, there have been tremendous advances in DNA sequencing technology. Billions of dollars have been spent by several well-known companies and a wide range of research groups, and great strides have been made in sequencing cancer mutations for drug treatment selection. However, there appears to now be a growing realization that the DNA sequence is only one part of the picture and is unlikely, for example, to be clinically useful for early cancer detection in many cancers.

DNA does not occur in isolation, but exists in cells as chromosomes made up of DNA and proteins in nucleosomes. The DNA essentially forms the recipe book for making all human proteins. But, like all recipe books, we don't make every recipe every day. Some recipes are made often, and others rarely; some are never made. The DNA recipes are just the same, and which protein dishes are made when is determined by the epigenetic state of the chromosomes.

Many human diseases, including cancer, are caused by a loss of normal chromosomal epigenetic regulation. Volition is an epigenetics company focused on advancing the science of epigenetics and exploring these advances in human health. This has been our mission since our founding, and is coming to fruition with our Nu. Q platform at the very heart of epigenetics.

So we say the epigenetics is as, if not more, important than the genetics, the DNA. In short, it's not DNA; it's the full chromosome. We strongly believe the last decade of work out of Volition, with our ever-expanding team in epigenetics, puts Volition in an extremely strong position with our expansive IP portfolio to be a significant player in this key field.

Overall, I'm delighted with our progress we are making and I'm excited by the momentum we have. We have spent a great deal of effort over the last two years developing our assays to final product grade, with many improvements, including monoclonal antibodies and using recombinant nucleosomes as calibrants, something that was implausible just a few years ago and is now routine in our assays.

As of today, we have now utilized two of our finalized Nu.Q assays in eight separate discovery cohorts across five cancers, and can confirm they have performed well in all studies to date, demonstrating its reproducibility and robust nature on manual plates, the simplest platform.

And so I'm delighted to announce that with regards to our traditional plates, we are now in the process of CE Marking some of our finalized assays so that our IVD kit can then be used in both human and animal clinical trials. In parallel, in order to insure our tests are accessible around the world, we have also undertaken broader work on automated platforms, which are based on chemiluminescence and magnetic beads. Our format, which is used by all the leading global diagnostic companies such as Roche, Abbott, et cetera, as well as a large range of smaller open platforms. These platforms are also on the very basic ELISA platform.

To expediate this, we are delighted to announce that a clinical validation expert on these automated platforms, with more than 15 years of experience in the industry, has recently joined our Belgian team. This assay transfer project has allowed us to work on cutting edge auto-analyzer platforms from both Europe and China. Indeed, we believe we are the first lab to be operating the LUMIART auto-analyzer outside China. Not only has this opened up the number of ELISA platforms that our technology can be operated on in the market.

But also, and perhaps even more importantly, the adaptation to automated platforms based on chemiluminescence and magnetic beads has significantly increased the analytical accuracy of our assays by a factor of more than 10 fold. We will now utilize these bead-based assays in our clinical studies, including our large scale clinical trial program, such as the colorectal and lung cancer studies collected in Taiwan.

I'm also delighted to announce that we have received our first revenues from both our first Research Use Only kit sales and from a service contract processing samples with our Nu. Q research kit. The results from the samples that we processed under contract were promising and will be published next year. This is yet again progress momentum in yet another area of our business.

Also this quarter, we were delighted to announce a significant milestone in our Nu. Q Capture development program: the ability to enrich nucleosomes -- and, therefore, DNA -- of tumor versus non-tumor origin by separating long from short nucleosomes. This breakthrough could be used in a number of ways.

Firstly, by using mass spectrometry, new biomarker targets may be discovered. Secondly, and importantly, as an enabling technology in sequence-based liquid biopsies by enriching the nucleosomes of cancer origin from the blood. And lastly, to increase specificity in Volition's current assays by removing the background signal.

I am extremely excited that this enabling technology could bridge the gap between Volition's epigenetic profiling approach to early detection and those sequencing approaches that have so far been limited to personalized treatment selection. These recent results could impact the entire sector, and highlight Volition as a leader in the field of clinical epigenetics.

The next step in our Nu.Q Capture development work -- which is underway, and we'll be reporting in the coming months -- is to determine the level of discrimination of tumor-derived nucleosomes using immunoassays and sequencing to provide a complete analysis of cell-free nucleosomes.

Overall, and our R&D team has made remarkable progress while keeping our cash burn rate low and consistent with prior quarters. Thanks must go to Dr. Gaetan Michel and all the Belgian team for their continuing efforts.

And so, to the all-important financials this quarter. We closed out the third quarter of 2019 with $19.7 million in cash and cash equivalents versus $13.4 million at the year-end of last year. During the third quarter, a long-standing investor exercised $4.8 million in aggregate amount of outstanding warrants to purchase shares of our common stock, bringing the total cash received by the Company upon exercise of warrants by existing shareholders in 2019 to date to $16.5 million, showing very strong shareholder support.

I'm also delighted to announce that subsequent to the quarter-end, we further strengthened our balance sheet with some additional non-dilutive funding from the SOFINEX Fund in Belgium. We are also really proud to be able to have done all of our work with a consistent quarterly cash burn rate throughout 2019 of approximately $3.6 million per quarter. We continue to manage cash carefully and believe that we are in a very sound position with regards to the financial runway to achieve our 2019 and 2020 key milestones.

During the third quarter, we were delighted that the National Taiwan University commenced our first large-scale lung cancer study, which will include 1,200 subjects receiving low-dose computed tomography scans. At a total cost of approximately $320,000 payable over two years, this study demonstrates, once more, Volition's commitment to conducting large yet cost effective trials worldwide. We are hopeful that our recent proof-of-concept results in lung cancer will be repeated in this much larger cohort, and expect to release preliminary data relating to the initial 600 patients in the first half of 2020, and the remainder by the end of next year.

We were also excited to have executed a contract with Shanghai Fosun Long March Medical Science Company Limited to introduce the Nu. Q platform to China. Based on our recent promising proof-of-concept data using product grade Nu. Q assays, the parties initially started a lung cancer study and have already expanded to collect colorectal samples, and we're working together on the new LUMIART platform that I mentioned earlier. I'm traveling out to the Far East later this month with Dr. Jasmine Kway, Singapore Volition's Chief Executive Officer, and I'm very much looking forward to continuing our discussions with the Fosun team.

We were happy this quarter to have completed the formation and commence operations of our new majority-owned Texas-based subsidiary, Volition Vet Diagnostic Development LLC, and to appoint and welcome its Chief Executive Officer, Nathan Dewsbury, to our team. Violation Veterinary will focus on the further development and commercialization of Nu. Q Vet products and help drive early revenue for the Company. On the veterinary front, subsequent to the quarter end, we were also delighted to execute a contract with Texas A&M University to collaborate on the research and development of our Nu. Q Vet products in the all-important veterinary market, and things are moving fast.

Last month, in October, Dr. Heather Wilson-Robles, Associate Professor at Texas A&M, presented pre-analytical data at the Veterinary Cancer Society annual conference in Houston. The VCS conference is one of the largest veterinary oncology meetings in the world. The presentation was well received and generated much interest in the potential of Nu. Q Vet.

Also in October, I, along with other members of the Board and executive team, visited Texas A&M to sign the contracts memorializing the collaboration between Volition and Texas A&M in the veterinary market. And I have to say, we were incredibly impressed with both the facilities and the team we'll be working with to bring Nu. Q Vet products to market. A video capturing some of the trip is available on our website.

On the intellectual property front, our worldwide portfolio of granted patents that protects various aspects of Volition's Nu. Q technology is growing steadily. This is yet another key differentiator with many other technologies under development or available in the market. And I would like to thank Dr. Jake Micallef, our Chief Scientific Officer, for his outstanding work in writing all of these patents.

We had 20 patent families related to our diagnostic tests with eight patents granted in the United States, seven patents granted in the European Union, and a further 25 patents granted worldwide. Additionally, we have 15 patent applications in the name of our subsidiaries pending in the US, and 13 such patent applications in the European Union. This portfolio also covers veterinary medical applications.

We intend to continue our pioneering work in the field of epigenetics through the development of our proprietary Nucleosomics technologies and will continue to apply for patents for future product developments. Our strategy is to protect our technologies and gain market exclusivity with patents in Europe and the United States, and in other strategic countries. We believe that the patents on the technologies underlying our products should provide broad coverage for each product, including protection through at least 2031.

And finally to future milestones. As the assay development program has gone so well, we can now return to our lung and colorectal cancer trials with a range of assays on an automated platform in early 2020, starting with medium-sized studies before moving on to our large-scale flagship trials. We expect to report the first of this data in the first half of next year. We are stepping up the work on these trials and preparations for abstract submissions for upcoming scientific conferences are underway, and we expect to submit at least one clinical paper for publication in the coming months.

In addition, we have been working on several proof-of-concept studies, the first data from which we will be releasing later this year. The need for a simple, easy-to-use, cost-effective test for cancer is truly universal. And we hope very much that our Nu. Q test can help revolutionize the way cancer is diagnosed worldwide. We are excited about the commencement of our work in China, and look forward to completing the study and to a successful collaboration with Fosun Long March.

We have also begun the process of CE Marking for Europe and registration in key Asian markets for our first lung and colorectal cancer triage products, and will provide further details on this in the coming months.

The development of Nu. Q Vet is picking up pace. And we are hopeful to announce data and indeed present at upcoming conferences throughout 2020, beginning in the first quarter, and aim to launch our first Nu. Q Vet product in the second half of next year.

We look forward to announcing the next and hopefully final step in demonstrating the clinical utility of Nu. Q Capture through both sequencing and in our immunoassay approach in the first half of next year. Our whole team, including our Science Advisory Board, who met just last week, are incredibly excited by the opportunities this represents.

We aim, with our solid cash position, to report throughout 2020 and beyond several key milestones, including Nu. Q's ability to detect a range of cancers in both humans and animals, including preliminary data from our first studies in China, in addition to clinical data on Nu. Q Capture. We are delighted to be working with collaborators from around the world, all of whom have outstanding reputations and share our aim in improving early diagnosis of cancer and other diseases.

Volition is an epigenetics company focused on advancing the science of epigenetics and exploiting these advances in human and animal health. This has been our mission since our founding, and it is coming to fruition with our Nu. Q platform at the very heart of epigenetics. Remember, it's not DNA; it's the full chromosome that's important.

We believe the last decade of work in epigenetics puts Volition in an extremely strong position with our expansive IP portfolio to be a significant player in this field. We also intend to further strengthen our supply chain for key components by bringing them in-house. We are extremely proud of the accomplishments we have achieved thus far, and look forward to what the future holds for Volition.

I, along with the rest of the Board, and indeed the whole Company, look forward to sharing the results of key studies over the coming year with our optimized platform. We expect 2020 to be our most exciting year yet. Thanks for joining the call today. I very much appreciate it, given the busy earnings call season.

We are happy to take your questions. Operator?

(Operator Instructions). Jason McCarthy, Maxim Group.

Congrats on the progress.

Thank you, Jason.

So for Nu. Q Capture, I'd like to see if you could help us contextualize the milestone you hit back in September. And specifically how that differs from the previous data you had in the program.

Yes, absolutely. And if you want to call afterwards, our chief scientist is here to go through it in much more depth. But for the purpose of this call: so now that we can capture the nucleosomes and pull them out, which is another benefit of all the background work we've been doing on magnetic beads, we've started the process just with one assay, which works extremely well, [and one] advanced most in March. And we proved back then we could pull between 70% to 80% of nucleosomes of that structure out of the sample, which was fantastic. So that's what we announced around the time of the Capital Markets Day in New York.

And we said at the time what we're also looking to do was also see if we could do other markers and also concentrate nucleosomes from tumor origin. Not to get too technical, but it's been shown in a few papers, including in Nature, that short nucleosomes with less than 150 base pairs of DNA are much more likely to be from cancer than ones with more sections of DNA around the nucleosome. So we found a marker which does do that. It pulls out short versus long. And so we do a massive concentration of nucleosomes from the tumor. Now -- so that was a very, very big breakthrough, and the team was incredibly happy.

So what we're doing now is working on a range of markers, including maps, to add the final step of sequencing or mass spectrometry and starting to use it on our assays to see -- put some numbers around what that concentration looks like so far as discrimination. But we can -- we're almost 100% pulling the structures we're after now. We've done three and there's a very wide range we can do. So not only can we preferentially pull out a range of structures, and one or hopefully many that are preferential in cancer; we can also do things like methylation and other markers, preferentially pull them out or leave them in, depending on concentrating or reducing. So extremely exciting.

And as I said, our science meeting was last week. I think on a scientific level and a world-changing level, I think the Advisory Board are incredibly keen on the potential for this, not only to help, us but a wide range of other companies. And as far as revenue goes, I think it's potentially a very, very good source of revenue through licensing. And we should have the next data around JPMorgan time on the first part of next year, which we would hope to include sequencing data, so it's really picking up.

Was that clear?

Yes, very much so. I have one more, actually, on the Capture, because you do mention that it can be used to increase the specificity of the Nu. Q test. So I'd like to see if this would be -- would this be integrated into a second-generation test? Or would it be more something that would be separately validated and then used as an additional step for the existing panels?

Yes, very good question. That's something -- the reason we haven't really [data] is we're working through how that would be integrated. So first of all, what it -- by preferentially taking out nucleosomes from the tumor, it's a step where you use a magnet because it's -- it's obvious, but it's not obvious until you've heard it -- but you use a magnetic bead and then you use a magnet to pull out the nucleosomes. So that then, once you have them, means you are pulling out either the background noise or the nucleosomes. So again, we haven't got data on this. But that would lead you to believe you could sweep away the noise, which would give you better signal to noise ratio, which then obviously means better clinical accuracy.

So I would -- this is just -- this is our current thinking. We won't make it all public until we've made final decisions. This is part of -- a lot of the work we're doing now. It's a very simple step. It's analogous to another assay at the start, so it's a very low cost. Again, a few dollars to do the first step. So the first step would be to either clear out the background or concentrate the nucleosomes from the cancer, and then run the assays. That's the current thinking, but there's other ways of doing it which we've also looked at.

But we'll hope to have a process and our numbers around what we're doing and how that helps us in the first half of the year. But we can definitely pull the nucleosomes out and we can definitely [preferentiate] long from short, so this looks to be very good but the exact numbers will come through soon.

Does that make sense?

All right, thanks. Perfect. And then just one more on -- actually on Nu. Q Vet. Because you've presented the preclinical work; you've established a subsidiary with A&M. So what are the next steps for Nu. Q Vet? And then how does that end up getting to market?

Yes, very good question. So we've just had actually the first inaugural call with the teams from Texas and ours, now the company is formed. And we're going through all the steps, same as the human market, actually. The results we're getting in the vet market are eerily similar to humans, because we do have very similar nucleosomes. So obviously there are potentials for things like Nu. Q Capture in the animals as well.

But the next steps -- so they are doing -- collecting two trials now, one in the relapse market. I guess it's very similar to the human market. If you have been diagnosed or a high risk, you want to make sure you're not getting the cancer back. So expecting samples for that, and also for a frontline screening.

And in the dog world, one of the major cancers in the breeds which are very common are things like the blood cancers, like in humans, things like non-Hodgkin's lymphoma. So they are continuing -- they are setting up a lab to be more like ours so they can run Capture, can use a bioanalyzer and other areas. And we are shipping them kits. And when we CE Mark kits, there will be a production and quality grade to be used on the animals as well, so that should greatly speed up the process.

So as far as product goes, the all-important product, there's two ways to the market, two main ways. Use our kits in their lab; we had a very good tour of their facility. It was quite remarkable; a lot better than humans treated in a lot of the world. It was an amazing facility in Texas. The team there has been absolutely fantastic. They run their own -- it's not a clear lab because it's not human. But it's a clear lab model where they get blood samples coming from a wide range of areas, and hundreds and hundreds a day. And they run some of their tests in their lab.

So the aim would be to use our kits the way they are, in a clear lab sense, if you will, which is in their hospital and facility, which is underground, below their hospital. And we aim to have that -- the first one next year, middle to the end of next year, based on the human assays. So it could be very quick.

USDA -- which actually potentially is often a smaller market than the clear labs or the vet hospitals -- that's still a fantastic market, would be roughly 12 months after that. And then what you do is license the kits or sell the kits to the other big vet hospitals around the United States. And there's about nine big ones that -- if Texas A&M is comfortable and happy in running them, you could also run them in those as well. So that's something we're hopeful to start off next year and then have a USDA product in 2021.

All right. Thank you very much.

Mark Breidenbach, Oppenheimer.

So Cameron, you mentioned that the CE Marking process is underway now for your triage test products, and I think I heard in both colorectal and lung. I was wondering, first of all, if you can walk us through the timeline of what needs to happen before the process is completing, and when you expect product launches for these triage products.

But also, I don't think we've talked too much about the triage product in lung before. We know quite a bit more about where it would be used in colorectal, specifically in Scandinavian countries that have nationalized testing. Where would a lung triage product fit in? And maybe you could talk to that point first.

Yes, absolutely. So currently there is -- the only screening commonly used for lung cancer, it's a low-dose CT scan which you are probably familiar with, which is actually quite sensitive. It's used for high-risk people in the United States, also in Taiwan where we're running the trial.

So it's a very good test for sensitivity but horrible for specificity, which for the nonscientists out there means it's good at picking up the cancers but there's a huge number of false positives. And the problem with that is the next step can be a biopsy in the lung, which is not where you want a needle being stuck, unless you're really certain something is going on, for the obvious risks.

So we have talked to partners around the world about where we would fit into that. So what they're looking for -- so the reason it's good for sensitivity, the current test, is if you are a 70-year-old smoker, you probably have some lumps on your chest. And if it's cancer, they will find the lump. But the problem is you probably have other lumps even if you don't have cancer, if you are an older smoker. So it picks up all the lumps, including everything else. So what they do -- hoping -- there are two problems we hope to be able to solve, or one or the other.

If it's done before -- the two problems with the test are the problems -- the current low-dose CT -- is problems with specificity, meaning false positives. So you'd have the low-dose CT scan first and then have the Nu. Q triage second to really show who's extremely high risk for having cancer to make sure those people have the lung biopsy.

But also, if you are very low risk, that you don't have the lung biopsy and you are more on monitoring. So if it is secondary, it's to increase specificity. If it's before, which is -- which same test you could also do before -- the second problem is compliance, our old enemy compliance is in colorectal screening.

There's a lot of people who don't want a low-dose CT scan because it's considered a little bit risky for radiation, and people don't like having scans. So we have talked to other groups who may want to do it first to drive compliance. So you'd have a Nu. Q test and say, look, you really need to go to your low-dose CT scan. And then the data could be used afterwards, as well, for triaging the test. So I think it fits very well into that pathway. Again, we're not looking to -- the assays which we have finished now are very good on the manual format.

So this was why we [seem acting] -- we're doing two platforms. The manual format, which you've seen from the data we released in March, is working very well in one or two assays. But where we are doing a whole panel of assays, like in colorectal and frontline screening, we will do them all on the bead-based platform because it's a very, very analytically accurate, reproducible -- all those things, so it's much better for a large range of assays.

So, when would we expect to see the data from that? So the Taiwanese trial includes people who have -- all have had low-dose CT scans, so it's perfect for a triage, some of which obviously have cancer, some of which have other benign nodules, and some of which have -- for better terms, a clean lung. There's no nodules at all. So we'll be seeing -- and we expect it to be good on -- potentially be used for either positive or negative selection. You don't need a biopsy, or you do, as a positive or negative triage.

So we're very excited about that. As you can probably tell, lung has really come through the pack. We had some fantastic results which we have announced. We are doing the trials in Taiwan and in China, and we hope to start them in the US, based on this kind of data. So timing-wise, they are collecting very, very well in the lung and the colorectal in Taiwan. And we expect to have the first big chunk of those samples in the first half, hopefully near the end of the first or early into the second quarter. And then we'd run the assays. Because it's the triage for that purpose, we'd run the plate format which we're CE Marking.

So there are two reasons. So once you have CE Marked the plates for one purpose, then it's much quicker to CE Mark them for others. Not sure if you remember this, but the main purpose of CE Marking is to make sure the plates are very well made, reproducible, robust; the controls are properly run; and they can be run at any lab, anywhere.

So once we have CE Marked it for one of our products, we will also incidentally use these CE Mark kits for the dog market. We want to take care of the dogs as well. Not for the same purpose, obviously; lung cancer in humans or -- is different from animals, but it just means that kits have been properly made. And then when you run them in samples in, say, the dog market or the other markets, they are absolutely perfect for the product, and then you just have to amend the CE Mark for a different purpose. But all the background work on the kits and all that work has already been done.

So it's a real momentum we're getting in all those areas, and we expect to have the first data from the lung (multiple speakers)

If I can interrupt just for a second, just to be clear: then the CE Marks that you are pursuing right now won't necessarily be the products that go to market. Is that correct? You'll have maybe different triage products that are eventually launched at some point in the future, and the stuff you are CE Marking now is not exactly what you'll be selling.

Yes. Well, yes and no. So we'll CE Mark in one or two areas, and then we'll be doing bigger and bigger trials with those assays. So a CE Mark means you can sell it for whatever purpose it is CE Marked for. And you can do that on a few hundred samples, which we obviously have in a range of different cancers. But we're going to be doing bigger and bigger trials, including this 1,000 to 1,500 trial in Taiwan for lung cancer. So it's a platform.

So once you have CE Marked it for one use, even in the animal market, it becomes much easier to launch a product in those areas. But yes, we do expect to do multiple trials in colorectal and lung, and the animal side, using these CE Mark kits. But yes, so that's something which we'll be doing a lot of.

Okay. And just one last follow-up for me. Can you give us a ballpark estimate for how far away we are from initiating the -- let's call them the flagship studies in -- the larger-scale studies in colorectal and maybe lung for asymptomatic patients?

Yes. So as I said, they are collecting very, very well. And we'll need a range of them on the new format, which is going very well. So we'll have the first assays this year, and we expect to have enough of them in the first or second quarter to give us a very good accuracy to launch products in asymptomatic. But we'd start running the trials, the big flagship trials, in the second half of next year.

But we'll have a lot of data on the plate format and on the -- still very meaningful small, medium-sized trial starting next month and then through the first half of next year. But the flagships will start, just on the bead-based assays, in the second half of next year.

Got it. Thank you for taking the questions.

Bruce Jackson, The Benchmark Company.

With the upcoming data releases and publications, is this coming from the Bonn study and from the endometriosis study? And maybe you could give us a little bit of a feel for which cancers are going to be reported first.

Yes, actually there will be a wide range of cancers. As you know, we've done a lot of background working in lung, in colorectal. We've also done some noncancer work, as you know, in endometriosis. We've also learned from one of our -- dog work, another cancer, which is what we're going to be announcing next month.

I won't say it now; it will all be public in a few weeks, but we are very excited about that as well. So I think the very best work we've had, and the best results we've had, have actually been on lung with these first -- the last assays on the plate format. So I would expect it to be lung.

We've also done contract research work with NIMS, which will also be published, which is also non-cancer. And we've also doing a lot of work on Capture, as well as all the pre-analytics. That's all very publishable. So we're the first group to really -- well, first and only group to work on nucleosomes. So there's an absolute treasure trove of information we'll be publishing on what's the best way to run our assays. We've gone through all the stuff with recombinants and the antibodies in serum and plasma; all those things are going to be published.

So we expect to start that process now. We wanted it to be all finished; and Jake's been, as you know well, has been writing patents furiously. We've done another bunch of them the last few months. So we're in a very confident position now. We absolutely believe the epigenetics is the answer to a huge part of the problem in diagnostics.

I think we have worked through the solutions. We're still working all the time on improving bits of it, but I think now is the time we're very confident to start publishing, and in a range of cancers and background work and other non-cancers. The exact details will be when the publications come out, but we have a huge amount to talk about now, and we'll start soon.

Okay, great. And then with regard to the revenue this quarter, I think this is your first quarter of revenue, right? From research revenue?

Yes. So that was a mixture. We sold about 11 kits, so we're very happy with how it started. And we did a contract research work using our kits, so it's all very much our base technology. So yes, it's a very exciting. And it was a -- everything is really starting off well.

And then in terms of continuing to generate revenues, this research revenue stream is something that can grow? Do you think it's going to be intermittent? And then second part of the question is when do you think you are going to begin generating revenue from one of the clinical products?

Yes, good question, and something obviously we've got -- given a lot of thought to: how to best drive revenue and get it done as quickly as possible. So I'll just give you a quick run-through. Yes, there was -- we were very happy with the revenue we got last quarter. There was a bit of a burst. It's the first time we've done both of those. The kits were launched, and the first time we looked for contract. So I think it's going to be a bit of a burst from the last quarter, but I think it will grow steadily through next year.

So just listing the areas we can get revenue from, I think the research kits and contract will be lumpy because some quarters we'll have contracts and some we won't, but we expect that to build solidly through the year. This is only from one or two types of research kits, so we intend to have a wide range on the market.

And as I said, epigenetics is really taking off, and we're the only company who really has kits in all of these areas. And the contract research, I think, will become more and more of what we do. When people want to run samples but don't want to do it in their lab, we can do that and charge as we have.

The next source of revenue is obviously -- we will be CE Marking the assays for the triage uses. And also -- so we'll have a lot of results from that in the first half. And I think the next revenue is probably the first product -- it's tough to say. The lung side has really picked up. Colorectal is taking a long time to get the assays perfect. We're working and also to collect these big trials. So I'd expect, as you said, to launch and have revenue from the veterinary space by the end of next year. And we do have a lot of opportunities now in licensing.

I'm in China in a few weeks. I think there's certainly a possibility next year of licensing our assays in the Chinese market. I'll give you some more updates if that does happen. And also from Capture; as I said, our scientific team absolutely enraptured with the prospects for Nu. Q Capture and how it could really transform the whole industry. So we will begin discussions on that in the first half. We haven't now because we're still perfecting and getting data on quantifying it. But that's, I think, very strong new potential for next year.

But I think the big revenue from the big -- I think Jason mentioned the big asymptomatic trials in Europe and the US, and Europe and Asia -- I think are more much more likely to be, at the earliest, the end of next year, but much more likely to be in 2021 for that -- for the big kick in revenue. But we do expect revenue from a range of sources next year, but I wouldn't expect to see a large kick-in until 2021.

And then it should really take off, because we will have, I think, at least a dozen assays on the platform ready next year. And we have a huge pent-up demand of different cancers, different conditions. And I think the research use is really going to take off as epigenetics really begins to fill its potential that we've thought it would have and absolutely coming through now.

(multiple speakers) I can talk you through your model afterwards if you'd like. We can go through it all and (multiple speakers)

That would be great. All right, thank you very much.

Jonas Peciulis, Edison Research.

Sounds like you had a quite busy quarter, so congratulations for the progress. You talked about the Nu. Q Vet product, about the timelines, and the setup with the university. And then it sounds like they will help you to [just a resource, like to tell] the product while in their own labs.

But what about the marketing side of things? So how -- I mean, will you need to increase some kind of commercial capability, so some commercial capacity? Or maybe hire reps or do some promotional activities? I mean, how -- what are you thinking, how to increase awareness about practitioners [and there] a test of such kind as this?

Yes, it's a very good question. And first of all, yes, thanks. It has been really busy quarter. I couldn't be happier with how things are going. It's really coming through in so many fronts. So yes, so the product launch would be in the -- we imagine in the clear labs' equivalent in the vet market.

And we would look to broaden that to licensing to the other big labs, which does not need sales reps. We have taken on Nate Dewsbury, who is a specialist in the sales area. He's putting together a plan from us: how we'd roll it out, [hook up] universities, and then product through reps.

I think this is not made public, but I can tell you what our thesis has been with everything else -- and I don't see we'd change it in the vet market -- is we really don't want large numbers of sales reps. Being a simple ELISA, there is a system set up currently for a whole lot of tests in human and the dog space, and current pipes for products to go through.

We don't intend to reinvent the wheel. We don't intend to have a large salesforces or teams. That's how we've kept everything really low cost now. If we don't need to do it, we don't do it. So we need a -- like in the human space, we need a few key people to market the process to the people who sell them. But I don't see any situation where we're going to need a large salesforce, and there's absolutely no need for one.

And that -- also the good thing on being on magnetic beads is we can also move from the plate format to the machines; also in the vet market as well for the big centralized hospitals, the vet hospitals. So it's very, very complementary to the human space, and I think we'll tackle it the same in the human space. And yes, as I said, tackle cancer at both ends of the leash in the same way. I think our model is very transferable to the vet market.

Okay, that's clear. So going to the Fosun collaboration in China, so you have the lung cancer trial, you have one potential ongoing. And if I'm correct, you mentioned in the press release that you've started working with Fosun in colorectal cancer as well. So can you tell more about it?

Yes, absolutely. So Fosun, I think, had been impressed with the results and what we do and what we're about. They also had their machine, their LUMIART. So where they can use manual plates or the LUMIART uses beads, so we're getting that to work. Yes, they are very happy with what was going on, so they have initiated the colorectal trial as well. So we could have data on that coming up soon. I hadn't mentioned that as a data point because it's obviously within their [gift] when they release the data, but I expect to see some data from either the lung or the colorectal soon.

And I'm in China in a few weeks -- actually two weeks -- and we're going to continue those discussions on how we can best roll out our Nu. Q in China. But I think given the very large size of the market and the size of our opportunity in so many countries, I would see China as a licensing opportunity, not something where we really want to launch a large range of products.

So I've been looking for a deal that's a mixture of milestone payments and royalties. And we'll continue on with what we do best, which is developing the platform and really revolutionizing epigenetics, and leave the selling in China to a Chinese group. So hopefully that's going to be Fosun if we continue the discussions, but I'm very happy with how that's going.

All right. Yes. I probably would agree [with the vehicle's income] commercial opportunity, it probably would make sense to do it -- to do it the licensing way. But I guess there would be readthroughs from the data in lung cancer and colorectal cancer, to have these indications of why it's important for you as well.

But in terms of the scope of your collaboration, so are these two main indications that Fosun is focusing on? Or is there potential you see with more cancers (multiple speakers)?

Absolutely potential for -- the Chinese have some slightly different cancers, different populations. Things like esophageal and head and neck and other cancers are more common there. But we're all human beings, so we have the commonality in a lot of cancers.

I think a perfect relationship with someone in China or other groups in Asia, like India or areas, would be to license one or two products, get the relationship working, and then develop it through a wide range of products, if that relationship is going well. And colorectal cancer is on the rise in China; lung is massive, as we know. But there's every indication that our assays could work in a range of cancers. And yes, they are very interested in working in any cancer which could be launched in China.

So all of that, I think, would lead us to -- I mean, they may or not be our choice to finish the work there. It's going very well so far, we like working with them, but I think if we did it would be very good, but there are other options. But the trial seems to be going well and I'm looking forward to continuing those discussions soon.

Okay, thank you. So that's it for now.

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Reynolds for any final comments.

Thank you, everyone. And I know it's a busy time for you all, so thanks for taking interest. Also, those of you who are going to be at JP Morgan, we're going to have a big team there. That's only in two short months we're going to be over there. And I think 2020 will truly be a fantastic year for Volition. So hopefully you can all keep track of what we're doing, and we'll have a lot of updates coming up. Thanks again for your time.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.