VolitionRX Ltd (VNRX) 2020 Q3 法說會逐字稿

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to VolitionRX Limited's Third Quarter 2020 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference call will be open for questions. (Operator Instructions) This conference call is being recorded today, November 13th, 2020.

I'd now like to turn the conference call over to Scott Powell, Executive 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 of 2020, along with a discussion of our recent activities and key upcoming milestones. Following our prepared remarks, we will open the conference call to a question-and-answer session. Also on our call today are Mr. Cameron Reynolds, President and Chief Executive Officer; Mr. David Vanston, Chief Financial Officer; and Dr. Jason Terrell, Chief Medicals 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, quarterly reports on Form 10-Q, and other filings with the Securities and Exchange Commission.

We do not undertake an obligation to update any forward-looking statements made during the course of this call. I'd now like to turn the call over to our President and Chief Executive Officer, Mr. Cameron Reynolds. Cameron?

Thank you, everyone, for joining Volition's conference call today. I especially appreciate it as always, given the busy earning call seasons, and the ongoing pandemic and lockdowns. I would like to yet again recognize the amazing commitment and hard work shown by our team over the past quarter during these difficult times allowing so much progress in so many areas.

Thanks all for those that attended our recent Virtual Capital Markets event. After such a great reception will be sure to host another event in the new year. I will start today by covering our financials and then get right down to discussing the upcoming launch of our first product, the Nu.Q Vet cancer screening test that we are targeting for the 30th of November exciting times.

We have strengthened our cash position this year, providing a great runway to achieve our many milestones and give us flexibility during the continuing pandemic. We closed up the third quarter with approximately $21 million in cash and cash equivalents compared with approximately $17 at the end of last year. We continue to manage our expenditures carefully. And as we approach commercialization, our burn rate is approximately $1.6 to $1.7 million per month, which we expect to continue as we make additional investments towards our product launches and expansion of our platform.

Regarding product launches, I am delighted to announce the target date of Monday, November 30th for launch of the Nu.Q Vet cancer screening test in the US. This is an extremely important milestone for the company as this first launch, that we expect to be the first of many, shows that our platform has reached the level of reliability and reproducibility to be launched in a completely independent lab.

This test will be positioned for use in the animal health check of older dogs. Those that are seven years and older and for cases where there is a high suspicion of cancer. It may also be a complementary test for young adults at high risk of developing cancer in their lifetimes such as Bernese Mountain Dogs, Golden Retrievers, Rottweilers, Beagles, Boxers, West Highland White Terriers and Shetland Sheepdogs.

The test will initially be available from the GI lab at Texas A&M University to potentially thousands of vets across Texas and the rest of the US. Further details will be released at launch, but in brief, vets will draw the blood as per the collection instruction and then ship it for processing to the GI lab at Texas A&M.

Results will be available within three to five business days of receipts. We expect the cost of the test from the GI Lab to be around $122, of which Volition receives approximately $45 per test at a greater than 85% margin. We anticipate vets to charge between $160 and $200 for the test. Cancer in dogs is widespread. It is the leading cause of death for dogs over the age of 10 and there are over 6 million new dogs cancer diagnoses each year.

As cancer screening is not commonplace in Animal Health, as it is in human health. We believe blood tests like the Nu.Q Vet cancer screening test could completely transform how vets manage cancer in companion animals. It really is a simple, low-cost, easy to use ELISA based screening blood test, which we believe will help streamline the screening process up to one third of malignancies in dogs including common malignancies such as lymphoma and hemangiosarcoma.

As in humans, early diagnosis of cancer has the potential to improve the treatment and quality of life as well as providing valuable additional information to inform the clinical decision-making process. If you've not had the opportunity to see it yet, I would recommend watching Professor Heather Wilson-Robles presentation from the recent Capital Markets Day that is available on our website.

Heather did a great job of bringing our first vet product and its clinical relevance to life. As part of our prelaunch marketing, you might have seen a release earlier this week, of report entitled, "A look to the future of cancer diagnostics". Which compiles contributions from some of the key opinion leaders in the vet oncology space.

It's an interesting read and is also available to download on our website. It was fantastic to connect with the thought leaders who continue to support us either through ongoing studies or upcoming launch activities. So, watch this space. To leverage our global team. I'm also delighted to say that we have begun prelaunch work in Asia, led by Dr. Jasmine Kway and supported by our vet team, and I'm looking forward to updating you on progress in the coming months.

Certainly, we will announce further details at the time of launch, but I wanted to spend a couple of minutes discussing the commercial opportunity that this initial vet product represents. The only pre-question is, what is the size of the potential addressable market? As I said earlier, there is high unmet need in the vet market with a few simple noninvasive tests currently available. Cancer is the leading cause of death in dogs over the age of 2 and up to 50% of all dogs over the age of 10, developed cancer in their lifetime.

There are approximately 77 million dogs in the US. And according to the 2019 AVMA US pet study, which is completed every five years, 83% of all dogs visited vet at least once per year with 75% being classified as routine preventative visits. So, we believe the market is both large and accessible.

Clearly building a market takes time, but just to give you an idea of the potential market of the 77 million dogs in the US, approximately 20 million dogs are over the age of seven and therefore at a high risk of cancer. For every 1.2 million dogs of the 77 million dogs in the US is tested using the current platform of plates, we would generate approximately $54 million in sales revenue and over $45 million in gross margin.

We're looking at it the second way, if just 10% of the old dogs in the US, competencies here that 2 million will generate approximately $90 million in revenue and approximately $76 million in gross margin. And that's only 10% of the potential older dog market. Not to mention the additional dogs that will be tested with the suspicion of cancer or out of an abundance of caution for higher risk breed and a wide way of potential new tests in dogs and other animals, such as cats.

In short, whichever way we look at this, we believe that this is a huge commercial opportunity. Our current expectations are based only on our initial canine cancer diagnostic test in the US market. However, we plan to launch additional veterinary tests and generate revenue outside the US in the future as well, and in other species. We are hopeful given the demonstrated strong accuracy of our test to market for additional product will end up numbering in the million tests per year.

Yes, while recognizing the desire to receive revenue guidance, we're unable to provide such guidance at this time as we don't know how quickly things will ramp up nor the total demand for the test. What we do know at this stage is that we have received our first request for a quote from the GI Lab for approximately $370,000. This being capacity for the first technician in the first year of the lab. We aim to announce the launch in further labs in the US and across the world. Once reviewed this detailed launch in the first quarter of next year. This is just the beginning, but a fantastic opportunity, and we are truly excited to start commercial operations.

As discussed at the Capital Markets Day, our plan is to initially drive awareness of the Nu.Q Vet test with specialist oncologists at the top institutions and have an extreme focus in Texas training all of the oncology hospital specialists and have an outreach program with general practice veterinarians. I am really proud of how hard the whole team has worked to prepare the launch of our first Pinnacle product is an incredible milestone for the company and we have exciting few months ahead for to push through.

Moving from the vet business to human cancers, where in parallel, we continue to make great progress. As we've discussed at the Capital Markets Day during the pandemic, we have focused on simplicity and in particular on our CE Mark, H3.1 assay in blood cancers.

You might ask why?

This is a product we can launch with a simple assay during the pandemic, given the very similar results we have obtained in both human and dogs in these cancers with exactly the same assay. I think this makes a lot of sense during the pandemic to launch the same assay for the same cancers in humans and dogs, again, showing the amazing versatility of our platform. To that end, I'm delighted to announce today that we have engaged diagnostic oncology LLC, otherwise known as DXO, as a contract research organization CRO to conduct a US clinical trial for non-Hodgkin's lymphoma NHL.

The trial is designed to obtain multiple FDA approved adjunct test to aid in the diagnosis of the five most common and aggressive forms of NHL. DXO is the largest US bureau specializing oncology purpose in vitro diagnostic device clinical trials. We are delighted to have them onboard. NHL accounts for approximately 4% of all cancers, with approximately 77,000 cases diagnosed per year in the US at around 700,000 worldwide.

As Dr. Terrell discussed at Capital Markets Day rapid diagnosis is essential as that can result in [weak], whereas early treatment is often curative. Diagnosis is often delayed as symptoms for NHL mimic those of common everyday conditions such as tiredness. Existing data suggests Nu.Q will greatly aid physicians in distinguishing NHL from common conditions, fulfilling what we feel is a critical unmet clinical need, which represents a major market opportunity.

The trial will enroll up to 1,500 subjects across 10 major US healthcare institutions over a total of 22 months. This extensive program will cost approximately $2.9 million over the two years, assuming the completion of numerous projects and includes not only the clinical study but also data analysis and regulatory and reimbursement submission preparation. We anticipate that diffused Large B-cell lymphoma, DLBCL, which accounts for approximately 35% of NHL cases, will accrue study subject more rapidly than less prevalent subtypes.

To that end, we expect a DLBCL FDA 510(K) submission will be possible approximately 10 to 12 months into the trial. At that time, we would like to submit a DLBCL 510(K) while petitioning the FDA to accept subsequent 510(K) a sufficient NHL, sometimes numbers accrue. The FDA approval for Nu.Q DLBCL, the subsequent 510(K) to be filed utilizing post-market data of an FDA approved test. The strategy will streamline both FDA regulatory approval and CMS reimbursement approval to minimize our time to market and hopefully time to revenue.

We're delighted to be working with diagnostic oncology LLC, DXO and to get started on this pivotal study in the US. Dr. Terrell joins us on the call today to answer any questions on this exiting trial and potential product launch in our usual Q&A session at the end of the management summary.

In addition to all of this, we have also made great progress on the research program for the use of Nu.Q technology in next process and in particular in monitoring disease progression of COVID-19. And we are looking forward to rolling this into influenza and potentially other diseases such as sepsis. Currently, we have several studies that have either been collected or are being negotiated in Europe, and we anticipate the next results will be reported before the end of this year. As announced on the last call, we are also negotiating a large FDA trial for the use of our assay in next for COVID-19 and influenza in the US, and we'll announce the full details once they have been finalized.

Early identification and triaging of patients tested positive for COVID-19 are the most likely to deteriorate and need critical care will enable both improved outcomes for patients and a more efficient use of critical care resources to healthcare providers. We believe this is still very much an unmet need worldwide in fighting the impact of the pandemic and given the information on the vaccine, many other conditions driven by the process, such as influenza and sepsis.

If we continue to see positive results in the lung into little studies, we aim to have a CE Marked product available on multiple platforms in the first half of 2021 and look to launch a low-cost product that could be used in any laboratory worldwide as soon as possible after that. We are yet again proud of the versatility of the Nu.Q platform and the range of applications for which this product can be leveraged. So while the process is to a relatively [Nu.Q] evolution.

Given such positive early results, we have formed a Nu.Q NET team to provide focus and drive to the product development program. To that end, we hope to announce an ambitious study in overall NET and NETosis before the end of this year. And I'm looking to use the Nu.Q technology in many ways in NET through diagnostic disease monitoring and as a companion diagnostic to monitor the treatment response.

This once again underlines the strong breadth of the Nu.Q platform technology supported by broad intellectual property portfolio. Designed to host another capital markets event focused on Nu.Q NET program early next year.

From the large cancer clinical trial perspective, our [monthly] trials, I think it is fair to say that in various ways, these have now been affected by the continued pandemic, either by slower or post collection or by a host of other supply chain or travel and communication issues. We believe we have successfully managed those areas under our control, such as assay development and running samples, both on track with our milestones, but many issues that are obviously beyond our control.

I particularly note that the EBRN study in the US, where in summary, the EDRN expect lower collections in 2020 than originally planned, and we expect this trial may be further extended as it is currently paused. As always, I will update with further details once available. On a better note, the collection of both large-scale study at the National Taiwan University continues with aim was to complete collection by the middle of next year.

With regards to those studies, we have now completed 12 discovery grades Nu.Q assays and five more orthogonal biomarkers on subject of both actual National Taiwan University studies, colorectal and lung, and they are working with our collaborators on data analysis. As for a more rigorous process of presenting data where we can, I need a peer reviewed papers or the accomplices an abstract has been accepted by the IAFLC meeting in January, where we look forward to presenting our lung cancer detection results.

The APDW meeting originally planned for December 2020 has been delayed to later next year. So, we provide updates colorectal cancer data in due course. From the convention point of view, we are in the final paperwork stages for Silver One, production hub for our products and components post through a lab in Belgium. We will soon be producing several key components and plan to achieve full assay certification next year.

We anticipate that as with our previous real estate transaction. At least some of these costs will be supported through non-dilutive grants and or loans from the local region. Our plan is to produce at large scale, raw material such as recombinant nucleosome, which act as a calibrant to our Nu.Q assay. in addition to antibodies that are key elements to our branded products and indeed will manufacture our full diagnostic kit once finalized. We expect to offer all elements for both commercial sale and for clinical trial purposes and CE-marked products for sale in Europe and beyond.

We also intend to install a service lab in the new facility, which will undertake sample processing for external parties. You have [to go to] new facility will not only bring manufacture of key components in-house, thereby securing our supply chain. It should also significantly reduce the cost of production of many of these elements and in turn should reduce the cost of assay development. It's an exciting time, and I could not be happier that we could find a suitable site so closely situated to our current lab plus another great step forward on our road to a diverse revenue stream.

To that end, I'm also delighted to announce the appointment of our first sales manager, Emmanuel Demillecamps. He starts with the business in December. Emmanuel brings over 25 years of sales experience in the diagnostic field. Having worked for companies such as Roche, Sanofi and most recently Vela. We believe he will be an excellent addition to our team with his focus to help drive revenue from our Silver One facility.

I'm equally delighted to also announce on the call today that we have opened a small, shared laboratory at California State University in San Marcos, California. This lab initially with a team of just two will be led by Dr. Terry Kelley, our Chief Scientific Officer of Volition America. They will focus on blue-sky innovation and discovery research, which we hope will help us lead going forward on some of our more cutting edge research projects such as Nu.Q Capital, which I think has been very active on over the past few months as well.

So watch this space, I'm sure that you'll agree that we have an incredible amount of existing and new activities underway and so to support the runway needed for the new NHL clinical study, NET study, including COVID-19 opening of Silver One laboratory expansion and of course, launch of our initial Nu.Q vet product, without a takedown of our existing shelf registration statement to conduct an at-the-market equity offering, ATM of an up to an aggregate of $25 million in shares of common stock to be sold periodically in the future, Oppenheimer and Cantor Fitzgerald will act as our sales agents under the ATM.

The object for this new ITM in contrast to our existing ATM is to include more institutional investors over the life of the offering. As you may be aware from our filings with the SEC, our existing ATM has been in existence since September 2019, and we plan to utilize the available balance under the offering price of the new ATM and so into the future.

I'd like to reiterate our vision and what makes us so excited with our progress and our space. Volition is an epigenetic company focused on advancing science of epigenetics and exploiting these advances in human and animal 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. We believe strongly the last decade of work at Volition with our ever-expanding team in epigenetics. Puts us in an extremely strongly position with our expansive IP portfolio to be a significant player in this very key field.

Overall, on so many fronts with our ever-growing team and IP. I'm delighted with the progress we're making, and I'm excited by the momentum we have developed in the epigenetics field. Indeed, a whole team is incredibly excited by the company's future opportunities. We aim to report through the end of this year and beyond into next year, several key milestones, including most excitingly, the launch of our new Nu.Q vet screening test.

We will focus on driving revenue in the coming quarters where possible during the pandemic in four key areas: vet products, disease monitoring tests, for NETosis for example, COVID-19 using our new production facility to drive reagent sales and licensing of our technology for others to commercialize. 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 months and years with our optimized platform.

Despite the pandemic, 2020 has proven to be our most exciting year yet, thanks to our fantastic hard-working team. Thanks for joining the call today. I very much appreciate it given the busy earnings call season and the pandemic. We're happy now to take questions, Operator?

Thank you, we are now conducting a question-and-answer session. If you'd like to be placed in the question queue, please press star one on your telephone keypad. (Operator Instructions)

Jason McCarthy from Maxim Group. Your line is now live.

Hey, guys. Thanks for taking the question.

Good morning.

So, I'd like to ask about the NTU study. You mentioned that you completed 12 discovery, great assays on the NTU subjects in both colorectal and lung Cancer. So, my question is how will you use dataset? And should we expect to see any of that data in the near future? And also, are these on the [weight] or the beads format?

Yes, yes, you expect to see this in the short term. They're eager to present them at conferences. So that's in a few months in January for the lung and then when the conference comes around and these are just subjects of the original populations. So, it's not the final trial, but it's fantastic to get some progress during the pandemic on them. Unlike the trial in the US. So yes, they are on the plates and so originally in plates and now on the magnetic beads.

We started with one and we've switched over to both. So, up a little bit on the plates initially and then everything else on the base. And yes, we'll be presenting that as soon as we can, but be eager to present them at conferences. So it will be the lung in January and as soon as we can on the colorectal side, as well.

Thank you. And then, I wanted to ask about the kind of the data in the canines since the nucleosomes are essential for them as they are in test, would you expect to see a similar result that you saw in dogs in the large-scale human trials?

Actually, yes.

And (inaudible) it will be the same using it as the first lung test in at-risk patients who may not want a biopsy?

Yes. So, the short answer is it's been remarkable. The pre-analytics the process has been almost exactly the same in dogs, actually the kits we send over were the human kits, the same kits with the CE Mark for the blood cancers. So yeah, it's been remarkably similar as you source superb results in the animal space, 97% and 87% AUC for the two cancers. We're in the high in the high 80s for the blood cancers.

And Jason in on the line, perhaps he could go through the use of what they would be used, but yes, I think it is a something that would be given to a lot of people not just those. Jason, do you want to give a quick description of how you would see the market being for the NHL blood test?

Yes, hi, this is Jason. Yes, So, can we talk a little bit about the prevalence of NHL just in general, in the US, mentioned that there's approximately 77,000 new diagnoses made every year. But the tricky thing about making the diagnosis of lymphoma is that the symptoms often mimic the symptoms of very common everyday illnesses. Routine infections and autoimmune disease and things of that nature.

So, the symptoms of the patients present are very common every day, the patients seen by primary care physicians where the most common list achieved complaints that you'll see a fever, fatigue, things of that nature. So even though there's 77,000 cases diagnosed in the US every year, the market for patients who present with those symptoms that could be NHL is much, much larger, and one of the most common chief complaints of medicine, honestly.

Okay thanks, Jason. Basically, that was actually one of the real important things which we drove while we're driving NHL through now. So, because -- we can do through a 510(K) because it's not a screening test. It's not given to everybody, and NHL can be actually quite young when you get the cancer. So, it's kind of in between it is symptomatic in people, but it's much more broadly symptomatic, as Jason said, things which could be pretty much anybody.

So, we don't know what the market size is going to be, and that's something we'll work on during the trial and work it out. But I think very much like the vet space, if we had shown good data, I think it's something which a lot of doctors were not using those quite nonspecific symptoms. And then the market could easily be in the millions of tests per year. And I think we charge a very similar amount to what we do in the vet space in a very similar margin.

So, the addressable market is certainly in the hundreds of millions or billions of dollars a year. And what we get of it will depend, of course, obviously on results from the trial and the rollout and everything else. But it's by no means a micro market. And it's a very good space for the company because you don't have to do a large PMA study like in colorectal, but it's still a very, very large addressable market. So, I think, if we can show good data. It could be an excellent product and really put us on the map in the US.

And timing-wise, obviously, the first readout we hope to be the end of next year. So, it could well be a 2022 story when we have an FDA approved product that we could expect to be a very large addressable market so, time will tell, but we're very encouraged with what we've seen so far.

Okay, and then I have one more if you don't mind, on the [NET's hosted] product, now as the pandemic subsides because even after the COVID pandemic, COVID is likely to remain with us for some time, probably a smaller scale. But how would this product be applied in patients who do get it or for other diseases like influenza, would it be largely patients who have severe cases and are trying to determine whether they're progressing too critical. Could you go into a bit more detail on that?

Yeah, it's a very good question. So obviously, we got into this market, NET's have been sort of on the cutting edge in the last few years and they are much better understood now. And obviously, with the pandemic, there's been a huge amount of focus back on them. So, during the COVID pandemic, the main use would be for NETosis test would be to say monitoring disease progression and coming to hospital, we've shown from the data we presented that people with severe COVID have very, very high levels of NET's in their blood measured by our assay.

People who are sick but not very sick, have medium levels. And people with low level COVID or asymptomatic have low levels, so you can monitor disease progression. We're seeing how good it is but the prognostic in longitudinal samples, which we'll have data on very soon. And I think, yeah, I think it is going to progress, probably for at least a few more years where we can work this through. But the body's immune response than the NETosis is the driver in sepsis as well. And sepsis is the biggest killer in hospitals, and it's something which is really tricky for physicians because it's very hard to know that it's actually underway, if you will.

And so, we're working on trials now for COVID and influenza. And I think obviously, influenza has been with us for millennia. So, I think that's obviously going to continue. COVID, I think will continue for a bit longer, but the validity of the NETosis test stretches way beyond even just COVID and influenza into things like sepsis. We've spoken to a lot of groups that have therapies underway for sepsis for NETosis from sepsis COVID influenza and they all say the same thing, there's absolutely no good companion diagnostic for the treatments, it's very hard to treat someone, if you don't know if it's working or not beyond some observations.

There are some markets, but they don't work well. So, we've had a lot of interest from groups to see if we can be companion diagnostic. So, all of those would be multiple tests on the same person. So, the potential market is absolutely huge. And I think if we can improve any validity in influenza, as with COVID, it's a massive ongoing market. And of course, sepsis would just be huge because there is nothing out there which can really monitor the progression or really tell you if this is building up and happening.

And we expect to have a lot of data on that in the next six months because we have a platform now. It's very, very similar to the assays we have in the different things we've developed. So, it's something which we have been ready, if you will. We can launch things very quickly. Now it's taking a lot of time to protect the platform, but now we couldn't be happier that it looks very useful in animals, a range of animals, humans, cancers and things is why does NETosis.

So very good, very good a year ahead of us I think, and I think NETosis would be a big part of us going forward and we'll have a lot more data in the short term. We've created a new small division within the company to focus on the NETosis on the trials and the marketing side and expect to see a lot more data soon. And we have very big expectations what this is going to look like.

All right. Thanks, Cam.

Thank you, have a good day.

Kyle Mikson from Cantor Fitzgerald. Your line is now live.

Hi. Thanks so much for taking the questions, congrats on all the great progress here.

Just wanted to jump straight into the vet cancer screening test in the market. Cameron, that was a great overview of the cancer market here. The $20 million, I think you said, what testing penetration are you expecting kind of see early on maybe a year or two post launch, did you kind of get to that point in your kind of a (inaudible)(multiple speakers)

I want to get one more piece (inaudible) this is ultimately like how long you think it'll take to get to maybe mid-single digit penetration, but 10% or so would be really incredible. But you mentioned like millions of tests per year. And so, I wanted to understand how the (inaudible) test to get there and obviously super early. But if you could answer any of those questions, just comments on the different variables, (inaudible) that would be super helpful. Thanks a lot.

Yes, that's a million, maybe billion-dollar question. We don't really know what that curve looks like because this is really something very unique, very new. Cancer screening in the US is not really common in dogs purely because there is no test. A very high percentage of dogs go to the vet every year in the US, 70% to 80%. So, the obvious addressable early market is the 20 odd million dogs who are geriatric, meaning over seven years old. So -- and then you probably had a few million more dogs who are higher risk. Also, probably looked at the presentation and therapy monitoring is also a positive solution, I think going forward. So, we're at zero today, I think that the general market either at least I think, 10% to 20% of the addressable market, which would be 2 million to 3 million dogs.

Now what does the curve look like, is that going to take two years or three or five?

It's very hard to tell. We are doing a lot of aggressive marketing on the -- the good news in this population unlike the cancer market humans, there's only about just over 1,000 veterinary oncologists in the US. So, I think a large percentage of those whenever we are in the next six months, we started with Texas because it's a very good discrete market of about 5,000 vets, we leave out the majority have been trained at Texas A&M.

So, there's quite a good outside network, if you will, between all of those people. So, I think we can get a very large number of vets in Texas know who we are. So, we're attacking to fuel the top veterinary oncologists through the lunch and learns to key opinion leaders, and they are all very positive. And then we're going in vets in Texas the first 5,000 and we're doing a beta launch, so we're making the product available and then going through the marketing process now, which have obviously begun. But then don't forget that's just one lab. We intend to rollout a wide range of labs who vendors their own marketing.

We've already started work in Asia. Dr. Clay has conducted some groups there. So, we would expect to get some sales in the first half of the year in Asia as well. And then we'll of course, we've got a sales person starting in December first in Europe. We could also stop the European prices. So, the short answer is it's really hard to gauge what that curve looks like, but I think we have a fantastic test. We have fantastic partners at 100% need out there for the test.

This is a very, very common cancer in dogs. The price points we're at seems to be very something which isn't going to be a big problem in United States. And there's always a temptation to trying to charge a really large amount, but our ethos has always been to keep it affordable. But given our accuracy, I think where we are is very achievable and we're in a very good margin anyway. So, I think it works for everyone. So, we have the first order from Texas A&M and they offer indicative, quote for the first $370,000 worth of kits. So that's just data, I'm not sure how long it's going to take them to go through that, but yes, it's kicking off, but it's really hard to say exactly what that curve looks like, but we're very bullish.

Got it. That was really helpful. Thanks a lot. I appreciate the color on the sales and marketing strategy as well. I guess just turning to the blood test, the NHL test. Can you just kind of walk through the clinical and regulatory pathway for that? I know you mentioned the trials and could take 22 months. You're working with the CRO.

But first of all, has the [tramp] gone enrollment yet. I wasn't quite clear on that or when did that start, I guess and then, what milestones and points benchmarks are you looking for before you submit that first 510(k) for DLBCL, and I guess, some of the young medical backgrounds here on the line maybe that could be helpful.

Yes, Jason, good idea. Jason, do you want to answer those questions, please?

Yes, sure. So, the trial has obviously gotten enrollment. We're still in the start-up phases with IRB approvals and protocol drafting and things like that. So, it has now begun enrollment, that should begin sometime in the following quarters, hopefully sooner rather than later. But the strategy, very first strategy for the trial is to begin the trial in after its enrolled about 20% of the total patients, that should probably be in the 35% to 40% of the total of diffuse large B-cell lymphomas that needed to be and enrolled to complete the study.

And once we have about a third of the diffuse large B cells. We will go to the FDA at a pre-submission meeting. And at that time, we'll present the interim data for this top trial, will present all the supporting evidence we have from all of our outside the US trials and all the retrospective studies that we've done and will ask the FDA to grant us approval for the 510(K), what sufficient numbers of the diffuse large B cell have been met. So, our hope is that we get the diffuse large B-cell vaccine came first. And then at that point, we'll use the same test in the same trial to get approval of the subsequent less prevalent subtypes as they accrue statistically significant numbers in and pre-submission meetings accordingly as the trial progresses and gets narrowed to the end.

Excellent. That's great. (multiple speakers) So actually, Cameron, assume you guys do close this Silver One acquisition in the near term here. Can you just help us think about the rampant reagent revenue next year in 2022? I guess I know it's tough, but just would appreciate the color there and just given the size of the facility, like what do you estimate is like the, I guess the run rate reagent revenue opportunity associated with Silver One. Again, I know it's tough, but you must know like based on the size, what you know, what is the capacity cognitive, just anything there would be helpful. Thanks a lot.

Yes, we're looking through working through that now as well. And it's 10,000 square feet and actually a very small footprint can actually make a huge amount of product because the two key components, the antibodies and the controls. So, retail for about 3 to 3 milligrams, and he can make a lot of ground in a small room. So, it's not a capacity issue. It just comes down to what the market is.

So of course, the first use for all will be for our own products. Now we bought Optima, Volition in Germany. We have the ability to make the controls as well as bringing in-house the making of the antibodies. And again, that goes down about 95% from the retail cost of buying those components. So, that's a huge shape across more than just the revenue with, in obviously bringing down the cost of goods were already on a very good margin that will hopefully increase the margin. So, there's a lot of things going on there. Number one, make our products cheaper. So that we can make a very good margin. That's something which we'll be doing by about the middle of next year once it's certified.

We're also going to have a contract research organization. Now we have over a dozen different nucleosome assays on the base. We expect to get incoming people that one revenue had last year was from names where we had EUR 17,000 from small number of samples. So it could be people don't want to set up a lab and set up a machine to run a profile of Nu.Q assays. So, that can be a good revenue from that point of view and then the reagents themselves, if we're making them at wholesale and selling at retail, nucleosides and antibodies become very profitable as well. And we think, as you probably know, there's a huge amount of activity in this space.

(inaudible) multiple billions, and there's a real shift to the epigenetic side now even with the pharma companies we think the demand for good antibodies, epigenetic profiling and Nucleosides and also Nu.Q capture program, which we didn't talk a lot about today, but is very much underway. It is going to be quite considerable, but I don't think it's going to be a lot in the first half of next year, we'll focus on making our own, obviously for our own launches. We want to make sure that we can make the kits ourselves and bring down the price for our products.

I'd expect the first half of next year for us to be sort of bidding in getting certifications. The second half of the year, we will start to release the guidance on what we think the CRO market, the Nu.Q market could be, but we're not, we're trying to be conservative and really know what that answer is before we give anything, but I think it is going to be something which could become very, very meaningful as epigenetics become very important. And I think that the huge amount of work we've now done to make our platform really robust, great ingredients will really pay off in reagent sales as well as our own products.

But also, don't forget when we license to we've been speaking to groups in China and place them in others. We don't expect just to license. We also want to sell the key reagents to supply the Chinese market with Nucleosomes and controls, the people running our tests there as well could be a massive market as well, but yet no guidance now. But we'll certainly be positioned to do that once the lab is fully operational and we've done the numbers ourselves in a comfortable, but that's going to be anything meaningful, it's not going to be until the back half of next year given the ramp-up needed in the facility.

Okay, that's awesome, thank you. And then maybe just one last one for me. You actually kind of touched on this in your on your answer there, can you just kind of update us or remind us where you kind of stand the epigenetic toolbox and Nu.Q capture liquid biopsy platform. It's really interesting on areas of your business. And I know it's maybe a little more longer term, obviously from a commercial standpoint. But just curious, just tell us what we should be expecting maybe in 2021 and maybe beyond? Thanks.

Yes, Kyle, absolutely. We were unbelievably happy. It's actually makes us on just very young. Very excited is the toolbox side, the capture and we're doing a lot of work on the mass spectrometry and the sequencing. And actually, you may have noticed there was a small bit in my presentation, we've opened a small laboratory in California where Dr. Terry will have assistance and that will grow slowly through the year so that we have a team just focusing on the capture side. As you know, Southern California is the key to a lot of this area. That's where Luminous headquartered and a lot of other companies. So, we thought having a footprint there really helps us to become known in this space.

So, what you expect to see, we've gone back like we have had to make sure that the platform we've got some very good results, as you probably saw, and we presented last quarter, but I think to launch a product, we're doing exactly what we did on the bead and the plate side. We're just making sure everything's fully optimized because when it's not optimized, you get very good results. And then things which change around as we used to get in what we did in our basic formats. So we now just optimizing the platform fully. So, I'd expect that to be a lot more news on the quarter one and quarter two as we go through that process.

Because we've now optimized the other platforms, it should be quite quick and easy compared to what used to be like to optimize this platform. But I think we should have a lot of news in the first half of next year and then second, all the way through next year as we optimize the platform. And just as a reminder, what we're doing is separating loan from shortly nucleosomes and the short have been shown to be where the cancer is and short DNA and domestic [geometry].

We got some and we've identified quite a few new biomarkers from mass spectrometry as well as potentially that could be a product in itself in the years to come. So, we're very keen to be pushing the products we are. But we're also spending a small amount of effort on this blue sky, work which very much feeds off basic work. So, expect to see a lot in the next few quarters on that as well and something which could well lead to a product and probably in the 2022 space. And if we can achieve what we are, it will be a really important part of the sequencing world if we can concentrate the way we were hoping to as a product.

Perfect. Yes. It's definitely an exciting time in the cancer screening industry. I really appreciate you kind of answered all the questions and look forward to hearing more in future here. Congrats on the progress again, Thank a lot.

Thank you, Kyle.

Bruce Jackson from Benchmark Company. Your line is now live.

Hi, thanks for taking the questions. If we could go into the upcoming abstract presentation at the IASLC. are these going to be the same markers that you reported on initially with the plates and is the data going to be coming off of the bead platform this time?

Yes, the bead platform, there's a wider range of market now, obviously in the 13, we've done, we've progressed some from the plates to the beads and then add a lot more beads on there. So, it's a broader range than we have on the plates, that will be fully revealed. I don't want to fill a bundle, but there is a wide range available now on the plates. So that will be presented then, and it's been a fantastic amount of work for the team to get a wide range of assays available on the platform. And it's been a great -- it's been quite remarkable that how many has managed to collect during the pandemic. So, this is something to watch for.

Okay. Good. And then to be perfectly clear on the FDA strategy for the DS, the non-Hodgkin's lymphoma test. Is this a de novo 510(K) that you're going after first?

Yes, it will most likely be.

So, most likely the de novo 510(K) and then with the ones that followed after that and you're hoping to make the first test to predicate device and then just use like a standard 510(K) process for the remaining tests. Is that the strategy here?

Yes, you're exactly right.

Okay. Okay. I just want to clarify that. And then with the Nu.Q Capture, great progress, have you gotten any inbound interest from anyone on that platform yet? It's a huge unmet need in terms of analyzing the cell-free DNA and circulating tumor DNA. Given that there's an arms race right now in the space, to get the assays working properly and spend curious to know if you're getting any interest.

Yes, absolutely. We actually -- we've got a lot of interest in this and a lot of areas certainly becoming a potential, a lot of people. But I think we are where we were, I guess, six months or a year ago with the assays. And we got some great results, but it's not a product until it's very stable. And you've really optimized everything fully. So, we've got very serious on that in the last couple of months. Dr. Terry is a real leader in the epigenetics field, and we're really glad you came on board (inaudible) that now, we thought it was important to have a separate focus on capture to make sure that it's fully optimized as quickly as we can.

And you might have noticed in the queue, we're also taken on some expert help from Israel on the analysis side to make sure we really are doing this properly, and we're trying to get the best well defined samples we can on the -- to show how well it works. So yes, there's inbound interest. I can't talk about obviously and tell you unless anything comes of it. But I think as we've had before, where new fully optimizing stage to launch a product and as I said, it shouldn't take that long because of the great work we've become very experienced and optimizing this platform.

And it's obviously quite a few of the key components that we -- what we use for everything else. So I'm very exciting and I think there'll be a lot more news on that over the next few quarters, but somewhere in that in the optimization stage now and then when we're ready, hopefully we can get some good publications, as you say, could be incredibly good tool in the epigenetics field and it couldn't possibly be hotter deployments, with the amount vote of money being thrown around of the space for that. So, it's something we've, again taken very seriously and put some power onto it and some people doing nothing else to make sure that we get it done as quickly as possible. And then when we publish it can be something we can be a product very quickly because we've done the homework.

All right. That's great. That's it for me. Thank you very much.

Thanks. Have a great day, Bruce. Thank you.

(Operator Instructions) Jason Kolbert from Dawson James. Your line is now live.

Hi, guys, great progress. I just would like to focus in on Nu.Q at the veterinarian [leve]. I mean, I think the real incentive to achieve market penetration for the vets is both what is the competitive landscape, so what does this replacing at the veterinary level, and how much revenue could this contribute in terms of margin to the veterinary to the veterinarian themselves? Because clearly a lot of veterinarians are doing in house diagnostics in house testing. And so, they're very, very strategic about what things they adopt and how we'll change the profitability of their practice themselves. So, if you could address those issues, it helped us understand the rate of market penetration in the future, kind of a little bit of a follow up on the direction that Dr. Okunewitch was going on the first few questions that he asked when you turned it over to him. Thanks.

Hi, Jason. Yes, very good questions. And that's something obviously, we've spent a lot of time working through Dr. Wilson-Robles who we can set up a call, and who could answer with a lot more depth than I can, but I understand reasonably well given where we are. So currently, there's no diagnostic blood tests, it's not that similar to humans. And things like scanning is much more difficult with dog because obviously I'm sure you have dog, but they are very tough to keep still for a few minutes in scanning machines.

So, we have to anesthetize them, and a dog cannot speak obviously and can't tell you they're having problems, which is actually one of the reasons I think the vet market has gone up so much during the pandemic as people are home with their dogs and noticed them much more as they're home all day every day. And they have problems, so they take them to the vet more often. So, the competitive landscape basically is completely breadth of anything good in the screening centers for the cancers.

So, unlike the human field, where there are quite a few good competition areas of the competition and the blood cancers are much more prevalent in dogs and humans. And that's the blood cancers where we've had fantastic results just with a very, very simple product and assay. In regard to the doctors in different ways, it can be used at the moment it's a lab test. We're running it on plates, we can -- we plan on progressing into the bead sometime next year and then it can be a much higher throughput. Although where we are the beads, the plates are fine, and we're also working on a point of care, which would be a finger prick.

Well, I guess in the dog's place a paw prick of blood. A point of care is also very possible for the vet space as you said. Now, currently, the vets are very used to sending blood to the big oncology centers like Texas A&M, the big centers and the GI Lab in Texas and the seven big ones in the US, and there are I think from what I asked the GL Lab, there is potential potentially possible for 14,000 investors to Texas A&M and have relationships with and they could actually send it to them if they wanted to.

And we've also been very careful not to gouge everyone, we're making a very fair profit for us. We think we're selling it for roughly $45 for the tests. The GI Lab does all the work running the samples, they look to be at about $122. So, there's still a nice margin for the bed as well. Different vet charge different amounts, but we'd expect it somewhere in the high below 100%, 50% to 70% margin, the vet would be charged around as I said in the $160 to $200 range.

So, I think and some of it's charge a lot more depending on where you are. So, it's something which the vet, I think will be encouraged to do because of the accuracy of the test utility is very, very good, I think it can help them a lot to trying to sort through who has cancer, but also that should make a little bit of money from it, as well, which obviously everyone likes to do. So, I think all of that should make it a very good test, both for profitability and for the drive. And we're doing a lot of marketing. I think a large number of it's in the US will know about the test in the coming months.

It's a reasonably large community, but reasonably small community that reach a certain number of journals. And there's only, as I said, just over 1,000 oncologists in the space. So, I think it's something certainly a very large number of vets will know about it. A very large number of it can order the test if they want. But that's also the reason we're launching in one facility then to get sort of a hot zone of people who know about it and then broaden it out to the other big centers, then they also start marketing it, they will have e-mail list of thousands of doctors they work with who are used to ordering through them.

So, it's very tough to know what the take-up is going to be. But I think it's an excellent product. We have excellent partners as a rule made, we've incentivized everyone along the way. So, I guess, time will tell, but I think like anything we could be surprised on the upside of how well that sector and very profitable. I mean, the addressable market is multiple billion dollars. If you take 22 million dogs, it's a $200 test, even that section of the addressable market is over $1 billion from just what we are, and because we don't have a sales force needed because it's through the vets and through the labs. We don't need a lab, we don't need a big sales force. So, almost 85% goes straight to the bottom line. So, it's very good potentially, we'll find out.

Does it make sense to kind of explore contracting with some consolidated veterinary practices, for example, like veterinary Centers of America and others kind of such entities that establish proof of concept where you get it contracted at that level once you're instantly and 50 to 100 practices?

Absolutely. I'm I can't discuss it at all because obviously, we're not public with all yet, but we're looking at a lot of options. So, this is a high margin for us, $45 a test. But if someone can sell a large number of tests, we can certainly be part of that. And obviously, there's two big companies involved in the space mathematics, which tend to control a lot of the area as well as, as you said, a lot of consolidation going on.

I think to get to if we do get into millions or even hopefully into the high millions of numbers of tests per year, which I think is possible if it goes moderately well, we're going to have to use different groups like that to not just proof of concept, but also to rollout. But we're very flexible where a burn rate isn't very large at all. This revenue is incredibly meaningful. So, and this is just one we've also been in discussions with launching potential products in the cat space as well, as they don't have the same regular tests of dogs don't do, but that's supposed to be changing.

So, I think we'll be very flexible and very adaptable, not just on our own in the labs, but also potentially point of care which adopted. So, I bet could do in their own facility. So, all that could be playful. But at the moment, we're focusing on how to make the launch successful in Texas. Again, not a micro market, there's 7.5 million in dogs in Texas and just under 5,000 beds. But I think there will be a very large percentage of those who know who we are by the first quarter and then we'll have a good indication of how it's going, I think.

Terrific. Thanks for the update.

Thank you. Thanks for your time, Jason.

Steven Ralston from Zacks. Your line is live.

Hello. Thank you for taking my questions. I'd like to concentrate on the top line. You mentioned that the first order for the Nu.Q vet product, it was roughly $370,000, which I calculate to be at 8,000 tests. When will you record those sales on the income statement?

Sorry, just to be clear that was indicative quotes on how the big universities work. It is not the first order. What they do is they asked for a quote for a larger amount than they're ordering right now. So that it maintains the price and also goes through a review system to make sure the university purchasing make sure there's no fraud and not related to the person buying it and all those kinds of things. So the first order would be, but we do expect that order sort of a month at a time. So that will be reported in the next filing.

The $370,000 was just the first indicative quite of what that they are hiring one person to run the tests in the first instance in that one lab. And that's about what they can run in one year. So, four or five flights a week, but that would obviously ramp up if the demand is higher and then we'd go through a lot of different universities and other chains. So, we would be reporting that revenue, it will not be $370,000 right now.

That's the indicative quote for a longer period of time, which I ask for to, but it shows the very serious the hiring of technicians around just the test. And (inaudible) actually get it moving. So, we've got we'll have the first order, which would be, as I said, the first couple of weeks, the first month's supply and then they just keep chipping away at that indicative quote until it's finished. But it's a mechanism for them to maintain price and make sure that there's everything is fully reported properly within their organization.

Thank you, and looking at the Silver One facility, you mentioned that the first half of 2021 will be the setup of this facility and you'd expect to be able to do some contract lab services in the second half. When would you start resume shipping test kits?

That's probably good questions for [the time], I'll get back to him, we are still in the process of working how long the certification will take. And when so the key in some key components, you can actually do much quicker than that, depending on who they are and what they are for, whether they're for research use or any sort of clinical use. Those are quite involved questions and we're working through it now. We're also working how much resource on extra people in the situation. But I would say by the second half of next year, it should be at a level where we can do a very large number of things there. Now that fit out is pretty close to being finished. So, we will be doing some things in there from the end of this year and then we'll look to ramp up through next year. But that's probably a question I can get offline from good time.

And a schedule as to what that all looks like. And would probably have a very good idea of that once we've fully resourced the facility, but the fit-out will be finished in the next few weeks, and we'll start doing work in there very soon. But the process from now by the end of next year, we'll be producing our own plates, our own antibodies, our own controls, the contract research facility incurred from that now so maybe something which I guess we'll have to really fill in next quarter. But it's really running in the wall.

We're throwing a lot of resource at this because I think from what I was saying to Jason, I think we might get surprised with the upsides -- we might get surprised with the downsides of sales. But I want to be ready, that is if there is demand that picks up quickly for the dog test or the COVID test or in the process of blood cancers that we can really meet demand with our own facility, where we make a much better margin. So, we're taking it's really, really carefully but really quickly. So, starting now and finished by the end of next year. But we'll be doing the first things definitely this year in the lab.

Thank you for taking my questions.

Thank you, Steven.

Thank you. We've reached the end of our question-and-answer session, and I'd like to turn the floor back over to management for any further closing comments.

Thanks, everyone, for being on the call as extremely exciting time for us. And I'd like to thank the entire team for working during the pandemic to make sure we can launch our first products. It's something which we're extremely excited about and I think it could well be the first of many, many products. We are at a fantastic space. We have a fantastic team, and a platform and intellectual property is just fantastic. So, I think 2021 is going to be a great year. So, I'm really looking forward to reporting our actual earnings on the earnings call. The next call for the [Kate]. Thank you very much for your time.

Thank you. That does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation.