VolitionRX Ltd (VNRX) 2021 Q1 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to VolitionRX Limited's first-quarter 2021 earnings conference call. (Operator Instructions) This conference call is being recorded today, May 12, 2021.

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

Thank you. And welcome, everyone, to today's earnings conference call for VolitionRX Limited. This call will cover Volition's financial and operating results for the first quarter of 2021 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. On our call today is Mr. Cameron Reynolds, President and Chief Executive Officer; and Mr. Terig Hughes, our 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, 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 would now like to turn the call 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 given the busy earnings call season. And speaking of busy: wow, we have had quite a start to the year and have made excellent progress in developing a range of products based on our proprietary Nu.Q platform. I expect that we will have a lot of news throughout the remainder of this year on additional product developments worldwide.

I will be updating you today on our products, people, patents, publications, and most importantly progress within all four key pillars: Nu.Q Cancer, Nu.Q Vet, Nu.Q NETs, and Nu.Q Capture. But to start off, I will quickly hand over to Terig for the financial report.

Thanks very much, Cameron, and thank you, everyone, for joining our call today. I will now provide a summary of the key financial results for the quarter ended March 31, 2021.

During the 2021 quarter, we reported a net loss of $6.1 million as compared to a net loss of $5.9 million in the same period last year. This result reflected research and development expenditure of $3.9 million, which was in line with last year; general and administrative expenses of $1.8 million, approximately $100,000 higher than last year; and sales and marketing expenditures of $0.4 million, approximately $150,000 higher than last year. The slight increase in operating expenses during the first quarter of 2021 was primarily driven by our ongoing transition to a commercial organization.

During the first quarter of 2021, we significantly strengthened our balance sheet by adding aggregate net proceeds of approximately $20.3 million in cash through an underwritten public offering of our common stock in February as well as through our at-the-market or ATM equity distribution program, with the last sale during the quarter under the ATM occurring on February 10.

We were also delighted to announce in January the award of approximately $4 million in non-dilutive funding from the Walloon region and Namur Invest. We have a long history of support from agencies of the Walloon region who to date have awarded Volition approximately $13 million in non-dilutive funding, including this most recent award. This additional funding consisted of a cash grant of $1.3 million and $2.7 million in loans.

And so we closed out the first quarter of 2021 with cash and cash equivalents of approximately $33.1 million compared with approximately $19.4 million at the end of 2020. With continued work on commercialization and the expected national rollout of Nu.Q Vet in the United States soon to be underway, we expect the cash burn rate going forward to average around $2 million per month. The company is in its strongest ever cash position and this provides us both a great runway to achieve our many milestones and continuing flexibility to weather the ongoing pandemic.

From a revenue perspective, we recorded $25,000 in the first quarter of 2021, mainly from the beta launch of Nu.Q Vet, which Cameron will discuss in greater detail later. Given we are seeing a lot of interest in the Vet product on the licensing side and as we anticipate the national launch in the US in the next few months, we would expect to see this revenue grow strongly through the year from the modest base set during the beta launch.

Last but not least, our new commercial team is building a solid pipeline of sales opportunities as we are also seeing a lot of interest from Nu.Q Discover, our sample processing service for our external parties such as pharmaceutical companies, biotech companies, and academic researchers in Europe. We believe that this opportunity should also translate into solid revenue this year.

And with that, I will pass back to Cameron for further operational and product updates.

Thanks, Terig. I'm delighted to have the strongest balance sheet we have ever had combined with the expectation of significant revenue growth throughout 2021. It is great to have you on board.

In fact, while we are talking about new team members, I will kick off with a people update, which as of late has mainly been focused on broadening the team with top talent to assist with commercialization of our Nu.Q platform. To be clear, we also remain committed to and aim to keep our exceptional R&D team in place to continue to drive world-class innovation.

In the first quarter of 2021, alongside Terig joining us as our new Chief Financial Officer, we also welcomed Gael Forterre, our Chief Commercial Officer, to our executive management team to help manage the broadening range of products, including potential products, in addition to the promotion of Gaetan Michel to the role of Chief Operating Officer and Dr. Mark Eccleston, one of our five founding scientists, to the newly created role of Chief Technology Officer. We also announced the appointment of two independent directors to our main Board: Kim Nguyen, an HR executive with global expertise at Google; and Richard Brudnick, a pharmaceutical business executive with extensive commercialization know-how.

And more recently, as of May 1, Dr. Tom Butera has joined the team as Chief Executive Officer of our veterinary subsidiary. Given our belief that Nu.Q Vet has enormous potential, we felt we needed a world-class leader for our veterinary products launches. Tom, a seasoned veterinary executive with a fantastic track record, joined us directly from the Veterinary Centers of America -- VCA -- part of the Mars Veterinary Group, where he served as Business Development Director. We are truly humbled to have someone of Tom's caliber and experience join us on a full-time basis to put a strong focus on driving revenue from our veterinary business.

As we are transitioning from a research-and-development company to a commercial company, we are excited to strengthen the leadership team with these key appointments. We have been very fortunate throughout our 10-year history to have an amazingly, stable, committed, and hard-working team which has grown in both strength and number. I would like to thank all of our team. I could not be prouder of their efforts.

So from people to patents, a core element of our competitive advantage, we have a broad intellectual property portfolio which covers both human and animal applications and we continue to strengthen our protection. As of March 31, 2021, our portfolio includes 28 patent families, 10 granted patents in the US, 14 in Europe, and a further 42 granted worldwide. We also have 93 patents pending.

Our research and development team is both highly innovative and prolific and we work hard to ensure their inventions are protected to the fullest extent of the law so that we might gain commercial advantage. The first quarter of 2021 was busy from a patent filing point of view and I also expect our patent portfolio to continue to grow in the quarters and years ahead.

Our next P: publications. Given our comfort with both our IP position and the stability and robustness of the Nu.Q platform, publications and abstracts remain one of our key objectives and our list of publications and abstracts continues to grow.

During the March 2021 quarter, data for Nu.Q was presented at two international conferences. And we collaborated on two clinical paper publications, with a third being published just last week and a further two awaiting imminent publication. These publications are another very important step forward for our Company. I'm extremely pleased that we continue to be on the very cutting-edge of epigenetics and delighted that these publications span our four key pillars.

These most recent abstracts and papers cover fundamental research into Nucleosomics and Nu.Q performance in lung cancer, the use of our Nu.Q Capture technology as a sampling preparation platform for mass spectrometry to aid biomarker discovery, and the performance of Nu.Q NETs in monitoring disease progression in COVID-19 subjects, and in an animal model study and treatment of sepsis. In the relatively near term, we anticipate two additional papers to be published from our Nu.Q Vet clinical studies.

Many of these topics are perhaps a little too lengthy and in-depth science to cover on the call today, so I will simply share a few highlights and perhaps try to answer any specific questions in the question-and-answer session later. In January, at the world's largest dedicated lung cancer conference, the WCLC, an abstract was published in conjunction with the National Taiwan University team.

Our clinical paper published in Nature's Scientific Reports in March detailed our novel proteomics approach to epigenetic profiling of circulating nucleosomes in the blood of cancer patients. We believe the Nu.Q Capture technology will be useful not only when it is used in combination with mass spectrometry to discover new biomarkers, as per this paper, but also as a DNA enrichment technology which could aid diagnosis, treatment selection, and both treatment and disease monitoring when used in combination with either sequencing and/or our Nu.Q assays.

The Nature Scientific Reports clinical paper was a great first paper on our Nu.Q Capture with further studies expected to be submitted in the coming quarters. From a Nu.Q NETs point of view, a clinical paper reporting the use of Nu.Q in monitoring disease progression in COVID-19 patients was published in March. Key findings, as Jake Micallef discussed on our last earnings call, are the nucleosomes were highly elevated in the plasma of COVID-19 patients, with a severe course of the disease relative to healthy controls and that both histone 3.1 variant and [circulating] nucleosomes increase with disease severity.

In addition, data was published from an animal study of sepsis in a presentation given by Dr. Andrew Aswani, a consultant in critical care and anesthesia at one of London's leading teaching hospitals. This small initial study looked at the use of Volition's Nu.Q NET assays to monitor treatment response to a novel therapy to remove NETs from the circulation in a pig model of sepsis, resulting in improved physiological and biochemical well-being indicated of the pig.

Most importantly, the results showed that the treatment was successful and that our Nu.Q assay was the best and most practical way to measure the NETs response. The studies are now progressing to investigate further animal models and a first-human trial is underway now. So busy start to the year with publications and we expect a strong pipeline in the coming quarters.

And now onto our key updates around our four key pillars. Firstly, Nu.Q Vet. We beta launched Nu.Q Vet cancer screening test in Texas in the fourth quarter of last year, 2020. We are very happy with how the beta launch has progressed, giving us not only our first Vet revenue, with Texas A&M University reordering on a monthly basis, but also in providing invaluable information for our anticipated launch nationally.

Additionally, our Vet product and the success of the launch has captured the interest of a wide range of industry players wanting to license or distribute our platform. This test is positioned for use in both the animal health check for older dogs -- those that are seven years or older -- and may also be a complementary test for younger dogs of breeds at high risk of developing cancer in their lifetimes, such as golden retrievers. The current test in its beta phase is only available at the GI Lab in Texas A&M University, with our launch focusing on veterinarians across Texas.

So what is a beta launch exactly? The beta launch is to facilitate real-world learning from actual customers paying for the tests to help shape the marketing mix before we launch nationally across the US. Which given our positive indicators we expect to be soon, likely in the next few months.

Also, as importantly, it has also given us a chance to showcase the product to the very large multinational companies we are currently in very active discussions with. Which, if successfully concluded, would help accelerate launches and sales worldwide. Given this is our very first commercial launch, we are using Texas as a test market to make sure all aspects of our product are properly tested before we launch in the US nationally and worldwide. And to help us address beforehand any issues with the companies who may end up distributing licensing our products worldwide as well.

We have gained extremely valuable feedback on key factors such as the logistics of a veterinarian taking a sample; shipping, processing, recording, and interpretation of the results; levels of customer service required; pet owners' feedback; and of course, the optimal pricing at all levels. Our team has also done a fantastic job in starting to educate key opinion leaders -- oncology specialists and GP veterinarians in Texas -- about Nucleosomics and raising the general awareness of the Nu.Q Vet cancer screening test.

In terms of the commercial opportunity and the addressable market, cancer in dogs is widespread. It is a leading cause of death for dogs over the age of 10, and there are over 6 million new dog cancers diagnosed in the US alone each year. As cancer screening is not as commonplace in the animal health as it is in human health, we believe blood tests like Nu.Q Vet cancer screening test could help transform how veterinarians manage cancer in companion animals.

Early diagnosis of cancer has the potential to help improve the treatment and quality of life as well as providing valuable additional information to inform the clinical decision-making process. The Nu.Q Vet cancer screening test is a simple, low-cost, easy-to-use ELISA-based blood test which we believe will help streamline this process for up to one-third of malignancies in dogs, including common malignancies such as lymphoma and hemangiosarcoma.

We recognize the desire to receive revenue guidance now that we have our first commercial product and aim to provide this later in the year when the mix of our own launches and licensing of our technologies to third parties in both the vet and human spaces becomes clear. But as Terig stated, we expect the revenue to be from both the Vet test and from other Nu.Q products and to increase throughout the balance of the year.

There is very strong interest in our Vet product and the whole Nu.Q Vet platform from a range of small and very large international companies. And we are continuing significant licensing discussions with several well-known major players in the veterinary space around the world. I look forward to updating you on the progress in the coming months. We believe the Nu.Q Vet platform presents a fantastic opportunity for the Company and are truly excited to have Dr. Tom Butera join the team to lead the efforts on that front.

We have a busy second quarter underway in the veterinary business, with a satellite symposium featuring Dr. Sue Ettinger at the world-leading VMX conference in Florida this May, and Professor Heather Wilson-Robles as invited speaker to the ACVIM conference in June, in addition to further clinical papers that we expect to be published any day now. We are also making strong progress on the product pipeline for Nu.Q Vet beyond our first product and aim to share further details of further products on our next call.

Lastly, we are making significant progress on the launch of Nu.Q Vet worldwide beyond our US launch and also expect to provide updates on this in the near term as well. All in all, Nu.Q Vet is a hot space for us right now, so definitely watch this space for further updates in the near term.

Our second pillar, Nu.Q Capture. Beyond our exciting Nu.Q Capture mass spectrometry clinical paper published in Nature's Scientific Reports in March, we are very happy with our team's significant progress on this front. Their work highlighted for the first time that histone H2A1R3 citrulline is, in plasma, upregulated in colorectal cancer patients and so could be a biomarker we target for future immunoassay development. Furthermore, it showed that the use of Nu.Q Capture may open up the possibility of using mass spectrometry not only for biomarker discovery but also as a high-throughput platform for screening and/or diagnostics.

We aim for Nu.Q Capture to be an important enabling technology in the liquid biopsy space. We anticipate further updates via clinical publications, collaboration announcements, and perhaps conference presentations in the coming quarters. We aim to launch our first product with this technology in 2022.

Our team could not be more energized and excited by how our work in our third pillar, Nu.Q NETs, is progressing and we believe it should be a very big part of our future success. Dr. Jake Micallef, our Chief Scientific Officer, discussed this in great detail on our last call, so I will just provide a brief recap and update.

Given the relatively recent understanding of the prominent role of both NETs -- neutrophil extracellular traps -- and nucleosomes in the pathology of COVID-19, sepsis, and many other diseases, we have been and continue to research the use of our proprietary technology in diseases, with particular regard to NETs and mitosis.

NETs are a vital component of our immune system. NETs are a web of chromosome material consisting of long strings of nucleosomes with added enzymes that damage and kill pathogens, such as bacteria and viruses. NETs are produced by neutrophil cells, the most common white blood cells, in response to infection or injury. NETs are highly efficient traps that catch and kill pathogens at the site of infection or injury and prevent the spread of infection around the body.

Whilst a vital component of the immune system, excessive production of NETs at the site of an infection can also damage the body's own cells and tissues. For example, a small proportion of COVID-19 patients experienced excessive production of NETs in the lungs in response to infection by the COVID-19 virus, which may lead to severe lung impairment or even death.

NETs are a complicating factor in a wide variety of other diseases, including respiratory infections, SARS, and pneumonia as well as metabolic diseases, autoimmune conditions, inflammatory conditions, cancers, thrombosis, stroke, and sepsis. And elevated levels are a clinical complication associated with poor patient outcomes.

As NETs material is made up of nucleosomes, Volition's Nu.Q nucleosome assay can detect NETs in minute quantities. We are researching the use of our proprietary nucleosome technology with particular regard to the activation of neutrophil cells and release of NETs in disease. We believe the versatility of the Nu.Q platform and the range of applications for which these assays can be leveraged may help increase diagnostic power and monitor disease progression and potentially treatment response across a broad range of diseases that involve the overproduction of NETs, such as COVID-19, pneumonia, influenza, and sepsis.

From a sepsis product development perspective thus far, we have animal studies in the monitoring of disease progress and treatment efficacy, which have demonstrated the use of Nu.Q NETs as an effective monitor of disregulated NETs production in vivo, disease progress, and treatment efficacy. Human studies in the monitoring of disease progress and treatment efficacy in sepsis are now underway at a leading UK hospital, and a potential US FDA 510(k) study is in preparation.

From a COVID-19 product development perspective, our COVID-19 study in 2020 showed Nu.Q NETs' nucleosome levels strongly correlated with disease severity in the first wave of COVID-19 patients and mortality. We have now conducted studies of serial testing in the second wave of COVID-19 patients at leading UK hospitals to determine the predictive value of our test. Exciting times for sure, with further data due to be presented at upcoming conferences and potentially additional studies and collaborations to be announced soon.

And finally, to our fourth pillar: Nu.Q in human cancers. Unfortunately, given the pandemic, some but thankfully not all of our studies have been affected. And we have pivoted to those areas we can still make progress during lockdowns. As previously reported, collection from the US EDRN study for colorectal cancer has been paused and collection for the blood cancer studies in the US has been slightly delayed. And we will give a full updated timeline in the near future.

In Asia, we have reached our target patient cohorts for both colorectal cancer studies and the lung cancer study, all collected in conjunction with the National Taiwan University, a fantastic effort by the team there. We are excited to now be running the assays and finalizing the analysis over the coming months, with data due to be reported at future conferences.

As discussed on previous calls, following the opening of Silver One, where we installed a service lab in a new facility which will undertake sampling processing for external parties, such as pharmaceutical companies, biotech companies, and academic researchers. We have branded this service Nu.Q Discover and have already generated much interest. We have commercial interest from and quotes into multiple pharma and biotech companies and anticipate revenue from this activity in the second quarter and growing throughout the year. We see this is another key driver of revenue.

Thus far, the projects we have been handling through our Nu.Q Discover service involve exploring the use of our assays to monitor the efficacy of our customers' therapeutics in development for cancer, NETosis, and other serious and/or chronic diseases in both pre-regulatory and regulatory trials. These projects, if initiated and indeed if the outcome is positive, could lead to more significant revenues for Volition if our assays are proven as companion diagnostics to our customers' therapeutics. Emmanuel, our sales manager in Europe, is doing a fantastic job ordering these relationships.

I'm also very happy to announce today that we have signed our first distribution agreement with [Biomedica], a distributor with over 40 years' experience for the distribution of our CE-Marked Nu.Q kit in Central and Eastern Europe. We expect this to be the first agreement of many.

Silver One is proving to be an excellent addition to Volition's commercialization efforts. We are now producing recombinant nucleosomes in-house and at large scale, building a library for sale through Nu.Q Discover and also for internal R&D use. We have also developed the capability for many of the key steps within the production process for our components, such as the ability to freeze dry. And by the end of this month, we will also be producing our very own antibody in-house. This is a great step forward in terms of supply chain management and will also reduce both the cost of goods and the cost of development.

And lastly, I am delighted that we no longer only manufacture our traditional plate-based format but are now manufacturing, again at large scale, up to 20,000 tests per batch of our bead-based format to CE Mark standards. Thanks to [Marvin] and all the Silver One team. A great effort.

And so, to the future. I would like to reiterate our vision and what makes us so excited with our progress and our space. 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. We believe the last decade of work at Volition, with our ever-expanding team in epigenetics, puts us in an extremely strong position with our expansive IP portfolio to be a significant player in this key field.

Overall, on so many fronts, with our ever-growing team and IP, I am delighted with the progress we are making. And I am excited by the momentum we have developed in the epigenetics field. In addition, our whole team is incredibly excited by the Company's future opportunities.

We aim to report throughout 2021 and beyond numerous key milestones now that we are in full swing in turning our platform into a range of products worldwide. We will focus on driving revenue in the coming quarters where possible during the pandemic in four key areas. Firstly, Nu.Q Vet products; secondly, disease monitoring tests, such as in COVID and sepsis; thirdly, Nu.Q Discover, processing samples at Silver One using our Nu.Q Discovery assays; and four, licensing of our technology for others to commercialize. We also aim to publish data on multiple fronts across our four pillars.

I along with the rest of the Board and indeed the whole Company look forward to sharing the results of our key studies over the coming months and year with our optimized platform. Thanks for joining the call today. I very much Appreciate it, given the busy earnings call season.

We are happy to take questions now. Operator?

(Operator Instructions) Kyle Mikson, Cantor Fitzgerald.

Hi, everyone. Thanks for taking the questions. So I was wondering if you could talk about how the first NETosis product would be launched and what the go-to-market strategy is. Specifically was wondering what the most likely use for the first assay is going to be. I understand that it's probably to monitor it, but just like which disease I was kind of thinking.

And when you say launching the product on multiple platforms, do you mean ELISA or beads when you say that? Or do you mean like the actual immunoassay analyzer like the IBS? And then on the go-to-market plan, is there going to be like a beta launch in Europe and then like a broader launch later? Or how should we think about that? Thank you.

Thank you, Kyle, and thanks for your question. I will answer them all, and make sure if I forget one of them, please return. So which disease. So a couple of calls ago, we thought perhaps NETosis/influenza -- sorry, for COVID in influenza might be the way to go. But I think given the waxing and waning of NETosis from COVID, I think perhaps sepsis might be the one which is easiest to get the traction in. Certainly the easiest way to get large numbers in a trial, because obviously, as I am sure everyone is aware, it is even during the pandemic the biggest killer in hospitals. So it's obviously a very, very big problem and therefore a much smoother ride to get the numbers needed for a trial.

When we say multiple platforms, that's a good question. So we launched the Vet on plates, initially where we are now. As you can hear, we have been working a lot on getting it on the machines. We are using IBS' machine, but we have also explored different machines we can use it on, the larger auto analyzer machines. And we are also producing the beads at large scale now. So we can absolutely launch things depending on what machines are available but on bead-based machines. And adapting to a new machine seems to have taken just a few months ago.

Then there is obviously new regulatory work, but the actual adaptation is quite easy. But we have also mentioned we are also working a lot on a point-of-care, both lateral flow small machines. We have actually -- Dr. Eccleston, who is in his new role as technology, has been looking at a lot of different options for just simple yes/no lateral flows, quantitative point-of-care, and also the small machines. I won't mention the companies but -- because of confidentiality, but we are talking to quite a few. And we actually have our assays out to quite a few different companies for small point-of-care machines as well as lateral flow.

So what we aim to do with everything I think -- as I think is clear what we believe is this is going to be potentially huge in a very wide range of areas. So rather than saying to a customer or a government or someone it has to be on beads or this machine or this point-of-care, we aim to offer a full menu.

So I guess they say horses for courses. Sometimes plates are easier, particularly for research. The machines are very easy if you want high throughput. The IDS machine, for example, can do 500 samples a day on quite a small machine. We are hoping in the future to license two groups, like the big auto analyzer companies. There is about half a dozen of them -- Abbott, Roche, Siemens -- and then develop the point-of-care. And that is quite developed, the point-of-care as well.

So the go-to-market strategy. That's a very good question and I think, as is probably clear from what I have said, we have been very, very happy with the results in the diagnostic power, increasing diagnostic power, patient selection, also monitoring disease progression. Also, we are trying to show some prognostic value as well from the assays, which I think we make get to.

So the go-to-market, I guess, like everywhere, you are looking at different regions. The EU, to get a CE Mark, could actually be reasonably quick because the platform -- we have CE-Marked very similar assays before. And then we aim to CE Mark them on beads quite quickly. So once we have the chosen intensive use, and it could be one of a few of those things, and the samples run, it is just a couple of month process to finish off the CE Mark.

So what's caused us some time has been finding the right population to get a CE Mark trial in. But if, as you mentioned, which indication? Sepsis can be reasonably quick because it's everywhere, as you know, and that is year-round, summer, winter, and in every hospital in the world.

So I hope that answers all your questions, Kyle? Sorry, and the US. There is some talk of trying to get emergency use, which of course we try for the COVID, but I don't know. I think it is certainly less than 50-50 we would get that. So it would be normal. The process we look to go through in a range of areas is to go to a CRO, collect for a 510k, and then go through that path, which Dr. Terrell has done quite a bit of work in a range of areas.

So the cost of that is a few million dollars typically. We tend to look at $2 million or $3 million. And it usually takes 12, 18 months for collection, plus all the regulatory timing, from whenever we start the process, which we are working on now but we don't have a timeline from when we expect to start. I guess that will be driven from the data we have got coming up in the next few months.

We have our assays in the hands of a bunch, I think five or six different groups now who are using them in their own trials to show the efficacy as proof of concept. So that is all coming together really well.

Did that answer your question, Kyle?

Thanks, Cameron. That was perfect. I threw a lot at you, but you did a great job answering. Thanks again. And I just wanted take the Nu.Q Capture. Great publication with the mass spec data. But when you think about commercialization, looks like a product will be out by 2022, which is positive. But when you think about like submitting for regulatory approval, how quickly could that FDA or CE Mark kind of occur? And if it's going down the FDA pathway, would that be a PMA IBD? Because it's a screening test, it seems.

And then I am also wondering like longer term, would partnerships with companies that offer that instrumentation, like mass spec or next-gen sequencers, would those partnerships make sense, too, to kind of couple the assays with?

Yes, absolutely. So we are obviously not in the sequencing nor mass spectrometry space. So I think the Nu.Q Capture -- and thank you. Yes, the paper was I think fantastic and great to be in Nature's Scientific Reports. It was a real breakthrough; shows that it's reproducible and robust like the rest of our platform.

So commercialization. Of course, anything which is going to be next year would not be an FDA study. It would be sold as a service for others to help. And I think there is a lot of different ways. By capturing and concentrating the chromosome fragments, we can help a range of different groups. And I or my team can go through that with you at greater detail.

But anything which is obviously a selection or monitoring as part of a trial would take many years. So that's certainly not going to be next year. But I think given what we are doing, like with Nu.Q Discover, it's looking very good in a range of different areas for Capture. And it would be selling as a service.

And would we work with big companies? Absolutely. So I guess there's one very well-known big sequencing company and there's quite a few big companies in the liquid biopsy space. And I think like everything, we would look to launch our own products to show it works, to really get the ball rolling like we have in Vet.

But we are very, very interested in licensing, particularly in Capture, because it would be something we believe, if it all works well, could be incredibly useful to them. So it is not something we have to commercialize ourselves. So I think once we have got the very good proof of concept from the next level, if that happens, we would quite aggressively look to license it out.

Got it. That makes sense. Yes, it doesn't have to be an approved assay. And then just thinking about the blood cancer study, it looks like the collections have been delayed a bit, which makes sense due to COVID. And I know there is going to be an updated timeline provided when it is ready.

But is there any detail that you could share to help us understand why the studies were delayed? And I'm sure mostly it was due to COVID. How significantly could that delay the first 510(k) submission for DLBCL? Because we talked about the timelines in the past. I'm just wondering how far those are now pushed out down to? Thanks.

Yes, that's a very good question. And I don't have the firm timelines and I don't want to update and then have to re-update, but it's tough updating at the moment with COVID going. The primary reason was what you said. And as I am sure you are aware, it's been a tough 15 months to be collecting trials in the US for cancer. And the EDRN study is still paused.

I don't want to half answer that question because we are not -- I don't think anyone really knows exactly what's happening at the moment with collections. And so we are doing as much as we can to really work out the new timescale and how much it's delayed. But I would strongly expect it's going to be at least a quarter or two given everything. But that's just speculative at the moment, and we are looking at ways perhaps we can get things back on track timewise.

But as I said, yes, it's just been a really tough time the last 15 months with the pandemic to keep collections on track in the US. But we will have a full update as soon as we know. And I strongly expect that's going to be before or at the next Q.

All right. That's understandable and it's very fair. I just had one last question. I think it's going to be quick. Just on the Biomedica distribution agreement, I just want to confirm. Are those for the RUO kits or is that for something else? I just want to make sure I'm thinking about that correctly.

No, no, that's for the Nu.Q first, which was -- we got the kits CE-Marked for the blood cancers in Europe. As you are seeing in dogs, it works very well on the blood cancers. And they are looking to see if they can get some traction in Eastern Europe as that is not one of our key markets. I know they are quite a large company, as you know.

This is both sides just kind of feeling each other out, if you will, seeing what -- if they can find a market in Eastern Europe and if we like working with them. So they have got until the end of the year to see if they think they can make a go of it in Eastern Europe, given the data they have or collect more data. So we are getting a lot of interest from different groups, just kind of trying to work at how they can be involved. Is Nu.Q going to be a thing?

And as they are a very good company and quite an established company, and it's a footprint where we didn't really have any traction in Eastern Europe, we thought it was a good thing to do. And there is a lot of these sort of smaller deals bubbling as well as the bigger deals we talk about as we sort of work out ourselves and they work out how the patchwork is going to work in all our different products.

So it was good to get this first one, the first run on the board, if you will. And we will see how that goes between now and the end of the year and see if we want to continue the relationship and they do. But it's a good start.

Makes sense. Thanks for the clarification. I will leave it there. But congrats on the progress, guys, and I will talk to you soon. Thank you.

Bruce Jackson, Benchmark Company.

Hi, I'd like to ask a couple of questions about the NETosis assay. So you have got the one COVID-19 study where you have been collecting the serial samples. Have you submitted that data yet for a pre-coming conference? And if so, which conference would it be presented at?

Yes, so we've gone down a couple of different paths. We try to do a big sort of study and that is been very tough to get off the ground because everyone quite naturally is concerned with getting their sick well in the emergency wards. So collecting serial samples and -- it's not a complicated trial, but it's obviously something which takes a lot of attention away from. And a lot of them have been obviously extremely busy, especially in London in the last few months.

So we have been working with -- through a few different networks of incredibly good people in the COVID and NETosis space. I guess the hospitals, we've talked about a bit, but very, very large hospitals, the best ones in London and some of the best in the world for COVID work.

They have submitted to conferences. I believe the next one -- they tend to be two or three months ahead. That's the only problem with -- when you do it like this. They do it through publications, which is good. I mean, it means they are very happy with the data and they are very comfortable. But it just takes a little more time to -- conferences don't happen in the next week from when the data comes out.

But the next one is July. And we have, as I said, a bunch more out there. So I would see a steady stream of them coming through the rest of this year, both in the pig animal model for sepsis therapy and the human model, also in sepsis, also in COVID. And I can't give you the details now, but there are several other areas of NETosis where we have been very active in supporting groups who have research going in that field. We are providing our assays and our knowledge of NETosis to see how it goes with them.

So the first one is I guess a bit over a month away. And there's a large range of them coming through the year. And I think we have been extremely encouraged with the work that we have been doing with our partners who are world-renowned specialists in COVID and sepsis and in emergencies. And we are also attempting to now get the size we needed for studies, which can then become the regulatory workforce CE Mark.

Which again, the studies is the delay. Once we have that, a CE Mark can actually happen quite quickly because our platform is so well developed. It's a matter of small number of months once we have the population and it runs. And as I discussed with Kyle, particularly with sepsis, you can get large numbers very quickly. Summer, winter, rain or shine, there is always sepsis in a hospital.

So I couldn't be more happy or excited with the way it is going. Our platform, we have been shipping kits to very busy, very independent people. The feedback we have got has been nothing short of excellent in every case, not only in the quality of our assay but how well it is at doing different things with regards to NETosis.

And as you said, not just the diagnostic but also potentially as a companion diagnostic or even patient selection for treatments for clearing out of NETs. So potentially a really, really big market and something we are very excited about. And there will be a lot of the data through the year. Does that answer your question, Bruce?

Yes. And if I could follow up on the sepsis application. So do you also have data in-house for that use of the assay and has it been submitted for presentation?

Yes, yes, and lots more to come. So it's a bit of a presentation. So the data we have, we have a lot we haven't published we are working on through now with them. Things have been published as well as don't forget. It was published in the pig model on the therapy. And I think from -- as you can see from the poster, our assay was an extremely good marker for the disease progression also and worked incredibly robustly and stably. And we are also -- this was all on a plate system. Obviously, you probably want more things faster in a very situation than just every six hours, so that is quite fast. So we are also working putting the sepsis platform on beads so it can be done in 45 minutes and also potentially point-of-care. So theoretically, you could have almost instantaneous measurement of your NETs level.

And if you think, for those who are wondering how that is useful, I think, Bruce, if you are in a hospital, sepsis is a big killer. It creeps up on you and it kills you for two main reasons. One, it is very early to diagnose early and really get ahead of. And two, the treatments aren't actually that great for it. And there is often a lot ---- there aren't many, so there's no good diagnostic for it. Really certainly nothing in real time and there is no really good therapy. But that is partly because there is not a good diagnostic. So I think this could be really, really something very, very helpful to a lot of people.

Okay, good. And then with regard to the contract research business from Silver One, who's been talking to some large companies, do you have any contracts in hand yet? And then if you can just give us a little bit of a flavor for the types of studies that they are contemplating. So are they looking at the Nucleosomic testing as something where they are trying to get a handle on it? Or do they have an actual application in mind, for example, as a companion diagnostic?

A lot of both, but mainly where they have a purpose in mind. A lot of monitoring of efficacy of their therapies in development in cancer, in NETosis. Also in the animal space, we have actually worked with a few groups looking to use our assays obviously in the dog space as well.

But so far as -- so yes. We have a handful of -- it's actually only been quite recently we even started, so we have been very happy with the response. We have one sales member, Emmanuel, who has been shaking the tree and there, it turns out, looks like there's a steady demand for epigenetic profiling.

So yes, it's for particular uses. So as we talked about, the revenue, it can be very small; it can be very large. Depends on where you sit in that continuum. Typically starts out -- it'd be more in the sort of small tens of thousands of dollars. A big quote over a sort of six-month period could get into seven figures, but -- so that's the kind of ballpark you are looking at. But of course, if it becomes part of the 510(k) or FDA study, then you are looking at a much larger amount. But obviously, most things don't progress to that level.

But it's a very good way of getting known, very good way to get more publications, very good way to get ---- so I would expect to see -- you never know as the contracts' sort of discussions might go nowhere. But there's certainly a lot of interest. Some of them are quite well advanced. So I'd be surprised if we didn't close a few of them in the sort of short to medium term. And it is just a good way to get things moving and I think it's very encouraging.

You can see Silver One is now -- I think there's 12 or 13 different recombinant nucleosomes we are producing. We could offer service for I think about 15 different nucleosome assays so -- and potentially Nu.Q Capture as a service as well, which could be the revenue next year. So it's -- and I believe as far as I know, our service is quite unique in the breadth and abilities of what we can do. And as I am sure you are aware, Bruce, epigenetics is really taking off. So it could be a very good process for us.

All right, perfect. Thank you.

Jason McCarthy, Maxim Group.

Hey, Cameron. Thanks for taking my question. This is Michael Okunewitch on the line for Jason. So I'd like to see if you could kind of give us just a bit of a deeper status update and walk us through the steps that you need to take for the human diagnostics platforms. We know that the big study in blood cancer and that's kind of on pause, but what about the other programs like lung cancer and colorectal, especially now that you have the -- it seems like you got full enrollment on the National Taiwan studies?

Yes, so I guess the human studies, the one -- so the reason we did the blood cancer first is just one assay or maybe two assays got fantastic results. I mean, look in the vet space. We are high 80s or 90s AUCs accuracy, which is quite remarkable for a very low-cost, easy-to-use blood test. But obviously in the lung and colorectal space, it is more work because we always need to do a panel. And so you have to get a broader range of assays ready. And also on a platform, that's not something you'd use four or five different plates for. So it would have been very hard to do a beta launch in [homo] CRC just on plates because you need a wide range of assays.

So that's actually ---- we haven't focused a lot of efforts on the backend of finalizing all because we only have a relatively small team. The fantastic thing is our optionality now, that we can pivot to the vet space where, again, a very simple assay has got spectacular results. NETosis, where a very simple couple of assays, which we can launch very quickly and easily.

I think if it hadn't been for the pandemic, we would have spent a lot of time finalizing the platform for a broader range of assays. Because to bring each assay to a product stage obviously takes a lot of background work. It's not incredibly detailed work, but there's a lot of detail. So you have to use -- it can take 6 to 12 months per assay. I mean, you can do them concurrently, but each one can take a lot of work to just making sure they are fully robust and reproducible.

Which, of course, we have done in the assays which are now ready for product in the vet and NETosis space, but we still need to go through that. But while they are still collecting and the process, particularly -- obviously, Taiwan is not going to be the biggest market. We are talking to a major player in Asia -- I can't mention the name, but if I said it, you would know it who they are -- about assisting us with launching on a more simple platform in Asia and one particular part of Asia. So we are just trying to work out now how much effort we put into. Because obviously, it's still going to take -- that's (inaudible) happens, but they are not US regulatory trials and they are probably not good enough for a country in Asia except with some more proof of concept.

But I think given how strongly vet has taken off, that could easily be a very, very large market. And so could NETosis with a platform we have ready. We still have to go through a bit of the background work to really finish off the lung and colorectal.

So given the fact that it is paused in the US, and I think we would probably focus on getting the blood cancer in humans product out first because that is very close to product-ready because it's a very simple panel. And to be 100% upfront, we have never got 90% AUC with one assay in lung or colorectal. It has always taken a panel, which is understandable. It's a solid tumor, not a liquid tumor. But so we do have to do quite a bit more work.

I can run you through more of the details if you want after. But we still have more work to do on the background for the lung and the colorectal. But as I said, given the optionality, we thought we would go where the very low-hanging fruit is at the moment in blood cancer, NETosis, and the vet space.

Thank you very much. And then I'd like to ask also about the H2A1R3 histone that you discovered through the Capture program. Is that something that you could add to kind of the mainline Nu.Q colorectal cancer assay, especially while the US EDRN study is on pause?

Absolutely. Actually -- and it is not necessarily a bad thing we have them being on pause. Gives us more time to adapt the platform. I mean, getting a colorectal panel is a lot of work and we could add those assays to it, absolutely. And we are actually looking for -- it's been proven very helpful in biomarker discovery.

So that one, and we're certainly looking at others as well, have never been described as being different and -- from the mass spectrometry. It certainly appears they are. So we can 100% add any assay theoretically. And because what we have is a bit of a process now where we can make the recombinant nucleosome, the antibody in-house and make the assay. So the short answer is absolutely. And that is one of the many reasons we are doing the Nu.Q Capture program is to also add new biomarkers that have not previously been described.

Thank you. And then just one more. I'd like to ask as it has been around seven months since you've started the beta launch for Nu.Q Vet. I'd like to see if you could talk a bit about what you've learned so far in the vet space and how you can take that and kind of apply it to more of the national launch later this year.

Yes, it's actually -- we have learned a huge amount. I am really happy and glad that we did it the way we did. I am very ---- and learning also comes from the people. Dr. Tom Butera coming on board. He's very well-renowned executive in this space. And leaving Mars, which is the biggest vet company in the world and coming to ours, which I'm guessing we are probably one of the smallest, really shows his faith in what we are doing. And he has been tremendously helpful in guiding us in some of these issues.

But I think to give some flavor, there is a huge amount of things to learn. Obviously, one very important factor is pricing. Obviously, we want to maximize the revenue and so we -- I think on the national launch, we will be adjusting the price. You will see a lot of that to really maximize the level.

Packaging has been very important. The need to be on ice obviously is a big difference in the amount of work required if it is frozen or at 2 degrees. Also, we've learned it's very good to ship a box to the vet so that -- and limit the amount of work they have to do. Also, a lot of vets also just want to package it up and send it off to a centralized lab. Like, there's two big companies or around the world several big companies which do that. If you are doing six other tests, it's sometimes easier to tick an extra box. So I think that will be a big part of it.

Yes, so we have looked at everything single aspect. Now not the test itself; that has worked incredibly well, but just all those nuances are incredibly important to get right. And I think, as I have discussed, but I couldn't reiterate enough that what it has also done is proven that we have a product to the big vet companies and small vet companies.

And I think we are in a really good position. Because as far as we are aware, we are the only real product out there that can show any real efficacy in cancer in dogs. And there are several big companies and several insurgents in the business and there is only one of us. So I think we are in just a really good position. And I think it is very fair to say they are taking this very seriously. We are in very serious discussions, and I think that's going to be a big part of the mix as well.

But that is kind of what we wanted to do all along. I think providing a solution ourselves is a good way to move forward, prove it works, and getting it all fine-tuned. But also -- and this is true in the human space but certainly also in the vet space, the companies have hundreds and hundreds of salespeople and reps worldwide. So I think that's going to be hopefully a big part of our mix as well.

So all in all, I think it has been a really good process for us and it should make a deal much smoother if we end up doing one with one of the majors. And also a really smooth launch of our product nationally and internationally because we also expect to be launching international in Europe and in Asia in the coming quarters as well because there is obviously a big need there as well.

All right. Thank you very much.

Nathan Weinstein, Aegis Capital.

Good morning, Cameron and Volition team. Thanks for taking my questions. I suppose just to start on Nu.Q Vet and Nu.Q Discover. Kind of as we think about the next few quarters on those program, should we be sort of thinking about a sequential revenue ramp?

I will deal with ---- well, I will do one at a time. So Nu.Q Vet, so the sales, they have been ordering, as we talked about. Each order is enough to do not quite a couple of hundred dogs, but at $46 each, $25,000 revenue, you work out roughly how many that is. It is in the hundreds.

We are not putting a lot more or very much at all marketing in at the moment because we are answering all these questions. So I don't expect that to markedly go up in the next sort of few months because we are putting all the effort into the negotiations for our own national launch and also, of course, perhaps licensing and the other processes.

So there has been good interest, but we are using this much -- there is no point spending a huge marketing budget now when I think we are going to nationally launch with all the twigs that we have been using. So I would expect it to rise, but I think the big change will be after the national launch. And I think if we can get a licensing deal, that would absolutely supercharge. Because as I said to Michael, the big companies have hundreds and hundreds of salespeople worldwide, so there is obviously a whole different potential to be quick in ramping up if that is done as a deal.

Nu.Q Discover. Yes, it's going to be a bit lumpy because I said, some deals can be as low as $10,000; some could be over $100,000 or euros. So in one quarter, you might get a couple and the next quarter you might not. But I think through the year, I would expect to see a few and I'd expect that to pick up strongly through next year as well.

And it's ---- we will provide guidance as soon it becomes clear or the mixture how Discover is going, how Vet is going, and potentially licensing deals. We have a potential licensing deal being discussed also in the human space in Asia that may or may not happen, but that would also change how things look as well. So the package should become a lot clearer through the year, but I'd expect to see a slow steady gain through the Vet and then the big movements would be either on the national or international launches and/or on a licensing deal.

And Discover will pick up I think quite strongly through the next few quarters, but could be lumpy. Some quarters could be quite good and some could be smaller just because the nature of outlooks in deals. Does that make sense?

Yes, thank you, Cameron. That's very helpful on the revenue front. And then maybe just thinking about margins, I've always thought of Nu.Q as having a particularly attractive cost of goods. So I just wanted to get your thoughts on the cost and maybe compare/contrast to other testing modalities that are out there. Are the costs attractive? And then how Silver One plays into that in the long term.

Yes, it's very interesting. In some ways, it follows -- I obviously have an MBA, so I've studied a few of these things. It follows in some ways a kind of a software model in terms of our whole idea in all this is not just to offer a license but sell the key components so that we can maintain quality. Also, have a good idea of actually how many they are selling and -- particularly in developing countries and countries where you might not see a royalty get revenue early on.

So at the moment on the plate-based format, it costs around $4-ish, $5 per test. But sometimes you have to do repeats, so you might have to -- might be a few of those to get it. Once you are on beads, there's no need or very few repeats and the cost goes down a lot, maybe even half or less than that. And we are in the process of changing over to beads now for the different platforms.

So Silver One, so I think sort of moving forward, we are seeing in the vet space obviously we have a very good margin and so does everyone in the chain. And I think we are looking to make it a mass-market product. I think it is something which, particularly as part of the world of screening tests, could easily be something which we target having several hundreds of thousands or millions of tests per year. And I think perhaps we need to be at a slightly lower price point. But given the fact that our cost of goods are going to be dropping a lot, it's probably very similar margin we have, but just a lot more throughput on the product front.

So I think we are in a very unique position because we have something which we can, when the cost of goods are as low as ours are and I think at full production, we could be at just a few dollars per assay or even less if it is in simplicate. You can kind of put -- we have to recoup, obviously, the large investment we have made in this space, but you can put the product at pretty much any pricing and have a very attractive margin. And that is -- we are all about a volume business, so we don't want to sell a few things at a very high price. We want to really dominate not just on the plates but magnetic beads, also on the point-of-care, and make it a test.

And if we do progress on the sepsis side, it is something which I think could be taken by a very large percentage of people in hospital regularly to check to see if they are starting to develop sepsis, for example. And to do that, you can't be $200 or $300 a test. You would have to be well below $100, I think, if it is going to be something which is really, really mass-market. But then the numbers of tests go up massively. So it's -- either way, we have a very high margin. And I think that we are really pushing for volume in sales.

Thank you, Cameron. That's very helpful. I appreciate it.

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to Mr. Cameron Reynolds for closing remarks.

Thank you, everyone. I understand you are all very busy and I really appreciate your time. And please keep an eye on us over the next few months and quarters and all the way through next year. We have a very strong team, I believe. We have the strongest balance sheet we have ever had, fantastic platform. But now we absolutely realize it is about making products and getting revenue. So now we have a good commercialization team in place and the first products, we are going to be taking that very seriously. So thank you for your time.

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