VNRX: Global Supply Agreement for Nu.Q Vet Cancer Test with a market leader in pet healthcare. U.S. Clinical studies for Nu.Q NETs are planned to pave the way for FDA approval.

By Steven Ralston, CFA

NYSE:VNRX

READ THE FULL VNRX RESEARCH REPORT

RECENT EVENTS THUS FAR DURING 2H/2022

Highlights

Volition (NYSE:VNRX), a multi-national epigenetics company, is focusing on developing diagnostic blood tests (assays) that can help detect a range of cancers and other diseases. The company’s IP portfolio consists of over 90 granted patents and over 100 patents pending. Volition’s most advanced product areas are cancer screening tests for canines and the detection of NETosis, an immune response related to an infection.

The company has begun to commercialize its Nu.Q Vet Cancer Test through two supply agreements:

• a point-of-care test with HESKA and

• through reference laboratory network with a market leader in pet healthcare

On November 3rd, Heska launched the point-of-care Nu.Q Vet Cancer Screening Test across the U.S. with the European launch scheduled for the upcoming weeks. Moreover, Volition continues to advance the Nu.Q Vet assay through clinical papers, abstracts and posters, along with research and studies to expand the test to felines, equines and production animals.

On the NETosis front, VolitionRx appointed Diagnostic Oncology CRO, LLC to develop and conduct large-scale clinical studies for Nu.Q NETs with the objective of gaining approval from the FDA. Volition also entered into a Sponsored Research Agreement with The University of Texas MD Anderson Cancer Center to evaluate the role of NETs in cancer patients with sepsis. A clinical study is to be entitled "Correlation of Circulating NETs and Cell Free DNA with Inflammatory Immune Responses in Cancer Patients with Sepsis."

Commercialization of Nu.Q Vet Cancer Test

Heska has announced the launch of the point-of-care Nu.Q Vet Cancer Screening Test in the U.S. The product’s launch in Europe is expected in a few weeks. This is a major milestone in the commercialization of the Nu.Q Vet test, which should accelerate the growth of the revenue stream from this product. In addition, the launch will quicken the receipt of the $18 million in milestone payments that are part of the Supply Agreement with Heska.

Story continues

In mid-October 2022, Volition signed a Global Supply Agreement for the Nu.Q Vet Cancer Test with a market leader in pet healthcare. Through the Agreement, Volition will provide its Nu.Q Vet Cancer Test and make its reference laboratory network available for the screening test of the blood samples drawn by veterinarians. Further details will be announced at the time of the official launch.

In its latest investor presentation, the company has shared its internal analysis of the potential mass market opportunity of the Nu.Q Vet Cancer Test (see image below).

Nu.Q NETs

On August 8, 2022, VolitionRx appointed Diagnostic Oncology CRO, LLC (aka DXOCRO) to develop and conduct large-scale clinical validation studies for Volition’s Nu.Q NETs and Nu.Q cancer tests in order to demonstrate significantly improved patient outcomes. Furthermore, DXOCRO will lead Volition’s regulatory program in the U.S. with the goal of gaining clearance, authorization or approval from the FDA. Management anticipates pre-submission process with the FDA to begin in 2023. DXOCRO is a contract research organization that specializes in the commercialization of diagnostic biomarkers.

On August 10, 2022, VolitionRx announced that the company entered into a Sponsored Research Agreement with The University of Texas MD Anderson Cancer Center to evaluate the role of NETs in cancer patients with sepsis. A clinical study entitled "Correlation of Circulating NETs and Cell Free DNA with Inflammatory Immune Responses in Cancer Patients with Sepsis" will be conducted. The trial will investigate whether Volition’s Nu.Q NETs test can identify the development of sepsis in cancer patients earlier so that treatments can be initiated sooner. Cancer patients have a weakened immune system and therefore, are more susceptible to developing sepsis by a factor of ten.

Financings During Third Quarter

In early August, an equity offering under the company’s shelf registration statement provided net proceeds of $6.4 million, which is intended to fund research, continued product development, clinical studies, product commercialization and other general corporate purposes while in the short bolstering working capital. The public offering consisted of 3,000,000 shares, plus an additional 450,000-share underwriter allotment, priced at $2.00 per share. Newbridge Securities Corporation acted as the sole book-running manager.

Furthermore, VolitionRx was awarded an additional $1.5 million of non-dilutive funding from Namur Invest Capital Risk in Belgium. The award (which is structured as a 6% unsecured loan maturing July 31, 2026) will help fund the launch of Nu.Q early access programs at key sites across the EU, UK, and USA. Since 2016, VolitionRx has received over $14 million in non-dilutive funding from agencies within the Walloon Region.

Collaboration Agreements

In early August, VolitionRx and Salarius Pharmaceuticals (NASDAQ:SLRX) signed a research and development collaboration for the purpose of utilizing Volition’s Nu.Q technology to epigenetically profile seclidemstat, Salarius’ lead candidate in its product portfolio. Currently in Phase 1/2 clinical trials for relapsed/refractory Ewing’s sarcoma, seclidemstat is a novel oral, reversible, targeted LSD1 inhibitor. The U.S. FDA has approved fast track, orphan drug and rare pediatric disease designations for seclidemstat as a therapy for Ewing’s sarcoma. By supporting the development of seclidemstat, Volition’s epigenetic assays should gain increased visibility for aiding development of drugs during the clinical trial process.

Also in early August, VolitionRx and Xenetic Biosciences (NASDAQ:XBIO) entered into a research and development collaboration to develop NETs targeted, adoptive cell therapies for the treatment of cancer. Xenetic recently in-licensed the DNase-Armored CAR T platform. Under the agreement, Volition will fund an early-stage exploratory research program focusing on combining Volition's Nu.Q NETs test and Xenetic's DNase-Armored CAR T platform in order to develop proprietary therapies for solid cancers. Volition’s CE-marked Nu.Q NETs test detects nucleosomes which are present on and within cancerous solid tumors and the DNase-Armored CAR T platform is designed to enhance the function of CAR T cells, which are employed by immunotherapy techniques in treating certain cancers. Any proceeds from commercialization and/or licensing of products arising from the collaboration are to be shared by the two parties.

New Papers, Posters and/or Abstracts

On July 27, 2022, an abstract entitled “NETosis and Nucleosome Biomarkers in Septic Shock and Critical COVID-19 Patients: An Observational Study” was published on MDPI (fka Molecular Diversity Preservation International). The study concluded that “H3.1 and Cit-H3R8 nucleosomes appear to be interesting markers of global cell death and neutrophil activation when combined. Nu.H3.1 permits the evaluation of disease severity and differs between septic shock and critical COVID-19 patients, reflecting two distinct potential pathological processes in these conditions.”

On October 13, 2022, two posters on Nu.Q NETs were presented at the 26th International Symposium on Infections in the Critically Ill Patient, namely Detection and evaluation of diseases associated with NETosis in Human Plasma using Nu.Q® NETs ChemiLuminescence Immunofluorescent Assay“ and “Circulating nucleosomes are markers of NETosis and correlate with SOFA scores in sepsis.”

Second Quarter 2022 Financial Results

On August 10, 2022, VolitionRx reported financial results for the second quarter ending June 30, 2022. Total revenues were $39,752, which was composed of $29,706 from product revenue from sales of the Nu.Q Vet cancer screening & H3.1 kits and $10,046 from services revenue from Nu.Q Discover.

Operating expenses increased 37.4% from $5.93 million to $8.14 million. R&D, G&A and sales & marketing expenses for 2021 were restated as employee functionality was redefined. Nevertheless the number of full-time employees (FTE) increased from 42 to 57 in R&D, from 21 to 23 in G&A and from 5 to 19 in sales and marketing. Overall, higher personnel expenses, stock-based compensation and direct marketing & professional fees drove the increase in operating expenses.

For the second quarter, VolitionRx reported a net loss of $7.65 million (or $0.14 per diluted share) versus a net loss of approximately $5.23 million (or $0.10 per diluted share) in the comparable quarter last year.

Milestones Expected During 2022 - 2023

• Nu.Q Vet Cancer

o Achievement of Heska Agreement milestones in order to receive $18 million in milestone payments

• Silver One: Under the Nu.Q Discover program, at least seven contracts for processing samples utilizing Nu.Q Discovery assays were signed between late-2021 and the second quarter of 2022. These contracts have an aggregate annual worth of over $200,000 and are expected to ramp up in the second half of 2022. Additional contracts are anticipated, though due to the project-based nature of these contracts, Nu.Q revenues are expected to be lumpy.

• Nu.Q NET

o In an effort to obtain FDA approval of Nu.Q NETs, clinical studies are expected to begin through Diagnostic Oncology CRO, LLC and The University of Texas MD Anderson Cancer Center.

• Additional Papers, Posters and/or Abstracts

o Nu.Q Vet

▪ A clinical study with over 100 canines is in progress; the results are expected to be submitted in a peer-reviewed publication in 2022. Preliminary data suggest that Nu.Q Vet may be able to detect that a dog is coming out of remission weeks prior to the current methodology of physical detection.

▪ The analysis of over 600 canines, 504 of which are cancer patients, has been accepted for publication by a veterinary journal and is currently under review.

o Large-scale Study of Lung Cancer Conducted in Asia - The findings have been submitted for presentation at two conferences later in 2022.

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