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Volition Business Review 2023

January 03, 2024

Thank you to you all for your continued support last year in helping us to advance our mission to save the lives and improve outcomes of millions of people and animals worldwide through our novel epigenetics platform.

On behalf of the whole team at Volition, I am delighted to share our key highlights from 2023.

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Volition Business Review 2023.

Expanding access to the Nu.Q® Vet Cancer Test

We started the year by announcing that our Nu.Q® Vet Cancer Test would be available to veterinarians via IDEXX’s reference laboratory network in the U.S., in addition to Heska’s veterinary diagnostic laboratory.

A global leader in pet healthcare innovation, IDEXX launched our test in the U.S. at the world’s largest veterinary conference, VMX, and is now looking to roll it out to other countries worldwide through 2024.

Establishing global supply agreements with two global industry leaders was hugely important for Volition, offering the potential to generate significant revenue and milestone payments for the company.

We are actively collaborating with both companies as they bed the new test into their laboratory networks, and also with Heska on launching the exciting point of care platform they have developed.

Treatment monitoring

In May, new research was published in the PLOS ONE peer-reviewed open access journal and revealed that plasma nucleosome concentrations can be a useful tool for treatment monitoring and disease progression in dogs with hematopoietic cancers.

The study was led by Dr. Heather Wilson-Robles, a leading veterinary oncologist and Chief Medical Officer at Volition Veterinary and took place at the Small Animal Clinical Sciences Department at Texas A&M University. The team used our Nu.Q® Vet Cancer Test for the study.

Whilst veterinarians can already use our Nu.Q® Vet Cancer Test as an accessible and affordable screening tool for dogs with increased risk of developing cancer, this new research demonstrated another potentially significant utility of the test – as an innovative monitoring tool for canine lymphoma management – providing actionable information and helping guide treatment decisions.

We aim to launch monitoring as a new use case for our test in 2024.

UK & Ireland launch

As we have continued to expand our worldwide reach, in November, we announced that the Nu.Q® Vet Cancer Test is now available in the UK and Ireland – two renowned pet-loving nations – through two new large local collaborations; NationWide Laboratories and Veterinary Pathology Group.

Our launch in the UK and Ireland highlights our commitment to ensuring that the Nu.Q® Vet Cancer Test is accessible to veterinarians worldwide and we look forward to launching in additional markets in Asia in the coming months.

Developing a market access program for Nu.Q® NETs

In 2023, we continued to develop a market access program for Nu.Q® NETs, a test we believe is extremely useful as an aid in the detection of diseases associated with NETosis, such as sepsis.

NETosis is a unique form of cell death that is characterized by the release of neutrophil extracellular traps (“NETs”) that trap and kill bacteria and viral particles. NETs play an important role in our immune system with a unique ability to counter infections by trapping and killing bacterial and viral particles. However, abnormal levels have been linked to a range of life-threatening conditions including sepsis.

Our Nu.Q® NETs test can detect clinically elevated levels of NETs and we have spent 2023 working closely with Key Opinion Leaders and centers of excellence worldwide, to ensure that the Nu.Q® NETs test can be introduced effectively into clinical settings.

We hosted a roundtable event on sepsis management in September and brought together some of the world’s leading experts in sepsis to explore the potential of using our technology effectively in clinical practice. The panel discussed how Nu.Q® NETs could be used to enhance the management and outcome of sepsis patients and its potential application in early diagnosis, treatment guidance, treatment monitoring, and personalized medicine. The KOLs also discussed areas for future research, and we are planning to host a follow-up round table in 2024, to maintain and build on this momentum.

Regulatory work

Nu.Q® NETs is CE-marked and available for clinical use in Europe. In October, we completed the Q-Sub process with the U.S. Food and Drug Administration, and now have a clear regulatory pathway to follow, which is a traditional 510(k) with an adjudicated clinical comparator. A successful 510(k) submission would pave the way for access into the U.S. market and will be a critical milestone for us as we commercialize the Nu.Q® NETs test.

Publication in Annals of Intensive Care

In October, a clinical paper was published in the Annals of Intensive Care which shows that our Nu.Q® NETs test is a promising biomarker for the evaluation of disease severity in septic shock patients and could play an important role in sepsis prognosis. The 150-patient study was led by Professor Guillaume Monneret, Head of Clinical Immunology Laboratory at Hospices Civils de Lyon in France. Professor Monneret and his team used our test to measure nucleosome levels in patients with septic shock and to determine whether there is an association with mortality.

This clinical paper was the first published data from our global centers of excellence program, and we are delighted to be able to collaborate with Professor Monneret and his team.

Valuable sources of further data include EPICTETUS, a one-year prospective study evaluating Nu.Q® NETs in 500 patients with sepsis or septic shock. The study started enrolling subjects in December, 2023 at Guy’s and St Thomas’ NHS Foundation Trust in London.

Development of our Nu.Q® pipeline

Whilst our strategic focus last year was to ensure the successful commercialization of Nu.Q® Vet and Nu.Q® NETs, we also made excellent progress in developing our wider product portfolio, namely our Nu.Q® Discover and Nu.Q® Cancer product pillars.

Nu.Q® Discover

We have seen considerable growth in sales within our Nu.Q® Discover pillar and now have nine contracts in place, with a significant number pending. The Nu.Q® Discover program enables drug developers, scientists and R&D professionals working within the field of pharmacoepigenetics access to our range of state-of-the-art assays.

Nu.Q® Discover is an invaluable research tool for: rapid epigenetic profiling in disease model development, preclinical testing and clinical studies from discovery to market ready: studying the epigenetic basis for variation in response to drugs: with applications in oncology, neurodegenerative diseases, autoimmune diseases and NETopathies.

We are excited to see this pillar flourishing, as it offers significant, long-term revenue opportunities for Volition.

Nu.Q® Cancer

We are currently collaborating with several hospitals in France and Taiwan to investigate the potential use of Nu.Q® in a range of cancers and clinical settings.

Nu.Q® can detect characteristic epigenetic changes in nucleosomes that occur from the earliest stages of cancer and has potential applications beyond cancer detection. Nu.Q® Cancer could help physicians predict treatment response, monitor treatment response and disease progression. We are also seeking to establish if our Nu.Q® Cancer Test could also play a role in Minimal Residual Disease Monitoring.

New cancer detection method

In October, we unveiled what we believe to be a very exciting, new breakthrough cancer detection method at the annual congress of the European Society for Medical Oncology.

In early-stage cancer, it is difficult to detect cancer-derived circulating tumor DNA (ctDNA) in the blood because it may comprise only 0.01% of the DNA present among a background of 99.99% normal DNA. Moreover, most of the cancer DNA has exactly the same sequence as normal DNA.

As physical separation of tumor derived and healthy circulating DNA has never before been achieved, current ctDNA detection methods involve DNA extraction, sequencing of all (cancer and normal) circulating DNA and analysis of the sequencing data using sophisticated computer bioinformatics to tell them apart.

We have developed a novel method for liquid biopsy involving the first reported physical isolation of a class of tumor-derived ctDNA fragments from blood. Cancer derived ctDNA fragments are then extracted after removal of all normal background DNA of the same sequence for detection with a simple, low-cost PCR test.

This is a breakthrough method which obviates expensive, time-consuming DNA sequencing and bioinformatics thus allowing for rapid, cost-effective detection in a routine blood test.

It is a fantastic achievement by our R&D team, further broadening and strengthening our Intellectual Property portfolio and represents, in our opinion, a tremendous opportunity.

Our commercial strategy is to license this technology and we have been very encouraged by the level of interest shown by a wide range of companies. It is going to be a busy few months ahead of discussions and negotiations.

Financing strategy

We remain committed to careful expenditure and tight budget control. We recently completed a rationalization project and identified annualized savings of approximately $2 million dollars including a lowering of our overall headcount. Given current operating conditions, we are working towards each of our four pillars (see below) supporting itself, either through product revenues, milestone payments from out-licensing or other non-dilutive funding by the end of 2024.

We are pursuing the following:

1. For Nu.Q® Vet to be overall cash flow positive, through the final milestone payment from out-licensing and the anticipated revenue ramp as more partners launch.

2. For Nu.Q® Discover to at least double revenue in 2024 and to be overall profitable from 2025.

3. To fund our Nu.Q® NETs pillar through non-dilutive and/or project funding up to $25million and/or out-licensing.

4. To license our Cancer pillar, either wholly or in part, to an industry leader which, if successful, could provide us not only with substantial milestone payments but also ongoing royalties/revenues.

Final thoughts

At Volition, we are dedicated to saving lives and improving outcomes for people and animals with life-altering diseases through earlier detection, as well as disease and treatment monitoring. We believe we made great progress in our mission throughout 2023 and have in place compelling plans to move forward in 2024.

Thank you all again for your interest in Volition.

Safe Harbor Statement

Statements in this Business Review may be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that concern matters that involve risks and uncertainties that could cause actual results to differ materially from those anticipated or projected in the forward-looking statements. Words such as “expects,” “anticipates,” “intends,” “plans,” “aims,” “targets,” “believes,” “seeks,” “estimates,” “optimizing,” “potential,” “goal,” “suggests,” “could,” “would,” “should,” “may,” “will” and similar expressions identify forward-looking statements. These forward-looking statements relate to, among other topics, Volition’s expectations related to the launch of product sales with Heska and other counterparties to agreements, the success of negotiations and the timing, completion and execution of term sheets and/or agreements with third parties regarding the licensing and distribution of Volition’s products, the timing, completion, success and delivery of data from clinical studies, the potential uses, benefits and effectiveness of its Nucleosomics™ technology platform, including the Nu.Q® NETs test and the Nu.Q® Vet Cancer Test, and the timing and execution of Volition’s strategy with the FDA. Volition’s actual results may differ materially from those indicated in these forward-looking statements due to numerous risks and uncertainties, including, without limitation, results of studies testing the efficacy of its tests, a failure by the marketplace to accept Volition’s Nu.Q® NETs test, Nu.Q® Vet Cancer Test or other products based on its Nucleosomics™ platform; Volition’s failure to secure adequate intellectual property protection; Volition’s failure to obtain necessary regulatory clearances or approvals to distribute and market future products; Volition will face fierce competition and its intended products may become obsolete due to the highly competitive nature of the diagnostics and disease monitoring markets and their rapid technological change; downturns in domestic and foreign economies; and other risks, including those identified in Volition’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, as well as other documents that Volition files with the Securities and Exchange Commission. For instance, if Volition fails to develop and commercialize diagnostic, prognostic or disease monitoring products, it may be unable to execute its plan of operations. Forward-looking statements are based on current expectations, estimates and projections about Volition’s business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are made as of the date of this Business Review, and, except as required by law, Volition does not undertake an obligation to update its forward-looking statements to reflect future events or circumstances.

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