VolitionRx Limited — Q2 2023 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2023. Financial statements are unaudited. VolitionRx develops and commercializes diagnostics based on its Nu.Q nucleosome-quantification platform, spanning veterinary cancer, human cancer, NETosis-related diseases, and research products.
Financial performance and liquidity
| Metric | Q2 2023 | Six months 2023 | Comparable 2022 |
|---|---|---|---|
| Revenue | $216,310 | $366,118 | $39,752 Q2; $153,963 six months |
| Operating expenses | $9.77 million | $18.96 million | $8.14 million Q2; $15.93 million six months |
| Operating loss | $9.55 million | $18.59 million | $8.10 million Q2; $15.78 million six months |
| Net loss | $9.55 million | $18.42 million | $7.73 million Q2; $15.45 million six months |
| Net loss per share, basic and diluted | ($0.14) | ($0.29) | ($0.14) Q2; ($0.28) six months |
| Cash used in operating activities | Not presented quarterly | $16.09 million | $2.65 million used in six months |
Six-month product revenue rose to $310,599 from $83,663, while service revenue declined to $55,519 from $70,300. Revenue remains small relative to operating costs; the filing does not present a clear gross margin or gross profit measure.
At June 30, cash and cash equivalents were $19.74 million, versus $10.87 million at year-end 2022. Current assets were $21.51 million and current liabilities $18.80 million. Total liabilities were $22.44 million; long-term debt, including current portion, was $3.65 million. The company reported total stockholders’ equity of $5.12 million, compared with a $3.13 million deficit at year-end.
Changes versus the prior period
- Six-month revenue increased by $212,155, but the company’s net loss widened by $2.97 million. Management attributed higher losses principally to clinical-trial and personnel costs.
- Six-month R&D expense rose 51% to $10.36 million, primarily from DXOCRO clinical work and higher personnel costs. General and administrative expense fell 8%; sales and marketing expense was essentially flat.
- Operating cash use increased substantially year over year. The 2022 comparison included the $10 million Heska upfront payment; no comparable payment was received in the first half of 2023.
- Financing activities provided $25.49 million, primarily from February and June public offerings and at-the-market sales. The company issued 20.17 million shares for cash during the six months; shares outstanding increased from 57.87 million at December 31, 2022 to 78.14 million at June 30, 2023.
Outlook, risks, and notable items
- Going concern: Management states substantial doubt exists about the company’s ability to continue as a going concern for at least one year from issuance. The company has incurred cumulative losses of $185.5 million, has minimal revenue, and expects to rely on additional financing, grants, licensing, or revenue growth. It warns that inadequate financing could force it to cease operations.
- Commercialization: Management describes a transition toward commercialization. Heska began pre-orders for its Nu.Q Vet point-of-care canine cancer test in February 2023; IDEXX launched the Nu.Q canine cancer screen in the U.S. in January 2023. The Heska agreement includes up to $18 million of additional milestone payments, subject to specified conditions. Its $10 million upfront payment remains deferred revenue.
- Funding and dilution: Management expects to fund operations through equity or debt financing and licensing rights. Additional equity could dilute existing holders; debt could restrict operations. June offering warrants are liability-classified and had a $337,989 fair value at quarter-end.
- Commitments: Contractual payments, including interest, leases, grants, and collaboration agreements, totaled approximately $6.65 million, including $1.85 million scheduled for 2023. Up to $1.32 million may be payable in future periods for DXOCRO services. The company also accrued $1.07 million related to performance-goal compensation.
- Controls and legal matters: Disclosure controls were not effective at June 30, 2023 because of material weaknesses in internal control over financial reporting; remediation is ongoing. The company reported no material pending legal proceedings and no material change to the risk factors in its 2022 annual report.
- No numerical financial guidance was provided. Product launches, clinical validation, regulatory clearance, market acceptance, third-party manufacturing and distribution, and access to capital remain important uncertainties.
Important facts for investors to verify
- Cash runway and financing needs against the reported $16.09 million of operating cash use in the first half and management’s going-concern warning.
- Whether product launches and distribution relationships generate meaningful recurring sales, and whether Heska milestones are achieved or accelerated.
- Clinical-trial progress, related DXOCRO spending, and the timing and evidence supporting planned diagnostic products.
- Further share issuance, at-the-market sales, and potential dilution from outstanding options, RSUs, and warrants.
- Progress in remediating internal-control material weaknesses and the status of contractual commitments and accrued performance compensation.