VolitionRx Limited — Q1 2021 Form 10-Q
Business context and reporting period. This unaudited filing covers the three months ended March 31, 2021, compared with Q1 2020. VolitionRx is developing blood-based diagnostic tests using its Nucleosomics and Nu.Q technologies for human and veterinary applications. The company remains predominantly in the research and development stage; its Nu.Q Vet Cancer Screening Test launched in late 2020.
Key financial metrics
| Metric | Q1 2021 | Q1 2020 / prior period |
|---|---|---|
| Revenue | $25,530 | $544 |
| Operating expenses | $6.11 million | $5.87 million |
| Operating loss | $6.09 million | $5.87 million |
| Net loss | $6.13 million | $5.86 million |
| Net loss per share, basic and diluted | $0.12 | $0.14 |
| Cash used in operating activities | $6.17 million | $4.80 million |
| Cash and cash equivalents, March 31 | $33.06 million | $19.44 million at December 31, 2020 |
| Total assets / total liabilities, March 31 | $40.51 million / $9.35 million | $26.15 million / $9.86 million at December 31, 2020 |
| Long-term debt, including current portion | $3.23 million carrying balance | $3.45 million at December 31, 2020 |
Revenue was mainly from direct sales of the Nu.Q Vet test through Texas A&M’s Gastrointestinal Laboratory. The filing does not provide a meaningful gross margin; revenue remains very small relative to operating costs. Q1 2021 cash used in investing was $0.48 million, primarily for laboratory equipment. Financing provided $20.21 million, mainly from equity issuance. Cash increased by $13.62 million during the quarter.
Material changes versus Q1 2020
- Revenue rose to $25,530 from $544, but remains immaterial relative to expenses.
- Operating expenses increased 4% to $6.11 million. R&D was broadly flat; general and administrative expense rose 6%, and sales and marketing increased 56% as personnel and stock-based compensation costs grew.
- Net loss increased approximately 5% to $6.13 million. Lower interest income and the absence of prior-year grant income contributed to the change.
- Operating cash use increased to $6.17 million, attributed primarily to higher payroll costs, prepaid expenditures (including insurance), and supplier payments.
- Cash rose following a February public offering that generated approximately $18.9 million net, together with ATM share sales. Shares outstanding increased from 48.61 million at year-end to 52.87 million at March 31.
Outlook, risks, contingencies and unusual items
- Going concern: Management says substantial doubt exists about the company’s ability to continue as a going concern for at least one year from issuance, citing cumulative losses of $116.3 million, operating cash outflows, and minimal revenue. Plans include grants, additional debt or equity financing, licensing, faster product development and commercialization, and cost controls. There is no assurance financing will be available; failure to obtain adequate capital could force cessation of operations.
- Funding and dilution: Management expects to rely on future financing or licensing proceeds. Equity financing could dilute existing holders; debt financing could impose operating restrictions. The company reported contractual payments of approximately $6.11 million, including debt, leases, repayable grants and research collaborations, with about $2.02 million due during the remainder of 2021. Separately, a project-based CRO agreement for lymphoma-related work could require up to $2.9 million over 22 months; no amount was payable for services under that agreement at quarter-end.
- Development and commercialization: Clinical validation, regulatory clearance or approval, market acceptance, competition, intellectual-property protection, availability of resources, and timely product development remain significant risks. The company provided no quantified financial guidance.
- COVID-19: The company reported no significant business or operating impact in the quarter, but warned that future effects could disrupt clinical trials, sample collection and healthcare resources.
- Controls: Disclosure controls remained ineffective due to material weaknesses involving segregation of finance duties, IT oversight, and review of complex accounting. Management is implementing remediation measures.
- Other: The company reported no material pending legal proceedings and no material change to its previously disclosed risk factors. Stock-based compensation was $555,342 in Q1 2021, versus $192,669 in Q1 2020.
Important facts for investors to verify
- Whether cash burn, financing availability and commercialization progress alter management’s stated going-concern uncertainty.
- Actual revenue growth, repeat sales and adoption of the Nu.Q Vet test, and progress toward clinical validation and regulatory milestones.
- Further equity issuance, dilution, ATM usage and changes in shares outstanding after quarter-end.
- Timing and funding of the disclosed research, debt, lease and CRO commitments.
- Progress in remediating internal-control material weaknesses and whether controls are subsequently judged effective.