Business context and reporting period
VolitionRx Limited (NYSE American: VNRX) filed this Form 10-K for the fiscal year ended December 31, 2021. It is a development-stage epigenetics diagnostics company developing blood-based tests for human and veterinary disease using its Nucleosomics/Nu.Q platform. The filing reports annual results; standalone fourth-quarter financial results are not provided in the supplied text.
Financial performance and condition
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | $90,035 | $13,433 |
| Operating expenses | $28.42 million | $21.26 million |
| Operating loss | $28.33 million | $21.25 million |
| Net loss | $26.99 million | $20.40 million |
| Net loss per share, basic and diluted | $0.51 | $0.45 |
| Cash used in operating activities | $20.85 million | $16.46 million |
| Cash used in investing activities | $0.97 million | $1.65 million |
| Cash provided by financing activities | $22.86 million | $20.62 million |
At December 31, 2021, cash and cash equivalents were $20.58 million, current assets $21.98 million, current liabilities $6.52 million, total assets $27.49 million, and total liabilities $9.77 million. Long-term debt was $3.07 million; finance lease liabilities were approximately $0.56 million, repayable grants $0.30 million, and operating lease liabilities $0.39 million. Accumulated deficit was $136.99 million. The company reported minimal revenue and no meaningful commercial margin metric.
Material changes versus 2020
- Revenue increased by $76,602, primarily from Nu.Q Vet Cancer Screening Test sales, but remained immaterial relative to expenses.
- Net loss widened by $6.59 million, or 32%; operating expenses rose 34% to $28.42 million.
- Research and development expense rose 7% to $15.54 million. General and administrative expense increased 55% to $8.75 million, and sales and marketing expense rose to $4.13 million from $1.07 million.
- Operating cash use increased by $4.39 million. The company raised net proceeds of $23.22 million from common-stock issuances during 2021, including a February public offering.
- Staff increased to 83 full-time equivalents from 60. Cash rose to $20.58 million from $19.44 million.
Outlook, risks and unusual items
- Management said additional financing and/or revenue is needed to sustain operations. The auditor expressed substantial doubt about the company’s ability to continue as a going concern. Management cited grants, debt or equity financing, licensing/distribution arrangements, and accelerated product development as potential responses; none assures adequate funding.
- The company is not profitable and faces clinical validation, regulatory clearance, reimbursement, market acceptance, manufacturing, distribution, competition, and intellectual-property risks. COVID-19-related disruptions may affect clinical trials, sample collection, operations, and supply chains.
- Disclosure controls and internal control over financial reporting were ineffective at year-end because of a material weakness involving segregation of duties in parts of finance. Management planned further remediation during 2022; the auditor did not provide an internal-control attestation.
- EU IVDR requirements were scheduled to apply from May 26, 2022, with expected additional review and compliance requirements for diagnostics.
- Stock-option expiration extensions generated $2.45 million of compensation expense in 2021. The company also recorded $1.52 million of grant income.
- After year-end, on March 28, 2022, Belgian Volition signed a worldwide license and supply agreement with Heska for Nu.Q Vet. The agreement provides for a $10 million upfront payment and up to $18 million in milestones, subject to specified terms and conditions; the upfront payment was not a year-end cash balance or 2021 revenue.
- Management estimated an approximately $70 billion annual total addressable market based on its own assumptions, including estimated eligible populations and assumed test prices; this is not reported revenue or a guaranteed market opportunity.
Important facts for investors to verify
- Whether and when the $10 million Heska upfront payment was received, and what conditions govern the additional milestone payments and commercial rights.
- Cash burn, available financing, and the company’s funding runway given $20.58 million of year-end cash and $20.85 million of 2021 operating cash use.
- Progress and timing of clinical validation, regulatory submissions/clearances, and commercialization across human and veterinary products.
- Whether the remaining segregation-of-duties material weakness was remediated after year-end.
- Evidence that product sales can grow materially from the 2021 revenue base and that commercialization proceeds can support ongoing losses.