VolitionRx Limited — Q1 2018 Form 10-Q
Reporting period: Three months ended March 31, 2018. The interim financial statements are unaudited. VolitionRx is developing blood-based cancer diagnostics, primarily Nu.Q ELISA assays; it reported no revenue and remains in the research and development stage.
Financial performance and position
| Metric | Q1 2018 | Q1 2017 / prior period |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $4.63 million | $3.34 million |
| Research and development | $2.42 million | $1.67 million |
| Net loss | $4.65 million | $3.35 million |
| Basic and diluted loss per share | $0.17 | $0.13 |
| Cash used in operating activities | $3.51 million | $2.67 million |
| Cash and cash equivalents at period end | $14.26 million | $10.12 million at Dec. 31, 2017 |
At March 31, 2018, current assets were $14.91 million and current liabilities were $2.61 million. Total assets were $18.98 million; total liabilities were $4.97 million. Balance-sheet debt was $1.77 million, with capital lease liabilities of approximately $1.01 million and grants repayable of $0.24 million. The filing reports no gross margin because there was no revenue.
Changes and financing
- Operating expenses rose 39% year over year. Management attributed higher R&D expense mainly to the University of Michigan trial and increased headcount; higher general and administrative expense reflected legal and professional fees and stock-based compensation.
- Net loss increased 39%, while operating cash use increased by approximately $0.84 million.
- A March public offering of 3.5 million shares at $2.40 per share generated $8.4 million gross and $7.8 million net proceeds. Shares outstanding were 30,030,793 at March 31, versus 26,519,394 at year-end.
- Investing cash use fell to $0.06 million from $0.87 million, reflecting lower facility, equipment, and IT spending than in the prior-year quarter. Financing cash provided was $7.72 million, primarily from the offering.
Outlook, risks, and contingencies
- Management disclosed substantial doubt about the company’s ability to continue as a going concern for one year from issuance, citing cumulative losses of $60.37 million, operating cash outflows, and no revenue. Continued operations depend on additional capital, financing, grants, licensing income, or commercialization. Management cited cost controls and these funding options as plans; there is no assurance of successful financing.
- The company intends to use cash primarily for R&D. It aimed to launch a front-line colorectal cancer screening test in Europe in 2018 and pursue Asia afterward; these are plans, not assured results. Financing delays could postpone clinical validation and regulatory approvals, and prolonged funding shortfalls could force cessation of operations.
- Contractual payments disclosed totaled approximately $8.50 million, including $3.79 million for research and collaboration agreements. The long-term debt contractual schedule in MD&A includes the full $1 million SOFINEX facility, although only €250,000 had been drawn; the balance-sheet debt figure reflects amounts payable, not that full undrawn commitment.
- Risks include clinical and regulatory uncertainty, market acceptance, competition and technological change, and potential dilution or restrictions from future financing. No material legal proceedings or material changes to previously disclosed risk factors were reported.
- Disclosure controls remained ineffective because of material weaknesses involving segregation of duties in Finance and IT oversight. The company reported a remediation plan, including selection of a financial reporting system for greater automation.
Important facts for investors to verify
- Cash burn, available funding, and management’s progress toward addressing the stated going-concern uncertainty.
- Clinical validation, regulatory pathway, and actual timing and commercialization prospects for the planned colorectal screening test.
- Use of offering proceeds, future capital needs, and potential dilution from additional equity financing.
- Research commitments and the difference between drawn debt and the full SOFINEX facility included in contractual-payment disclosures.
- Implementation and effectiveness of remediation for the disclosed internal-control weaknesses.