VolitionRx Limited — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; comparisons are with FY2021. This is an annual report, not a standalone fourth-quarter report. VolitionRx is a development-stage epigenetics diagnostics company building blood tests on its Nu.Q platform for veterinary and human health applications.
Financial results and position
| Metric | FY2022 / year-end | FY2021 / comparison |
|---|---|---|
| Revenue | $306,392 | $90,035 |
| Operating expenses | $32.1 million | $28.4 million |
| Operating loss | $31.8 million | $28.3 million |
| Consolidated net loss | $30.6 million | $27.0 million |
| Net loss per share, basic and diluted | $0.55 | $0.51 |
| Cash and cash equivalents | $10.9 million | $20.6 million |
| Net cash used in operating activities | $15.3 million | $20.9 million |
| Total assets | $18.3 million | $27.5 million |
| Total liabilities | $21.4 million | $9.8 million |
- Revenue remains immaterial relative to expenses; the filing does not provide a meaningful gross margin. FY2022 revenue consisted of $211,000 in product sales, $92,000 in services, and $2,911 in royalties.
- Current assets were $12.2 million versus current liabilities of $17.4 million, a working-capital deficit of approximately $5.2 million. Stockholders’ equity was a deficit of $3.1 million.
- Long-term debt had a carrying balance of $3.85 million, including $1.07 million classified as current. Contractual payments for debt, leases, repayable grants, and collaboration obligations totaled approximately $6.90 million, including interest where applicable.
- FY2022 financing activities provided $6.9 million, including a public offering and debt proceeds. The company ended the year with $10.9 million in cash.
Material changes and developments
- Revenue rose from $90,000 to $306,000, primarily from Nu.Q Vet test sales and Nu.Q Discover laboratory services. The company said operations were transitioning from research and development toward commercialization.
- Operating expenses increased 13% to $32.1 million. Research and development rose 12% to $14.6 million; sales and marketing increased 77% to $6.6 million; general and administrative expense declined 6% to $10.9 million. The net loss widened 13% to $30.6 million.
- Operating cash use declined to $15.3 million from $20.9 million, largely reflecting the $10 million Heska upfront payment, partly offset by higher payroll and supplier payments. The payment remains deferred revenue at year-end and is expected to be recognized as products are supplied.
- The company’s 2022 Heska agreement granted exclusive worldwide point-of-care rights for Nu.Q Vet and non-exclusive central-laboratory kit rights. Up to $18 million of additional milestones remained constrained at year-end, subject to specified conditions.
- Nu.Q NETs received CE marking in May 2022 for two platforms. The company reported completion of the first U.S. sepsis study phase and expected to submit an FDA Breakthrough Device application in the first half of 2023.
- After year-end, IDEXX launched the Nu.Q Vet test through its U.S. reference laboratory network, and Heska opened point-of-care pre-orders. The company also raised approximately $8.0 million before offering expenses in a February 2023 share offering.
Outlook, risks, and unusual items
- Management said the company needs further financing and/or revenue to fund its plan. It may seek grants, debt or equity financing, licensing and distribution arrangements, and faster commercialization; no specific revenue or profitability guidance was provided.
- The auditor’s report includes an explanatory paragraph stating that recurring losses and a net capital deficiency raise substantial doubt about the company’s ability to continue as a going concern. Management also acknowledged that insufficient funding could delay studies and regulatory work or force cessation of operations.
- Key risks include continued cash burn and potential shareholder dilution; uncertain product adoption and clinical validation; regulatory clearance requirements, including evolving EU IVDR requirements and the need for U.S. FDA clearance or approval; and dependence on third-party manufacturers, distributors, clinical partners, and suppliers.
- Management determined disclosure controls were ineffective at December 31, 2022 because of a material weakness involving segregation of duties in certain finance areas. Remediation efforts were underway. The independent auditor did not attest to internal-control effectiveness.
- Other notable obligations include up to $3.4 million of future payments for DXOCRO services under its U.S. clinical-development agreement and $879,805 of research and collaboration commitments at year-end.
Important facts for investors to verify
- Current cash, quarterly operating cash burn, and financing needs, including the effect of the February 2023 offering and subsequent ATM sales.
- Progress and economics of Heska and IDEXX commercialization: product volumes, per-test revenue, milestone eligibility, and timing of deferred-revenue recognition.
- Clinical validation results, regulatory milestones, and whether the anticipated FDA Breakthrough Device submission and other approvals were achieved.
- Progress in remediating the segregation-of-duties material weakness and any changes in financial controls.
- Debt maturities, grant-repayment and collaboration obligations, and the company’s ability to fund operations without further dilutive financing.