VolitionRx Limited — Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2018. This is an annual report, not a standalone fourth-quarter report; separate Q4 results are not clearly provided in the filing.
Business context
VolitionRx is a clinical-stage life sciences company developing blood-based cancer and disease diagnostic tests using its Nucleosomics technology. Its Nu.Q assays are designed as ELISA tests that detect nucleosome changes. The company reported no revenue in either 2018 or 2017 and was transitioning toward commercialization.
Research programs included colorectal, pancreatic, lung, prostate and other cancers. The filing describes clinical studies and sample-collection programs underway or in analysis, but does not report commercial product sales or establish a definitive launch date. Management planned to pursue European and Asian markets before the United States, subject to regulatory requirements, and expected to work with partners or distributors.
Financial performance and position
| Metric | 2018 | 2017 |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $17.90 million | $14.70 million |
| Research and development expense | $10.91 million | $8.03 million |
| Sales and marketing expense | $1.17 million | $0.84 million |
| Net loss | $18.01 million | $14.77 million |
| Basic and diluted loss per share | $0.57 | $0.56 |
| Net cash used in operating activities | $14.73 million | $12.19 million |
| Cash and cash equivalents at year-end | $13.43 million | $10.12 million |
Operating expenses rose 22%, principally reflecting higher R&D spending; R&D increased 36%, while general and administrative expense was essentially flat. The company reported no operating margin because it had no revenue.
Net cash provided by financing activities was $17.97 million in 2018, mainly from a March public offering and an August private placement, partly offset by debt and lease payments. Investing activities used $0.30 million, compared with $1.43 million in 2017.
At December 31, 2018, total assets were $17.49 million, total liabilities $5.35 million, and stockholders’ equity $12.14 million. Current assets were $13.90 million and current liabilities $2.33 million. Long-term debt was $2.40 million, capital lease liabilities totaled $0.87 million, and repayable grants totaled $0.35 million. The filing lists approximately $9.42 million in contractual payments, including debt, leases, repayable grants and research collaboration commitments; about $3.81 million was scheduled for 2019.
Material changes and financing after year-end
- Net loss increased by $3.24 million year over year, while cash used in operations increased by $2.54 million.
- Shares outstanding at year-end were 35.34 million, up from 26.52 million a year earlier. The company reported 37.81 million shares outstanding as of March 12, 2019.
- After year-end, warrant exercises generated approximately $1.66 million in gross proceeds through February 26, 2019. On March 8, 2019, significant stockholder Cotterford partially exercised its warrant for 1.72 million shares, generating $5.0 million gross proceeds. The warrant covered a further 3.28 million shares at $3.00 per share through August 10, 2019.
- The company had a $10 million equity distribution agreement available but reported no sales under it through December 31, 2018.
Outlook, risks and unusual items
Management expected to use available cash mainly for R&D, clinical validation, commercialization activities and working capital. It anticipated needing additional financing, grants, licensing proceeds or revenue to carry out its plans; no quantified revenue or earnings guidance was provided. If financing is delayed, the company said it would prioritize R&D personnel and facilities and patent rights, with clinical validation and regulatory timelines potentially delayed.
- Going concern: The company had an accumulated deficit of $73.72 million, no revenue and negative operating cash flow. Its auditor expressed substantial doubt about the company’s ability to continue as a going concern; the financial statements contain no adjustments for a possible failure to continue operations.
- Development and regulatory risk: Diagnostic candidates require further clinical validation and regulatory clearances or approvals. The filing cautions that early results may not predict later study outcomes. European IVDR requirements were expected to increase regulatory review demands.
- Commercial and funding risk: Product adoption, reimbursement, manufacturing, distribution and access to additional capital remain uncertain; competitors may have substantially greater resources.
- Financial reporting controls: Management reported ineffective disclosure controls and material weaknesses involving segregation of finance duties, IT and HR oversight, and review of complex transactions. A remediation plan was being implemented; the auditor did not provide an internal-control attestation.
- Potential dilution: At year-end, 9.61 million potential shares from options and warrants were excluded from diluted loss per share as anti-dilutive. Stock-based compensation expense was $2.57 million in 2018.
- Other items: No material pending litigation was reported. The company does not expect to pay dividends in the foreseeable future.
Important facts for investors to verify
- Whether ongoing clinical studies produce reproducible performance in larger, prospective screening and symptomatic populations, and what regulatory milestones and launch timing are achievable.
- Cash runway under the company’s operating burn and contractual commitments, and the availability and terms of future financing.
- How much additional dilution may result from outstanding warrants and options, including Cotterford’s remaining warrant shares.
- Progress in remediating the disclosed internal-control weaknesses and whether subsequent filings report effective controls.
- The status, timing and costs of research collaborations and the regulatory and reimbursement pathways for intended products.