VolitionRx Limited — 2023 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2023; filed March 25, 2024. This is an annual filing, and the supplied figures compare full-year 2023 with full-year 2022, not standalone fourth-quarter results.
Business context
VolitionRx is a development-stage epigenetics diagnostics company focused on blood tests using nucleosomes and related biomarkers. Its commercially available Nu.Q Vet Cancer Test screens dogs for cancer; other programs include Nu.Q NETs, Nu.Q Discover, Nu.Q Cancer, and Capture-PCR. The company relies on licensing partners and distributors, including Heska and IDEXX, for commercialization.
Financial performance and liquidity
| Metric | 2023 | 2022 |
|---|---|---|
| Revenue | $0.775 million | $0.306 million |
| Operating expenses | $36.763 million | $32.086 million |
| Operating loss | $35.988 million | $31.780 million |
| Net loss | $35.677 million | $30.598 million |
| Net loss per share, basic and diluted | $0.50 | $0.55 |
| Net cash used in operating activities | $18.063 million | $15.278 million |
- Revenue rose by about 153%, but remained small relative to operating costs. Product revenue was $0.598 million, service revenue $0.175 million, and royalty revenue $0.001 million. The filing does not provide a clear gross margin.
- Research and development expense increased 28% to $19.552 million; general and administrative expense increased 2% to $10.368 million; sales and marketing expense increased 4% to $6.843 million.
- Cash and cash equivalents were $20.730 million at year-end, versus $10.867 million in 2022. Financing activities provided $28.983 million, principally from equity issuance and loans; investing activities used $1.084 million.
- At year-end, current assets were $21.854 million and current liabilities were $31.837 million. Total liabilities were $36.663 million, including $4.832 million of long-term debt (net of current portion) and $1.207 million of current debt. Total stockholders’ deficit was $8.712 million.
- Deferred revenue was $23.0 million, including $13.0 million of Heska milestone payments received in 2023. The company expects to recognize the Heska contract amount over time as it supplies components and kits; the payment is not equivalent to recognized revenue.
Material changes and notable items
- Revenue increased from a low base, driven mainly by Nu.Q Vet product sales and Nu.Q Discover services. The IDEXX Nu.Q Canine Cancer Test launched in January 2023; Heska completed transfer of the test to its in-house platform during 2023. UK and Ireland distribution launches occurred in November.
- Net loss widened by approximately $5.1 million. Higher research and development costs and lower grant income were important factors; grant income fell to $0.214 million from $1.229 million.
- The company issued shares in two public offerings and a December private placement. Shares issued and outstanding increased to 81.898 million at year-end from 57.873 million a year earlier. A further 3.205 million shares were sold in the December private placement for approximately $2.7 million.
- Auditors issued an unmodified opinion on the financial statements but included a going-concern explanatory paragraph, citing recurring losses, negative operating cash flows, and minimal revenue. They expressed substantial doubt about the company’s ability to continue as a going concern.
- Management concluded that disclosure controls and internal control over financial reporting were ineffective at December 31, 2023, due to a material weakness involving insufficient written control documentation. Remediation efforts are ongoing. The auditor did not attest to internal controls.
Outlook, risks, and contingencies
- Management provided no quantified revenue, earnings, or cash-flow guidance. It plans to fund research, clinical validation, and commercialization through grants, licensing or distribution arrangements, and additional debt or equity financing, while controlling costs. It warns that inadequate financing could force it to reduce or cease operations.
- Key risks include the going-concern uncertainty and need for additional capital; dilution or financing constraints; uncertain regulatory clearance, clinical validation, reimbursement, and market acceptance; reliance on distributors and third-party manufacturers; competition; and the unremediated internal-control weakness.
- Contractual payments, including interest, totaled approximately $8.688 million as of year-end, including $5.792 million of long-term debt payments, $1.274 million of collaborative agreement obligations, and lease and grant-repayment commitments.
- No material pending or threatened litigation was reported. The company reported no significant off-balance-sheet arrangements. A $0.240 million gain from remeasurement of warrant liability partially offset other expenses in 2023.
- Subsequent events included an additional DXOCRO sepsis-study commitment of up to $0.7 million and an EpiCypher license agreement involving fees, royalties, and restricted shares.
Important facts for investors to verify
- Cash burn, financing availability, debt maturities, and management’s basis for concluding it can continue operating through the going-concern look-forward period.
- Commercial sales, repeat testing, distribution economics, and the timing and conditions for recognizing the $23.0 million Heska deferred revenue balance and any remaining milestone.
- Clinical validation results and regulatory pathways for human diagnostic programs, particularly Nu.Q NETs and sepsis applications.
- Progress and evidence supporting remediation of the material weakness in financial reporting controls.
- Potential dilution from future equity financing, outstanding equity awards, warrants, and the remaining authorized common shares.