VolitionRx Limited (NYSE American: VNRX) — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Unaudited results; comparisons are with the three months ended March 31, 2023. VolitionRx develops epigenetic diagnostic tests and is transitioning from research and development toward commercialization.
Key financial results
| Metric | Q1 2024 | Q1 2023 | Change / context |
|---|---|---|---|
| Revenue | $171,535 | $149,808 | Up 15%; product revenue was $131,759 and service revenue $39,776. |
| Operating expenses | $8.56 million | $9.19 million | Down 7%, principally from lower direct clinical-trial spending and lower G&A costs. |
| Operating loss | $8.38 million | $9.05 million | Improved by approximately $0.66 million. |
| Net loss | $8.47 million | $8.87 million | Improved by approximately $0.40 million. Loss attributable to VolitionRx stockholders was $8.37 million. |
| Net loss per share | $0.10 | $0.15 | Basic and diluted; weighted-average shares increased to 82.0 million from 60.2 million. |
| Operating cash flow | $(8.34) million | $(8.74) million | Lower cash use was attributed mainly to reduced clinical-trial spending. |
| Cash and cash equivalents | $11.77 million | $20.73 million at Dec. 31, 2023 | Declined $8.96 million during the quarter, including a $0.33 million adverse foreign-exchange effect. |
| Debt | $4.52 million carrying value | $4.83 million at Dec. 31, 2023 | Contractual long-term debt payments, including interest, totaled $5.43 million. |
| Liquidity | $13.47 million current assets; $31.49 million current liabilities | Current-liability excess over current assets was approximately $18.02 million. Current liabilities include $23.00 million deferred revenue. |
The filing does not provide a clear gross margin figure. No full-year financial guidance or quantified revenue outlook is provided.
Changes and business developments
- Revenue grew 15% year over year, although product revenue declined about 9%; the increase came from higher service revenue. The company said its main revenue source was Nu.Q Vet Cancer Test sales.
- R&D expense declined 6% to $4.63 million, primarily due to lower direct R&D spending following reduced clinical trials with DXOCRO; personnel costs increased. G&A declined 13% to $2.25 million, while sales and marketing was broadly flat at $1.67 million.
- Other income and expenses shifted from $172,121 of income to $87,501 of expense. Q1 2024 included no grant income, lower interest income, higher interest expense, and an $18,922 warrant-liability fair-value loss.
- Commercialization activity included the November 2023 UK and Ireland launch through distributors and a March 2024 Japan launch by Fujifilm Vet Systems. Antech announced in April 2024 the US and Europe launch of the in-clinic Nu.Q Canine Cancer test.
- In March 2024, Volition issued 129,132 shares to EpiCypher as partial consideration for license rights. Subsequent to quarter-end, it sold 639,316 shares under its ATM facility for approximately $515,775 net proceeds through May 6, 2024.
Outlook, risks, and contingencies
- Going concern: Management concluded substantial doubt remains about the company’s ability to continue as a going concern beyond one year from issuance of the financial statements. The company has a history of operating losses and negative operating cash flow and expects further losses. Management plans to conserve cash and may seek grants, debt or equity financing, licensing or distribution deals, and more efficient commercialization; there is no assurance these plans will provide adequate funding. Failure to obtain capital could force cessation of operations.
- Management intends to use cash primarily for R&D and commercialization. If financing is delayed, it expects to prioritize clinical validation studies and maintenance of patent rights. Equity financing may dilute shareholders; debt financing may impose operating restrictions.
- Contractual payments disclosed as due total approximately $8.44 million, including debt, lease obligations, repayable grants, and research collaboration commitments. A further DXOCRO study may cost up to approximately $0.70 million; the company reported up to $696,920 may be payable for future services under that agreement.
- The company reported no known material legal proceedings and no material changes to its previously disclosed risk factors. It identified ongoing material weaknesses in internal control over financial reporting, including insufficient written control documentation; disclosure controls were deemed ineffective. Remediation efforts are ongoing.
- Management’s commentary emphasizes commercialization through established partners and distributors. Product adoption, regulatory clearances, clinical validation, third-party manufacturing and distribution, and access to additional capital remain important uncertainties.
Investor verification priorities
- Assess cash runway against the quarterly operating cash use, contractual obligations, and the company’s going-concern conclusion.
- Verify the timing, terms, and sufficiency of future financing and licensing proceeds, including dilution from ATM sales; the filing reports 82,815,121 shares outstanding as of May 6, 2024.
- Track whether commercial launches translate into meaningful recurring revenue, and confirm partner sales, distribution reach, and any remaining Heska milestone eligibility.
- Monitor clinical validation and regulatory progress, particularly the sepsis-related Nu.Q program and the DXOCRO study expected to be completed by the end of Q3 2024.
- Review progress in remediating the disclosed internal-control material weakness and whether controls become effective.