VolitionRx Limited — FY2017 Form 10-K
Reporting period: Fiscal year ended December 31, 2017; comparison is with FY2016. This is an annual report, not a standalone fourth-quarter report. VolitionRx is a clinical-stage diagnostics company developing blood-based cancer tests using its Nucleosomics technology. It reported no revenue in either year.
Financial performance and position
| Metric | FY2017 / Dec. 31, 2017 | FY2016 / Dec. 31, 2016 |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $15.05 million | $12.43 million |
| Net loss | $14.77 million | $11.91 million |
| Basic and diluted loss per share | $0.56 | $0.52 |
| Net cash used in operating activities | $12.19 million | $8.86 million |
| Cash and cash equivalents | $10.12 million | $21.68 million |
| Total assets | $14.62 million | $24.73 million |
| Total liabilities | $4.67 million | $3.56 million |
| Stockholders’ equity | $9.96 million | $21.18 million |
Gross margin and operating margin are not meaningful because the company had no revenue. No income tax expense was reported. Other income was $0.35 million, principally grant-related, versus $0.55 million in FY2016; interest expense rose to $0.07 million from $0.02 million.
At year-end, current assets were $10.57 million and current liabilities were $2.29 million. Long-term debt was $1.31 million, with a further $0.44 million current portion; capital lease liabilities totaled approximately $1.01 million. The filing lists $8.73 million of contractual payments, including debt, leases, and clinical collaboration commitments, of which $3.10 million was due within one year. The company reported no significant off-balance-sheet arrangements.
Changes versus FY2016
- Net loss increased 24% to $14.77 million as operating expenses rose 21% to $15.05 million.
- Research and development expense rose 13% to $8.91 million, including increased spending on the 13,500-sample National Cancer Institute Early Detection Research Network study with the University of Michigan.
- General and administrative expense increased 29% to $5.38 million, driven mainly by higher stock-based compensation and personnel costs. Sales and marketing expense more than doubled to $0.76 million as personnel and stock compensation increased.
- Cash used in operations increased to $12.19 million. Financing cash inflow fell sharply to $1.97 million from $25.19 million in FY2016, when the company conducted substantial equity offerings.
- Year-end cash fell by $11.56 million. Shares outstanding increased from 26.13 million to 26.52 million; weighted-average shares rose 14%.
Business developments, outlook, and risks
- The company had developed 39 Nu.Q immunoassays and described colorectal cancer as its primary focus, with planned development in lung, prostate, pancreatic, and other cancers. It reported prior CE Marks for selected CRC and pancreatic biomarkers and a CRC screening triage test; additional clinical validation and regulatory work remained necessary for planned products.
- Major studies included prospective and retrospective CRC cohorts, a 27-cancer study, and a pancreatic cancer study. Several sample collections were complete, with results expected in 2018 or 2018/19; other studies were ongoing into 2020–2022. The filing describes these as development activities, not established commercial outcomes.
- Management intended to pursue commercialization first in Europe, then Asia, and later the United States, working with partners or distributors. The company gave no quantified revenue, earnings, or launch-date guidance.
- Management said available cash would primarily support R&D and commercialization, and that delayed financing could postpone clinical validation and regulatory approvals. Funding plans included grants, equity or debt financing, licensing, and accelerated product development.
- The auditor issued an unqualified opinion on the financial statements but included a going-concern explanatory paragraph. Management and the auditor cited substantial doubt about the company’s ability to continue without additional financing. The filing reported a $55.7 million accumulated deficit and no revenue to date.
- Material weaknesses in internal control over financial reporting remained unremediated at year-end: inadequate segregation of duties in some finance areas and insufficient oversight in IT and human resources processes affecting financial reporting. Management said remediation was underway; disclosure controls were deemed ineffective.
- Key risks include the need for additional capital and possible dilution, clinical results failing to validate in larger populations, regulatory and reimbursement uncertainty, competition, dependence on third-party manufacturers and distributors, and patent or product-liability exposure. The filing reported no known litigation expected to have a material adverse effect.
Important facts for investors to verify
- Current cash, subsequent financing, burn rate, and management’s expected funding runway; the filing does not provide a definitive runway estimate.
- Progress and results from the EDRN/University of Michigan and other clinical studies, including whether findings support intended test performance and product claims.
- Regulatory status and timing for each intended market, including the impact of the EU In Vitro Diagnostic Regulation and required U.S. FDA pathways.
- Commercial launch readiness, partner or distributor arrangements, reimbursement prospects, and any revenue generated after year-end.
- Remediation of the disclosed material weaknesses and any subsequent changes in financial reporting controls.
- Debt, lease, and collaboration payment schedules, along with potential equity issuance and resulting dilution.