VolitionRx Limited — Q1 2023 Form 10-Q
Business context and reporting period. This unaudited filing covers the three months ended March 31, 2023, with comparison to Q1 2022. VolitionRx is developing blood-based diagnostic and disease-monitoring tests using its Nu.Q nucleosome platform, spanning veterinary and human cancer, NETosis-related conditions, and research applications. The company describes its business as transitioning from research and development toward commercialization.
Financial results and liquidity
| Metric | Q1 2023 | Q1 2022 |
|---|---|---|
| Revenue | $149,808 | $114,211 |
| Operating expenses | $9.19 million | $7.79 million |
| Operating loss | $9.05 million | $7.68 million |
| Net loss | $8.87 million | $7.72 million |
| Net loss per share, basic and diluted | $0.15 | $0.14 |
| Net cash used in operating activities | $8.74 million | Net cash provided of $3.61 million |
- Revenue increased 31%. Product revenue rose to $144,452 from $53,957, while service revenue fell to $5,356 from $60,254. Management attributed Q1 2023 revenue mainly to Nu.Q Vet test and H3.1 kit sales.
- Research and development expense increased 37% to $4.91 million, primarily due to clinical-trial and personnel costs. Sales and marketing expense increased 7% to $1.71 million; general and administrative expense was broadly flat at $2.58 million.
- Cash and cash equivalents were $10.01 million at March 31, down from $10.87 million at year-end. Q1 investing cash use was $0.20 million; financing provided $8.15 million, including about $8.0 million net from a February public offering and about $0.7 million from at-the-market sales.
- Current assets were $11.96 million and current liabilities $17.24 million. Total liabilities were $21.02 million, including $3.67 million of long-term debt on the balance sheet; stockholders’ equity was negative $2.98 million. The $10.0 million deferred-revenue balance relates to the Heska agreement’s 2022 upfront payment.
- No gross margin or product-level profitability figure is presented in the filing.
Changes, outlook, and material items
- Net loss widened by about $1.15 million year over year as operating expenses increased. The comparison of operating cash flow is substantially affected by the $10.0 million Heska upfront payment received in Q1 2022.
- Commercial activity advanced: Heska began pre-orders in February 2023 for its Nu.Q canine cancer screening and monitoring test, and IDEXX launched the IDEXX Nu.Q Canine Cancer Screen in January 2023. The filing describes potential launches for canine monitoring, NETosis-related tests, and human cancer tests, but provides no quantified revenue or earnings guidance or firm launch dates.
- Under the Heska agreement, Volition may receive up to $18.0 million in additional milestone payments, subject to specified commercialization milestones and agreement terms. These payments are not assured; the $10.0 million upfront payment remains deferred revenue pending satisfaction of performance obligations.
- Management and the financial statements state that substantial doubt exists about Volition’s ability to continue as a going concern for at least one year from issuance. The company has incurred $176.0 million in cumulative losses, has minimal revenue, and expects to need additional financing, licensing proceeds, grants, or revenue. Failure to raise sufficient capital could delay development and regulatory work or threaten continued operations. Future equity financing could dilute shareholders.
- Contractual payments disclosed as of March 31 totaled approximately $6.72 million, including $2.19 million due during the remainder of 2023. This includes debt, leases, repayable grants, and collaboration obligations. Up to $2.17 million may additionally be payable in future periods for DXOCRO services.
- Disclosure controls and procedures were ineffective at quarter-end due to material weaknesses in internal control over financial reporting; remediation efforts were ongoing. The company reported no material legal proceedings and no material change in its risk factors from its 2022 annual report.
Important facts for investors to verify
- Cash consumption, near-term financing requirements, and whether available capital can support the planned operating and clinical-development timeline.
- Progress and commercial uptake of the Heska and IDEXX products, including test volumes, product economics, and any milestone-payment triggers.
- Whether revenue growth can meaningfully offset operating expenses, particularly rising R&D costs and continuing losses.
- Timing and amount of remaining contractual obligations, including debt maturities, research commitments, and DXOCRO costs.
- Progress in remediating internal-control material weaknesses and any subsequent changes to the going-concern assessment.
- Share issuance and potential dilution: common shares outstanding rose from 57.9 million at year-end to 63.1 million at March 31; 63.18 million were reported outstanding as of May 3, 2023.