VolitionRx Limited (VNRX) Q1 2021 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to VolitionRx Limited First Quarter 2021 Earnings Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference call will be opened for questions. [Operator Instructions] This conference is being recorded today, May 12, 2021. I would now like to turn the conference call over to Mr. Scott Powell, Executive Vice President of Investor Relations. Please go ahead.

Thank you, and welcome everyone to today’s earnings conference call for VolitionRx Limited. This call will cover Volition’s financial and operating results for the first quarter of 2021, along with a discussion of our recent activities and key upcoming milestones. Following our prepared remarks, we will open the conference call to a question-and-answer session. On our call today are Mr. Cameron Reynolds, President and Chief Executive Officer; Mr. Terig Hughes, our Chief Financial Officer. Before we begin, I would like to remind everyone that some of the information discussed on this conference call will include forward-looking statements covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on our beliefs, as well as assumptions we have used based upon information currently available to us. Because these statements reflect our current views concerning future events, these statements involve risks, uncertainties and assumptions. Actual future results may vary significantly based on a number of factors that may cause the actual results or events to be materially different from future results, performance or achievements expressed or implied by these statements. We have identified various risk factors associated with our operations in our most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and other filings with the Securities and Exchange Commission. We do not undertake any obligation to update any forward-looking statements made during the course of this call. I would now like to turn the call over to our President and Chief Executive Officer, Mr. Cameron Reynolds. Cameron.

Thank you, everyone, for joining Volition’s conference call today. I especially appreciate it, given the busy earnings call season and speaking of busy wow, we have had quite a start to the year and made excellent progress in developing a range of products based on our proprietary Nu.Q platform. I expect that we will have a lot of news throughout the remainder of this year on additional product developments worldwide. I will be updating you today on our products, people, patents, publications and most importantly, progress within all four key pillars, Nu.Q cancer, Nu.Q vet, Nu.Q nets and Nu.Q capture. But to start off, I will quickly hand over to Terig for the financial report.

Thanks very much, Cameron, and thank you everyone for joining our call today. I will now provide a summary of the key financial results for the quarter ended March 31, 2021. During the 2021 quarter, we reported a net loss of $6.1 million as compared to a net loss of $5.9 million in the same period last year. This result reflected research and development expenditure of $3.9 million, which was in line with last year. General and administrative expenses of $1.8 million, approximately $100,000 higher than last year and sales and marketing expenditures of $0.4 million approximately $150,000 higher than last year. The slight increase in operating expenses during the first quarter of 2021 was primarily driven by our ongoing transition to a commercial organization. During the first quarter of 2021, we significantly strengthened our balance sheet by adding aggregate net proceeds of approximately $20.3 million in cash, through an underwritten public offering of our common stock in February as well as through our at the market or ATM equity distribution program, with the last sale during the quarter under the ATM occurring on February 10th. We were also delighted to announce in January the award of approximately $4 million in non diluted funding from the Walloon region and the more invest. We have a long history of support from agencies of the Walloon region, who to-date have awarded volition approximately $13 million in non diluted funding, including this most recent award. This additional funding consisted of a cash grant of $1.3 million and $2.7 million in loans. And so we closed out the first quarter of 2021 with cash and cash equivalents of approximately $33.1 million, compared with approximately $19.4 million at the end of 2020. With continued work on commercialization, and the expected national rollout of Nu.Q Vet in the United States, soon to be underway. We expect the cash burn rate going forward to average around $2 million per month. The company is in its strongest ever cash position and this provides us both a great runway to achieve our many milestones, and continuing flexibility to weather the ongoing pandemic. From a revenue perspective, we recorded $25,000 in the first quarter of 2021, mainly from the beta launch of new Nu.Q Vet, which Cameron will discuss in greater detail later. Given we are seeing a lot of interest in the VAT product on the licensing side. And as we anticipate the national launch in the U.S. in the next few months, we would expect to see this revenue grow strongly through the year for the muddy space set during the beta launch. Last but not least, our new commercial team is building a solid pipeline of sales opportunities. As we are also seeing a lot of interest from Nu.Q discover our sample processing service for external parties such as pharmaceutical companies, biotech companies and academic researchers in Europe. We believe that this opportunity should also translate into solid revenue this year. And with that, I will pass it back to Cameron for further operational and product updates.

Thanks, Terig. I’m delighted to have the strongest balance sheet we have ever had combined with the expectation of significant revenue growth throughout 2021. It is great to have you on board. In fact, while we are talking about new team members, I will kick off with a people update, which as of late has mainly been focused on broadening the team with top talent to assist with commercialization of our Nu.Q platform. To be clear, we also remain committed to and aim to keep our exceptional R&D team in place to continue to drive world class innovation. In the first quarter of 2021 alongside Terig joining us as our new Chief Financial Officer, we also welcome Gael Forterre, our Chief Commercial Officer to our executive management team to help manage the broadening range of products, including potential products. In addition to the promotion of Gaetan Michel to the role of Chief Operating Officer and Dr. Mark Eccleston, one of our founding scientists to the newly created role of Chief Technology Officer. We also announced the appointment of two independent directors to our main Board. Kim Nguyen, an HR executive with global expertise at Google, and Richard Brudnick, a pharmaceutical business executive with extensive commercial know-how. And more recently as of May 1st, Dr. Tom Butera has joined the team as Chief Executive Officer of Veterinary subsidiary. Given our belief that Nu.Q vet has enormous potential, we felt we needed a world class leader for our Veterinary products launches. Tom, a seasoned Veterinary Executive with a fantastic track record joined us directly from the Veterinary Centers of America, VCA, part of the mass and Veterinary Group, where he served as business development director. We are truly humbled to have someone of Tom’s caliber and experience join us on a full time basis to build a strong focus on driving revenue from our Veterinary business. As we are transitioning from a research and development company to a commercial company, we are excited to strengthen the leadership team with these key appointments. We have been very fortunate throughout our 10-year history to have an amazingly stable, committed and hardworking team, which has grown in both strength and number. I would like to thank all of our team, I could not be prouder of their efforts. So from people to patents, a core element of our competitive advantage. We have a broad intellectual property portfolio, which covers both human and animal applications. And we continue to strengthen our protection. As of March 31, 2021, our portfolio includes 28 patent families, 10 granted patents in the U.S., 14 in Europe and a further 42 granted worldwide. We also have 93 patents pending. Our research and development team is both highly innovative and prolific, and we work hard to ensure their inventions are protected to the fullest extent of the law, so that we might gain commercial advantage. The first quarter of 2021 was busy from a patent filing point of view and also expect our patent portfolio to continue to grow in the quarters in the years ahead. Our next [piece] (Ph) publications given our comfort with both our IP position, and the stability and robustness of the Nu.Q platform. Publications and abstracts remain one of our key objectives and list of publications and abstracts continues to grow. During the March 2021 quarter, data for Nu.Q was presented at two international conferences, and we collaborated on two clinical paper publications. With a third, we can published just last week, and a further two awaiting imminent publication. These publications are another very important step forward for our company. I’m extremely pleased that we continue to be on the very cutting edge of epigenetics, and delighted that the publication span are four key pillars. These most recent abstracts and papers cover fundamental research into Nu.Q mix and Nu.Q performance in lung cancer. The use of Nu.Q Capture technology as a sampling preparation platform for mass spectrometry to aid biomarker discovery and the performance of Nu.Q Net in monitoring disease progression in COVID-19 subjects and in an animal model study in treatment of sepsis. In the relatively near-term, we anticipate two additional papers to be published from our Nu.Q Vet clinical studies. Many of these topics are perhaps a little too lengthy and in-depth science to cover on the call today. So I will simply share a few highlights and perhaps try to answer any specific questions in the question-and-answer session later. In January at the world’s largest dedicated lung cancer conference. The WCLC an abstract was published in conjunction with the National Taiwan University team. Our clinical paper published in Nature’s Scientific Reports in March, detail our novel proteomics approach to epigenetic profiling of select circulating nucleosomes in the blood of cancer patients. We believe that you can capture technology will be useful not only when it is used in combination with mass spectrometry to discover new biomarkers, as per this paper, but also as a DNA enrichment technology which could aid diagnosis treatment selection, and by treatment disease monitoring when used in combination with either sequencing and or Nu.Q assays. The Nature’s Scientific Reports clinical paper was a great first paper on our Nu.Q capture, with further studies expected to be submitted in the coming quarters. From a Nu.Q net point of view a clinical paper reporting the use of Nu.Q is monitoring disease progression in COVID-19 patients was published in March. Key findings as Jake Micallef discussed on our last earnings call, or the nucleosomes were highly elevated in the plasma of COVID-19 patients with a severe course of the disease relative to healthy controls, and they are both histone 3.1 variant and citrullinated nucleosomes increase with disease severity. In addition, data was published from the animal study of sepsis in a presentation given by Dr. Andrew Aswani, a consultant in critical care and anesthesia at one of London’s leading teaching hospitals. This small initial study for the use of volitions nuclear assays to monitor treatment response to a novel therapy to remove nets from the circulation in a pig model of sepsis, resulting in improved physiological and biochemical well being indicators of the pigs. Most importantly, the results showed that the treatment was successful, and that our Nu.Q assay was the best and most practical way to measure the net response. The studies are now progressing to investigate further animal models and first human trial is underway now. So busy start to the year with publications and we expect a strong pipeline in the coming quarters. And now on to our key updates around our four key pillars. Firstly, Nu.Q Vet, we beat to launched Nu.Q Vet cancer screening test in Texas in the fourth quarter of last year 2020. We are very happy with how the beta launch has progressed, giving us not only our first bed revenue, with Texas A&M University reordering on a monthly basis, but also in providing invaluable information for anticipated launch nationally. Additionally, our best product and the success of the launch has captured the interest of a wide range of industry players wanting to license or distribute our platform. This test is positioned for use in both the animal health check for older dogs, those that are seven years or older, and may also be a complimentary test for younger dogs of breeds at high risk of developing cancer in their lifetimes, such as Golden Retrievers. The current test in its beta phase is only available at the GI lab in Texas A&M University, with our launch focusing on veterinarians across Texas. So what is a beta launch exactly? The beta launch is to facilitate real world learning from actual customers paying for the tests to help shape the marketing mix before we launched nationally across the U.S., which given our positive indicators we expect to be soon likely in the next few months. Also, as importantly, it has also given us a chance to showcase their product to the very large multinational companies. We are currently in very active discussions with which is successfully concluded would help accelerate launches and sales worldwide. Given this is our very first commercial launch; we are using Texas as a test market to make sure all aspects of our products are properly tested before we launch in the U.S. nationally and worldwide. And to help us address beforehand any issues with the companies who may end up distributing licensing our products worldwide as well. We have gained extremely valuable feedback on key factors such as the logistics of a veterinarian taking a sample, shipping, processing, reporting and interpretation of the results. Levels of customer service required, pet owners feedback, and of course, the optimal pricing at all levels. Our team has also done a fantastic job in starting to educate key opinion leaders, oncology specialists, and GP veterinarians in Texas, about Nucleosomics and raising the general awareness of the Nu.Q Vet Cancer Screening Test. In terms of the commercial opportunity, and the addressable market, cancer in dogs is widespread. It is a leading cause of death for dogs over the age of 10. And there are over 6 million new dog cancers diagnosed in the U.S. alone each year. As cancer screening is not as commonplace in the animal health as it is in human health. We believe blood tests like new Nu.Q Vet Cancer Screening Test could help transform how veterinarians managed cancer in companion animals. Early diagnosis of cancer has the potential to help improve the treatment and quality of life as well as providing valuable additional information to inform the clinical decision-making process. The Nu.Q Vet Cancer Screening Test is a simple low cost easy-to-use, the laser based blood test which we believe will help streamline this process for up to one-third of malignancies in dogs, including common malignancies such as lymphoma and hemangiosarcoma. We recognize the desire to receive revenue guidance now that we have our first commercial product and aim to provide this later in the year, when the mix of our own launches and licensing of our technologies to third parties in both the vet and human spaces becomes clear. But as Terig stated, we expect the revenue to be from both the Vet test and from other nuclear products and to increase throughout the balance of the year. There is very strong interest in our vet products and the whole Nu.Q Vet platform from a range of small and very large international companies. And we are continuing significant licensing discussions with several well-known major players in the veterinary space around the world. I look forward to updating you on the progress in the coming months. We believe the Nu.Q Vet platform presents a fantastic opportunity for the company and are truly excited to have Dr. Tom Butera join the team to lead the efforts on that front. We have a busy second quarter underway in the veterinary business with a satellite symposium featuring Dr. Sue Ettinger at the world leading VNX conference in Florida this May and Professor Heather Wilson-Robles as invited speaker to the ACVIM conference in June. In addition to further clinical papers that we expect to be published any day now. We are also making strong progress on the product pipeline for Nu.Q Vet beyond our first product and aim to share further details or further products on our next call. Lastly, we are making significant progress on the launch of Nu.Q Vet worldwide beyond a U.S. launch and also expect to provide updates in the near-term as well. All in all, Nu.Q Vet is a hot space for us right now. So definitely watch this space for further updates in the near-term. Our second pillar Nu.Q Capture, we under exciting new capture mass spectrometry clinical paper published in Nature’s Scientific Reports in March. We are very happy with our team significant progress on this front. Their work highlighted for the first time that histone H2A1R3 citrulline is in plasma up regulated in colorectal cancer patients and so could be a biomarker we targets for future immunoassay development. Furthermore, it showed that the use of Nu.Q Capture may open up the possibility of using mass spectrometry not only for biomarker discovery but also as a high throughput platform for screening and all diagnostics. We even need to capture to be an important enabling technology in the liquid biopsy space. We anticipate further updates by clinical publications, collaboration announcements and perhaps conference presentations in the coming quarters, we aim to launch our first product with this technology in 2022. Our team could not be more energized and excited by how work in our third pillar, Nu.Q net is progressing, and we believe it should be a very big part of our future success. Dr. Jake Micallef, our Chief Scientific Officer, discusses in great detail on our last call. So I will just provide a brief recap an update. Given the relatively recent understanding of the prominent role of both net neutral extracellular traps and nucleosomes in the pathology of COVID-19, sepsis in many other disease, we have been and continue to research the use of our proprietary technology in diseases, with particularly regard to net and the -. Nets are a vital component of our immune system. Natural web of chromatin material consisting of long strings of nucleosomes with added enzymes that damage and kill pathogens, such as bacteria and viruses. Nets are produced by nuclear fuel cells, the most common white blood cells in response to infection or injury. That is a highly efficient traps that catch and kill pathogens at the site of infection or injury, and prevent the spread of infection around the body. Whilst a vital component of the immune system. Excessive production of nets at the site of infection can also damage the body’s own cells and tissues. For example, a small proportion of COVID-19 patients experience excessive production of nets in the lungs in response to infection by the COVID-19 virus, which may lead to severe lung impairment or even death. Nets are a complicating factor in a wide variety of other diseases, including respiratory infections, SARS and pneumonia as well as metabolomic diseases, autoimmune conditions, inflammatory conditions, cancer, thrombosis, stroke and sepsis, and elevated levels are a clinical complication associated with full patient outcomes. As nets material is made up of nucleosomes volitions Ryukyu nucleosomes assay can detect nets in minute quantities. We are researching the use of our proprietary nucleoside technology, with a particularly regard to the activation of [indiscernible] cells, and release of nets in disease. We believe the versatility of the nuclear platform and the range of applications for which these assays can be leveraged may help increase diagnostic power and monitor disease progression, and potentially treatment response across a broad range of diseases that involve the overproduction of nets, such as COVID-19, pneumonia, influenza and sepsis. From a sepsis product development perspective, thus far, we have animal studies in the monitoring of disease, progress and treatment efficacy which have demonstrated the use of EQs nets as an effective monitor of dysregulated nets production in vivo, disease progress and treatment efficacy. Human studies in the monitoring of disease progress and treatment of efficacy and sepsis are now underway at a leading UK hospital, and a potential U.S. FDA 510(k) study is in preparation. From a COVID-19 product development perspective, our COVID-19 studies in 2020 showed a Nu.Q net nucleosomes level strongly correlated with disease severity in the first wave of COVID-19 patients and mortality. We have now conducted studies of serial testing in the second wave of COVID-19 patients at leading UK hospitals to determine the predictive value of our test. Exciting times for sure, with further data due to be presented at upcoming conferences and potentially additional studies in collaboration is to be announced soon. And finally to our fourth pillar, Nu.Q and human cancers. Unfortunately, given the pandemic some, but thankfully not all of our studies have been affected. And we have pivoted to those areas we can still make progress during lockdowns. As previously reported collection from the U.S. EDRN study for colorectal cancer has been caused and collection for the blood cancer study in the U.S. has been slightly delayed and will give a full updated timeline in the near future. In Asia, we have reached our target patient cohorts for both colorectal cancer studies and the lung cancer study, all collected in conjunction with the National Taiwan University, a fantastic effort by the team there. We are excited to now be running the assays and finalizing the analysis over the coming months. With data due to be reported at future conferences. As discussed on previous calls, following the opening of Silver One, we have installed a service lab in the new facility, which will undertake sampling processing for external parties, such as pharmaceutical companies, biotech companies and academic researchers. We have branded this service Nu.Q discover, and I have already generated much interest. We have commercial interest from and quotes into multiple pharma and biotech companies and anticipate revenue from this activity in the second quarter and growing throughout the year. We see this as another key driver of revenue. Thus far, the projects we have been handling through our Nu.Q discover service involve exploring the use of our assays to monitor the efficacy of our customers therapeutics, in development for cancer, the toasters and other serious and or chronic diseases in both pre-regulatory and regulatory trials. These projects if initiated, and indeed, if the outcome is positive, could lead to more significant revenues for evolution. If our assays are proven as companion diagnostics, to our customers therapeutics. A manual sales manager in Europe is doing a fantastic job forging these relationships. I’m also very happy to announce today that we have signed our first distribution agreement with Biomedicaa, a distributor with over 40-years experience for the distribution of our CE mark Nu.Q Kit in Central and Eastern Europe. We expect this to be the first agreement of many. So everyone is proving to be an excellent addition to volitions commercialization efforts. We are now producing recombinant nucleosomes in-house and at large scale, building a library for sale through UK discover, and also for internal R&D use. We have also developed the capabilities for many of the key steps within the production process for our components, such as the ability to freeze dry. And by the end of this month, we will also be producing our very own antibodies in house. This is a great step forward in terms of supply chain management, and we will also reduce both the cost of goods and the cost of development. And lastly, I’m delighted that we no longer only manufacture our traditional pipe format, but are now manufacturing, again at large-scale up to 20,000 tests per batch of our bead based format to CE mark standard. Thanks to my team and all the Silver One team, a great effort and so to the future. A lot to reiterate our vision and what makes us so excited with our progress and our space. Pollution is an epigenetics company focused on advancing the science of epigenetics, and exploiting these advances in human and animal health. This has been our mission since our founding, and it is coming to fruition with our Nu.Q platform at the very heart of epigenetics. We believe the last decade of work inflation without ever expanding team in epigenetics puts us in an extremely strong position with our expansive IP portfolio to be a significant player in this key field. Overall, on so many fronts, with our ever growing team, and IP, I’m delighted with the progress we are making. And I’m excited by the momentum we have developed in the epigenetics field. In addition, a whole team is incredibly excited by the company’s future opportunities. We aim to report throughout 2021 and beyond numerous key milestones, now that were in full swing in turning our platform into a range of products worldwide. We will focus on driving revenue in the coming quarters where possible during the pandemic in four key areas. Firstly, Nu.Q Vet products. Secondly, disease monitoring tests, such as in COVID and sepsis, thirdly, Nu.Q discover processing samples, so one, using our Nu.Q discovery essays, and four licensing of our technology for others to commercialize. We also aim to publish data on multiple fronts across our four pillars. I along with the rest of the board, and indeed the whole company, look forward to sharing the results of our case studies over the coming months and year without optimized platform. Thanks for joining the call today. I very much appreciate it. Given the busy earnings call season. We are happy to take questions now. Operator.

[Operator Instructions] Your first question comes from the line of Kyle Mikson with Cantor Fitzgerald.

So I was wondering if you could talk about how the first nematocysts products can be launched and what the go-to-market strategy is. Specifically was wondering what the most likely use for the first assays are going to be I get? I understand that it is probably from monitoring, but just like which disease I was kind of thinking. And when you say launching the product on multiple platforms, do you mean allies or beads when you say that or do you mean like, the actual amino assays analyzer like the [indiscernible]? And then on the go-to-market plan, is there going to be like a beta launch in Europe and then like a broader launch later? Or how should we think about that? Thank you.

Thank you, Kyle, and thanks for your questions. I will answer them more than make sure if I forget one of them, please return. So which disease so a couple of quarters ago, we thought perhaps under NETosis/influenza, sorry, for COVID in an influenza might be the way to go. But I think given the waxing and waning of NETosis from COVID, I think perhaps sepsis might be the one which is easiest to get the traction in. Certainly the easiest way to get large numbers in a trial because obviously, as I’m sure everyone’s aware, it is even during the pandemic, there is the biggest killer in hospitals. So it is obviously a very, very big problem and therefore much smoother ride to get the numbers needed for trial. When we say multiple platforms that is a good question. So we launched the vet on plates, and initially where we are now. As you can hear, we have been working a lot on getting it on the machines. We are using IDSs as machine but we have also explored different machines, we can use it on the larger auto analyzer machines. And we are also producing the beads at large scale now so we can absolutely launch things depending on what machines are available but on bead based machines, and adapting to a new machine seems to have taken just a few months ago. There is obviously new regulatory work but the actual adaptation is quite easy. But we have also mentioned we have also working a lot on a point of care both lateral flow small machine. We have actually, Dr. Eccleston, who is in his new role, as technology has been looking at a lot of different options for just simple yes, no lateral flows, quantitative point of care, and also the small machines. I won’t mention the companies but because of confidentiality, but we are talking to quite a few. And we actually have our essays out to a quite a few different companies. So for small point of care machines, as well as lateral flow. So it is what we aim to do with everything. I think, as I think it is clear, what we believe is this is going to be potentially huge in a very wide range of areas. So rather than saying to a customer, or a government or someone, it has to be on beads, or this machine, or this point of care, we aim to offer a full menu. So I guess they say, courses for courses, sometimes plates are easier, particularly for research. The machines are very easy, if you want a high throughput. The RDS machine, for example, can do 500 samples a day on a quite a small machine. We are hoping in the future to license to groups like the big auto analyze the companies, there is about half a dozen of them at Roche, Siemens and then developed a point of care. And that is quite developed to the point of care as well. So the go to market strategy. That is a very good question. And I think, as you have probably created, from what I said, we have been very, very happy with the results. In the diagnostic power, increasing diagnostic power, patient selection, also monitoring disease progression. Also, we are trying to show some prognostic value as well, from the assays, which I think we may get to. So the go-to-market, I guess like every way you are looking at different regions. The EU, to get a CE mark could actually be reasonably quick, because the platform we have CE mark very similar assays before, and then we aim to see mark them on beads quite quickly. So once we have the chosen intensive use, and it could be one of a few of those things. And the samples run, it is just a couple of months process to finish off the CE mark. So what is caused us some time has been finding the right population to get a CE mark trial in. But if, as you mentioned, at which indication, sepsis can be reasonably quick, because there are many, it is everywhere, as you know. And that is year round, summer, winter, and in every hospital in the world. So I hope that answers all your questions, how does that matter? And the U.S., there is some talk of trying to get emergency use, which of course we try for the COVID. But I don’t know, I think it is certainly less than 50/50, we would get that so it would be normal. The process we look to go through in a range of areas is to go to a CRO collect for a 510 (k) and then go for it go through that path which Dr. Terrell has done quite a bit of work from in a range of areas. So the cost of that is a few million dollars typically. We tend to look at two or $3 million and it usually takes up 12-months, 18-months for collection, plus all the regulatory timing from whenever we start the process, which we are working on now, but we don’t have a timeline from when we expect to start. I guess that will be driven from the data we have got coming up in the next few months. We have our assays in the hands of a bunch, like five or six different groups now who were using them in their own trials to show the efficacy as proof of concept. So that is all coming together really well. Does that answer your question?

Thanks Cam. That was perfect. I threw a lot at you. But you did a great job answering. Thanks again. And I just want to take the Nu.Q Capture great publication with mass spec data, but when you think about like commercialization looks like a product could be out by 2022, which is positive. But, when you when you think about, like submitting for regulatory approval, how quickly could that FDA or see more kind of occurred? And if it is going down the pathway, would that be a PMA IBD, because it is a screening test, it seems. And then I’m also wondering, like longer term, would partnerships with companies that are offered that instrumentation like mass spec or next gen sequencers. Would those partnerships makes sense to kind of couple the assets with?

Yes, absolutely. So we are obviously not in the sequencing nor mass spectrometry space. So I think the Nu.Q capture from and thank you, yes, the paper was fantastic. Nice, great to be in nature scientific reports, it was a real breakthrough shows that it is reproducible and robust to like the rest of our platform. So commercialization, of course anything which is going to be next year would not be an FDA study, it would be sold as a service for others to help them I think there is a lot of different ways by capturing and concentrating the crumbs and fragments, we can help a range of different groups. And I will my team can go through that with greater detail. But anything which is sorry, obviously, selection of monitoring as part of a trial would take many years. That is certainly not going to be next year. But I think given what we are doing, like with Nu.Q discovery, it is looking very good in a range of different areas for capture, and it would be selling and as a service. And would we work with big companies? Absolutely. So I guess there is one very well known, big sequencing company, and there is quite a few big companies in the liquid biopsy space. And I think, like everything, we would look to launch our own products to show it works to really get the ball rolling, like we have invested. But we are very, very interested in licensing, particularly in capture, because it would be something we believe if it all works well could be incredibly useful to them. So it is not something we have to commercialize ourselves. So I think once we have got the very good proof of concept from the next level, if that happens, we would quite aggressively look to license it out.

That makes sense. It doesn’t have to be an approved assay. And then just thinking about the body’s natural studies looks like the collections have been played a bit, which makes sense due to COVID. And I know there is going to be an updated timeline provided when it is ready. But is there any detail that you could share to help us understand why the studies were delayed? And I’m sure you know, mostly it was due to COVID? How significantly could that delay the first 510(k) submission for DLBC, because we talked about the timelines in the past and just wondering how far was there now pushed out to 10-Q?

Yes, that is a very good question. And I don’t have the firm timelines, and I don’t know, updates and have to re update, but it is tough updating in the moment with COVID going. That is the primary reason was what you said. And as I’m sure you were, it is been a tough 15-months to be collecting trials in the U.S. for cancer. So an EDRN study is still paused. I don’t want to half answer that question. Because we are not I don’t think anyone really knows exactly what is happening at the moment with collections. And so we are doing as much as we can to really work out the new timescale and how much it is delayed. But I would strongly expect it is going to be at least a quarter or two, given everything. So that is just speculative at the moment, and we are looking at ways perhaps we can get things back on track time wise. But as I said, yes, it is just been a really tough time. The last 15-months with the pandemic to keep collections on track in the U.S., but we will have a full update as soon as we know and I strongly expect that is going to be before at the next cue.

Alright, that is understandable, and it is very fair. I just had one last question. I think it is going to be quick. On the biomedical distribution, I just want to confirm are those for the [indiscernible] or my is overwhelming. So just want to make sure I’m thinking about that correctly?

I don’t know that is where the Nu.Q first, which was, we got this kit CE mark, for the blood cancers in Europe. As you are seeing the dogs, it works very well on the blood cancers, and they are looking to see if they can get some traction in Eastern Europe. And as that is not one of our key markets, I don’t quite a large companies as you know. This is both sides just kind of feeling each other out, if you will see, what if they can find a market in Eastern Europe and if we like working with them, so they have gotten to the end of the year to see if they think they can make a go of it in Eastern Europe, given the data they have or collect more data. So we are getting a lot of interest from different groups just kind of trying to work out how they can be involved is Nu.Q going to be, I think and as they are a very good company, and quite an established company. And it is a footprint where we didn’t really have any traction in Eastern Europe, we thought it was a good thing to do. And there is a lot of these smaller deals bubbling as well as the bigger deals we talked about. As we sort of work out ourselves, and they work out how the patchwork is going to work in all our different products. So it was good to get this first one, the first run on the board, if you will. And we will see how that goes between now and the end of the year and see if we want to continue the relationship and they do but it is a good start.

Your next question comes from the line of Bruce Jackson with Benchmark Company.

Hi, I would like to ask you a couple of questions about the NETosis assays. So you have got the one COVID-19 study where you have been collecting these material samples? Have you submitted that data yet for a pre-conference? And if so, which conference, would it be presented at?

Yes. So we have gotten a couple of different paths, we tried to do a big sort of study. And that is been very tough to get off the ground, because everyone quite naturally is concerned with getting their sick well, in the emergency wards. So collecting serial samples and not a complicated trial. But it is obviously something which takes a lot of attention away from, a lot of them have been obviously extremely busy, especially in London in the last few months. So we have been working with, through a few different networks, they have been incredibly good people in the COVID. And so space. I guess the hospitals, we talked about a bit, but very, very large hospitals, the best ones in London and some of the best in the world for COVID work. They have submitted to conferences, I believe the next one, they tend to be two or three months ahead. That is the only problem with when you do it like this. They do it through publication, which is good. I mean, it means they are very happy with the data. And they are very comfortable, but just takes a little more time to conferences don’t happen the next week from when the data comes out. But the next one is July. And we have, as I said a bunch more out there. So I would see a steady stream of them coming through the rest of this year, both in the pig animal model for sepsis therapy and the human model also in sepsis, also in COVID. And I can’t give you the details now. But there is several other areas of NETosis where we have been very active in supporting groups who have research going in that field with providing our assays and our knowledge of NETosis to see how it goes with them. So the first one is, I guess it is been over a month away. And there is a large range of them coming through the year. And I think we have been extremely encouraged with the work that we have been doing with it with our partners who are world renowned specialists in COVID and sepsis and in emergencies. And we are also attempting to now get the size we needed for studies, which can then become the regulatory work for CE mark, which again, at the studies is the delay, once we have that a CE mark can actually happen quite quickly because our platform is so well developed. It is a matter of small number of months once we have the population at run. And as I discussed with Kyle, particularly with sepsis, you can get large numbers very quickly, summer, winter, rain or shine, there is always sepsis in a hospital. So I couldn’t be more happy or excited with the way it is going our platform. We have been shipping kits to very busy, very independent people. And the feedback we have got has been nothing short of excellent in every case, not only in the quality of our assay, but how well it is at doing different things with regard to the NETosis. And as I said, not just the diagnostic, but also potentially, as a companion diagnostic or even patient selection for treatments for clearing out of nets. So potentially a really, really big market and something we are very excited about. And there will be a lot of data through the year. Does that answer your question Bruce?

Yes, if I could follow-up the sepsis application. So do you also have data in-house for that, for that use of the assay? And has it been submitted for presentation?

Yes. And lots more to come. So it is a bit of a presentation. So the data we have, we have a lot, we haven’t published, we are working on through now with them. And things have been published, as well as don’t forget, it was published in the pig model on the therapy. And I think from, as you can see from the poster RFA was an extremely good marker for the disease progression also, and worked incredibly robustly and stabling. And we are also that this was all on a plate system, obviously, you probably want more things faster, and in a very situation than just every six hours. So that is quite fast. So we are also working, putting the sepsis platform on beads, so it can be done in 45 minutes. And also potentially point of care. So theoretically, you could have almost instantaneous measurement of the next level. And if you think for those who wondering how that is useful, I think, you know, Bruce, if you are in a hospital, sepsis is a big killer, it creeps up on you. And it kills you for two main reasons. One it is very early to diagnose early and really get ahead of, and two the treatments aren’t actually that great for, and there is often a lot of tritton, there aren’t many. So there is no good diagnostic for it really certainly nothing in real time. And there is no real legal therapy, but that is partly because there is not a good diagnostic. So I think this could be really, really something very, very helpful to a lot of people.

And then with regard to the contract research business from silver one you have been talking to some large companies. Do you have any contracts in hand yet? And [indiscernible] this give us a little bit of a flavor for the types of studies that they are, they are contemplating. So are they looking at the Nucleosome IQ testing as something where they are trying to get a handle on it? Or do they have an actual application in mind, for example, is the companion diagnostic?

A lot of both, but mainly where they have a purpose in mind. A lot of monitoring of efficacy of their therapies in development in cancer in the toeses. Also in the animal space, we have actually worked with a few groups looking to use our assays, obviously, in the dog space as well. But so far as so yes, we have a handful have actually only been quite recently we even started so we have been very happy with the response. We have one sales member manual who has been chasing the tree. And there is turns out looks like there is a steady demand for epigenetic profiling. So yes, it is four particular uses. So as we talked about the revenue, it can be very small, it can be very large depends on where you sit in that continuum typically starts out to be more in the sort of small tens of thousands of dollars. A big quote, over a sort of six month period, could get into seven figures. But so that is the kind of the ballpark you are looking at. But of course, if it becomes part of the 510(k) or FDA study, then you are looking at a much larger amount. But obviously, most things don’t progress to that level. But it is a very good way of getting known, very good way to get more publications, very good way to get to. So it is, yes, I would expect to see, you never know, the contracts, I suppose the discussions might go nowhere. But there is certainly a lot of interest. Some of them are quite well advanced. So I would be surprised if we didn’t close a few of them in the sort of short to medium term. And it is just a good way to get things moving. And I think it is very encouraging to see silver one is now I think there is 12 or 13 different recombinantly presents were producing. We could offer service for I think about 15 different new custom assays. So and potentially, you could capture as a service as well, which could be the revenue next year. So it is and I believe, as far as I know what that service is quite unique in the breadth and abilities of what we can do. And as I’m sure you are well, wherever epigenetics is really taking off, so it could be it could be a very good process for us.

Your next question comes from line of Jason McCarthy with Maxim Group.

It is [indiscernible] on the line for Jason. So I would like to see if you can kind of give us just a bit of a deeper status update. And walk us through the steps that you need to take for the human diagnostic platforms. We know that the big study in blood cancer has kind of on pause, but what about the other programs like lung cancer and colorectal? Especially now that you have the same like, you got full enrollment on the National Taiwan studies?

Yes. So I guess the human studies, the London said that the reason we did the blood cancer first is just one assay, or maybe two assays got fantastic results. I mean, look in the bed space, we are high 80s or 90s AUC’s accuracies, which is quite remarkable for a very low cost, easy-to-use blood test. But obviously, in the lung and colorectal space, it is more work, because we have always needed to do a panel. And so you have to get a broader range of assays ready. And also, on a platform, that is not something you would use four or five different plates for. So it would have been very hard to do a beta launch in [indiscernible] CRC, just on plates, because you need a wide range of essays. So that is actually we haven’t focused a lot of efforts on the back end of finalizing all because, we only have a relatively small team. The fantastic thing is our optionality now that we can pivot to the Vet space, where again, a very simple essay has got spectacular results, NETosis were very simple couple of assays, which we can launch very quickly and easily. I think if it hadn’t been for the pandemic, we would have spent a lot of time finalizing the platform for a broader range of assays, because to bring each assay to a product stage, obviously takes a lot of background work. It is not incredibly detailed work with a lot of detail. So you have to use, it can take six-months to 12-months per assay. I mean, you can do them concurrently but each one you can take a lot of work to just making sure they are fully robust and reproducible, which of course we have done in the assays which are now ready for products in the vet and the NETosis space. But we still need to go through that. But while they are still collecting and the process particularly, obviously, Taiwan’s not going to be the biggest markets. We are talking to a major player in Asia, I can’t mention the name but if I said it, who they are about assisting us with launching on a more simple platform in Asia, and one particular part of Asia. So we are just trying to work out now and how much effort we put into, because obviously, it is still going to take that that is low friction, that happens, but they are not U.S. regulatory trials. And they are probably not good enough for a country in Asia, they have accepted more proof of concept. But I think given how strongly that has taken off, and that could easily be a very, very large market, and so good to entice us with the platform we have ready, we still have to go through a bit of the background work to really finish off the lung and colorectal. So given the fact that it is paused in the U.S., and I think we would probably focus on getting the blood cancer in humans product out first, because that is very close to product ready, because it is a very simple panel, and to be 100% upfront, we have never got 90% AUC with one assay on local records always taking the panel, which is understandable, it is a solid tumor or liquid tumor, but so we do have to do quite a bit more work. I can run you through more of the details if you want to, after that. We still have more work to do on the background. So but I’m going to colorectal but given the optionality we thought we would go with where the very low hanging fruit is at the moment in the blood cancer and NETosis and the vet space.

Thank you very much. And then I would like to ask also about the H2 A1 or three histone that you discovered to the capture program. Is that something that you could add to kind of the main line Nu.Q colorectal cancer assay especially while the U.S. EDR and studies on pause?

Absolutely. So actually, and that is it is not necessarily a bad thing. We have been big on polls, gives us more time to adapt the platform. I mean, getting a colorectal panel is a lot of work. And we can add those assets to it. Absolutely. And we are actually looking for it is been proven very helpful in biomarker discovery. So that one, and that we are certainly looking at others as well. I have never been described as being different. And from the mass spectrometry, it certainly appears they are, so we can 100% add any assay theoretically, and because what we have is a bit of a process now where we can make the recombinant nucleosomes the antibody in-house and make the assay. So the short answer is absolutely. And that is one of the many reasons we are doing the Nu.Q capture program is to also add new biomarkers that have not previously been described.

Thank you. And then just one more, I would like to ask as it is been around seven months since you have started the beta launch, for Nu.Q Vet, can I talk see if you could talk a bit about, what you have learned so far in the Vet space and how you can take that and kind of apply it to more of the national launch later this year?

Yes, it is actually we have learned a huge amount. I’m really happy and glad that we did it the way we did. I’m very and learning also comes from the people. Dr. Tom Butera coming on board. He is a very well renowned executive in this space, and leaving Mars which is the biggest Vet company in the world and coming to ours, which I’m guessing we are probably one of the smallest really shows his faith in what we are doing. And he has been tremendously helpful in guiding us in some of these issues. But I can put to give some flavor, there is a huge amount of things to learn. Obviously, one very important factor is pricing. Obviously, we want to maximize the revenue. And so we, I think, on the national launch, we will be adjusting the price and you will see all of that, to really maximize the level. Packaging has been very important, the need to be on ice. Obviously, is a big difference in the amount of work required, if it is frozen, or at two degrees. Also, we have learned it is very good to ship a box to the vet, so they don’t have to limit the amount of work they have to do. Also, a lot of that, also just want to package it up and send it off to a centralized lab, there is two big companies or around the world, several big companies, which do that, if you are doing six other tests, it is sometimes users take an extra box. So I think that will be a big part of it. So we have looked at every single aspect, not the test itself, that is worked incredibly well. But just all those nuances are incredibly important to get right. And I think, as I have discussed, but I couldn’t reiterate enough, that what it is also done is proven that we have a product to the big vet companies and small vet companies. And I think we are in a really good position. Because, as far as we are aware, were there any real product out there that can show any real efficacy in cancer in dogs. And there are several big companies and several insurgents in the business, and there is only one of us. So I think puts us in a really good position. And it is I think it is very fair to say that taking this very seriously, we are in very serious discussions. And I think that is going to be a big part of the mix as well. But that is kind of what we wanted to do all along, I think providing a solution ourselves is a good way to move forward and prove it works and get it all fine tuned. But also, and this is true in the human space, but certainly also in the vet space. The companies have hundreds and hundreds of salespeople and reps worldwide. So I think that is going to be hopefully a big part of our mix as well. So all in all, I think it is been a really good process for us. And it should make a deal much smoother if we end up doing one with one of the majors, and also really smooth launch of our product nationally and internationally. Because we also expect to be launching internationally in Europe and Asia, in the coming quarters as well, because there is obviously a big need there as well.

Your next question comes from line of at Nathan Weinstein with Agesi Capital.

I suppose just to start on Nu.Q Vet and Nu.Q Discover kind of as we think about the next few quarters on those programs, should we be sort of thinking about a sequential revenue ramp?

Well I will do one at a time. So Nu.Q Vet, so the sales, debit ordering, as we talked about each order is enough to do not quite a couple of hundred dogs, but in $46 each. Now 25,000 revenue can work out roughly how many it is in the hundreds. We are not putting a lot more on very much at all marketing in at the moment, because we are answering all these questions. So I don’t expect that to market to go up in the next sort of few months, because we are putting all the effort into the negotiations for our own national launch and also of course, have licensing and the other processes. So there has been good interest, but we are using this much there is no point spending huge marketing budget now. When I think we are going to look nationally launch with all the tweaks that we have been using. Yes, I would expect it to rise but I think the big change will be after the national launch. And I think if we can get a licensing deal that would absolutely supercharge. Because as I said to Michael, the big companies have hundreds and hundreds of sales people worldwide. So it is obviously a whole different potential to be quick. In wrapping up, if that is, that is if that is done as a deal. You can discover, yes, it is going to be a bit lumpy, because I said, some deals can mean as low as $10,000, some couldn’t be over $100,000, or euro. So in one quarter, you might get a couple in the next quarter, you might not but I think through the year, I would expect to see a few. And I would expect that to pick up strongly through next year as well. So and it is, we will provide guidance, as soon as it becomes clear the mixture, how discovers going how Vet going, and potentially licensing deals, we have a potential licensing deal being discussed also in the human space. In Asia, that may or may not happen, but that would also change how things look as well. So the package should become a lot clearer through the year, but I would expect to see a slow steady gains with a Vet and then the big movements would be either on the national or international launches and or on a licensing deal. And discover will pick up I think quite strongly through the next few quarters, but could be lumpy, some quarters could be quite good. And some could be smaller, just because the nature of how it looks in deals. Does that make sense?

Yes, thank you, Cameron. That is very helpful on the revenue front. And then maybe just thinking about margins, I have always thought of Nu.Q as having a particularly attractive cost of goods. So I just wanted to get your thoughts on those costs, and maybe compare contrast to other testing modalities that are out there and the costs attractive, and then how silver one plays into that in the long-term?

Yes, it is very interesting, it is in some ways as follows. I obviously have an MBA to study a few of these things. It follows in some ways a kind of a software model in terms of our whole idea in all this is not just to offer a license, but still the key components so that we can maintain quality, also have a good idea of actually how many they are selling. And particularly in developing countries in countries where you might not see a royalty get revenue early on. So at the moment, on the plate based format, it costs around $4 each $5 per test. But sometimes you have to do repeats. So you might have to it might be a few a few of those to get it. Once you on beads, there is no need for a very few repeats. And the cost goes down a lot, maybe even half or less than that. And we are in the process of changing over to beads now for the different platforms. So silver one, so I think it is sort of moving forward, we are seeing in Vet space, obviously, we have a very good margin, and so does everyone in the chain. And I think we are looking to make it a mass market product. I think it is something which particularly is part of the world of screening tests, could easily be something which we target to having several hundreds of thousands or millions of tests per year. And I think perhaps we need to be a slightly lower price point. But given the fact that our cost of goods are going to be dropping a lot, it is probably a very similar margin, we have just a lot more throughput in on the product front. So it is, I think we are in a very unique position because we have something which we can, when the cost of goods as low as ours are and I think it is full production, we could be at just a few dollars, per se, or even less if it is in simple terms. You can kind of put the, we have to recoup obviously the large investment we made in this space, but you can put the product at pretty much any price we have a very attractive margin. And that is we are all about a volume business. So we don’t want to sell a few things at a very high price. We want to really dominate, not just on the plates, but magnetic beads also on the point of care and make it a test. And if we do progress on the step society, it is something which I think could be taken by a very large percentage of people in hospital regularly to check to see if they are starting to develop sepsis, for example. And to do that you can’t be $200 or $300 a test, you would have to be well below $100. I think it is going to be something which is really, really mass market. But then the numbers of tests go up massively. So it is either way, we have a very high margin, I think, but we are really pushing for volume of sales.

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to Mr. Cameron Reynolds for closing remarks.

Thank you, everyone. I understand you are all very busy. And I really appreciate your time. And please keep an eye on us over the next few months and quarters and all the way through next year. We have a very strong team I believe, we have a strong balance sheet we have ever had, fantastic platform. But now we absolutely realize it is about making products and getting revenue. So now we have a good commercialization team in place and the first products we are going to be taking that very seriously. So thank you for your time.

This concludes today’s conference. You may disconnect your lines at this time. Thank you all for your participation.