Volitionrx Ltd Q2 FY2021 Earnings Call

Hello, and welcome to VolitionRx Limited Second Quarter 2021 Financial Results and Business Update Conference Call and Webcast. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Scott Powell, Executive Vice President, 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 second quarter of 2021, along with the 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. Also on our call today are Mr. Cameron Reynolds, President and Chief Executive Officer, Mr. Terig Hughes, our Chief Financial Officer, and Dr. Tom Butera, Chief Executive Officer of Volition Veterinary Diagnostics Development, LLC. 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 how busy you all are during the earnings call season. Speaking of being busy, our whole team has worked very hard during the pandemic towards our goal of becoming a commercial enterprise. As you might remember from our last call, 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, in addition to making significant progress in negotiations over a number of potential licensing arrangements. I expect that we will have a lot of news throughout the remainder of this year on progress with our numerous commercialization efforts. I will be updating you today on our patents, publications, products, people, and most importantly, progress within our four key pillars: Nu.Q, Nu.Q Vet, Nu.Q NETs, and Nu.Q Capture. I'm delighted that Dr. Tom Butera, Chief Executive Officer of our Veterinary Subsidiary, is joining us to update on the fantastic progress and upcoming plans for Nu.Q Vet. To start off, however, I will quickly hand over to Terry for the financial report.

Thanks, Cameron, and thank you everyone for joining our earnings call today. I will now provide a summary of the key financial results for the quarter ended June 30, 2021. During the second quarter of 2021, we reported a net loss of $5.6 million, compared to a net loss of $5 million in the same period last year. This result reflected research and development expenditure of $3.6 million, up slightly compared to approximately $3.5 million in the prior year period. General and administrative expenses were $1.8 million, approximately $300,000 higher than the prior year period, and sales and marketing expenditures more than doubled to $459,000, primarily driven by our ongoing transition to a commercial organization. Grant income earned in the quarter was approximately $400,000, $300,000 higher than the same period last year. During the second quarter of 2021, we also received approximately $857,000 of net proceeds through our aftermarket equity distribution program. As such, we closed out the second quarter of 2021 with cash and cash equivalents of approximately $27.9 million compared to approximately $19.4 million at the end of 2020. We expect the cash burn rate going forward to average around $2 million a month, excluding the impact of income from licensing deals, if any. Therefore, the company continues to be in a strong cash position, providing a significant runway towards achieving our commercial milestones. From a revenue perspective, we recorded $25,000 in product revenues for the second quarter of 2021, mainly from the beta launch of Nu.Q Vet. This was steady with the first quarter of 2021 as expected, given the nature of the beta launch. I don’t want to steal Tom’s thunder, but considering the interest we are seeing in the Nu.Q Vet products from a licensing perspective, we anticipate significant future veterinary revenue opportunities to come from licensing arrangements, including potential upfront payments and commercial milestones, rather than just direct book sales. Last but not least, our new commercial team continues building a solid pipeline of sales opportunities with interest developing in Nu.Q Discover, our sample processing service for external parties, such as pharmaceutical companies, biotech companies, and academic researchers. We believe that this opportunity should also translate into solid revenue this year. With that, I will pass back to Cameron for further operational and product updates.

Thanks, Terig. I’m delighted to have such a strong cash position with consistently low burn rates, providing us a significant runway toward achieving our commercial milestones. Regarding patents, our core element of our competitive advantage, we have a broad intellectual property portfolio covering both human and animal applications, and we continue to strengthen our protection. Our research and development team is both highly innovative and prolific. We work hard to ensure their inventions are protected to the fullest extent of the laws so that we can gain a commercial advantage. The first half of 2021 was extremely busy from a patent filing perspective, and I expect our patent portfolio to continue to grow in the quarters and years ahead. As of June 30, 2021, our portfolio includes 27 patents and families plus three in licensed families, 10 granted patents in the U.S., 14 in Europe, and a total of 47 patents granted worldwide. We also have 89 patents pending. On publications: Given our comfort with our IP position and the stability and robustness of our Nu.Q platform, publication and abstracts remain one of our key objectives, and our recent publications and abstracts continue to grow. Starting with our veterinary team, our second clinical paper was published in BMC Veterinary Research at the end of the quarter, with a third clinical paper accepted and due for imminent publication now. Our fourth paper will be submitted later this month, detailing new clinical data for Nu.Q Vet Cancer Screening Test, broadening its application to seven of the most common canine cancers. Also on the veterinary side, we have had two abstracts accepted for the Veterinary Cancer Society meeting due to be held in October. We will showcase a lot of new data, firstly, using our Nu.Q assay to monitor both disease progression and treatment response in dogs with cancer. Secondly, using our first-ever data employing our patented Nu.Q Capture technology in dogs with lymphoma. An absolutely fantastic effort on the R&D side from the veterinary team and the researchers at Texas A&M University. Well done to you all. Also published this quarter in Nature Scientific Reports was a fundamental research project led by Professor Stefan Holdenrieder, with some physician team members as co-authors. The paper was entitled 'Serial Profiling of Cell-Free DNA, and Nucleosome Histone Modifications in Cell Cultures,' summarizing a better understanding of cell-free DNA and cell-free DNA biology by measuring and comparing total cell-free DNA, fragment sizes, and epigenetic profiles of nucleosomes in three different cell lines in the aim of developing a comprehensive clinical assay. I’m delighted that our team is involved in such cutting-edge research and that our efforts are leading to published papers. More recently, data has been presented at an International Congress by two collaborators from leading UK hospitals using the Nu.Q NETs assay in COVID-19 studies. These proceedings included early-stage data showing that results using the Nu.Q NETs on admission could predict future COVID-19 disease severity and that serial results correlate with disease progression. Fantastic results; I’m grateful about it to be reported at such an internationally renowned Congress and to be working with such great colleagues. We are pleased to be making progress in a rigorous approach to present data where we can, in either peer-reviewed papers or at conferences. However, this does mean a lag time to study results and public patients. By way of example, the data from these studies was finalized in February-March; however, it was released only at the end of July. All in all, 2021 has been our strongest year-to-date with publications, and we expect more papers posted and abstracts in the second half of this year. To our product updates: First, on our Nu.Q NETs. As a reminder, we believe that the Nu.Q NETs assay will have wide applicability for monitoring diseases with a NETs component, such as COVID-19, influenza, sepsis, autoimmune diseases, and cancer. We have previously reported preliminary results demonstrating that our Nu.Q NETs assay correlated well with current COVID-19 disease severity. The recently published posters show that early-stage data with the same assay demonstrated that results on admission could predict future COVID-19 disease severity and that serial results correlate with disease progression. The lead author of the first poster, Dr. Catherine Rea, stated that the Nu.Q NETs biomarker results taken on hospital admission in this study correlated with COVID-19 disease severity and were predictive of whether patients required care in a general ward or organ support in an intensive care unit. Study results also indicated that elevated values of Nu.Q H3.1 could predict poor outcomes in patients admitted to intensive care, including an association with 28-day mortality, and could be valuable in risk stratifying patients for treatments, such as therapeutic anticoagulation, as well as monitoring patient response to treatment. Dr. Sophia Stanford, Lead Scientist and Author of the second study, commented, 'while this was a small exploratory study, the Nu.Q NETs H3.1 biomarker values closely track the clinical course of COVID-19 patients admitted directly to intensive care or those admitted to a general ward and then transferred to intensive care during the hospital stay. These findings suggest that the Nu.Q H3.1 assay may be able to risk stratify COVID-19 patients on admission and monitor disease progression in individual patients.' Strong findings from these studies, and I’m delighted to say we have further large studies in progress in COVID-19, sepsis, and other diseases due to be completed soon, with the publication of further data expected in the coming months. During the second quarter, we hosted our first key opinion leader workshop on NETosis and are delighted with the level of openness and collaboration across the team. We have our next session in the coming weeks, and I look forward to continuing this positive dialogue. Regarding NETosis, I’m pleased to report that we have a seasoned Product Manager joining us in August, with a strong track record working in sales and marketing for Roche Diagnostics for over 20 years. A fantastic addition to the team; I’m sure it will help us develop the first products. To summarize where we are in what I think is an extremely exciting new area for our proprietary Nu.Q platform: we had excellent results thus far with a range of different world-class collaborators, with more results to come. We are now looking to transform these results into a range of next products worldwide. Given the numerous potential commercial uses we have identified to date and our expectations for further identified users, we have expanded the team to include experienced industry professionals to help us with this process. We aim to launch our first commercial NETs product in 2022 and outline the strategy for FDA approval of the NETs product this year. This leads me to another fantastic addition to our team as I hand over to Dr. Tom Butera, Chief Executive Officer of our Veterinary Subsidiary. You may remember Tom originally joined the Volition team as an Independent Director on our Board, but we were then delighted when he agreed to come on Board full-time as CEO of the Vet business. Tom, a seasoned Veterinary Executive with a fantastic track record, joined us directly from the Veterinary Centers of America (VCA), part of the Mars Veterinary Group, where he served as Business Development Director. We are thrilled to have someone of Tom’s caliber and experience join us; he only joined us at the beginning of May, but he has truly hit the ground running and has some fantastic updates to share. Tom, over to you.

Thanks very much, Cameron, and thanks to everyone who joined the call today. It has been a busy first three months in my new role but tremendously enjoyable and rewarding. I would like to start off by complimenting the Volition team and the researchers at Texas A&M University, led by the incredible Dr. Heather Wilson Robles, for the great work they have done in developing a simple, easy-to-use assay to address a huge unmet need in the veterinary market. It has certainly made my job much easier. Cancer screening is not yet as commonplace in animal health as it is in human health, but I believe blood tests like the Nu.Q Vet Cancer Screening Test can significantly help transform how veterinarians manage cancer in companion animals. Early diagnosis of cancer has the potential to improve treatment and quality of life and provide valuable information to inform the clinical decision-making process. In these first few months, I’ve had the opportunity to really dig deeper into our ongoing research. I’m extremely excited about the clinical work being done by our veterinary team to date. There are numerous clinically relevant concepts we have for future programs, and I believe we are truly only at the very beginning with the Nu.Q platform in the veterinary world. So, where are we today? The recent clinical paper published on the 29th of June, authored by Dr. Wilson Robles, reported that the Nu.Q Vet Cancer Screening Test detected 82% of hemangiosarcoma cases and had a very high specificity of 97%. The test indicates all stages of the disease, with unsurprisingly nuclear concentration levels increasing with disease severity. A second dataset, co-authored by Dr. Wilson Robles, has been accepted and, as Cameron mentioned earlier, is expected to be published any day now. This paper shows data from Nu.Q Vet in detecting a very high proportion of lymphoma patients, again with the same specificity. The clinical team has also completed the analysis of over 600 canine subjects, which includes 504 cancer patients and 134 healthy controlled dogs. Unfortunately, I cannot disclose too much on the call today, as this data will be submitted for publication at a widely read peer-reviewed veterinary journal. I’m happy to say that nucleosome levels were evaluated in plasma samples from patients with seven of the most common canine cancers, so we do expect to broaden our marketing claims in the coming months. So, please watch this space for further updates on this multi-cancer topic. Dr. Wilson also presented new data as an invited speaker at the ACVIM forum in June. This is a closed meeting, so the proceedings are not reported. However, an abstract regarding the use of Nu.Q Vet in monitoring disease progression and treatment response has been accepted by the Veterinary Cancer Society Conference in October. So, we anticipate more clinical news there. These studies, papers, and conference publications are time-consuming but help to build our profile and credibility with key opinion leaders, oncology specialists, and general practitioners, which I firmly believe will position us in a formidable leadership position long-term. There is also significant progress being made to expand the clinical utility of the current Nu.Q Vet Cancer Screening Test, in addition to fueling new product development for monitoring tests. We are continuing our work with several veterinary university teaching hospitals to collect samples from additional cancers and other non-cancerous conditions, such as inflammatory conditions, benign masses, and endocrinopathies, amongst others, to determine how they may affect the plasma nucleosome compartment. This data may help us better differentiate between cancer and other diseases and provide further relevant products in the future. Clinically, I couldn’t be happier with our Nu.Q Vet product. So, let’s go tell these folks about it. This quarter, I had the pleasure of attending the 2021 VMX Conference in Orlando, Florida. While the physical meeting attendance is smaller than usual due to the pandemic, it was also a virtual format available, and we had great interest in our Nu.Q Screening Test. We were delighted to feature Dr. Sue Ettinger, aka Dr. Sue Cancer Vet, in a presentation entitled 'What’s New in Cancer 2021.' Dr. Sue is a great speaker and an advocate for us, and we will be filming some Nu.Q case studies soon. We have a busy program planned through late summer and fall too. We will be presenting and hosting a booth at the upcoming Western Veterinary Conference in Las Vegas in September, and at the Vet Show in both New York and London. As I said earlier, we hope to have poster sessions at the Veterinary Cancer Society Conference in October. These conferences are helpful not only in raising our profile, awareness, and credibility, but also in engaging in important dialogue with veterinary colleagues. These invaluable conversations help us understand some of the unmet needs to provide improved diagnostic cancer screening and monitoring tests for pet owners, which fuels our future product development. While we are certainly confident in our current knowledge base, we are always listening and open to new ideas, which we are sure to gather from our busy conference groups. Regarding commercial updates, in terms of commercial opportunity in 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 cancer diagnoses in the U.S. alone each year. As I said earlier, cancer screening is simply not commonplace in the animal health market, but the need is there. The potential to help various pets and their owners is there. The Nu.Q Vet Cancer Screening Test is positioned for use during the Annual Preventative Care Wellness Test for older dogs, ages seven years and older, and for dogs four years and older of all breeds, such as Golden Retrievers. Approximately 80% of dogs visit the veterinarian each year, and according to the AVMA from 2016, there were 77 million dogs in the U.S. alone, a number that has grown significantly during the pandemic. The addressable market is indeed huge. But how are we accessing the opportunity? Our beta launch has achieved everything we wanted from it, and we have gained extremely valuable insight into all aspects of this great first of a few products. Interestingly, I think the most valuable contribution of the beta launch has been the high level of interest it has drawn from some of the world’s largest veterinary companies. This is not surprising given we are the only company with the outstanding Nu.Q platform, and there are multiple large potential licensees and distributors interested in our veterinary products, which puts us in a solid negotiating position. While it is no secret that Volition does not currently have the ambition to assemble large-scale sales and marketing teams, we rather focus our skill set and know-how on scientific breakthroughs and intellectual property development; thus, driving revenues by licensing our patented technologies to large companies already established in the relevant marketplace. A considerable amount of my time together with our Chief Commercial Officer, Gael Forterre, and other talented members of the Volition team has been spent identifying, vetting, working with, and negotiating with several potential licensing partners around the world. We are not at the finish line just yet, and I clearly cannot disclose too much due to active negotiations, but we have a lot of favorable parties around the table, and we are certainly in the business end of negotiations with a number of prospective partners. We hope, and I know all of the prospective licensors hope too, that terms will be finalized in the coming months, and we aim to have a very meaningful deal signed in 2021. On behalf of the whole team, I will be delighted to share that news with you just as soon as we can. In summary, a fantastic start to my time at the company. I have appreciated the warm welcome from my colleagues, but more importantly, I have been incredibly impressed with the quality of work completed to date and the exciting plans we share. I will now hand it back over to Cameron.

Thanks a lot, Tom. Great to have you onboard. We too appreciate all your hard work and the experience you bring to the team. I'm conscious of time, so I will briefly provide a quick update on a couple of other items. I think it happened just as the March quarter closed, so as a reminder from our Nu.Q Capture perspective, we published a clinical paper in Nature Scientific Reports, which details our novel proteomics approach to epigenetic profiling of circulating nucleosomes in the blood of cancer patients. We believe that Nu.Q Capture technology will be useful not only when 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 both treatment and disease monitoring when used in combination with either sequencing and/or our Nu.Q assays. The Nature Scientific Reports' clinical paper was a great first publication on our Nu.Q Capture, with further human studies expected to be submitted in the coming quarters. As I mentioned earlier on the call, we have submitted an abstract to the Veterinary Cancer Society Meeting using our Nu.Q Capture technology in dogs with lymphoma. It is exciting to see our third pillar of Nu.Q Capture branching out in terms of research from humans to vet users as well. Unfortunately, given the pandemic, all of our studies related to human cancers have been affected due to a very difficult collection and enrollment environment. However, we have pivoted to those areas where we can still progress during lockdowns. The brightest nodes in this pillar during the pandemic are in Asia, where I’m delighted to announce we have reached our target patient cohorts for both colorectal cancer studies and lung cancer studies, all collected in conjunction with National Taiwan University, a fantastic effort by the team there. We are excited to have just completed preliminary analysis of the lung cancer study and look forward to reviewing it with Professor Chen and his team ahead of publication, either through clinical paper or conference abstracts. We are also running the essays and finalizing the analysis for the CRC study and anticipate these filings will be presented at a conference in 2022. As previously reported, collections for the U.S. EDRN colorectal study have been paused. In what is hopefully a good sign, I’m happy to announce today that after a 15-month pause, EDRN reinitiated enrollment in June and aims to be enrolling at full capacity in September. Given all this, the expected study completion date has been extended by EDRN to the fourth quarter of 2022. Regarding our two U.S. blood cancer studies, these timings too have now been impacted by the pandemic due to collection and protocol issues. For the 1,500 subject NHL diagnostic study, all preliminary protocol development and study preparation have been completed. Given the experience we have had with EDRN, we are closely monitoring the ability of clinical sites to perform the study as COVID restrictions dissipate while ensuring pre-analytical and logistical procedures align with routine clinical workflow. We now aim to begin collection late this year, protocols and pandemic permitting, and submit the first data to the FDA later in 2022. COVID restrictions have also made sequential therapy matched specimen collections exceptionally difficult in the DLBCL Treatment Monitoring Study. We now aim to issue interim analysis results later this year. We also have ongoing negotiations with a major player in Asia regarding our first human cancer launch in China. We will, of course, keep the market updated on any successful transaction being closed. As discussed on previous calls, following the urging of Silver One, we have installed a service lab in our new facility, which will undertake sample processing for external parties, such as pharmaceutical companies, biotech companies, and academic researchers. We have branded this service Nu.Q Discover, and it has already generated substantial interest. We have commercial interest from and quotations sent to multiple pharma and biotech companies and anticipate revenue from this activity this year, with continued growth in the future. Thus far, the projects we are handling through our Nu.Q Discover service involve exploring the use of Nu.Q assays to monitor the efficacy of customers' therapeutics in development for cancer, the NETosis, and other theories in chronic diseases in both pre-regulatory and regulatory trials. These projects, if initiated—and indeed if the outcomes are positive—could lead to more significant revenues for Volition if our assays are proven as companion diagnostics through our customers' therapeutics. I would like to reiterate our vision and what makes us excited about our progress in this space. Volition is an epigenetic 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 as a leader in epigenetics. We believe the last decade of work by Volition, our ever-expanding team in epigenetics, positions us strongly in this critical field with our extensive IP portfolio. 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. The entire team is incredibly excited about the company’s future opportunities. We aim to report throughout 2021 and beyond numerous key milestones, now that we are in full swing transforming our platform into a range of products worldwide. We will focus on driving revenue in the coming quarters in the following key areas: 1) Licensing our technology, particularly but exclusively on Nu.Q Vet, with the aim of signing the first deal or deals this year; 2) Nu.Q Discover processing samples using our Nu.Q discovery assays; and 3) Disease monitoring tests such as COVID-19 and sepsis. 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 key studies over the coming months and year with our optimized platform. Thanks for joining the call today. I very much appreciate your attendance, especially during this earnings call season. We are happy to take questions now.

Thank you. Our first question today is coming from Bruce Jackson from Benchmark Company. Your line is now live.

Hi. Good morning. And thanks for taking my questions. So, if we could just talk a little bit about the Nu.Q Capture product line. The paper in Nature, of course, represents an initial milestone for you after potential applications here. Have you received any inbound interest from people who want to work with you on this, either in their own labs or with Silver One?

Yes. Good question, Bruce. So the Nu.Q Capture project, we have been making progress on two fronts. It is divided into the sequencing and mass spectrometry arms. As you may have read, the paper focused on the mass spectrometry side, where we are starting to generate some interest, and it is quite encouraging. On the sequencing side, we hired Dr. Terry Kelly in California, who has been building a team to fully optimize that process as well. So, it is early on the mass spectrometry side because it is like our assays; we have had to spend significant time ensuring that it is very robust, reproducible, and sufficient to be a product. Regarding the mass spectrometry side, given the paper and our work; we are indeed seeing interest. However, our commercialization focus on Capture remains a work in progress, meaning less effort right now in the veterinary, NETs, and human cancer areas. Our focus is optimizing before we really start marketing aggressively. Yet, we've had some interest on the mass spec side, but I wouldn’t expect us to put a lot of effort into the Capture commercialization until it is fully optimized, hopefully sometime in the next 12 months; we shall see how the optimization goes.

Thank you, great. Moving over to the NETs, you briefly outlined the FDA regulatory strategy. I was hoping you could run through that again, as I didn’t quite catch whether you're going to have the strategy outlined by the end of this year or whether you will submit it by the end of the year. If you could just clarify that, I would appreciate it.

Actually, not submitted by the end of the year; it is the strategy that will be outlined. We are very pleased with the data and the fantastic collaborators we have had. It ends up being exceptionally well. Our team and our collaborators are exceptionally happy. Now we are in the process of working out, to put it simply, we are sipping from a vial of opportunities. We are closely following what we have done on the veterinary side. We have strengthened our bench with an industry professional, and we have had great data with collaborators. Our strategy would be very similar in that we will launch our own products. Additionally, we are looking at using it in conjunction with other applications with industry players and collaborators. We are discussing with several parties in the U.S. about potential uses in areas like sepsis. Jason has been doing a lot of work with a CRO on their own 510(k) study. We also have been talking to partners about leveraging it alongside existing COVID and sepsis applications. Our aim is to prepare everything for the FDA work and outline our strategy this year, whilst also looking at European strategies with our new hire, who has decades of experience at Roche, helping us as well. Does that answer your question, Bruce?

It does. Thank you very much. I will hop back in the queue.

Thank you, Bruce. Have a great day.

Our next question is coming from Nathan Weinstein from Aegis Capital. Your line is now live.

Good morning, and thanks for taking my question. If you could start with Nu.Q Vet, I would appreciate a general view into the beta launch — how that is going, any reception, reorder rate, or anything you can say to help us understand how that is proceeding would be great.

Absolutely. So I think Tom very well articulated it; it accomplished everything we wanted it to do. It was designed to ensure that all aspects were ready for our own launch, the focus of our last call. Since then, as you probably gathered, our focus has been on partnerships, working with very major players, and their interest has been tremendous. Tom has been spending a lot of his time to ensure that negotiations are progressing favorably and quickly. Our strong focus now is to license through one of the big collaborators, as you indicated. The beta launch revealed a few things: interest from vets has been very high, we worked out all the issues regarding shipping and packaging, and we are definitely ready for our own launch. The best way to secure a good deal is to do it ourselves. Under no circumstances will we settle for a mediocre deal with a vet company since we can launch ourselves, which we have demonstrated. The interest from the vet companies has been very high. It is a fantastic platform, and we think the domestic market is easily several million tests a year, potentially yielding hundreds of millions of dollars in revenue. So, for one of the big vet companies, this could significantly impact their operations. Thus, it's been very successful. Now we’re focusing primarily on negotiating a significant deal with one of the large vet operators. I will keep the market updated. Overall, the beta launch exceeded our expectations.

Great. Thanks, Cameron. Turning to clinical cancer, it is great news that EDRN appears to be proceeding again. When thinking about the NHL diagnostic study, particularly, we had this timeline around submitting the first data to the FDA. Can you help us think about what our expectations should be for that and when that data may be adequate to drive clearance in that indication?

Yes. Jason can go through with you; there are many NHL subtypes, which I’ll let him discuss. However, for the primary ones, we could be potentially done in that time scale next year and then submit to the FDA, aiming for a product launch in 2023. Once the trial is in full swing and collections are underway, it won't take a long time. Understandably, the pandemic has made it tough to get protocols and collections, particularly for longitudinal studies that require multiple visits during lockdowns. I think yes, within the next year seems quite achievable. That is our target date, which could be sufficient for the first FDA product launch if successful, and as I tell you, on the vet sides, the human blood cancers present very similar challenges to animal cancers. The data has been exceptionally positive for the vet side. We will keep you informed, but our U.S. team led by Dr. Trellis is diligently pushing this forward.

Great. Thanks, Cameron. Thank you for taking my questions. Much appreciated.

Thanks, Nathan.

Thank you. Our next question is coming from Steven Ralston from Zacks. Your line is now live.

Good morning, or good afternoon, as the case may be. To drill down into Nu.Q Vet, it seems like you have established a steady base on the revenue side there as you proceed to get into a partnership arrangement. Your in-house sales effort seems, from what I gather, primarily in Texas? I’m wondering if there is going to be a natural geographic expansion with the new information that you are pushing into the veterinary field, the abstracts, papers, and attending these conferences, and whether you would have veterinarians outside that small geographical area contacting you to utilize your product.

Yes, on all counts. The interest has been favorable. Yes, it primarily started in Texas, but that was simply a beta launch’s focus. We have not spent much time or effort on sales; this was a strategic choice to ensure we executed a successful launch. However, I believe given our evaluation and the data backing it up, we have a potentially mass-market product with millions of tests a year — leading to hundreds of millions in annual revenue across a few players. This first product has the potential to move quickly into a large market, meaning our focus should be on solidifying a partnership soon to help us quickly launch in a larger geographic market. We are in serious discussions with almost all the obvious candidates, many of whom have nearly a thousand salespeople worldwide. Their interests, however, often center on exclusivity, which we will determine how aggressive they are and what they can offer. Having experienced professionals on our Volition team, we can effectively negotiate, but the best way to ensure our product's success is through an affinitive partnership.

Thank you. I’m also looking forward to potential revenues in the second half of 2021 from Nu.Q Discovery. You mentioned submitting several quotes to various pharmaceutical and biotech companies. Generally, what is the timing for them considering these quotes and deciding to move forward?

That is an excellent question, actually. Terig will have to address the revenue recognition side here. However, we do have several quotations, some of which are quite large and, in total, certainly in the hundreds of thousands of dollars. But, how many of these will finalize? If it’s a year program, I have to recognize the revenue over one or two years. We will report these details in the accounts appropriately. Typically, these will begin in the tens of thousands, and if successful, can scale into millions in just a few years. From where we are currently, hundreds of thousands in quotes is an encouraging start. If we can convert a reasonable percentage, it should result in significant revenue over the next few years, with anticipated growth thereafter. Our platform in epigenetics is increasingly recognized and stable now, allowing us to run over a dozen assays. We expect interesting synergies and opportunities to emerge moving forward, but actual bookings will depend on how many quotes we convert this year.

Thank you for taking my questions.

Thank you, Steven.

Thank you. Our next question today is coming from Jason McCarthy from Maxim Group. Your line is now live.

Hey, this is Michael Okunewitch on the line for Jason. In your press release, you mentioned that later this year in NETosis, you are expecting a few readouts from larger trials coming in the coming months. I was wondering if you could advise what data points we should expect from these studies.

Yes. Just as an example, we generally release results through a publication, peer publication, or at conferences. Sometimes there can be a lag time. For instance, great data presented at the most recent conference was finalized in February but only shared in July. I can’t disclose too much as they are not public yet, but there has been substantial progress recently with many studies now being processed for upcoming publications later this year. Netosis shows spectacular potential across diverse applications. If you check the abstracts we published in July, the scope of opportunities our assays offer will impress you. There are so many conditions where NETosis could prove critical. We expect numerous results from the trials in COVID, sepsis, and other conditions later this year, while being clear about our focus on turning these insights into tangible products.

Thank you very much. Also, I would like to touch briefly on lung cancer and the plans to submit Nu.Q data later this year. What would be the next steps after the Nu.Q data for launching the first human lung cancer product?

That is a good question, Michael, one we are actively considering. It will depend on how the data turns out. The preliminary data has been encouraging, especially considering its extensive sample sizes. As you may recall, the initial encouraging data was from an inflow clinical trial with a target of about 1200 samples and 7000 in the colorectal side of things. The current clinical data collection is ongoing, and we await the clinical data from about one thousand patients over time, which could take time. We are also now working on analyzing this data and looking to see what questions those data points will help clarify. Ultimately, once we have a clearer picture of the data, we’ll determine how best to commercialize it, but the early data does look promising.

Alright. Thank you very much, Cameron.

Thank you, Michael.

Thank you. We have reached the end of our question-and-answer session. I would like to turn the floor back over to management for your further closing comments.

Thank you, everyone. It has been an exciting start to the year. I think the year ahead will be even more thrilling, as we have a very strong commercial focus now, and I’m very grateful to have good news on a range of different areas, including commercialization in the coming months. I look forward to updating you as these events unfold. Thanks for your time.

Thank you. That does conclude today’s teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.