Good morning, ladies and gentlemen, and thank you for standing by. Welcome to VolitionRx Limited Fourth Quarter and Full Year 2023 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference call will be open for questions. This conference call is being recorded today, March 26, 2024. I would now like to turn the conference over to Louise Batchelor, Group Chief Marketing and Communications Officer. Please go ahead.

Thank you, and welcome, everyone to today's earnings conference call for VolitionRx Limited. Before we begin, I'd 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 an obligation to update any forward-looking statements made during the course of this call. I am joined today by Mr. Cameron Reynolds, President and Group Chief Executive Officer, Mr. Terig Hughes, Group Chief Financial Officer, Dr. Tom Butera, Chief Executive Officer of our Volition Veterinary Subsidiary and Dr. Andrew Retter, currently Medical Consultant to Volition, who has recently announced he will join Volition in the role of Chief Medical Officer in April 2024. During the call, we will cover Volition's financial and operating results for the fourth quarter and full fiscal year of 2023, along with a discussion of our recent activities and upcoming milestones. Following our prepared remarks, we will open the conference call to a question-and-answer session. I'll now turn the call over to Cameron Reynolds. Cameron?

Thanks Lou, and thank you, everyone, for joining Volition's fourth quarter and full year 2023 earnings call today. We appreciate your time given the busy annual 10-K filing season. We will commence the call with a financial report from our Group Chief Financial Officer, Terig Hughes, before moving on to a prerecorded update from Dr. Tom Butera, Chief Executive Officer of Volition Vet on the rollout of our Nu.Q vet cancer test. And I'm delighted to welcome Dr. Andy Retter to the call to provide an update on the Nu.Q NET and Capture-PCR. As was announced last week, Andy will be joining Volition as our Chief Medical Officer beginning April 1st. Many of you will have heard from Andy previously, but I'd like to formally share his credentials. Dr. Butera is an intensive care consultant at Guy's and St Thomas' NHS Foundation Trust in London, where he has worked as a consultant since 2014 and leads clinical governance in critical care. He specializes in the management of severe respiratory failure, ECMO and thrombosis. Dr. Butera is the only consultant in the UK to hold dual entry on the specialist register in Intensive Care and Hematology and provides national guidance on the management of complex hematology patients in clinical care. He will continue his clinical and research duties at Guy's and St Thomas' NHS Foundation Trust after joining Volition. Dr. Butera has worked with Volition in an advisory capacity since January of 2022. To help guide the product development and clinical utility of Nu.Q NET's, a CE-Marked routine blood test to detect disease associated with NETosis, such as sepsis. The whole team is absolutely delighted to be welcoming Andy more formally into Volition. As Chief Medical Officer, he will be vital to our success, ensuring the needs of the patient are placed at the heart of our research, development and commercialization activities. It's great to have you on board, Andy. And I must say your enthusiasm for our mission and platform really helps us to fully understand the great importance of the work we do. Following Andy's update, I will wrap up with my thoughts on upcoming milestones and discuss our overall strategy going forward. Without further ado, I'll hand you across to Terry for our financial report. Terry?

Thanks very much, Cameron, and thank you everyone for joining our earnings call today. I'll now provide a summary of the key financial results for the quarter ended December 31 full year 2023. From a revenue perspective, we recorded revenue of $244,000 for the quarter, a 104% increase over the same period last year. For the full year 2023, we recorded revenue of $775,000, an increase of 153% over the prior year. We believe that these results demonstrate steady progress but not yet the ramp in revenues that we anticipate. We expect revenues to accelerate in 2024 as several additional distributors come online with our Nu.Q vet cancer test, in particular, Antech and FujiVet, who are both about to launch and our Nu.Q discover pipeline continues to grow. The 2023 full-year revenue of the Nu.Q Vet cancer test was $475,000, a year-on-year increase of 194%, mainly reflecting sales of reference kits through our agreement with IDEXX. Revenues in Nu.Q discover for 2023 were $300,000, which reflects 107% growth over 2022. Moving on to the balance sheet. We ended the year with cash and cash equivalents of approximately $20.7 million compared with $10.9 million at the end of 2022. Net cash generated from operating activities during the fourth quarter 2023 was approximately $6.4 million and reflected the receipt of $13 million in milestone payments from Heska Corporation in December. For the full year 2023, net cash used in operating activities was $18.1 million, compared to $15.3 million in the prior year. Net loss for the fourth quarter 2023 was $8.8 million, compared to $7.3 million for the fourth quarter 2022, and for the full year, $35.7 million, compared to $30.6 million in 2022. This increase was primarily the result of increased Research & Development expenditures mainly reflecting the cost of our U.S. clinical trials which added $3.1 million to the P&L costs in 2023. To date, various European funding bodies and in particular, Belgian agencies have committed to the company over $21 million in non-dilutive funding in various forms, including cash grants and loans on favorable terms. In the fourth quarter, our Walloon institutional fund and regional government bodies of the Walloon region of Belgium committed additional funding to the company aggregating approximately $5.5 million, of which approximately one half was in the form of a loan. We would like to publicly thank the various government agencies of Belgium for their continued support. We have also initiated efforts with respect to seeking non-dilutive funding in the U.S. Our aim is to fund some of our major programs through either non-dilutive or project financing, which we anticipate could be substantial over the next two years. As mentioned earlier, at the end of the fourth quarter, we received $13 million in milestone payments from Heska Corporation, now an Antech company and part of Mars Petcare, one of the largest pet health companies in the world. And so, to recap, we ended the year with cash and cash equivalents of $20.7 million. With that said, I believe that we are well-placed to execute the plans the team have in place for 2024. And with that, I will pass over to Dr. Tom Butera, CEO of our Volition Veterinary subsidiary. Tom?

Thanks very much, Terig, and good morning everybody. In 2023, we supplied kits and components for over 58,000 tests, five times the number in the prior year. This growth demonstrates solid progress to date and we certainly expect more growth to come as additional companies fully launch our product at home in the United States and around the world. By the end of 2023, the Nu.Q Vet cancer test was available in the United States, the United Kingdom, Ireland, Portugal, Singapore, Taiwan, and Italy. 2023 was a breakthrough year for Volition Veterinary gaining such wide distribution and with such respected companies, so kudos to the team and a special thanks to our legal department. We have also learned a great deal, launching and introducing a new product in veterinary medicine, especially early cancer detection in dogs takes a tremendous amount of education to teach veterinarians how to incorporate this early cancer dialogue into their routine wellness visits. Our Nu.Q test also requires an additional cost to the client, which is part of our educational conversation in teaching doctors how to easily make this part of their wellness office visit. Additionally, we are always emphasizing the affordable cost of our test and encouraging doctors to keep the test at very reasonable margins. The fact is clearly related to the very large number of dogs that they will be screened for early cancer detection. All in all, I believe our Volition team will look back on 2023 as a proud pivotal moment in the burgeoning field of early canine cancer detection, setting the stage to improve and extend the lives of millions of dogs in the months and years to come. We have also launched the Nu.Q test with IDEXX, one of the world's leading veterinary diagnostic companies and now Heska, an Antech company and part of Mars Petcare, another leading veterinary company in completing the exciting tech transfer onto the Heska Element I+ in-house diagnostic platform. More recently, as you will have seen in an announcement just last week, we have signed a supply agreement with Fujifilm Vet Systems for our Nu.Q Vet Cancer Test in Japan. Indeed, I have pre-recorded my update for today's call as I am currently over in Japan with our colleagues from Fuji and Wow! What an incredible event this last week. We were delighted to be deeply engaged with our Fuji colleagues at their veterinary booth located at the World Veterinary Cancer Congress in Tokyo. This event also provided significant exposure to numerous veterinary cancer specialists from around the world. We believe that Japan is a considerable market opportunity for Volition as we seek to expand our Nu.Q Vet Cancer Test offering in Asia and Fuji is a great partner with us. Fujifilm Vet Systems is Japan's leading veterinary diagnostic laboratory service with a network of 10 laboratories serving more than 90% of the 12,000 veterinary clinics and hospitals nationwide in Japan. As a reminder, our test is a simple, affordable, easy to use blood-screening test that can be easily integrated into preventive care programs and used alongside other routine blood work during regular wellness visits. We had an incredibly busy time at the Fuji booth and have been excited not only to see the response to the test, but also to hear about the exciting marketing plans Fuji has in place to drive the adoption of Nu.Q. Heather also had the privilege of presenting a poster about the Nu.Q Vet Cancer Test at the Congress. It's been a busy few days and we look forward to working alongside Fujifilm Vet Systems as they roll out our test countrywide across their extensive diagnostic laboratory network. We are also incredibly excited that the Nu.Q Vet cancer test will soon be available as an in-house diagnostic via Heska and Antech company. We understand preorders are currently being processed and the test will be rolled out fully at their upcoming national sales meeting at the end of this month. Soon veterinarians will have accurate in-hospital fast test results in under eight minutes, so that they can discuss findings with pet owners and hopefully develop an action plan before the patient even goes home. Antech is initially pricing the test at $35 to the veterinarian and we really believe that the relatively low cost combined with the effectiveness of our test will help drive adoption of the test not only as a screening tool but also in time as an important monitoring tool for disease progression and remission. So, to quote Cameron, very exciting times indeed. That's a quick update for me given our packed agenda today. I will now with absolute great pleasure hand over to our incoming Chief Medical Officer, Dr. Andrew Retter. Andy is a fabulous addition to our leadership team. Andy, over to you for an update on Nu.Q NET.

Thank you for those kind words, Tom, and good morning, everyone. I want to take a moment to express my gratitude to Cameron, Jake, and the Board of Directors for partnering with me and inviting me to join the Volition team during this crucial period. My time at Volition over the past two years has been very rewarding, and I am eager to contribute to our mission in the future to enhance the lives of millions worldwide. Today, I’d like to share some of the significant advancements we’ve made with Nu.Q NET and our new cancer detection method, Capture-PCR. To begin with, regarding NETosis and sepsis, sepsis is a leading cause of death globally, accounting for almost 50 million cases and approximately 11 million deaths each year. In 2023, there was notable progress in addressing these challenges, and I’d like to highlight a few key points. In September, Volition hosted an influential roundtable event in Athens, Greece, focused entirely on sepsis and Nu.Q NET’s potential role, attended by some of the leading experts in the field, many of whom are part of our Center of Excellence program and have firsthand experience with the assay. The consensus was that Nu.Q NET may represent a significant breakthrough in sepsis diagnosis and monitoring in the last three decades. We are collaborating with this group, and I am currently preparing a review article aimed for submission and publication by the end of the year. Shortly after our Canadian opinion leader event, the first clinical paper from our clinical excellence group was published in October. Professor Gila Monterrey's team in Leon presented data showing a correlation between Nu.Q NET levels and sepsis, indicating that higher Nu.Q NET levels correlate with an increased mortality risk. We’ve observed that Nu.Q NET levels align well with the severity of a patient’s condition. We use the sepsis score, or sequential organ failure assessment score, to calibrate Nu.Q NET levels. It’s exciting to have this initial paper published, and I look forward to sharing more results from our centers of excellence as we progress through 2024 and 2025. In the U.S., Volition successfully completed the Q sub process with the FDA, confirming that we can proceed with a traditional 5, 10-K pathway. I'm also pleased to share that my hospital will begin using Nu.Q NET in our first study, aiming to enroll around 500 patients to compare those with sepsis against healthy patients undergoing cardiac surgery. This will provide valuable data to help differentiate between these groups. For those who may have missed the recent Edison webinar on sepsis or their thematic report, I want to mention two ongoing studies that we believe will strengthen our clinical utility case. We are analyzing two large retrospective sepsis cohorts in Europe, collaborating with the German sepsis group and UMC Amsterdam, which will assess outcomes and trajectories for over 2,500 patients with sepsis and involve processing over 8,000 Nu.Q NET samples. We are eager to present this rich dataset and aim to submit it for publication by the end of 2024. This research will provide extensive insights using Nu.Q NET on a grand scale and enhance its clinical application as we move forward. Our project with Professor De Carli Annan in France is also progressing well. He is involved in a consortium with an ongoing prospective study where Volition is a member, aiming to recruit 1,500 patients. We have refocused our study in the U.S. to concentrate on the sickest patients admitted from the emergency room, rather than just intensive care patients, expanding our patient population for Nu.Q NET usage. We plan to wrap up this study by the end of the second quarter and will share the findings as soon as possible. We expect to significantly strengthen our data within the confidential data room for ongoing commercial discussions by mid-year. From a publication standpoint, we are focusing on the European Society of Intensive Care meeting in October, where we anticipate presenting several of the studies I just mentioned. We're also excited to sponsor our first satellite symposium at the Congress. More details will follow, but we foresee a busy year ahead for Nu.Q NET and sepsis. Now, I’d like to discuss Volition’s potentially breakthrough cancer detection method, which we first introduced at the European Society of Medical Oncology Congress Press in 2023. Cancer impacts millions every year, and unfortunately, the number of new cases continues to rise. Early diagnosis leads to better outcomes, yet cancer often goes unnoticed until it has advanced. For instance, around 45% of cancers in the UK are diagnosed at later stages, Stage 3 and Stage 4. Our test targets the detection of circulating tumor DNA, or ctDNA, which is challenging because its concentration in blood is low, comprising only about 0.01% of circulating cell-free DNA, and it often resembles normal DNA. Volition has created a novel liquid biopsy method that physically isolates tumor-derived DNA fragments from blood. After removing normal background DNA, we extract and sequence the cancer-derived ctDNA fragments using a low-cost PCR test, known as Capture-PCR. Our proof-of-concept data shared at ESMA 2023 indicated our method successfully isolated tumor-derived ctDNA fragments from plasma, detecting various liquid and solid organ cancers, including early-stage disease. These initial assays stemmed from our leukemia model but surprisingly allowed us to identify other cancers, notably colorectal cancer. We are excited about Capture-PCR's potential moving forward. Dr. Jake Micalle and his team have presented at key cancer-specific conferences and received valuable feedback as they share their data with important opinion leaders. They are also identifying additional markers and potential targets related to the PCR test that we look forward to presenting, especially concerning solid organ cancers, throughout this year and beyond. Lastly, Jake is diligently working on completing the manuscript for this revolutionary method to submit for peer-reviewed publication, which is essential for aligning with Volition's mission of providing low-cost diagnostic testing worldwide. In conclusion, I am thrilled to join this company. I genuinely believe in Volition's ethos and mission, and I will now turn it back to Cameron for his closing remarks. Thank you very much.

Thanks very much, Andy, for providing those insights, and thanks as always to Terry and Tom for their reports. 2023 was certainly transformational for Volition and a year we can look back on with pride. The commercialization of our transformational Nu.Q vet cancer test within the companion animal healthcare sector has led to agreements with several new global and regional partners, including last week with Fujifilm Vet Systems, Japan's leading veterinary diagnostic service provider; and looking just around the corner, the Nu.Q vet cancer test will soon be available as an in-house diagnostic test through Heska and Antech company. We strongly suspect we will see very good revenue growth from Nu.Q vet through 2024 and beyond. I'm also absolutely delighted in the progress made in our Nu.Q NET's pillar, and in particular, in determining our regulatory pathway forward with the U.S. FDA, a key milestone for the company and in having a number of large-scale clinical studies due for publication later this year. Thirdly, and as we always seem to run low on time, I won't cover too much, but I would like to quickly mention Nu.Q Discover, which recorded revenue of $300,000 in 2023 and now has a pipeline of projects valued over $1 million. As a reminder, Nu.Q Discover is a complete solution to profiling nucleosomes; drug developers and scientists can work with us, access our state-of-the-art proprietary assays and realize their long-term drug development needs. In this way, Nu.Q Discover is able to unlock value from Volition's IP portfolio by helping us commercialize the areas we are not going to focus on ourselves. As I mentioned, revenue in 2023 was $300,000 and we expect it to more than double in 2024 and be as profitable as early as 2025. Finally, I'm absolutely also delighted with our potential breakthrough CTCF cancer detection method, Capture-PCR, which we had a poster at ESMO in Q4. We believe this is a true breakthrough moment. The first reported physical isolation of a class of tumor-derived cell-free DNA fragments from blood. We expect that this method obviates expensive and time-consuming DNA sequencing and bioinformatics, allowing for a rapid cost-effective detection in a routine blood test. This method could become a must-have technology. Given its significance, we are very much open to licensing this technology. We have been tremendously encouraged by the level of interest thus far. It has been and will continue to be a busy few months ahead of discussions and negotiations, not only on Capture-PCR, but as we build out the data room for Nu.Q NET through the second quarter of this year, we anticipate more active discussions on that front as well. It is an exciting time for us as a company and we look forward to sharing further updates and milestones with you over the coming quarters as we continue to adapt to such changing times and conditions, delivering on what we believe to be revolutionary technologies. Given the current macroeconomic conditions, we are focusing on getting each pillar to support itself, either through product revenues, milestone payments, out licensing, or other non-dilutive funding in the coming year. We are making every attempt to ensure as little dilution as possible to reach breakeven as a company with a mix of non-dilutive funding, revenue, and milestone payments from our licensing as we have achieved in Vet. As we've described before, we are currently targeting the following: firstly, we expect Nu.Q Vet to be overall cash positive from existing milestone payments and the expected revenue ramp as more partners launch and existing partners expand into new territories. We're also working on a range of new products to drive revenue growth and hopefully new out licensing and milestone payments in future years from Vet. Secondly, we expect Nu.Q Discover to more than double revenue in 2024 and to become profitable as a unit starting in 2025, with over $1 million in the current pipeline and growing strongly. Thirdly, we have begun the strategy to fund, as Terig alluded to earlier, our Nu.Q NET pillar through non-dilutive and/or project funding with an aim of $25 million. We have targeted a range of governmental agencies and are also preparing the background work aimed at attracting a large player to either out license or invest in this product directly. We have made strong progress through the first quarter of 2024 in getting the data required, and our aim is to get the first payments in the next 12 months from either corporate or governmental sources. Lastly, as discussed by Gael Forterre, our Chief Commercialization Officer in our recent webinar, there has been a lot of external interest in our CTCF and Nu.Q cancer technologies. Our strategy is to license this out to one or more large companies as a commercial undertaking of this size is likely beyond our current capabilities. If successful, we believe this strategy could provide us with ongoing royalties and very meaningful milestone payments in the next 12 months. In drawing to a close, I would like to thank you all for joining the call today. We very much appreciate it, given how much there is to digest across all of our pillars. We are now happy to answer questions. Operator?

Our first question is from Tim Moore with EF. Tim, please proceed.

Thank you. That was very informative prepared remarks. It was nice to hear that there's a lot of different levers being pulled and good optionality. Maybe I just want to start out with IDEXX. You mentioned there were revenues, it sounds like the end of the year could start to come through. I'm just kind of wondering if you can talk a little bit about, it seems like they have finally finished kind of getting their standard operating procedures and best practices in place for the marketing launch? And if you can remind me, is it something like $10 per kit you're getting on those because you're assembling the full kit and shipping them?

Yes, yes, it is. That's correct. So yes, IDEXX have been great partners for the last year and a half and I think that we're putting a lot of work into really try to get the sales growing. So, I think there's an absolutely huge need for the test worldwide. And certainly, to get to where we need to get to, there's had to be some education of the customers. It's a completely disruptive technology. So, when it comes into the market, it's obviously a whole new thing for the vets as well as for the company. And so, we've been working closely with them to really get sales moving. And I think as it was mentioned several times, there were 58,000 tests sold this last year, so we sold the components for. So, it's getting adoption and obviously it's a very disruptive test. And I think also when the new platform comes through, which is actually starting on the first of next month, having it available in the lab as well as a point of care, I think will be absolutely huge to getting adoption out there. I think the more groups out there selling it whether that's IDEXX or Heska or Fuji, it really helps to generate awareness and education in getting vets used to a disruptive new technology. As we discussed, there's been nothing available in the cancer space before. So yes, and $10 a test is correct.

Thanks for that really good Japan Fujifilm Vet Systems update. That was terrific news. And actually, I had a question about feline tests. Do you think that's still maybe on track to launch maybe late this year? And when would you think you would receive the $5 million milestone payment timing?

Good question. And the first point, Fuji have done a huge amount of work before the launch. They're very organized. They're the biggest vet company in Japan. There's 60,000 vets in Japan and 12,000 vet hospitals. I didn't realize it was that big a market. It's obviously a large country and quite a rich country. So, as you probably heard from Tom and the team, the enthusiasm from the vet conference there has been very large. So, it's extremely good to get enthusiasm coming through and have a good new market. Yes, so the feline test we've been doing some work on with a range of other products looking to launch in the vet space. We're looking to get it working in cats this year. So, it's certainly possible this year or in the first half of next year that that payment will be made. As we talked about, an overall part of our strategy is to get as much funding as we can from non-dilutive and milestones and that would be the last of the payments due to us from Heska, the 23 million we've got so far plus this 5 million. So yes, it's definitely still in process and it's a reasonable thing to still have on the books.

My last set of questions is tied to sepsis. I mean, such a huge catalyst, gigantic market, number one killer in the hospitals. So, you have talked before about the traditional 5, 10-K regulatory pathway. And if you can remind me, you're trying to demonstrate substantially equivalent performance and characteristics of a device already cleared by the FDA in the U.S., right? Can you kind of walk us through that? And I know it's theoretical, but what is the timeline? I get a lot of questions from investors about when do you think, if it does work out and you get approved, when do you think you can maybe start achieving revenues on the sepsis side?

Very good question. So, there's obviously, it's a product which has shown tremendous promise as you said. And the two things we've proven so far, publications have shown, that's closely correlated with intensive care mortality and sepsis score, which is obviously both of which is incredibly important. As we talked about, there's a range of studies we're doing now, which will put a mountain of data, an avalanche of data coming out from thousands and thousands of patients and tens of thousands of samples beginning this month and all the way through the rest of the year with a big crescendo kind of in June. We're looking to show correlation with the sepsis III score, which sepsis is now defined as a dysregulated immune response, which is exactly what we measure. So, it's actually obviously incredibly useful. Disease severity, correlation with 28-day mortality, the duration of organ support, and the length of stay in hospital. So, all of those are incredibly important to the clinician, which I think is why Andy and all the other clinicians we've been working with are so keen on them. With regards to the exact 510(k) pass, probably best get it from Andy. He was the key person in those trials. I don't want to make a mistake on that. There are quite a few predictive products, none of which measure what we measure, but there are products which have the ability to do some of this. That's why we were very lucky to get the 510(k) pass and I'm sure he can outline. I think he might be available on some later calls to go through the predicates as they were discussed. But that is something we're incredibly excited about. I think it's if it continues to go well, and every bit of day we've seen so far has been outstanding. Because the test is low cost, can be run on any platform, it could be a bedside test, it can be a lab test, it could be a lateral flow test and doing it through a 510(k), which is, as you know, is the easier path through the FDA is very important. Now as to timing, obviously we're doing everything we can to preserve cash. So, we're working with large governmental agencies to see if they can take a large part of the funding in the U.S. as well as Europe. We're also getting the data ready so that we can get industry partners involved. So that's coming to a head in June when we'll start to open up a data room to look to get as much funded as possible from outside sources. For obvious reasons, the market is what it is at the moment, so we're doing everything we can not to spend money. After that, our product would be at least a couple of years. But don’t forget, our model has always been to make as much money as we can from licensing and upfront milestone payments. In the last two years, we've gotten $23 million just from Heska alone, which is obviously very, very meaningful in what we do. So, I wouldn't just think of it as revenue which is obviously a few years away, but as we have invested getting large chunks of money in the meantime from large industry partners and/or government agencies and I think there's certainly our aim and I think it's a very reasonable chance that we'll get some licensing or milestone revenues from either or both transcription factors and the sepsis side in the next 12 months. If you look at the level of payments we've got on the vet side, it's a very important test in the vet. But I think the Nu.Q NET test is a whole level of importance for humanity. So, we'd be expecting some very significant payments in that sort of timescale. Does that answer your question?

It does, it does. It's terrific color and granularity. And I have one last little related topic question. You kind of already addressed this. There could be potential for project financing. You can come from the corporate rev, government, both milestones. One question I get from investors a lot was, as things go well on the vet side and maybe that becomes positive free cash flow and self-funding two years from now, hopefully. Would you consider divesting the vet side or spinning it out to maybe cash flow fund the human sepsis trials?

Yes, absolutely. So, obviously, at the moment, it is actually not from revenue because you've seen what that is, but from the milestone payments and the other payments we're getting, it's actually cash flow positive at the moment from all those other payments. $23 million obviously has been a lot from those sides. Yes, we would absolutely look to corporatize and then have it run as a separate entity, because this is just the very first test on what should be a very long pathway of products we can launch in the vet space. We mentioned feline as well. Obviously, sepsis happens in dogs and every other animal as it does in humans. And also, the human transcription factor work, we have every reason to believe it would work in animals just as well as humans and then all the other animals. So, I think going forward, our business model has been very much to develop the technology and then prove it works, get a product launch like we have in vet, like we're about to in NETosis and then make revenue from licensing it out. But I think the final step on that path would be to make it to the vet itself. I think that's something which could well happen in the next couple of years. And actually, there's obviously been some interest from other groups. We're the only cancer detection company out there at the moment, which has a product in the market. I think it's going to be a very attractive one. But we want to get that value curve kind of pushed up the curve by pruning felines and/or sepsis and/or transcription factors in the next 12 months. It's probably a two-year target for that.

Our next question is from Ilya Zubkov with Freedom Broker. Please proceed.

Good morning, and congrats for the progress in Q4. I have a question on the oncology test. Talking about Capture-PCR technology, what types of cancer are currently considered as the most promising for detection according to studies and your expectations?

That’s a very good question. So, transcription factors are actually indicative of all types of cancer because they are an epigenetic signal, which is in all cancers. So, we've done some work in a varied range of cancers, including lung and colorectal and the blood cancers. Initially, we'll focus on the larger cancers, the more prevalent ones particularly, of course, like we have in the past, in lung and colorectal and the blood cancers because that's where we did the first work. But it certainly holds the promise of – it's definitely going to be low cost, very easy to run, as easy to run as a proven test in blood, but certainly potential for every single type of cancer. But you would probably not develop a test for every single type of cancer. You'd probably develop the top five types or seven types, which between them account for the majority of cancer cases.

Thank you. That's helpful. And one more from me. The case test has demonstrated strong sensitivity in leukemia detection. And I'm wondering has any progress been made in its diagnostic performance for detection of solid tumors since October last year? And do you see the opportunity for improvement?

Yes. We have been working diligently to optimize our process, making it as quick and easy as possible while exploring a wide range of targets. We have been making progress, and Andy mentioned a paper that is in the process of being published. The prototype we announced is being developed further to enhance its speed, ease, and cost-effectiveness for both solid tumors and liquid tumors. We are making significant progress and aim to submit our findings in the next few months while also focusing on out-licensing opportunities. We've highlighted in public calls that we believe this represents a complete breakthrough. If we continue to demonstrate the selection or concentration of tumor-derived DNA, it will become essential for anyone involved in the liquid biopsy market. We're encouraged by the excitement and interest from various groups, and active discussions are ongoing. We anticipate sharing news on this in the coming months and quarters, as we are aiming to license out our technology for upfront payments and a share of future profits. So please keep an eye on these developments in the next few months and quarters.

Yes. And Cameron, if I can just ask, this is Lou actually here. I can just add we've also presented at a number of conferences this year cancer-specific conferences. So, we've been at a prostate cancer conference, liver cancer conference, and then just this last weekend, a lung cancer conference with cancer-specific posters with the CTC, capture PCR technology. We've been at several additional data presented and then we've got some further down the line with the Generation two.

Our next question is from Bruce Jackson with the Benchmark Company. Please proceed.

Hi, good morning, and thanks for taking my question. So, my first question is for Andrew. With the 500-patient study that you've just initiated, could that be ready in time for the conference in October?

I'm sorry, Andy can't answer that question, but he's in the clinic. Just importantly, the full study won't have been finished, Bruce, by over this year, but we are hoping that we might potentially have some interim analyses available but we will have the results from several large-scale studies that will be presented at the October conference. So, the UMC in Amsterdam study and also the German Sepsis Group Study will be presented in October. But potentially, there might just be an interim analysis of hepatitis. One is the retrospective, Bruce, so the retrospective ones, UMC Amsterdam and the German study will be presented, we believe, but not the prospective that will be a bit slower, of course.

Okay. And then a question on the burn rate. Is it going to stay where it was last year, roughly? How is that going to develop over the course of this year and 2025?

Terig?

Good question, Bruce. As we mentioned just now, we ended the year with cash of $20.7 million in the bank. We used net cash in operating activities last year of $18.1 million. That was partly offset – or costs were partly offset by the $13 million that we received in licensing fees last year. What we can expect is that our costs this year will be slightly lower than they were last year. And that's partly the result of the cost-saving actions that we took at the back end of last year saving a little over $2 million on a full-year basis. Our focus this year is on achieving our next licensing deals in the human space, as Cameron mentioned. So, we've also initiated efforts with respect to seeking non-dilutive funding in the U.S. And again, as Cameron mentioned, we're looking at getting each leg to support itself. What we're focusing on is bringing in those licensing deals so that we can achieve upfront payments and milestone payments. We do expect to make good progress on those by the end of the year. I would expect that we've achieved one or more licensing deals by the end of the year. I'm pretty confident with the resources that we've got available to us with some additional non-dilutive funding that we're working on at the moment that we'll be able to achieve those milestones that we've got planned for this year.

Our next question is from Steven Ralston with Zacks. Please proceed.

You currently have many projects underway, more than I've observed in the past. While I acknowledge the advancements you've made in your research and development efforts in cancer and sepsis, I'm looking to gain a clearer understanding of your two emerging revenue streams. When I review your product categories and the listed products and services, it appears that the revenue streams are within the veterinary and Discover segments. Could you clarify those further so I can more accurately model the company?

Terig?

Yes, certainly. In terms of our veterinary revenue, we generated approximately $475,000 in net revenue last year, which was an increase of 194%. This figure has not yet begun to ramp up, but we anticipate growth starting this year as we activate two new distributors. Antech and Fuji Vet are both set to launch and are pricing the test aggressively under $40, along with robust marketing strategies. Looking ahead, we expect to see a significant increase beginning in the second quarter and continuing into the latter half of the year. Regarding Nu.Q Discover, we earned about $300,000 in revenue last year, and we have a promising pipeline with over $1 million in opportunities. However, forecasting on a quarter-to-quarter basis is more challenging due to the variability in project sizes and timing. Nevertheless, I expect to see strong growth over the next year and for the year as a whole. We can look forward to further substantial growth in the Nu.Q Discover projects. Did that address your question?

I think so. In other words, some of the Discover revenue is classified under both product and service categories.

That's right. It is probably slightly more weighted towards the service than the product.

Is it too early in the process to determine the relative profitability between Discover and Vet?

So, both are highly profitable in terms of gross margin. Vet, I would say, is probably higher or more highly profitable once we get it to scale, and Discover, although highly profitable, has a service element that makes it slightly less profitable, but still we have very, very good gross margins on both products.

Also, is there a corporate model of when to capture your deferred revenue? I know it's a long tail and a very large market, and it might be too early to determine that, but you are generating some sales in that and therefore, some minuscule percentage of the deferred revenue should be coming over through the bottom line, well being put into the top line to come.

Yes, that's a good point. And I'm glad you brought that up because, as you know, we've received about $23 million so far in payments related to the license agreement with Heska now Antech. That's currently classified as deferred income on the balance sheet. I do expect that to start earning out this year because it's linked to when the point of care or in-house diagnostic test launches with Heska, which is, as we said, imminent. I do expect to start to see some of that burning this year, but it's a long tail over the lifetime of the agreement, which is 20 years.

We have reached the end of our question-and-answer session. I would like to turn the conference back over to Cameron for closing remarks.

Thank you, everyone, for attending our call. We really appreciate it. We look forward to updating you with all the developments that we've outlined over the next few months and on the first-quarter earnings call, which is, of course, due in mid-May. So, thank you very much, and have a great day.

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.