Earnings Call Transcript - VNRX Q1 2020

Operator, Operator

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the VolitionRx Limited First Quarter 2020 Earnings Conference Call. During today's presentation, all parties will be in listen-only mode. Following the presentation, the conference call will be opened for questions. This conference is being recorded today, May 8, 2020. I'd now like to turn the conference call over to Louise Batchelor, Chief Marketing and Communications Officer. Please go ahead.

Louise Batchelor, Chief Marketing and Communications Officer

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 2020, along with a discussion of 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 is Mr. Cameron Reynolds, President and Chief Executive Officer; Mr. David Vanston, Chief Financial Officer; and Dr. Jake Micallef, Chief Scientific Officer. 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 report 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'd now like to turn the call over to our President and Chief Executive Officer, Mr. Cameron Reynolds. Cameron?

Cameron Reynolds, President and Chief Executive Officer

Thank you, everyone, for joining Volition's conference call today. I especially appreciate it, given the busy earnings call season and the ongoing pandemic. Speaking to which let me first start by addressing how the COVID-19 pandemic has affected operations for Volition thus far. During the first quarter of 2020, we implemented contingency planning to protect the health and well-being of our employees, with most employees working remotely where possible. Our lab in Belgium has remained open with the attendance of our dedicated laboratory technicians who have kept our research and development work on track with our expectations. Many of our small and medium-sized studies have already been collected and their samples stored at our onsite biobank, so the trial work underway and planned for the first half of 2020 is still tracking expectations. Regarding our large-scale studies, both the colorectal cancer and lung cancer studies underway in Taiwan are still ongoing with collection. However, the study collection in the U.S. with the EDRN has been paused during the pandemic. The overall timing impact of the EDRN collection pause on the study is unknown at this stage, however, we'll provide an update once the study re-commences. Unsurprisingly, we have taken the decision, given the current travel restrictions, to postpone our Capital Markets Day originally planned for June 1 to later this year, most likely in September, and we will announce a new date as soon as possible. We hope to see many of you in person then. For the quarter ended March 31, we did not observe significant impact on our business operations due to the COVID pandemic. However, going forward to the extent the pandemic continues and worsens, we cannot at this time predict the effects it may have on our company in future. The key potential risks from the pandemic relate to the slowing of the supply chain, our consumables and antibody and the delay in the provision of services by external contractors. We are working hard to mitigate any risks, whilst continuing to protect the health of our team. I'm truly proud of how hard the whole team has continued to work throughout these difficult times. My thanks to them and their families for quickly adjusting to the situation. Our aim has been to continue to work at full speed to meet upfront milestones. On the subject of COVID, after the quarter end in mid-April, we announced that we are actively developing a COVID triage test using our proprietary Nu.Q platform that aims to predict the likelihood that an individual who is COVID positive will develop complications and severe disease. The goal of this test is to provide early insight into which patients may require higher levels of monitoring, including hospitalization and critical care resources, versus those who will not develop serious symptoms. Preliminary studies of patients with COVID infection are ongoing in hospitals in Belgium and Germany. While cancer remains our core focus disease-wise, our existing Nu.Q epigenetic toolbox may have the potential to help doctors and patients in the COVID pandemic or in future respiratory viral outbreaks including pneumonia. We have filed a novel patent for the utilization of our Nu.Q epigenetic platform for the triaging of COVID-19 sufferers. This patent is also potentially useful going forward in many other respiratory infections such as the flu and pneumonia due to the similarities. I am delighted to share today, preliminary results from our first proof-of-concept study in 84 patients, 34 who were PCR positive for COVID-19 and 50 control subjects, nucleosomes were highly elevated in the PCR positive COVID subjects. The Area Under the Curve, AUC, for single Nu.Q assay was 98.7%, PCR positive COVID versus control subjects with 100% sensitivity detection at 94% specificity. A second Nu.Q assay also showed promising results with an AUC of 86.2%. These top-line results are top of the press, so to speak, and further analysis of the data will be undertaken. However, I thought it important to share this initial news. I look forward to sharing further results of the trial and indeed other ongoing studies with the goal of developing a clinically useful product to help in the battle against the COVID-19 global pandemic and potentially other diseases. I am delighted that the hard work to develop our Nu.Q platform is starting to pay dividends. For example, for the COVID trials, we could send our Nu.Q assays knowing that they are robust, reproducible, and reliable to third-party labs and hospitals. This yet again shows the amazing potential range of uses of our epigenetics toolbox. As I'm sure you can imagine, our team has worked exceptionally hard to facilitate these studies in such a short period of time. So thanks once more to all of your efforts. But even given this additional work in the COVID-19 arena, I'm also happy to say that we have kept our momentum on our core focus of cancer diagnostics and have made significant progress this quarter on numerous fronts, particularly in assay and platform developments, and with our Nu.Q capture program. Let me emphasize we are currently on track with the milestone details in the corporate deck made available on our website last month, with further details provided on this call. Firstly, at the beginning of the year, we completed the acquisition of Octamer to expand our capabilities in epigenetics, and further our goals of bringing all three components of our tests in-house. Secondly, a simple multi-well plate format is expected to be seen by the end of this quarter, quarter two. Additionally, regarding our fully automated magnetic bead-based chemiluminescent format, we have now finalized eight assays by the end of last quarter, which was our target, and studies are now ongoing for colorectal, lung, and blood cancer with data readouts expected by the end of this quarter. In addition, I'm also delighted to announce today that we have also recently signed a contract with Shanghai Fosun Long March Medical Science, Fosun Long March China to further develop our Nu.Q magnetic particle-based assays for use on Fosun's open-access platform LUMIART-II, an Automated Chemiluminescence Immunoassay System. The agreement allows for the parties to negotiate an exclusive license agreement for Fosun Long March to distribute Volition's Nu.Q tests for the LUMIART System in China. This is very strong progress on our strategy to begin the process of international commercialization of our assays. I believe that we have made fantastic progress on all fronts, particularly given the challenging circumstances of recent months. Given the strength of our platform, we have also made strong progress on the veterinary front. We are now following the end of the third quarter, our initial data for Nu.Q Vet in a proof-of-concept study conducted by Texas A&M University, one of the world's leading experts at a specificity of 90%, a single Nu.Q Vet assay to detect over 70% of both canine blood and lymphoma cancers with an Area Under the Curve of 84.5% and 83.1% versus healthy. These two cancers alone represent almost a third of all canine cancers. These results, with the team in Texas, open us to move forward with other Nu.Q vet assays in our pipeline and with the larger range of cohorts and trials that we have collected and that are planned. There is a video interview with Associate Professor Heather Wilson-Robles, who also serves as Volition Veterinary's Chief Medical Officer on our website, as well as a presentation deck focused on Volition Vet Diagnostics, so please take a look for more in-depth analysis. It is exciting to see such strong results from our first Nu.Q vet study conducted by Texas A&M University veterinary hospital. It is also interesting to note that the similar patterns of detection seen in both canine and human samples confirm that the Nu.Q platform does appear to be useful in more than just human diagnostics. At this human diagnostics, there are currently no active, simple, affordable cancer screening tests available in the veterinary medicine market, and yet 25% of dogs will develop cancer at some stage in their life. Commercially, this is a significant opportunity. The U.S. is currently the largest veterinary market in the world with almost 70 million pet dogs and approximately 6 million cancers diagnosed each year in dogs, which is about 2.5 times the numbers diagnosed in humans. That's diagnostic have a clearly defined regulatory pathway via the USDA requiring fewer and smaller clinical studies when compared to the FDA process for human diagnostics, which generally allows a much faster route to revenue from veterinary products as compared to human products. I look forward to completing the planned trials and to launch our first Nu.Q Vet product in the U.S. that we expect to occur this year. Looking ahead, I'm very happy to report that we have had three abstracts accepted for publication at ASCO, the American Society of Clinical Oncology, one of the world's biggest cancer conferences. Due to their strict rules, I cannot discuss these in detail today, but they are expected to be publicly released after market close on Wednesday, May 13, but please keep an eye out for these. For those of you who follow up closely, you will be well aware that it has been some time since we published data at conferences. Following the significant work on both the platform development and securing our IP, we expect the abstract publications to be the first of many this year, and are also planning to get a number of clinical papers published throughout this year and beyond. We believe that now is the time to publish, and so the validity of our Nu.Q platform in so many areas. In financial terms, we closed out the quarter with approximately $12 million in cash and equivalents. We continue to manage cash carefully and believe that we are in a solid position with regards to the financial runway to achieve our key 2020 milestones. Looking to the future, I would like to reiterate our vision and what makes us so excited with the progress in our space. Volition is an epigenetics company focused on advancing the science of epigenetics and exploiting these advantages in human and animal health. This has been our mission since our founding and it's coming to fruition with our Nu.Q platform at the very heart of epigenetics. So we say that epigenetics is as, if not more important than DNA genetics. In short, it's not the DNA, it's the full chromosome. We believe the last decade of work at Volition with our 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 many fronts, with our ever-growing team and IP, I am delighted with the progress we're making, and I'm excited by the momentum we have developed in this epigenetics field. Indeed the whole team is incredibly excited about the company's future opportunities. We aim to report throughout this year and beyond several key milestones including Nu.Q's ability to detect a range of cancers in both human and animals. In addition to the clinical data of the Nu.Q Capture program and data relating to COVID-19 triage test in development. We are delighted to be working with our collaborators from around the world, all of whom have outstanding reputations and share our aim in improving early diagnosis of cancer and other diseases. 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. We expect 2020 to be our most exciting year yet. Thanks for joining the call today. I very much appreciate it, given the busy earnings call season and the pandemic, we are happy to take your questions now.

Operator, Operator

Thank you. We will now be conducting a question-and-answer session. Our first question comes from the line of Mark Breidenbach with Oppenheimer. Please proceed with your question.

Unidentified Analyst, Analyst

Hey, guys. We've got Matt on here for Mark. Thanks for taking our questions. And Cameron, let me extend my congratulations on the recent progress.

Cameron Reynolds, President and Chief Executive Officer

Thank you.

Unidentified Analyst, Analyst

On interesting proof-of-concept data in COVID, and I'm just wondering what you attribute to the high level of specificity. And also whether you believe the Nu.Qs could discriminate COVID from other active infections, which may be increasing nucleosomes in blood presumably?

Cameron Reynolds, President and Chief Executive Officer

Yes, that's a great question. We were pleasantly surprised by the results we obtained. This was a comparison of COVID to normal controls, and the results were exceptionally high. We are currently conducting extensive work on both the prognostic and diagnostic processes, which involves investigating other conditions that might lead to elevated nucleosome levels. This work is ongoing this week and will continue in the upcoming weeks. Our collaborators in Germany and Belgium are very enthusiastic about the results. We are assessing the body's response to the virus, particularly focusing on neutrophil extracellular traps, also known as NETs. All of these questions will be addressed, but we are being cautious for now. We are very excited about our findings and will continue to do significant work over the short to medium term to analyze the data. It was an excellent starting result, and we will closely examine its diagnostic and prognostic implications. It’s important to note that this is a COVID-related issue, but it also involves the body's reaction involving NETs. If this approach proves useful for COVID, it could also be applicable to other conditions like ammonia and influenza, which similarly increase NET levels and have comparable fatal mechanisms. We hope to clarify this during the pandemic, and we expect to have that information soon. If this proves effective, it could have long-term applications as well. We are very excited about the prospects and will provide a comprehensive update as soon as we have more information, which should be available shortly.

Unidentified Analyst, Analyst

Okay, great. That makes sense. Yes. So now I guess turning to the clinical-grade assays, it sounds like you have eight. Now that has then validated. I'm just wondering whether you think eventually you will probably have to use different combinations of these assays based on the indication whether it's lung or colorectal or other. And then if you could just give us an update when you plan to have finalized panels for the Taiwanese lung trial and the EDRN study? Thanks.

Cameron Reynolds, President and Chief Executive Officer

We currently have eight assays, which is the highest number we've had at this stage. We're aiming to add three or four more each quarter, expecting to reach 12 and then 16 by the year's end. Some of these assays show promise across various cancers, and we anticipate differing levels of effectiveness depending on the specific disease. We're focusing on those that have demonstrated variance in tissue, as that’s where we've identified them. Additionally, we're searching for new biomarkers through our mass spec work in the Nu.Q Capture program. There's substantial evidence of distinct structures linked to different cancers, and we have developed assays accordingly, which we will test in trials to validate our findings. We are also exploring new markets discovered through Nu.Q Capture and mass spec work. We will define the assays as we currently test smaller groups for colorectal and lung cancers, and we plan to incorporate larger populations moving forward. This year, we expect to have strong indications for both lung and colorectal cancer as we generate more assays. We have observed several that perform exceptionally well, leading us to believe we may only need a panel of three or four. We are refining our approach and will gather more data as we run multiple assays through these populations, having already adapted them to our platform. It's crucial that our assays correlate with existing ones to provide added value. We're pleased with the development progress, especially given the challenges of the pandemic, thanks to the excellent work from our team in Belgium. The increase in the number of assays is significant, and they are now very robust and reproducible, allowing us to advance our work in lung and colorectal cancer, as well as veterinary applications and COVID-related studies on the same platform. In summary, we are on track with eight assays and expect to add four more each quarter, with more data to share in the coming months. We aim to finalize the panels shortly.

Unidentified Analyst, Analyst

And then maybe just one more if I can squeeze it in. Do you still think you'll be able to have data from the Taiwanese lung trial at some point in the first half of this year? Or do you think given the pandemic that those timelines might shift?

Cameron Reynolds, President and Chief Executive Officer

I think it's a reasonable target, but if it slips, it is only a few months. We will have data in the short term, short to medium term. We're reasonably on target, I think. It's never exactly sure with everything, but I'm not unaware it's delayed now, it could be in the future, but we are sticking to the target. It's coming up and that's for sure. The main delay was getting the assays developed on the platform and now that we have a lot, we should have that data.

Unidentified Analyst, Analyst

Great. Thanks for taking my questions.

Cameron Reynolds, President and Chief Executive Officer

Thank you, Matt. Thank you.

Operator, Operator

Thank you. Our next question comes from Jason McCarthy with Maxim. Please proceed with your question.

Unidentified Analyst, Analyst

Thank you for taking my question. This is Michael speaking on behalf of Jason. I have a follow-up question regarding the COVID test. How do you plan to implement this in a triage setting? Based on the data you released, it appears you can accurately detect elevated nucleosomes in COVID cases. What additional information do you need to apply this for triaging patients?

Cameron Reynolds, President and Chief Executive Officer

Yes, that's absolutely correct. What we demonstrated was a comparison between COVID and normal conditions, which is the first step. If that information isn't available, it can complicate the triage process. The next phase involves collecting a larger number of samples that provide differential diagnoses and prognostic insights, including cases that have progressed well, those that have deteriorated into the ICU, and unfortunately, instances resulting in death, as well as how these relate to other competing conditions. This is currently in process. The goal is to understand the body's response to COVID, which includes fever and antibodies, as well as the presence of NETs detectable by our assays since they are based on chromatin. NETs act as the body's final defense mechanism, where white blood cells release them to physically trap the virus. While this is a beneficial strategy, an excessive amount can create significant issues. We're observing high signals in some COVID-positive samples, and we are now analyzing whether these signals derive from NETs and whether we can successfully detect them. Our objective is to determine how early we could signal that an individual is at risk due to their immune response, which is what we measure rather than the virus itself. In this case, the body's response, particularly the NETs, can lead to mortality by congesting the lungs and other organs if they become too abundant. Similar to how fever aids in eliminating the virus, an excessive immune reaction from NETs can be harmful. We are focused on detecting this and are hopeful about addressing it in COVID patients. Our next step is to analyze time points in order to ascertain how early we can predict that someone is in trouble, a challenging aspect currently. Through our collaborations, we believe this could lead to a highly beneficial clinical tool if we can substantiate our findings. Initial results have been promising, but there's still work ahead. Given the pandemic, significant efforts and sample collection are underway, and we plan to evaluate the prognostic value soon. Thanks to the robustness of our platform, we have highly reproducible assays, which means that if we progress to developing it as a product, it could happen swiftly. Improvements are being made rapidly. Overall, we are pleased with the results thus far and aim to contribute to prognostic advancements as we move forward. It's also crucial to highlight that while we are an epigenetics company, we remain focused on our cancer trials in the veterinary sector, which have been progressing exceptionally well during this pandemic. It's an exciting time, and we anticipate having more information on the COVID situation soon.

Unidentified Analyst, Analyst

Thank you. I'd like to switch over to the Capture program. It seems that there will be a significant amount of data this year, particularly concerning the sequencing immunoassay mass spec data. Once that data is available, what are the next steps? I understand you are exploring some licensing opportunities for 2021. Could you provide some insight into what those opportunities might entail and how you plan to position this technology for application?

Cameron Reynolds, President and Chief Executive Officer

Yes, that's a great question, Michael. To give you a brief overview of the Capture program, we haven't discussed it much during this call because we had a lot of other topics to cover, but it is progressing very well. We will provide more updates soon. What I can share at this moment is that the program is designed to selectively capture nucleosomes from various structures where we have the antibody. One significant application is distinguishing long nucleosomes from short ones, with short nucleosomes (147 base pairs) being more prevalent in cancer. By enriching the DNA and nucleosomes specifically from cancer samples, we can significantly improve our assays. Reducing background noise typically enhances results, and this may be particularly beneficial in the sequencing space, which faces greater challenges with background interference than we do, as nucleosomes are far more common than mutations in DNA. We believe this strategy could serve as an effective cleanup step before our assays, and we are currently exploring this. Additionally, we're working on ways to concentrate the DNA for sequencing. If we succeed in concentrating the nucleosomes and thereby boost the validity of screenings, it would create substantial licensing opportunities in this field. Furthermore, once we have the nucleosomes, we can utilize mass spectrometry, which involves breaking apart the nucleosomes to examine their components. This provides definitive proof of what is present on the nucleosome. Our mass spec work can analyze histone modifications and their methylation levels, which is quite impressive. Currently, this method is being used as a discovery tool to validate our findings and explore new markets. Looking ahead, in three to five years, this could potentially allow for multiplexing multiple targets without specificity concerns if focused solely on mass spec analysis. We are currently investigating how effective this cleanup step is for our assays and will have data on that soon. We are also concentrating on nucleosomes from known cancers to see if we can enhance the detection of mutations for quicker and lower-cost sequencing, which could be immensely valuable since current sequencing often operates at about 50,000x coverage. The work we've done on our assays has significantly benefited the Capture program because we use the same antibodies and processes. Just for context, the Capture procedure costs as much as a single assay and can be performed on our machines by using antibodies attached to magnetic beads, which are pulled out with magnets. Although it has required substantial effort and optimization, all the new intellectual property developed, including contributions from Dr. Micallef, has been very encouraging. The technology has versatile applications, and we plan to share more information about it later this year.

Unidentified Analyst, Analyst

Thank you. And then there is one more from me. It looks like there's going to be a lot of progress in 2020 with that moving forward towards the market commercial preparation for three years and a number of studies. So how should we look at expenses going forward? Should we anticipate the higher run rate that we saw in the first quarter to continue throughout the year or how should we look at that?

Cameron Reynolds, President and Chief Executive Officer

I think for now we are on track with our long-term target of $1.2 million to $1.3 million per month. Over the past year, the first quarter is typically higher due to D&O expenses and other annual costs occurring early in the year. This quarter, we also had the Octamer purchase, which is a one-time expense. We may end up doing more work, but currently, we are following a 12-month average. There will be fluctuations between quarters for these reasons, but I don't expect a significant increase. If there are changes, we will provide an update next quarter. For now, during the summer months, we aim to maintain our long-term average until the next update.

Unidentified Analyst, Analyst

All right. Thank you very much, Cameron. I'm looking forward to the progress. Stay safe guys.

Cameron Reynolds, President and Chief Executive Officer

Thank you, Michael. Yes, it's exciting times.

Operator, Operator

Thank you. Our next question comes from Bruce Jackson with Benchmark Company. Please proceed with your question.

Bruce Jackson, Analyst

Hi, good morning and thank you for taking my questions.

Cameron Reynolds, President and Chief Executive Officer

Thank you, Bruce.

Bruce Jackson, Analyst

So if we could just talk for a moment about the veterinary program, you brought out the proof-of-concept data. What work remains to be done with that program? Do you still think it's going to be the first product out the door? Is the commercialization strategy still going to be possibly so lab developed test? And then if you could also maybe as a follow-up run through the rank order of the pipeline in terms of how they might be launched?

Cameron Reynolds, President and Chief Executive Officer

Thank you, Bruce, for the good questions. The veterinary aspect is crucial to our work and we want to ensure it isn't overlooked amid other developments. The proof-of-concept data we received was very promising, particularly since the Texas A&M Vet team chose cancers that are significant, representing about a third of all dog cancers. This positive outcome aligns with what we know about similar cancers in humans, serving as an important validation from an independent group and reflecting the hard work we’ve put into developing reliable assays. We have shipped the assays and collaborated with excellent partners who understand the needs of vet clinics better than we do. We have already gathered point-of-care data from the plates we supplied, which is the simplest format for their applications. They also have plans for our magnetic bead platform, which will be operational soon. Currently, we have a limited number of assays on plates, but we have eight and aim to expand that significantly. This will enable us to process more samples and develop additional assays for various cancers. Remarkably, the initial results we’ve seen from the assays are already impressive, and we now have a broad array of options. Additionally, we plan to replicate the human research on the Capture side for the veterinary side to enhance our understanding and exploration of the vet market. This work is set to progress within the year. Concerning launches, we aim to initiate with a lab-developed test in Texas, where there are specialized labs that can operate like CLIA labs. Once they feel prepared, they can begin to use the tests in their facilities. We also plan on launching a USDA-approved product for the cancers, focusing on kit distribution. Overall, the developments align closely with human applications concerning pre-analytics and assay performance, and we observe substantial insights emerging from both ends. Notably, blood cancer assays performed exceptionally well on the veterinary side, prompting us to investigate these results further in human studies. Thus, we anticipate significant cross-benefit developments between the vet and human sectors. The extensive efforts invested into creating a robust and reproducible platform over the past two-and-a-half years, especially by our team in Belgium, are starting to bear fruit. We expect to release more data and Texas will actively publish findings like the rest of the company, as we have much to share. We are very satisfied with our platform and intellectual property in the veterinary space in tandem with our human endeavors, leading to exciting times ahead in the vet market.

Bruce Jackson, Analyst

After we launch the vet tests for humans, which assay do you believe will be the first to enter the market?

Cameron Reynolds, President and Chief Executive Officer

If we discover something clinically valuable from COVID, it will likely benefit from a quicker approval process due to the pandemic. However, we will gain clarity in the short to medium term. The triage project is expected to stay on schedule for the end of next month, and we are currently conducting trials focused on lung and colorectal cancers. It's challenging to predict outcomes, but we are running substantial trials in both areas. We aim to determine the clinical applications and analyze the resulting data. Our strongest results so far have been in blood cancers, where we have promising data. We're investigating the most relevant clinical questions and corresponding trials. To summarize, if we identify clinically useful findings from COVID, it will probably be prioritized first because the assays are ready and the approval process is expedited. The triage assessments will follow. Additionally, we've not focused much on research kits lately due to other commitments, but I anticipate a surge in activity once we start publishing results. There is a significant movement in the epigenetic sector, and we are at the forefront of it, demonstrating strong efficacy in cancer research for both humans and dogs. Collaborations related to pregnancy, pre-eclampsia, lung diseases, and more further highlight the importance of epigenetics across various fields. We have much to discuss over the coming year.

Bruce Jackson, Analyst

Absolutely. Getting back to the COVID-19 data that you showed this morning with the proof-of-concept data, was that the NETs assay that you were referring to or was it another one? And then you said there were two Nu.Q assays that were being evaluated. So...

Cameron Reynolds, President and Chief Executive Officer

Yes, we're publishing and we're also patenting. So I mentioned which two assays they were, but yes, it worked incredibly well in this aspect, and the other one, I mean 86 is still incredibly good as you see, and they do different things. So we've got a lot of work to do. Our collaborators are working at a lot of other markets as well for these same purposes in clicking trials. The same combination work the different questions, prognostic as well as diagnostic. The PCR is a great test as you know. It is very accurate, but it has its issues. So they're working to see how it can work in a lot of different ways. There are a lot of clinical questions now being thrown up because of COVID beyond just the straight diagnostic question, and it appears very much that the NETs are a very big part of what does the damage to your body. And obviously, the NETs very much related to chromatin, I mean it is chromatin that is spewed out. So that's what our assays appear. It's all cutting edge now. So we'll publish that. I think there'll be a lot of papers published in the future on how our assays and can be determining all the NETs in the process, but we are working right now and we'll update a lot in the short-term.

Bruce Jackson, Analyst

Okay, great. Thank you very much.

Cameron Reynolds, President and Chief Executive Officer

Thank you.

Operator, Operator

Thank you. Our next question comes from Jason Kolbert with Dawson James. Please proceed with your question.

Jason Kolbert, Analyst

Hi, guys. Thank you. Pretty good rundown. But I just want to pick up on some of the questions that have already been asked. When you talk about the COVID assay and detecting the NETs, my understanding of what you're saying is that you can detect what the body's immune response might be and it might be a predictor of who's going to get into a cytokine storm that's going to result in potentially candidates for ventilators. And so it could be used as a prognostic to determine where there would be benefit for a viral knock down like remdesivir. And if that interpretation is correct, I'm wondering whether there are discussions going on with therapeutic developers, so that they could use the assay prognostically to determine which candidates would be best for therapy and what the timing of that therapeutic intervention might be?

Cameron Reynolds, President and Chief Executive Officer

I'll provide a brief response, and then Jake can add anything further as our Chief Scientist. We're conducting extensive research, but I can't disclose too much at this stage as some of it is confidential. However, there are many developments underway. I believe we can make significant contributions in the areas you've mentioned. Once we finalize any initiatives, we will make an announcement. Jake, do you have anything additional to share?

Jake Micallef, Chief Scientific Officer

Only that the work is ongoing. And if the assays do indeed turn out to be prognostic, then they could very well be used in the scenario that you described, where we're not really at a stage where we can say that yet.

Jason Kolbert, Analyst

Okay. But that's the true differentiator because there are many good assays that can determine the presence of COVID, but very few can assess the magnitude or predict the response. That's the whole point. Many people may get COVID without any symptoms, while others face serious issues. Being able to distinguish between these two groups would indicate an incredibly unique product if that proves to be the case. Is that your perspective as well?

Jake Micallef, Chief Scientific Officer

That's exactly how we're looking at it. Yes.

Cameron Reynolds, President and Chief Executive Officer

Exactly, right, yes. But I think with the nature and the size of potential is...

Jake Micallef, Chief Scientific Officer

I was going to say that what we're measuring although we get superb detection for COVID that's not actually our goal at all. And what we are measuring, as Cameron was saying is not the COVID itself, but the body's response to the COVID, and it is an over response and one aspect of that is the cytokine storm that is the cause of the complications and it is that that we're measuring. And so, we're very successfully measuring that. And whether that is clinically useful in the way that you describe is something that we're investigating now.

Jason Kolbert, Analyst

Yes. We all understand the implications are significant. Have you had any early discussions or contact with individuals on the COVID task force or BARDA? I assume those channels are open to you?

Cameron Reynolds, President and Chief Executive Officer

Yes, we have been very active. We've been looking at this for several months. And given the size of the opportunity and how much we can help, we're just trying to be conservative until we are certain exactly what we can do, but all the things you described is exactly what we've looked to do. And we've been in communication with the authorities as you mentioned in the U.S., as well as in Europe, as well as in Asia because if you can have a prognostic it's incredibly useful. And as you said, there is really nothing out there currently in this space. And as Jake has mentioned before, it's also potentially very useful in pneumonia and in the flu which caused millions of hospitalizations every year as well going forward.

Jason Kolbert, Analyst

Right. With the same kind of cytokine storm associated with it, I think.

Cameron Reynolds, President and Chief Executive Officer

Exactly. Exactly, yes.

Jason Kolbert, Analyst

Thank you. That's really exciting. On the veterinary side, as well as the human side, the ability to identify the source of cancer is crucial. Can you help me understand the process on the veterinary side? A patient brings in their dog, and the veterinarian might detect a GI-related tumor or something else, but they can't get a clear response since dogs can't communicate like humans. So, how advanced is the diagnostic library in isolating the type of cancer and determining its stage? What I'm really asking about goes beyond just detection; it's about tracing the source and matching it with the library. This has significant implications, not only for dogs but also for ethical diagnostics, and I want to ensure I grasp that connection.

Cameron Reynolds, President and Chief Executive Officer

To address your question, it would be beneficial for you to connect with our veterinary team, as none of us on this call are veterinarians. We collaborate closely with Texas A&M because they possess a deep understanding of clinics and their processes. They play a crucial role in guiding us on clinical questions, the various cancers, and the specific clinical processes involved for each one. These processes can differ significantly between vet hospitals and labs, and they are actively working on this. Regarding epigenetics in the human context, Jake can provide you with more details. As we've discussed, there are numerous epigenetic structures associated with nucleosomes, and many have been found to differ across various diseases and cancers, which we are monitoring as well. We are presently examining our own markets based on domestic insights. We believe that prior research has established a solid foundation around which targets to investigate in tissue samples. We have concentrated on refining our platform to ensure we can measure all the relevant factors, which we have successfully accomplished. We will be employing many of these assays to distinguish between different cancers, as well as to identify the presence of cancer itself. We've observed some differences, revealing both similarities in certain assays across cancers and distinct divergences that we are currently exploring within our expanding library. It is essential to develop a reliable test panel for cancer detection that can also differentiate it from other cancers and competing conditions, which is a priority in our ongoing work. Thus, increasing our array of assays is crucial for enhancing our ability to discriminate between different conditions effectively.

Jason Kolbert, Analyst

Right. So, and the mass spec is really just an internal tool that helps you build the library, so that going forward on a volume basis that just becomes a digital comparison if you will. Is that correct?

Cameron Reynolds, President and Chief Executive Officer

Yes, but also confirms markets that we say there from the antibodies and the recombinant controls are also definitely there. So it's a confirmatory as well as exploratory. But yes, for the next foreseeable future, that's absolutely correct.

Jason Kolbert, Analyst

Okay. I want to clarify the timelines for Nu.Q. There's a lot happening, but if I understand correctly, we should expect more incremental data throughout the year, starting with the triage next, followed by the lung cancer study, and then some of the hematological assays towards the year's end. Is that right?

Cameron Reynolds, President and Chief Executive Officer

Yes. And if you look at the presentation we have, on Slide 6 and 7, there is all the targets for all the different areas from the assays, the trials, the vet and the Capture. There's two pages of them just to be accurate; if you want to refer to that we've kept that up to date.

Jason Kolbert, Analyst

Really, really professional breakdown. Thank you very much. I'm excited to see as the platform and the company matures, particularly given COVID. I mean this really has the potential to kind of in the words of our President, be a game changer. So it is exciting. Thanks.

Cameron Reynolds, President and Chief Executive Officer

Thank you very much. We are excited too.

Operator, Operator

Thank you. Our next question comes from Nathan Weinstein with Aegis Capital. Please proceed with your question.

Nathan Weinstein, Analyst

Good morning, guys, and thanks for taking my question. So if perhaps you can just remind us about the Octamer acquisition that you closed early in the quarter? And what was exciting to you guys about that and then has integration turned out as expected?

Cameron Reynolds, President and Chief Executive Officer

We planned this in the last few quarters of last year and got to know Dr. Schomburg well through our Science Advisory Board. A crucial aspect of having a robust platform is the recombinant nucleosomes, which very few people can produce effectively. This cutting-edge component is vital to our current level of robustness. We've considered this thoroughly and aim to control our entire supply chain. While the situation hasn’t unfolded as we initially predicted, it's been beneficial to have the key components under our control. The main objective was to acquire a company capable of producing recombinant nucleosomes, which are essential for our vet assays, human assays, Capture program, and antibodies. The producer we work with creates excellent nucleosomes, and we have been utilizing them. Part of our strategy involves licensing our products, as we recognize that if epigenetics is as broad as it appears, we won't be able to handle everything as a small or even a medium-sized company. We will begin licensing, and while we've always envisioned this, we aim to grant rights to use our extensive intellectual property while also providing consumables like nucleosomes and antibodies. This way, we can monitor usage and production and prevent unauthorized copies by tagging our products. We were fortunate that our nucleosomes came through Shanghai, especially considering the challenges posed by the pandemic. We didn't heavily market them during the pandemic since we focused on producing nucleosomes for our own programs. Our goal has been to integrate and understand how to create these nucleosomes, with plans to bring more development back to our headquarters in Belgium. We will transition from internal production to actively marketing these nucleosomes, as our current products are excellent. Our ability to mass-produce and tag them will reduce costs and enhance our control over the supply chain and licensing. This could represent a significant opportunity in the epigenetics market, and we are ensuring that we consider all necessary steps as we move forward.

Nathan Weinstein, Analyst

Thank you. And then, perhaps just one more from me. If we think about the supply chain that leads to your assay, just any disruption there from COVID, and just in good times does that tend to be a lot of vendors and easy to get the supply that you need?

Cameron Reynolds, President and Chief Executive Officer

The great aspect of our process, compared to sequencing and other methods for circulating tumor cells, is that it is fundamentally straightforward. It involves antibodies and nucleosomes on magnetic beads, produced by numerous companies. We plan to manufacture the essential components at our facility when we begin product production and licensing. We are facing some supply chain challenges since we are dealing with many nucleosome targets. We do not produce our nucleosomes until we see their utility and develop our own antibodies. While we still purchase some antibodies and various items from different suppliers, there have been minor delays. Typically, we try to secure at least two or three suppliers for all critical components to avoid bottlenecks, but there have been some disruptions. Consequently, things are progressing more slowly, similar to what others are experiencing during this crisis. However, it has not significantly affected our operations because we are handling more internally and have multiple suppliers. Despite the slower pace during this crisis, suppliers do generally fulfill orders, albeit with some delays. We are also planning ahead by ordering larger quantities in areas where we are not producing ourselves.

Nathan Weinstein, Analyst

Cameron, thanks so much.

Cameron Reynolds, President and Chief Executive Officer

Thank you. Thanks, Nathan.

Operator, Operator

Thank you. Our next question comes from Anita Dushyanth with Zacks Investment Research. Please proceed with your question.

Anita Dushyanth, Analyst

Hi, good morning. Congratulations on the progress. I just have a couple of questions also on the COVID and the veterinary space. Just to have a better understanding of how the COVID product would go through the regulatory pad, could you discuss the next steps, and what you're doing there? And also considering this pandemic could subside temporarily and there is talk that there is a possibility of recurrence maybe a couple of times later in the season. How do you sort of expect to rollout this into the market, maybe there is some lumpiness in certain quarters, and then it's kind of the later?

Cameron Reynolds, President and Chief Executive Officer

Yes, certainly. Our next steps involve conducting extensive clinical work. The assays we have developed show a strong ability to differentiate between COVID patients and those without the virus. We are analyzing multiple samples from the same individuals to determine outcomes and assess how early we can predict these results. We have established excellent clinical partnerships, which have gathered samples to address various questions, including this one. The next objective is to explore how the discrimination we've identified can be applied in practical settings. This process is ongoing, and substantial sample collection is taking place. Following our successful proof-of-concept data, there is increasing interest from our partners, as, as Jason mentioned earlier, it could be highly beneficial for clinical use if we can demonstrate the desired results. The collaboration has been very effective in providing us with samples and enabling analysis, as we do not operate an infectious lab ourselves due to safety concerns for our staff. These tests are performed in hospitals where COVID is diagnosed and treated, and we have been supplying testing kits. This highlights the robustness of our approach, as shipping kits allows for continued progress, which would be challenging if we were reliant on our own facilities. Our next steps will focus on evaluating the utility of our findings. If we identify something useful, we aim to launch a product in Europe that meets CE mark standards, which are currently being approved quickly based on the platform we choose. We have a simple platform format with specific applications, and we are also utilizing magnetic beads that can be adapted to multiple platforms, including one we have in Europe and another in collaboration with Fosun in China. The clinical utility will become clearer as we gather more data. It's important to note that COVID-19 may continue to fluctuate in incidence until a vaccine is available. Additionally, the mechanisms we are studying are also prevalent in other common diseases such as pneumonia and influenza during typical seasons. If we can demonstrate clinical utility, there is significant potential for broad applications, as millions are hospitalized each year for these conditions. Therefore, if we can establish clinical relevance, there is strong potential for future opportunities.

Anita Dushyanth, Analyst

Great, that was helpful. Thank you. And regarding the veterinary space, does the hemangiosarcoma and the lymphoma, are they specific to certain breeds in the canines and are you also looking at the detection in other animals?

Cameron Reynolds, President and Chief Executive Officer

Dog cancers are somewhat different from human cancers due to inter-breeding. Certain breeds are particularly prone to specific types of cancer, and many cancers in various breeds are quite common. In fact, often over half of the cancers in a particular breed may stem from one type due to inbreeding, making it possible to predict the type of cancer if it occurs in a specific breed. We have utilized vet schools to gain specialized knowledge that isn't currently in Volition, but is available through our veterinary partners in Texas. They focus on cancers that are prevalent in the breeds they frequently see, which adds clinical value to our work. It's encouraging to see the progress we've made so early in the program. Regarding other animals, any organism with DNA shares similar nucleosomes. We have initiated initial discussions on various other animals but decided to first focus on dogs for our Nu.Q vet process before expanding. Other obvious candidates, especially in agriculture, could offer logical uses, but that will be a story for next year as we continue to work with dogs. If we succeed with the products in the canine space, there's no reason we couldn't apply the same approach to a wide range of other animals since they, too, will face similar cancer challenges. This area holds significant potential value, and we might look to license it out through our veterinary subsidiary because there is a great deal of work to be done, but it would utilize the same platform, allowing for rapid development with specialists in those animals.

Anita Dushyanth, Analyst

And I presume that you're possibly after launching this by the end of the year you're looking at other cancers in dogs or so?

Cameron Reynolds, President and Chief Executive Officer

That's correct. They've collected data in Texas on various cancers in different dogs. The next step isn't just more assays for these cancers, which would certainly be beneficial. Ideally, having a panel of two or three assays would improve our approach. Each assay is not expensive and doesn't require a lot of blood, allowing us to add more assays for better distinction. They are currently working on that, as well as investigating other cancers, and we anticipate some data on that in the short to medium term. Following that, we plan to conduct larger trials and launch products as they become available. It's crucial to recognize how prevalent cancer is in dogs and the critical need for cancer detection in these animals. As Jason mentioned earlier, it's quite challenging to ask broad questions; scanning an animal is difficult because they tend to move and won't stay still. Additionally, human proteins are not as effective for obvious reasons. Thus, the situation for diagnosing animals is even more pressing than for humans. This presents a significant opportunity, and we are pleased with our partnership with Texas A&M, as they have extensive knowledge in veterinary medicine. We supply the assays and expertise in epigenetics, while they provide veterinary insight, making it a strong collaboration.

Anita Dushyanth, Analyst

Yes. Yes, thank you. And lastly, regarding the cancer studies that are going on in human population, so geographically also the population is exposed to different types of cancers. So do you plan to sort of license and partner in different regions?

Cameron Reynolds, President and Chief Executive Officer

Yes, we want to become experts in epigenetics, including assays and intellectual property. We're launching our own products because we believe we can successfully do that with our current resources and the trials we're gathering. However, the epigenetic space is likely too vast for a single company to cover all those areas. Many different cancers and various other diseases have significant epigenetic components, even COVID, which is related to immune responses. This field can be crucial in numerous areas. Our initial revenue will stem from our own products, but we also plan to incorporate more licensing, ensuring we maintain control over essential components that we can sell and monitor to better understand sales volumes from our licensees. We're laying the groundwork for our first products while actively pursuing licensing, which we anticipate will become an increasingly significant part of our business as it proves broadly applicable across many sectors. We aim to launch the first few products and then pursue aggressive licensing.

Anita Dushyanth, Analyst

Great, thank you. Thank you for that.

Cameron Reynolds, President and Chief Executive Officer

Thank you.

Anita Dushyanth, Analyst

That's all from me. And good luck on the releasing data.

Cameron Reynolds, President and Chief Executive Officer

Thank you. Hopefully, we can be helpful in a lot of areas. Thank you, Anita.

Operator, Operator

Thank you. We have no additional questions at this time. So I'd like to pass the floor back over to management for any additional concluding comments.

Cameron Reynolds, President and Chief Executive Officer

Thank you for joining the call today. I understand it's a challenging time for everyone, and we truly value your interest during this tough pandemic period. I am eager to share the milestones that are coming up over the next few months and quarters. I look forward to speaking with you at the next earnings call. Thank you.

Operator, Operator

Ladies and gentlemen, this does conclude today's teleconference. Once again, we thank you for your participation. And you may disconnect your lines at this time.