What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-03-25 compared with 2023-03-15 · 34 added, 36 removed, 134 unchanged (34% of the section changed)

5 unchanged sentences

Company Overview

Volition is a multi-national epigenetics company powered by Nu.Q ® , its proprietary nucleosome quantification platform.

Through its subsidiaries, Volition is developing simple, easy to use, cost-effective blood tests to help diagnose and monitor a range of life-altering diseases, including some cancers and diseases associated with NETosis, such as sepsis and COVID-19.

Volition is a multi-national epigenetics company.

It has patented technologies that use chromosomal structures, such as nucleosomes, and transcription factors as biomarkers in cancer and other diseases.

The tests in the Company’s product portfolio detect certain characteristic changes that occur from the earliest stages of disease, enabling early detection and offering a better way to monitor disease progression and a patient’s response to treatment.

The tests offered by Volition and its subsidiaries are designed to diagnose and monitor a range of life-altering diseases, including certain cancers and diseases associated with NETosis, such as sepsis and COVID-19.

Early diagnosis and monitoring have the potential to not only prolong the life of patients but also improve their quality of life.

The tests are based on the science of Nucleosomics™, which is the practice of identifying and measuring nucleosomes in the bloodstream or other bodily fluids, since changes in these parameters are an indication that disease is present.

We have five key pillars of focus, all of which use the same proprietary Nu.Q ® platform to commercialize in different areas.

Nu.Q ® Vet - cost-effective, easy-to-use cancer screening blood test for dogs and other animals.

We have several key pillars of focus:

Nu.Q ® Vet - cost-effective, easy-to-use blood tests for dogs and other companion animals.

The Nu.Q ® Vet Cancer Test is commercially available as a cancer screening test in dogs.

Nu.Q ® NETs - monitoring the immune system to save lives.

Nu.Q ® Cancer - detecting cancer early to save lives.

Nu.Q ® Capture - capturing and concentrating samples for more accurate diagnosis.

Nu.Q ® Discover - a complete solution to profiling nucleosomes.

Our research, product development and manufacturing activities are centered in Belgium, with innovation and U.S.

operations in California, and additional offices in Nevada, London, and Singapore, where we focus on bringing our diagnostic and disease monitoring products to market.

Nu.Q ® Cancer - monitoring disease progression, response to treatment and Minimal Residual Disease.

Capture-PCR TM - isolating and capturing circulating tumor derived DNA from plasma samples for early cancer detection.

The Company has grown from a single two-meter lab bench at the University of Namur in Belgium to a purpose-built lab in Gembloux, Belgium, an Innovation Lab in California, and offices in California, London, Singapore and Nevada.

In 2015 the Company’s common stock was listed on the New York Stock Exchange (VNRX).

We now have a team of over 100 dedicated employees, spanning a wide range of disciplines;

all united in its mission to improve outcomes for patients.

We have identified the specific processes and resources required to achieve the near and medium-term objectives of our business plan, including personnel, facilities, equipment, research and testing materials including antibodies and clinical samples, and the protection of intellectual property.

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(a) securing additional grant funds;

(b) obtaining additional equity or debt financing;

(b) obtaining additional financing through debt or equity transactions;

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If we are unable to obtain adequate capital, we could be forced to cease operations.

Developments—COVID-19 Pandemic

Due to the continued evolution of the COVID-19 pandemic since March 2020, we cannot precisely determine or quantify the impacts the pandemic will have on our business, financial conditions or results of operations.

For example, although we have worked with clinical trial sites impacted by the pandemic to ensure study continuity, we have experienced and may in the future experience disruptions that could impact our clinical trials, including delays in enrolling patients in clinical trials or in sample collection, and diversion of healthcare resources from the conduct of our clinical trials.

The extent of the impact of the COVID-19 pandemic on our business remains uncertain and subject to change.

If there is a subsequent outbreak of COVID-19 in the future, we may experience significant delays in our clinical development timelines, which would adversely affect our business, financial condition, and results of operations.

Liquidity and Capital Resources

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Net cash used in operating activities was $18.1 million and $15.3 million for the years ended December 31, 2023 and December 31, 2022, respectively.

The decrease in cash used in operating activities during 2022 when compared to 2021 was primarily due to a $10.0 million payment received pursuant to our master license and product supply agreement with Heska, partly offset by higher payroll costs, and higher amounts paid to suppliers during the period.

The increase in cash used in operating activities during 2023 when compared to 2022 was primarily due to higher payroll costs and higher amounts paid to suppliers during the period.

Net cash used in investing activities was $1.1 million and $1.6 million for the years ended December 31, 2023 and December 31, 2022, respectively.

The increase in cash used in investing activities during 2022 was primarily due to an increase in purchases of laboratory equipment as compared to 2021.

The decrease in cash used in investing activities during 2023 was primarily due to reduced purchases of laboratory equipment as compared to 2022.

Net cash provided by financing activities after associated costs was $29.0 million and $6.9 million for the years ended December 31, 2023 and December 31, 2022, respectively.

The decrease in net cash provided by financing activities for the 2022, when compared to 2021 was primarily due to $18.9 million in net cash received from the issuance of shares of common stock in a registered public offering in February 2021, and an aggregate of $4.6 million in cash received from the issuance of shares of common stock under our “at-the-market” facilities during 2021.

This compares with $6.4 million in net cash received from the issuance of approximately 3.5 million shares of common stock in a registered public offering in August 2022 (before deducting offering expenses of $0.2 million paid by the Company), a $1.1 million loan received in August 2022 from Namur Invest Capital Risk ("Namur Invest"), a $0.5 million loan received in December 2022 from Namur Invest, and an aggregate of $0.8 million in cash received from the issuance of shares of common stock under our “at-the-market” facilities during 2022 (before deducting offering expenses of $0.2 million).

For additional information on our “at the market facilities,” refer to Note 7, Common Stock – Equity Distribution Agreements, of the Notes to consolidated financial statements.

The increase in net cash provided by financing activities for the 2023, when compared to 2022 was primarily due to the following $8.0 million in net proceeds received from the sale and issuance of common stock in a registered public offering in February 2023, before deducting offering expenses of $0.2 million, $17.6 million in net proceeds received from the sale and issuance of common stock in a registered public offering in June 2023, before deducting offering expenses of $0.1 million and $2.7 million (€2.5 million) in net proceeds received from the sale and issuance of common stock in a private placement in December 2023, also in June 2023 a $0.2 million loan was received from Namur Invest and in December 2023 a $1.6 million loan was received from Wallonie Entreprendre S.A.

This compares with $6.4 million in net cash received from the issuance of approximately 3.5 million shares of common stock in a registered public offering in August 2022, before deducting offering expenses of $0.2 million paid by the Company and a $1.0 million (€1.0 million) loan received in August 2022 from Namur Invest, a $0.5 million loan received in December 2022 from Namur Invest, and $0.8 million in cash received from the issuance of shares of common stock under our “at-the-market” facilities during the year, before deducting offering expenses of $0.2 million.

For additional information on our “at the market facilities,” refer to Note 7, Common Stock – Equity Distribution Agreements, of the Notes to consolidated financial statements included within this Report.

The following table summarizes our approximate contractual payments due by year as of December 31, 2023.

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Collaborative agreements obligations

We intend to use our cash reserves to predominantly fund further research and development activities.

We do not have any substantial source of revenues and expect to rely on additional future financing, through the sale of equity or debt securities, or the sale of licensing or distribution rights, to provide sufficient funding to execute our strategic plan.

We intend to use our cash reserves to predominantly fund further research and development, and commercialization activities.

We do not have any substantial source of revenues and expect to rely on additional future financing, through the sale of licensing or distribution rights, grant funding and the sale of equity or debt securities to provide sufficient funding to execute our strategic plan.

There is no assurance that we will be successful in raising further funds.

In the event additional financing is delayed, we will prioritize the maintenance of our research and development personnel and facilities, primarily in Belgium, and the maintenance of our patent rights.

In such instance, the completion of clinical validation studies and regulatory approval processes for the purpose of bringing products to the IVD market would be delayed.

In the event additional financing is delayed, we will prioritize the completion of clinical validation studies for the purpose of the sale of licensing or distribution rights, and the maintenance of our patent rights.

In the event of an ongoing lack of financing, it may be necessary to discontinue operations, which will adversely affect the value of our common stock.

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The following table sets forth our results of operations for the years ended on December 31, 2023, and December 31, 2022, respectively (expressed in United Stated Dollars, except outstanding share numbers and percentages).

Percentage Increase

Total Revenues

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Interest expense

Gain on change in fair value of warrant liability

Total Other Income (Expenses)

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Revenue for the year ended December 31, 2023 was $775,302 compared with $306,392 for the year ended December 31, 2022.

The main source of revenues during the year ended December 31, 2022, was product sales of the Nu.Q® Vet Cancer Test and services revenue from our Nu.Q ® Discover offering.

The primary source of revenue during the year ended December 31, 2021, was direct sales of the Nu.Q ® Vet Cancer Test through the Gastrointestinal Laboratory at Texas A&M University.

The main source of revenues during the years ended December 31, 2023 and December 31, 2022, was product sales of the Nu.Q® Vet Cancer Test and services revenue from our Nu.Q ® Discover offering.

Operating Expenses

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Research and development expenses increased to $19.6 million from $15.3 million for the years ended December 31, 2023 and December 31, 2022, respectively.

The increase in overall research and development expenditures during 2022 was primarily related to higher personnel expenses offset by a reduction in stock-based compensation expenses.

FTE personnel numbers within this division increased by six to sixty-three during 2022 compared to the prior year period.

The increase in overall research and development expenditures during 2023 was primarily related to higher personnel expenses and clinical research costs.

FTE personnel numbers within this division increased by three to sixty six during 2023 compared to the prior year period.

Personnel expenses

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General and Administrative Expenses

General and administrative expenses decreased to $10.9 million from $11.7 million for the years ended December 31, 2022 and December 31, 2021, respectively.

The decrease in overall general and administrative expenditures during 2022 was primarily due to lower stock-based compensation in relation to modification of options, offset by higher personnel expenses.

The FTE personnel number within this division increased by nine to twenty-two in 2022 compared to the prior year period.

General and administrative expenses increased to $10.4 million from $10.2 million for the years ended December 31, 2023 and December 31, 2022, respectively.

The increase in overall general and administrative expenditures during 2023 was primarily due to higher personnel expenses and legal and professional fees offset by lower stock-based compensation.

The FTE personnel number within this division remained at twenty two in 2023 compared to the prior year period.

Personnel expenses

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Sales and marketing expenses increased to $6.8 million from $6.6 million for the years ended December 31, 2023 and December 31, 2022, respectively.

The increase in overall sales and marketing expenditures was primarily due to increased personnel expenses, stock-based compensation and direct marketing expenses.

The FTE personnel number within this division increased by six to nineteen in 2022 compared to the prior year period.

The increase in overall sales and marketing expenditures was primarily due to increased personnel expenses offset by lower stock-based compensation.

The FTE personnel number within this division increased by three to twenty two in 2023 compared to the prior year period.

Personnel expenses

Stock-based compensation

Other Sales & Marketing expenses

Other sales and marketing expenses

Depreciation and amortization

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Dollars and British Pounds Sterling and its reporting currency is the U.S.

Management has adopted ASC 830-20, “ Foreign Currency Matters – Foreign Currency Transactions ” All assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date.

Management has adopted ASC 830-20, “ Foreign Currency Matters – Foreign Currency Transactions ”.

All assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date.

For revenues and expenses, the weighted average exchange rate for the period is used.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis