Ian Cassel

About the Author Ian Cassel

Full Time Micro Cap Investor. Founder of MicroCapClub.com Founded in 2011, MicroCapClub is an exclusive forum for experienced microcap investors focused on microcap companies (sub $300m market cap). MicroCapClub was created to be a platform for experienced microcap investors to share and discuss stock ideas. MicroCapClub’s mission is to foster the highest quality microcap investor Community, produce Educational content for investors, and promote better Leadership in the microcap arena.

VolitionRx: The Future Of Cancer Screening

Last September, I wrote an article on VolitionRx’s (NYSEMKT:VNRX) potential to revolutionize cancer screening. Since then, the company has continued to show promising data not only with colorectal cancer, but also pilot results with lung, prostate, and pancreatic cancers. VolitionRx’s cancer diagnostic platform could be the first accurate, cheap, and easy to use diagnostic of its kind addressing multiple cancers and worldwide screening populations. Last week, the company announced the pricing of a public offering of $8.5 million and simultaneous uplisting onto the NYSE.

Last month, VolitionRx announced a new set of data from a study into whether the NuQ® technology could pick up pancreatic cancer. The company has made several such announcements over the past few years in a range of cancers, but this was an important announcement mostly because it shows now, with little doubt, that their technology has broad potential uses as a simple to use cost effective blood test. It is important to remember their IP covers all cancers.

The double blinded trial analyzed blood samples from 60 patients, 25 with either stage IIa or IIb pancreatic cancer, 10 non-cancer pancreatic diseases, and 25 healthy people. A panel NuQ® test was able to distinguish “21 of 25 pancreatic cancer cases (84%) from the healthy cases, with only two healthy false positives.” Additionally, the panel distinguished “76% of pancreatic cancer cases from all other subjects including healthy subjects and those with other pancreatic diseases,” again with a low false positive rate (91% specificity). This is particularly important, as current methods cannot distinguish pancreatic cancer from other pancreatic diseases.

While a pilot study, this is a very promising result for a notoriously difficult cancer to diagnose and treat. VolitionRx says that it plans to move to a larger trial, and I will await those results with interest as if they are successful it would be a tremendous breakthrough.

The company is currently focusing on colorectal cancer, to facilitate launching a clinical product as soon as possible (the company is currently carrying out a 4,800-patient trial and a 14,000-patient trial, both in colorectal cancer, in Europe). However, last month’s results, as well as those from other studies that the company has released, suggest that expansion into other cancers is a real possibility. Beyond colorectal cancer, VolitionRx has released strong data on lung cancer, prostate cancer, and now pancreatic cancer; these are four of the most common five cancers, so each one of these is a multibillion-dollar market potential worldwide.

The company has made strong progressive steps since releasing its first clinical data for a 90 patient colorectal cancer study in Bonn University, Germany, in November 2013, which reported that use of a single individual NuQ® test detected 75% of colorectal cancers with a specificity of 70%. This data was subsequently published in a peer-reviewed journal in April 2014. The first data for a 2-assay NuQ® panel were announced in December 2013obtained from another colorectal cancer study performed in collaboration with Mont Godinne Hospital, Belgium, reported that a combination of 2 NuQ® assays detected 85% of colorectal cancers with 85% specificity. This study also found that the 2 assays were able to detect 50% of pre-cancerous colorectal polyp growths. A year later, in September 2014, VolitionRx releasedresults for the first 938 patients of a 4800 patient study performed in collaboration with the University of Copenhagen, Denmark, which reported that a panel of 3 NuQ® assays detected 84% of colorectal cancer cases with a specificity of 78% as well as 60% of pre-cancerous polyps. This was a key development because it was the first time the company was able to show the efficacy of NuQ® assays in a large statistically powered study.

In the meantime, broadening the platform, data from a first pilot prostate cancer study were announced in March 2014, which showed that another panel of two NuQ® assays was able to detect approximately 80 percent of prostate cancer cases. Significantly, the trial also showed that the levels of “epigenetically altered circulating nucleosomes” were different in prostate cancer and colorectal cancer, suggesting that NuQ® tests can be used to detect both prostate and colorectal cancer and also to differentiate between the two types of cancer. This pointed towards the possibility of one panel of tests distinguishing between multiple cancers; this would be an amazing outcome if confirmed.

In November 2014, data from a blinded pilot lung cancer study conducted with Liege University Hospital in Belgium showed that panels of NuQ® assays were able to detect lung cancer both in blood samples and in sputum samples (coughed up airway secretions). A panel of NuQ® sputum assays was able to detect 85% of lung cancer cases (18 of 21 cases) with no false positive results for healthy subjects. Furthermore, the company says their NuQ® assays “were able to discriminate lung cancer from COPD, another important respiratory disease linked to habitual smoking.” Apart from adding another cancer target, it was the first trial to show strong results in a fluid beyond blood, with the addition of sputum.

2015 will be a very active year for VolitionRx. Most notably:

  1. The full results from the retrospective 4,800 patient colorectal trial.
  2. The first results from the prospective 14,000 patient colorectal trial.
  3. The first CE mark for a colorectal product
  4. Entering the US market late in the year as an LDT CLIA test.
  5. The first results from the Bonn trials into the 20 most prevalent cancers.
  6. A range of data from trials announced in both endometriosis and lung cancer.

VolitionRx’s technology certainly shows promise, and if carried through to products as planned would be a huge breakthrough in cancer detection. Exact Sciences (NASDAQ:EXAS) commands a $2.2 billion market capitalization with one FDA approved colorectal cancer fecal test. Their test is very good but expensive, and fecal tests generally have known compliance rate issues, due to the need to collect one’s own feces. This test will also not be applicable to worldwide screening populations due to its very high cost (about $500) which precludes the massive market in national government CRC screening programs. VolitionRx aims to get its first CE mark, which allows sales in all of Europe, this year, with the first panel available for sale there next year. Products can be available in the US as an LDT at about the same time as a European launch; however, the main game is FDA approval, which could reasonably be expected to take 1-2 years more than CE marking.

There are of course risks in bringing one, never mind several, products to market, hence the relative valuations. The risks include competition, the company running out of capital, the large clinical trials not matching results from the earlier trials and the management failing to deliver on the milestones. But given the strong performance so far in bringing this from an idea to a NYSE listed company with nine trials underway in a range of cancers and other diseases, I for one, would not bet against this management team. VolitionRx’s recent $8.5 million capital raise gives the company approximately 16-18 months of runway, more than enough time to reach several significant milestones.

I would argue that VolitionRx’s potential market is multiple times bigger than Exact Sciences’. The cancer test of the future will be able to detect cancer early and accurately. This is what VolitionRx hopes to continue to prove out over the next several months and years.

The cancer test of the future will also have to be cheap, easy to use, and have high compliance rates. VolitionRx’s cancer diagnostic platform not only fits these parameters, but it is also likely applicable to multiple cancers. Unlike most other life science companies that have one binary event once per year, I expect VolitionRx to have numerous material milestones throughout 2015 that could increase the value of the company significantly. VolitionRx is currently being valued at $70 million (post capital raise), roughly 3% of Exact Sciences’ market cap. Now that VolitionRx is well funded and on a major stock exchange, further milestones should be more accurately reflected in the stock price.

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