VolitionRX Poses An Asymmetric Risk/Reward Opportunity

| About: VolitionRX Ltd (VNRX)

VolitionRX (NYSEMKT:VNRX) is a development stage next-gen cancer diagnostics company focused on developing advanced blood based tests for several different varieties of cancer. The company's tests aim to meet the current unmet medical need for cancer diagnostics assays which can provide both high levels of accuracy with minimal invasiveness and cost to the patient. Unlike many other cancer diagnostic companies, VolitionRX's niche is focused on easy to administer, rapid acting blood tests which are similar in nature to point of care diabetes and cholesterol diagnostic formats. While the company has certainly been under the radar in the public eye thus far, there is a high chance VolitionRX will soon be entering the $10B colorectal cancer diagnostic market within a year's time and could pose to be a big win for early investors if clinical trials continue to show high sensitivity and specificity.

Promising Clinical Data

Thus far the initial clinical data received from VolitionRX's trials has been nothing short of impressive. Preliminary results from a 105 patient trial showed that the company's NuQ™ cancer tests were able to detect between 76%-100% of cancers with a high degree of specificity ranging between 79%-90%. Currently the company is working on a 10,800 patient clinical trial where the company's NuQ™ Colon Cancer diagnostic test is being compared head to head against the standard colonoscopy test. VolitionRX's next set of clinical results for the first 1,000 patients of this trial are expected to be published sometime within the next 1-2 quarters and should give a great deal of insight as to whether the NuQ™ diagnostic platform will continue to show a high level of accuracy. If the company's tests can continue to show high levels of cancer detection and specificity as they did in preliminary trial results then an initial product launch in Europe could likely take place in early 2014.

EU Backing

Being that VolitionRX is headquartered in Belgium, the company has received a significant advantage in applying for and receiving EU government funding from various contracts and grants. As well as the previous $517K grant the company received from the Belgian government for its colorectal cancer program, just this week the company announced another grant award for approximately $1M from the European Union's Eurostars Programme to be put towards furthering the company's diagnostic development efforts. These new grants put VolitionRX in a highly advantageous cash position which will help immensely in bringing its new diagnostics tests to commercialization. While the company's first test in the pipeline is for colorectal cancer, the company is also in the process of developing various other tests for cancers such as lung, breast and prostate.


VolitionRX's diagnostic test for colon cancer which is the first in the pipeline for launch will be entering a market where colonoscopies are the primary means for screening and comprise a market of $10B annually. Anyone familiar with a colonoscopy procedure however understands that the level of invasiveness involved in the screening is rather high. Likewise, the average colonoscopy exam costs patients with insurance an average of $1,000 per exam and between $2000-$3000 per exam for patients who don't have insurance. While VolitionRX's test will initially be a preliminary or adjunct screening to the colonoscopy exam, if specificity and sensitivity results continue to impress then the test could very well compete head to head with colonoscopy examinations in the future. With an expected price range per test of $40-$60, VolitionRX's colon cancer screening would pose a clear financial and non-invasiveness advantage in comparison to the colonoscopy exam.


VolitionRX's current quarterly burn rate is roughly $751,000 and the company reported a cash and equivalents position of approximately $751,000 at the end of Q2 this year. This originally looked as if the company would only be able to last one more quarter without a second offering, however this week's grant award for $1M from the EU's Eurostars Programme changes the company's financial outlook. In taking into consideration the company's new grant award it should have enough funds to last at least 2 more quarters in my opinion before needing to raise further capital. Considering that the company's first test could be commercially launched within the next 4 quarters, I feel that the reward potential posed by VolitionRX greatly outweighs the downside risk even if a secondary offering takes place.


This summer on July 30th Zacks Small-Cap Research issued an update on VolitionRX with an Outperform rating and a price target of $7.25 per share for the company. Being that VolitionRX currently only has a very small 10,941,854 shares outstanding and a market cap today of a mere $16.63M to match, there clearly exists an enormous upside potential for investors getting in at this valuation level. While the risk remains that the company could do another offering in the future, or that its next set of data results could not be a impressive as preliminary results, the asymmetric risk reward opportunity posed by VolitionRX is nonetheless undeniable.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.