Colon Cancer Blood Tests from VolitionRx
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In past articles, we have been very critical of “over the counter” OTC stocks and with good reason. Most OTC stocks end up losing investors’ money while the management teams of these companies emerge unscathed to move on to their next venture. In some rare cases, an OTC company is actually successful in “uplisting” to a more regulated trading market which helps legitimize their offering. One OTC company that is looking to commercialize cancer blood tests, VolitionRx, recently filed with the SEC to raise up to $12 million and uplist on the NYSE.
About VolitionRx
Unlike many OTC companies, VolitionRx (OTCMKTS:VNRX) isn’t suspiciously incorporated in Nevada. This Belgium based company was established in 2010 and began trading on the OTC market in 2011. The company stated in June of this year that they intended to uplist to a major exchange, an often repeated mantra of OTC companies, and in this case, they are actually showing progress towards this goal. With a market of $55 million, Volition has a deficit of just $18 million so far. While minuscule revenues have begun trickling in, the Company has just around $2.4 million in cash with net losses of $7.2 million during the 9 months ending September 2014. The capital they are looking to raise seems much needed.
The Opportunity
According to the World Health Organization, colorectal cancer is the cause of 608,000 deaths a year making it fourth highest in the number of cancer-related deaths with the colorectal cancer market totaling $8.3 billion in 2011. According to BioMedReports, about 10 million patients are screened in the US every year using one of the three main types of screening. At an average estimate of $100-200 per patient per year in test costs, this would imply a $1-2 billion dollar market opportunity just in the United States alone.
The only commonly used blood screening test for any cancer is the PSA test for prostate cancer. Volition considers the PSA test to have relatively poor diagnostic accuracy (detecting approximately 70% of prostate cancers and misdiagnosing about 30% of healthy men as positive for cancer) but it is still widely used because it is the only product currently available. In a preliminary study of 830 samples completed this September, the VolitionRx NuQ blood test demonstrated much higher levels of accuracy in detecting colorectal cancer in various stages as seen below:
Though a simple test, with less than a drop of blood, the VolitionRx NuQ test can detect nucleosomes released by cancer in the bloodstream. By measuring and analyzing these nucleosomes, the test can establish whether cancer is present in the patient. VolitionRx is currently assessing the efficacy of their Nucleosomics® platform to detect colorectal and lung cancers. The Company began sales of their tests assays for the “research use only” market in 2014 and plans to apply for the first of their CE Mark (European) approvals in the second quarter of 2015.
Competition
VoiltionRx is not alone, however. Their main competitor in the blood-based diagnostics market is Epigenomics (FRA:ECX), a publicly traded German company with a market cap of around $80 million that also trades on the OTC market (OTCMKTS:EPGNY). Epigenomics has received European approval for its DNA based PCR tests in colon cancer (Epi proColon®) and lung cancer (Epi proLung). Just last week, Epigenomics announced that their first patients have been enrolled into its ADMIT trial for Epi proColon®. The trial was requested by the US Food and Drug Administration (FDA) in the context of Epigenomics’ pre-market approval application for Epi proColon®.
Unlike the typical “copy and paste” SEC filings you see for many OTC companies, the Volition S1 statement is thorough, well researched, and seems to provide plenty for information for investors who find the company of interest. Provided the uplist filing completes successfully, VolitionRx shares will begin trading on the NYSE MKT under the same symbol; VNRX.
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“Volition is a multi-national epigenetics company developing simple, easy to use, cost effective blood tests to help diagnose a range of cancers and other diseases.”
VolitionRx launched its first product, a blood test to detect two cancer types in dogs, in Q4 2020.
Market cap: $162M. Current price: $3.
If we look at the price chart for the last 10 years: the stock was moving up and down in the range £2-$5.5. So historically VolitionRx wasn’t a good investment, but now things may be different as they have their first product.
Analysts have price target: $8. (+167%).
They burn $6M per quarter and have $36M in cash.
Expected to have its test kits for human diagnosis approved for the US by 2023. Likely to get profitable in 2023.
If they get profitable they will deserve market cap at least $1B. So that means the price could increase 6x in 2 years if things go as expected.
The market cap is way too small, well under our $1 billion cutoff. We’re not interested in what some random price target some analysts are pulling out of their asses. You are proposing something that is purely speculative and the sort of Foolish tripe one might see coming from other investing sites. Whether or not you are right in the long run is completely irrelevant because at this stage it would be luck. You have to start approaching this stuff more scientifically instead of trying to read tea leaves.