For those of you who are
interested in investing in speculative growth with biotech stocks, the
potential of a test or drug that can be brought to market makes all the
difference. I have been watching and researching a company called VolitionRx
and its blood-based marker testing research for cancer detection and treatment
progression looks extremely promising.
The market is much broader
and greater than one can imagine. Testing has shown great promise so far. Let’s
take a look at the company, one of its test products and the market potential
for just this one product. The potential for these blood-based biomarkers is
very broad for numerous types of cancers.
About the Company
There is only one type of
blood test commonly used for screening for cancer today, and that’s for
prostrate cancer. VolitionRx has a goal to provide inexpensive, accurate and
scalable cancer diagnostics with its NuQ® products. These products are based
upon proprietary Nucleosomics® technology. The technology provides measurement
and identification of nucleosome structures in the blood.
Technologies
VolitionRx has a goal to
provide inexpensive, accurate and scalable cancer diagnostics with its NuQ®
products. These products are based upon “proprietary Nucleosomics® technology.
This technology provides measurement and identification of nucleosome
structures in the blood.
The company is presently
undertaking clinical trials for its products. When these clinical trials are
done and VolitionRx gains regulatory approval, they will offer tests for
individual cancers under the NuQ® brand name. The blood tests for cancer will continue
to expand for both screening and diagnostic cancer tests with simple formats.
What is Nucleosomics?
Nucleosomes are particles of
DNA and proteins compacted so that they can fit inside the cell nucleus. The
degree of compaction controls how different genes are accessed and this is
controlled by chemical modifications on the DNA and protein components.
Nucleosomics measure combinations of these modifications and uses that to
identify where the nucleosomes came from. Nucleosomes are modified during “tumor
genesis” and these modified nucleosomes provide diagnostic information
The Technology of Blood
Detection
As cells grow and die they
break up and release nucleosomes into the blood. So, by taking a blood sample,
cells from the tumor can be analyzed.These “blood-based marker” tests will play
a vital role in providing information for both physicians and patients in the
future. Dr. Stefan Holdenrieder, Senior Physician at the Institute of Clinical
Chemistry & Clinical Pharmacology at the University Hospital Bonn, Germany;
wrote a paper in December of 2013 explain how these “blood-based marker tests”
can be used to help cancer patients in the future.
These tests can be used to
better manage the disease in the course of treatment for the patients.
When a patient has cancer
today, the severity of the prognosis is usually assessed by using
histopathological findings. This basically means invasive tissue sampling
through a biopsy. Blood-based biomarkers could play a significant role
throughout the course of cancer treatment.
Not only can it be used as
described in the last paragraph, but it will play a significant role in
monitoring how the therapy is working in its early stages, and this is very
important. Presently, therapy progress is usually done by imaging techniques at
the end of therapies, usually 12 to 24 weeks. Patients want to know early
whether or not they are benefiting from the treatment.
Dr. Holdenrieder states that
blood-based markers can be used to indicate non-response early, after the first
application of therapy, and can be used as an accurate standardized monitoring
process through the whole treatment cycle.
Managing treatment options
as well as early detection of tumor reoccurrence looks like a very promising
application for blood-based biomarkers. The potential to monitor treatment and
adjust treatment as needed with an inexpensive biomarker test has incredible
potential.
VolitionRx will have a broad
market for its blood-based markers. Let’s take a look at just one to get a
picture of what a long term investment in this company could possibly play out.
Example of the first
Blood-based Biomarker Being Tested
VolitionRx reported their
latest results in ongoing research for developing a blood test for bowel
cancer. The research found that the company’s test can detect 85% of cases of
the disease as well as 50% of polyps. The test could be available in Europe by
2015.
The present standard of
testing in Europe is a fecal occult blood test which detects tiny amounts of
blood in stool samples. According to Hans Jorgen Nielsen, professor of surgical
oncology at Hvidovre Hospital in Denmark, the 85% detection rate is on par with
the fecal occult blood test findings.
Mr. Nielsen goes on to say
that 90% of cases of bowel cancel are treatable if caught early. Simple
noninvasive screening is far less intrusive than a fecal occult blood test and
could possibly be given to more people to improve early detection of colorectal
cancer cases and provide treatment saving many lives.
This is an example, but it is
important to know that ongoing research is needed and these tests are not ready
for market yet. The results have been from early trial tests, but more
extensive research and testing is underway.
VolitionRx is carrying out
clinical validation of its colorectal cancer test as I write this article.
The company has begun
analysis of a large collection of blood samples through a collaboration with
Hvidovre Hospital, Denmark. Samples of blood collected from 4800 patients have
been included in a blind retrospective study to further establish the accuracy
of the company’s NuQ® initial screening tool for colorectal cancer.
Trial results are
anticipated in Q3 2014. In April 2014, the hospital in Denmark will also start
collecting samples from 11,000 subjects as part of a prospective trial. The
data from these trials will be used to apply for a CE Mark for colorectal
cancer tests and then also submitted to the FDA.
Now that we have looked at
the product, let’s look at the market.
Colorectal Cancer Market
Potential
US Market
Colorectal cancer is the
third most common cancer diagnosed in United States for both men and women.
Combined, there were 136,000 new cases in 2013. Over 50,000 people are expected
to die from this cancer in 2014.
Europe
While it may be the third
most common in the United States, it is the second most common malignant
disease in Europe where 412k are diagnosed and 207k die from it every year. The
Council of the European Union (EU) recommended CRC regular screening for early
detection. The most frequently applied method is the fecal occult blood test
FOBT.
An FOBT test costs about
$8.50 on average.
According to the CDC, in
2012 65.1% of US adults between the ages of 50 and 75 years were up to date
with their CRC screening. A colonoscopy was used to 61.7% of the time and the
FOBT came in second at 10.4%.
The market of adults who had
not been screened yet was 27.7%.
In 2010, the total
population of men and women between the ages of 50 and 75 was around 70.5
million. According to CDC percentages:
• 45.9 million People were updated on their CRC screening
• 28.3 million People had a colonoscopy
• 4.77 million People had a FOBT
• 19.5 million People were still untested
In early studies, as I have
already mentioned in this article, Volition’s blood-based biomarker test for
colorectal cancer was considered as accurate as FOBT. If the test continues to
show as much promise, it does not take much thought to understand how the
blood-based biomarker tests will become much more popular than the standard
FOBT because it is so less intrusive.
With something less
intrusive, there is a good probability that the 19.5 million untested will open
up another market. If we add the FOBT and the “untested” populations in the
United States together, that gives us a market of about 24.27 million people
that might consider this preventative test.
With the Affordable Care Act
encouraging preventative care as a foundational philosophy for healthcare, more
people are going to be encouraged to take these preventative measures. This is
a free advertisement for the blood-based biomarker tests if and when they are
brought to market. VNRX is dedicated to providing affordable tests, and if we
put them on par with the present cost of a general FOBT test, we have a
potential market size of $206.3 million just for “blood-based testing for
colorectal cancer.”
This is just in the United
States; it doesn’t include Europe which would be a much bigger market.
Where the Company is
Financially
VNRX is a company still in
the research and development stage. We can see from the company’s last income
statement in its 3Q 2013 10-Q report, that its income is minimal and its
expenses are fairly large in comparison. Research and development consumes two
thirds of the companies operating expense.
vnrx-financials
This is important for
investors to know. Biotech companies in the research and development stage are
high risk and investors must be patient.
As with most companies at
this stage of development; its revenues are limited. An investor should be
concerned if the company has the ability to keep going or not.
The company needs to obtain
sufficient capital to sustain its operations and management will address these
needs to the following plan:
• Frugality in cost control to continue to conserve cash
• Continue to look for additional grant funds
• Obtain necessary financing through debt or equity
financing
An investor needs to know
that the company’s success depends upon its ability to accomplish these three
things. These types of companies are in the developmental stage and have no
reoccurring source of income so raising money is very important to the success
of the company.
The example of VNRX’s first
blood-based biomarker test for colorectal cancer looks very promising and has a
$200 million market in the United States alone. This is one example of a type
of test that has multiple applications to it and could be very lucrative
long-term for the company. It will be some time before we know how well it will
perform and I expect this first test to be approved in the European Union first
Conclusion
I like how VolitionRx is
developing one blood-based biomarker product at a time. The company has a very
promising technology with incredible market potential. Between “screening” and
“supportive treatment testing,” its technical capabilities to design biomarker
testing could easily reach markets in the billions of dollars. VolitionRx is
definitely a company that investors in the biotech industry should keep their
eyes on.
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