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.
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.
