VolitionRx Limited (VNRX) 15 Nov 242024 Q3 Earnings call transcript

Good day, ladies and gentlemen. Thank you for standing by. Welcome to VolitionRx Limited's Third Quarter 2024 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, November 15, 2024.

I would now like to turn the conference call over to Louise Batchelor, Group Chief Marketing and Communications Officer. Please go ahead.

Thank you, and welcome, everyone, to today's earnings conference call for VolitionRx Limited.

Before we begin, I'd like to remind everyone that some of the information discussed on this conference call will include forward-looking statements covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on our beliefs as well as assumptions we have used based upon information currently available to us.

Because these statements reflect our current views concerning future events, these statements involve risks, uncertainties and assumptions. Actual future results may vary significantly based on a number of factors that may cause the actual results or events to be materially different from future results, performance or achievements expressed or implied by these statements.

We have identified various risk factors associated with our operations in our most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and other filings with the Securities and Exchange Commission. We do not undertake any obligation to update any forward-looking statements made during the course of this call.

Dr. Tom Butera, Chief Executive Officer of our Volition Veterinary subsidiary, will open the call today, providing the key highlights for Nu.Q Vet for third quarter and indeed the year-to-date. He will then pass over to Dr. Andrew Retter, Chief Medical Officer, who will cover us some significant progress from the Innovation Lab, R&D and clinical team. Chief Financial Officer, Terig Hughes, will then provide the financial report; and Cameron Reynolds, President and Group Chief Executive Officer, will wrap up with a summary and look ahead to upcoming milestones.

We will then open the conference call to a question-and-answer session.

And with that, I'll turn the call over to Tom.

Thanks, Lou, and thank you, everyone, for joining Volition's third quarter 2024 earnings call today.

As Cameron always says, we appreciate your time given the busy earnings season.

November is pet cancer awareness month, and so I'm especially honored to open the call today. I'm delighted to report that we have now sold over 110,000 Nu.Q Vet cancer tests in the first 3 quarters of 2024 versus 58,000 in the whole of last year 2023.

You've heard me say it many times, our test is a simple, affordable, easy-to-use blood screening test. It can be integrated easily into preventive care programs and used alongside other routine blood work during regular wellness visits.

By detecting cancer early, we can help to improve and extend the lives of millions of dogs and keep that special member of the family with us longer.

Our Nu.Q Vet cancer test is now available in 17 countries and counting.

Our revenue growth is accelerating quarter-on-quarter. Year-to-date revenue growth is 100%, while, in this quarter, revenue was up 37%, each versus the same periods of 2023.

Year-to-date, revenue of our veterinary kits and key components is approximately $730,000. We don't have time to discuss each and every distributor of our Nu.Q Vet cancer test, but this quarter, I'd like to specifically mention 3.

First, Fuji Film Vet Systems. Wow. Fuji launched nationwide this quarter in July, and I am delighted to say that already almost 10% of their veterinarians have ordered the Nu.Q test, a very rapid market penetration. Thanks so much to the Fuji team and my colleague in particular, [ Jasmin Kwei ], for their dedicated efforts in Japan.

Next up, Vetlab Poland, again, a fairly recent addition to our stable, also launching the test this past July. They have made a great impact in the local market, which includes a few countries they also service around Poland. Dr. Heather Wilson Robles, our Volition Vet Chief Medical Officer, has been invited to speak next week on Nu.Q Vet at Poland's largest veterinary conference where many veterinarians will be in attendance. Vetlab's website and marketing efforts are top-notch.

So many kudos and congratulations to them on their hard work.

And last, but not least, Heska, which is now a Mars Antech company, has worldwide distribution channels in numerous markets under the new brand of Antech. Antech has made significant progress introducing Nu.Q Vet on the Element i+ in hospital instrument around the world. It is now available in 15 countries and counting.

We have received some fantastic testimonials. And given November is Pet Cancer Awareness Month, Antech has generated a great deal of activity promoting Nu.Q's early cancer screening test.

In particular, I'd like to highlight an upcoming Antech webinar with Dr. Sue Ettinger, a long-time world-renowned veterinary oncologist and strong advocate of our Nu.Q Vet cancer test. Dr. Ettinger is now the proud user of the Element i+ in her own veterinary hospital. I was delighted to join Antech's Chief Medical Officer, Dr. James Barr, and other members of the Antech team this week at some launch events in the U.K., including multiple presentations of Nu.Q at the London Vet Show yesterday. It's a testament to our close collaboration and was a real honor.

So thank you to the Antech team.

I have the pleasure now handing over to Dr. Andrew Retter, Chief Medical Officer on our human side of the business. But before I do, I'd like to thank Andy for joining me and meeting with the Antech team yesterday.

Here at Volition, we are in a pretty unique position when it comes to the critically important topic of 1 medicine, which connects and shares veterinary and human clinical advancements for the betterment of the human and animal world.

It was really terrific for Andy to share insights from our human research, with Dr. James Barr, and to discuss the ways in which discoveries across our human and veterinary pillars, not only for cancer, but including diseases such as sepsis, might help both companies in their missions to help improve and save lives.

So thanks, Andy, for your time. And now I'll turn the call over to you.

Thanks, Tom, and thanks for the opportunity to meet the Antech team and take experience in London Vet yesterday. And good morning, everybody. . From the human side of the business, I'm incredibly proud of the progress we have made from an innovation, scientific and clinical perspective across both Nu.Q NETs and Nu.Q cancer pillars in recent months. Not all of this progress is publicly reportable yet, manuscripts take time to be written reviewed and published, but we have certainly added to our data rooms in a very meaningful way in the last year.

It's interesting, Tom mentioned Pet Cancer Awareness Month as it is also Lung Cancer Awareness Month in November.

So I'll begin with lung cancer in my update today.

Lung cancer is the leading cause of cancer-related deaths worldwide, accounting for the highest mortality rates among men and women. In the U.S., it kills 3x as many men as prostate cancer and 3x as many women as breast cancer. Typically, lung cancer is diagnosed at an advanced stage where treatment options are limited and limited to palliative, life-prolonging, not curative options.

While there have been some welcome advances in early detection of lung cancer, methods such as low-dose CT scanning have high levels of force positive results, resulting in the need for a follow-up biopsy and further investigations for patients. In scientific terms, low-dose CT is highly sensitive, but not very specific. In simple terms, it's useful in identifying lumps and [indiscernible] and nodules, but isn't very precise at identifying whether they are cancerous or benign. Therefore, biopsies are commonly used to confirm the diagnosis and detect lung cancer. They are invasive, uncomfortable for patients, time-consuming and expensive.

Therefore, there is a real need for a low-cost, noninvasive method to help differentiate between benign and malignant lung nodules. This is precisely the clinical question the team at the National Taiwan University are trying to answer, and they made real progress this quarter with the submission of their manuscript for peer review. Unfortunately, the paper is not yet in the public domain and I'm unable to report further details, other than to say it's a large prospective study of approximately 800 low-dose CT positive for high-risk patients.

Subsequent to quarter-end, and thanks to all the hard work of [ Jasmin Kwei ] and others, a contract has been signed for a 500-patient prospective validation study taking place in the real-world setting of the National Taiwan University Hospital and the National Taiwan University Hospital Cancer Center. The validation study is set to begin before year-end and complete in the fourth quarter of 2025, could, according to Professor, Chairman and Department Chief, if successful, lead to the inclusion of Nu.Q cancer tests in the Taiwan national lung cancer screening program. This work could have implications not only for Taiwan screen program, but potentially other programs throughout Asia and beyond.

Sticking with lung cancer for a moment, but looking beyond screening to disease progression, our colleagues from Lyon presented an interesting poster at the European Society of Clinical Oncology Meeting in September.

As a reminder, the Leon team have a number of studies across different cancers and different stages of cancer, from diagnosis, treatment response, to detect minimal residual disease and the surveillance of disease recurrence.

Key findings presented at ESMO '24 demonstrated Nu.Q is predictive of survival independent of treatment and mutation status, alerts on the risk of early progression, identifies a subset of patients who may benefit from immunotherapy.

For more information, please do check out the Resources section of our website and watch this space for further clinical papers from the Lyon team.

Lastly, from an oncology perspective, the research and development team have made some significant progress on the use of Nu.Q in the diagnosis of a range of solid cancers. Dr. Jake Micallef is busy completing the manuscript for peer review and publication.

So hopefully, more on that project next time.

We have had an incredibly exciting, busy and productive few months with Nu.Q NET 2. In September, we hosted our second key opinion leader workshop, focusing on the use of Nu.Q NET in sepsis. We were extremely fortunate to have 4 of the authors of the seminal [indiscernible] definition paper participating.

During the meeting, data was presented from many centers of excellence together with confidential work completed by my colleagues at our Innovation Lab in California. The focus of the discussion helped shape our first Satellite Symposium meeting at the world's largest intensive care conference, ESICM held last month.

The symposium explored research findings from 3 large independent studies carried out at centers of excellence in France, Germany and the Netherlands, involving more than 14,000 samples from over 3,000 patients admitted to intensive care with sepsis. All 3 clinical studies use Volition's Nu.Q NET test to measure levels of circulating H3.1 neucleosomes in the bloodstream, a surrogate marker of neutrophil extracellular traps.

The findings of these studies, summarized subsequently in a report available on our website, clearly and consistently show the elevated levels of circulating H3.1 nucleosomes in sepsis reflects a potentially dysregulated host immune response. High H3.1 nucleosome levels are associated with an increased risk of mortality, increased risk of renal failure, increased risk of severe respiratory failure, increased risk of multiple organ failure, and strongly correlates with septic shock.

As a clinician to know the sepsis patients with an elevated H3.1 level on admission to intensive care at greater risk of deteriorating means we can act fast to save lives. Professor [indiscernible] a world leader in the field of septic management and research, talked about using the Nu.Q NETs test to measure elevated H3.1 nucleosome levels as a treatable trait in sepsis management, and how, in his opinion, it could be a game changer in modifying a patient's trajectory.

Just to clarify, in case of term treatable trait of Nu.Q, the thinking here is at a very practical level the Nu.Q test could be clinically actionable as a therapeutic target. A result above a certain threshold would drive clinical decision-making.

From a publication perspective, we are again making strong progress. [indiscernible] et al's entitled Understanding Complex Chromatin Dynamics of Primary Human Neutrophils During PME-Induced NETosis was recently published and the subsequent follow-on paper, so to speak, by [ Cayford ] et al has recently been submitted for peer review in addition to a methods papered by [ Wagney ] et al from our Belgium research and development team.

These scientific papers demonstrating the strong validity of our work provide a firm foundation to support our clinical studies and have proved to be of notable interest, not only to the key opinion leaders and clinicians attending ESICM, but also to our potential licensing partners.

So often, we like to know why, knowing simply what is not always enough.

Lastly, manuscripts for 2 of the large studies described here are close to submission for peer review and subsequent publication.

So our communication team has certainly been kept very busy in recent months.

In summary, the Nu.Q NETs pillar has reported impressive data, which has generated powerful efficacy.

Our oncology data room has also been significantly strengthened this year. Both sepsis and oncology indications have certainly generated a great deal of interest from key industry players in the diagnostic space, potential licensing partners, but more of an update on commercial negotiations from Cameron later.

So with that, thank you very much for your attention this morning. I will now pass you over to Terig for our financial report. Thank you, Terig.

Good morning, everyone, and thank you for joining the call today.

As previously announced, our goal is to be cash neutral in 2025, meaning income matches expenditure on a cash basis. And I'm delighted to report that across a range of financial indicators, we have made significant progress towards this target throughout this year.

In 2024 we have recorded $1 million in revenue in the 9-month period ending 30th of September, a growth of 96% over the same period of 2023. Great to finally hit that milestone.

And positively, revenue is starting to ramp up with a year-on-year growth rate in the quarter of 187%, with revenue of $475,000 recorded in the third quarter. This was driven primarily by the sales of Nu.Q Vet cancer tests, which saw growth rates of 100% year-to-date and 307% for the third quarter versus the prior year.

As Tom said earlier, we have now sold more than 110,000 Nu.Q Vet cancer tests and test components in the first 3 quarters of 2024, almost double what we sold in the whole of 2023. A great effort and well done to the team and our distributors.

From an expenditure perspective, we have significantly reduced operating expenses, which were 28% lower compared to the same quarter last year, as our cost reduction measures discussed previously took effect.

As a result of both the higher revenues and reduced costs, cash used in operating activities was $5.4 million in the third quarter 2024, down 36% year-on-year.

Cash and cash equivalents at the end of the quarter totaled approximately $5.4 million. And subsequent to quarter-end, we received commitments of over 2.2 million of nondilutive funding from agencies within the Walloon Region, Belgium.

As you are aware, throughout the company's history, we have been successful in securing nondilutive funding on favorable terms, and it is encouraging that we have already received indications that similar funding is anticipated in quarter 1 of 2025.

So to summarize the finance report, all indicators are positive this quarter. Revenue is up and indeed growth rates are increasing. Cash used in operations is significantly reduced, down by 36% versus the same period in 2023.

We continue to receive nondilutive funding support.

Our goal to be cash-neutral in 2025 is progressing well, supported by progress in our licensing discussions.

With that, I will pass over to Cameron for a commercial update.

Thanks, Terig, and thanks, Tom and Andy, for your insightful reports. The whole team has achieved a tremendous amount in 2024, and the pace has really picked up across not only the financial indicators, but all the product pillars in the third quarter.

Our near-term focus is to secure our first licensing deal in the human clinical space, and I'm pleased to report that, given the strong data, there is great interest and the team continues to progress discussions with multiple key industry players. The nature of these potential licensing and/or supply agreements is both broad and complex.

As you can imagine, there are a range of options we are discussing. Understandably, the nature of all these meetings and interactions are strictly confidential in nature, so obviously, I cannot provide any more detailed information until one is signed and can be made public.

Suffice it to say, we are advancing several active commercial discussions with significant players in the diagnostic space in human and animal health, including large markets such as sepsis and oncology liquid biopsy.

We have accumulated a lot of expertise from our very successful licensing and supply negotiations for Nu.Q Vet, which have helped us as we move towards commercializing some of our other technologies such as but not limited to Nu.Q NETs, Nu.Q cancer, and capture PCR. It is indeed an exciting time as we work to push our technologies up the value curve to maximize the monetization of our IP, be that through payments for exclusivity, milestone payments, and ongoing licensing revenues. We believe this strategy will provide us with ongoing revenue and very meaningful milestone payments as we achieved in our biggest vet deal. I look forward to providing more color and detail in the coming months.

This is a critical next few quarters for our company.

I think it is very fair to say that we have now developed a technology platform that has already been a breakthrough in veterinary oncology, and it looks very likely we will also make a significant contribution to both human oncology and human sepsis. We now have evidence to support the use of our platforms across a range of clinical applications with high unmet needs. It is low cost, robust and reproducible.

Now we need to commercialize our technology as quickly and as well as possible to make our technology accessible worldwide. If successful, this would clearly support our mission of saving lives and improving outcomes for millions of people and animals worldwide.

Our strategy to achieve this has been to raise as much nondilutive funding as possible, ramp revenues, cut costs, and sign commercial deals with large industry players. The human commercial deals are the final part of this long journey to complete our mission, and we remain focused.

And last, but certainly not least, in drawing our prepared remarks to a close, I would like to welcome our newly appointed Chair, Mr. Timothy Still, and Independent Director, Dr. Ethel Rubin, to Volition. Both Tim and Ethel have tremendous experience in the diagnostics sector from both a commercial and financial perspective, and I'm sure they will both be real assets to the company.

Thank you again for joining our call today. We very much appreciate it.

We will now take your questions. Operator?

[Operator Instructions] Our first questions come from the line of Jason Kolbert with D. Boral Capital.

Congratulations. The numbers look exciting. Can you talk a little bit about what the dynamics are on the ground in Japan? And I think you said that you -- what percent -- I know you mentioned this, but remind me kind of what the penetration rate is among the veterinary clinics and how big that market could be?

Yes. Thank you, Jason. And we're very excited by the numbers too.

As Terig so correctly pointed out, all the indicators are going in the right direction, and we're very excited about the deals in the human space. Yes, Fuji have been absolutely fantastic. They're quite a good organization so far as they've got the place working incredibly well in their labs, and they've been extremely good at marketing it to the vets, and then by far the biggest Japanese group in the vet space.

The number given was that it's been ordered by 10% of their vets.

As far as numbers of dogs go, it is quite a big market. It's obviously not as big as the United States. But there -- it would be equivalent to a state like California or one of the bigger U.S. states.

But they do spend a lot on their dogs. They're very organized. And Japan, as you know, is quite a homogenous country and a small country, so it's easy to service. We've been very impressed with Fuji's ability to run the test and actually get out proactively.

So we'll see.

But it always does take. These things are 1 vet at a time. But they are very conscientious and they've really put their shoulder into the wheel.

So we've been extremely happy with our Japanese colleagues. And I think there's a vet [indiscernible] coming up in Japan soon, and we're presenting there as well.

So it's been a very close relationship and one we're very happy with.

Can you talk a little bit about -- I know you haven't given guidance per se, but we have a very modest ramp-up. We're only looking at about modestly $6 million in revenues for Nu.Q next year. That number is starting to look low based on the ramp and where you're at. Any thoughts about how big this could be?

That's a good question for our Chief Financial Officer, who happens to be here. Terig?

Yes.

So you're right, the ramp looks very strong at the moment, and we're very encouraged by the positive progress that we've made to date and the fact that we're now in 17 countries, and yes, the progress that we've made with partners like Fuji and Antech is very exciting.

As we've said previously, the revenue can be quite lumpy at this stage in the revenue ramp.

So it is difficult for us to provide meaningful revenue guidance at this stage. Suffice to say, we are very happy with the progress.

We also tend to forget about Nu.Q Discover where we've also developed a very strong pipeline with dozens of clients now and some very large pharma companies.

I think to go back to your question about the size. We do know that there are 80 million dogs in the U.S., and our target market for this screening test is 25 million, I believe.

So the opportunity is very large. And the rest of the world, on top of the U.S., the rest of the world is probably a similar amount again.

So we are looking ultimately to wrap this up into millions of tests a year over the next couple of years.

And Jason, I think one important thing to sort of mention, so the increase in revenue ramp has been very good, but it is hand-to-hand, 1 vet at a time. It's a very new product. We're the only product out there at the moment in the vet screening market, so I think we've got a strong position. . But don't forget, I think the big story in the next hopefully few months and quarters is the licensing, which if we structure it a little differently, would also come in as revenue. And we are expecting some large payments.

We are out-licensing. I could not be prouder of the number of companies that are interested, large brand-name companies in oncology, large brand name international diagnostic companies. And also, we're licensing -- looking to license the [ i10 ] in the vet space in dogs, which we've only licensed to [indiscernible] and the point of care.

So I think a key picture, the ramp is lumpy, it's going to grow well so far, and we expect to have a very good year next year. But there might be some quarters which are better and some are worse. But I think what's going to really hit it out of the park for us is when we sign another big licensing deal.

And as I said, we've been around a long time. We've never really had anywhere near the interest in what we have. Andy, as you could hear, is incredibly excited about the -- and our key opinion leaders, about the sepsis data. We're very encouraged with all the things we're seeing in lung cancer.

We're also speaking to several national screening programs. We mentioned Taiwan. We're also obviously looking in Europe and other ones in Asia.

I think there's a possibility we're in 1 or 2 national screening programs in the next 12 months as well.

So as a package, it's really all coming together, and I think that will feed through to the revenue side.

But it's pretty hard to say exact numbers right now. But all signals are pointing in the right direction, and we're very happy and positive with the licensing discussions so far.

I'm sitting here with canine Luna.

So on behalf of canine Luna, we're very appreciative, and I know you've waited a long time to get to this point. It's very exciting.

So I look forward to seeing the growth.

Thank you, Jason.

Now we're very excited too, and we're working extremely hard to make sure we commercialize properly and save as many dogs and humans as we can, as quickly as we can.

Our next questions come from the line of Ilya Zubkov with Freedom Broker.

I have a question on the cash neutrality in 2025.

So considering your plan to be cash-neutral next year, does it mean that all business segments individually should be self-sufficient in terms of financing?

Yes. That's a good question. I mean that is what we're aiming for is trying to get each of the pillars to support itself.

One of the key things, as Cameron just mentioned, will be the licensing agreements that we're currently working on. What we've said is we expect to be sort of cash flow neutral as opposed to P&L neutral. And that's part of why we say that, is because it depends on the nature of the licensing deals and how we structure those as to whether that's recognized as revenue, as opposed to recognized over a longer period.

So that is the goal, is to get vets revenue ramped up. It's to get licensing in the oncology portfolio and licensing in the sepsis portfolio. And at that point, yes, we would then expect that each of the pillars is supporting itself from a cash flow point of view.

And I think if you -- exactly right, Terig.

And so Nu.Q Discover, we've got a lot of -- I think there are dozens of groups now we've now sold to. It's dependent on the very big revenues come down to a few big brand name, companies who we're in negotiations with to help with.

So I think it's a very good chance that's actually cash flow positive from revenue.

I think the same from vets [indiscernible] ramping and the cost.

So I think that's very positive just from actual sales. Nu.Q NETs and the oncology section, as we talked about, we've got a lot of deals in discussion. We're in front of a lot of players. We've hired Pharma Ventures on the oncology side.

So those being cash flow neutral are based on the licensing deals. But we're confident given all the interest that it's certainly possible in 2025.

And there are separate, obviously, discussions going on with a range of companies in sepsis and oncology and our technology. We've been around quite a while and they've all come good at the same time.

So that's where the focus really is on now as an organization, getting some human deals in the process.

And as I said, we're also looking to license the i10 to some of the big vet companies as well, which could also be an item which could also bring in some money in the next few months or quarters as well.

So as a package, I think it's a very reasonable target and one which we're working very strongly towards.

That's a great color.

And so I see that Volition is doing a good work in cash spending reduction. And I'm curious if we should anticipate further decrease in operational expenses in the nearest quarters.

Yes. We're very happy with the direction that things are going at the moment.

You're right, we've reduced operating expenses. We've ramped up revenues, so the cash flow is down in the quarter, was down 36% compared to the prior year. We do expect that to continue to come down modestly between now and the end of the year. And the goal is then to keep it at a modest rate and so that we can achieve that goal next year of being cash flow neutral.

And just on that, from a Chief Executive's point of view, it's been -- actually, as a balance, I think we've handled very well. Obviously, when you're cutting 36% of expenses and a lot of personnel, it's never a pleasant or easy thing to do, but it's been critical to do.

But I think in this organization, we've really tried to make sure that we don't cut into the bone because we're going to be successful, not just from cutting, but from being successful in the revenue ramp and licensing.

So we think we've done a good job at keeping the current people that we really need on board and making sure that we get the revenue ramp and the licensing deals.

And as you tell, we're writing a large amount of papers and hosting symposiums to get -- Dr. [ Gilliano ] you probably heard said this could well be a breakthrough. We've got to keep doing that kind of work.

So it's a balance between cutting, but keeping the ship moving forward. And as of now, I think we've done a very good job, and we'll try to make sure we continue on that through the year. Because we'll be judged from now on the success of the revenue ramp and the licensing.

So it's a balance. And I think it's one we've done and we'll hope to keep that going, the balance.

Our next questions come from the line of Steven Ralston with Zacks.

Congratulations on the real traction you made in the sales of Nu.Q Vet tests during the third quarter. And I'm trying to get a handle on the tone of the ramp-up.

You mentioned that you've led with Japan and Antech, and Antech is delivering into 15 different countries. Are these sales basically stocking sales? Or do you have some sort of metric that looks at how many [indiscernible] versus how many you -- the tests have been processed?

So that's a good question, Steven. And it's a mix. There's some part will be stocking as Antech rolls out its machines, its point-of-care machine.

And some part is clearly sell-through.

As we said, we've had some good feedback from our distributors. And in Japan and Poland, some of the newer distributors in Poland, have given us very good feedback that they're getting good uptake.

But because we deal through distributors, it is difficult for us to understand exactly what the sell-through is at any one point in time. And that's why we're sort of cautious in giving guidance.

And so we say it is -- it can still be a bit lumpy, as you've seen this year. It is difficult to forecast what the next quarter is going to be.

And I think, Steven, this is a very good question. Obviously, something we've thought about a lot. There is obviously a large element of stocking in every quarter, but that goes back all the quarters.

So this quarter is no different. Every quarter we think maybe this is the one where it pauses a bit or goes back a bit while they're sort of selling the ones they've stocked. But that's been going for a few months.

Now I'm sure one of the quarters in the next few quarters, that is going to happen because there's a balance between the stocking and selling. But as we said, there's a lot of different people out there selling and stocking. We're also hoping to augment it with some good revenue in Nu.Q Discover. We've got some great very large companies using our technology on that platform as well.

So there will be a pause in one of the quarters, I'm sure, or even a little backwards, but we will hopefully fill it up with Discover. But also what's going to be really key for us is signing from deals because, as I said, we are potentially another 1 in the vet space. We're working very hard in the sepsis and oncology space. We think we've got something very special.

So what I think hits us out of the park is one of those getting done with a very big company. And that will finally provide the validation in the human space that we've very much now got in the vet space.

So a mixture of all of those things, I think, should be a very good year next year for us.

Just to continue, is there a possibility that you just have this rolling lumpiness as you get more partners on the distribution side, and they're constantly restocking to a certain level? And then the validity of the test comes through and it just continues that way?

It could well continue that way for the next few quarters because, like you said, we've now got 17 -- or we've now distributed across 17 countries, and there will be some elements of it accelerating and stocking and perhaps decelerating in some months or quarters. But the more distributors that we have out there, the more countries we have it in, I think the smoother the trend will get.

So perhaps we'll have a bit more of an idea over the next 6 months what that trend is going to look like.

But I think just to be clear and just for clarity, a lot of them buy sort of stock for 6 months ahead.

So it's been very good, very good so far. And that may continue. There might be a time when one of the big ones doesn't order in the quarter, so it's lumpy. We don't know. . But the trends are all going very well. It's in a lot of countries, a lot of different groups. But that's not really -- quarter-to-quarter is not really critical. The critical thing is 110,000 tests that's moving.

So far, it's been excellent. We'll augment it with Discover. And touch wood, in the short term we'll also augment with another big licensing deal.

So I think overall it's good, but there could certainly be some lumpiness in these early stages. I don't think it's going to be a smooth upward curve, although it has been so far.

So maybe we're wrong, but maybe it won't be a smooth one until sort of midway through next year, but we'll find out.

We are working on all these areas and we'll see how it goes. But we're very happy with how it's gone so far.

Moving to the cost-cutting program.

You've obviously made excellent progress here with G&A and sales and marketing expenses going down more than 30%. Could you tell us about what percentage of the $10 million cost-cutting program has been implemented? And can you kind of give a little color about that previous $2 million cost-cutting program you had in late 2023?

Yes.

So as you recall, I think we started -- we trimmed back the back end of last year, but we still had quite a number of large R&D projects ongoing at that point. Effective Q2 of this year was when we really started sort of in earnest to cut costs because we've completed a lot of the work that we needed to get done in order to start these licensing discussions.

And so since then, we've seen the winding down of a number of studies, and we've been able to implement a number of cost-cutting measures.

I think we've seen probably about half of the savings come through this year. But of course, next year, we've got a full year worth of those savings.

So I think we're on track to achieve that number. And we -- there are still some more trimming to do. It will be a continuous exercise that we go through to keep those costs under control. But we are highly focused, and it's -- one of the key objectives of the team is to keep these costs down and under control so we achieved our cash neutrality next year.

And I think, Steven, just as a -- again, from the chief executive's point of view, I think Terig has done an excellent job by doing the cutting and identifying it.

So we're not -- obviously, we haven't stopped the ramp, nor have we stopped the licensing, nor have we stopped the papers being published in all the key opinion leaders.

So we're trying to make sure that we do cut, but we actually also deliver.

So we have to, to make sure we get down to where we need to get to, but we're also making sure that we really achieve.

So I'd like to thank our team. We've just had a leadership meeting here for 2 days. Again, we're going through all the strategic imperatives. And we managed to keep everything afloat and moving at a lot lower cost, which is a real credit to the team and the dedication of all the people.

We've also been taking salary sacrifices. I'm being down to half salary, so I'm getting it all in stock for the last 5 to 6 months. And the team has shown a great amount of effort and teamwork and sacrifice to make sure that we get all this work done and we cut the costs.

So I think it's been a financial success, but also been a team success. And it's something which has been very important to do so we can get set up for success.

Last question. Can you share with us how the data rooms are working? It seems like the focus is on sepsis. But do you also have information like, for example, on lung cancer? What are the size of the visits? Are they groups, individuals? The length of time they spend in the data rooms. And how many data rooms do you have? And where are they?

So I've got to be a little careful because, obviously, it's confidential. We signed a lot of NDAs because the big companies don't like to -- I think [indiscernible] someone else's [indiscernible] their name reputation. But on the sepsis front, we're most interested in a small number of very large players. I can't tell you the names, but I'm sure you know that we're targeted and have been very well-responded by the largest of the big [indiscernible] players worldwide. And we're at a very good stage there.

The data room, we use a program called Share Vault, which actually can track where people are and what they're doing, on the sepsis side. The sepsis was a little more advanced because as Andy pointed out, the data was really, really good and large.

So we've got a sort of a month's head start on that because the data came through.

The first data we could share, sort of early to midsummer. And being -- the sepsis side is something which is potentially very close to a product. I mean, very close in the sense of they would do their own study with their machines. But that looks to be a 510(k), which is sort of 18 months plus whatever extra time.

So that's something in the diagnostic world is actually a very quick time for product.

The oncology side, again, are the large players you'd expect to know. Again, I can't mention the names without betraying confidences. I don't want to scare them off because that's going very well. But the large companies expect to see in the liquid biopsy space as well as some of the large diagnostic players.

That's a little different because. It's not one -- the sepsis is actually sepsis and coagulation and the large coagulation players. The oncology is the ones you'd expect. And there's 3 main areas we're licensing in the oncology space, Nu.Q Capture, which there are a couple of very big players who have shown very good interest. We're backing [indiscernible] and data. There's -- as we said, we've also got Nu.Q working in solid tumors very well.

So there's obviously some interest in some of those players in 1 or 2 of the other players.

And then we have our general lung cancer work. And that side is obviously licensing, but we're, I believe, quite a good chance to be in a couple of screening national screening programs in the next 12 to 18 months, which is a massive breakthrough. To my knowledge, there's not a single liquid biopsy company in any national screening program worldwide that I know, maybe you know better.

So for us to get potentially a couple in the sort of short to medium term, I think, is outstanding.

So obviously, there's some interest in that as well.

And none of the companies I mentioned are smaller than multibillion dollar to many hundreds of billions of dollars in valuation.

So certainly a little bigger than us.

So we're really pushing. We're working hard. It's just a matter of getting it all through and getting the best deals. But we're very happy with how it's going so far.

Our next questions come from the line of Bruce Jackson with the Benchmark Company.

I wanted to ask about the [ feline ] testing.

So you got the milestone from Heska. Have they actually commercialized that yet? And do you have any sense of if that's growing or not?

So the feline, we have not got the milestone yet. We've got the $13 million in December, which was monitoring and dog screening. The feline milestone is still outstanding.

We're doing a lot of work. The issue with feline, the cat friends is a little different to our dog friends, a little more cantankerous. Not to stereotype cats. But they're much less likely to go to the vet.

But the main issue for us has not actually been that, but we've had to optimize for a different animal, obviously. Cats not surprising, but until you think about it, when you think about it, have a lot less blood.

So the sample size is obviously smaller. But also, we've discovered they have a lower overall level of nucleosomes.

So we've had to get our tests working on a lower LOQ, limit of quantification.

So in humans and in dogs, our test was fine, testing at 20 or above milligrams per ml. But cats, we've had to bring it down to 5, which is actually, again, oops, shout-out to our production team. And they have done a great job at getting all that working.

So what we've been -- getting it to work, and we've now got it to work on the plates and [indiscernible] on the machines as well so that we can measure it actually in cats with the process. And now we're in the process of working with our partners on a feline study to get that going. But no, we have not got the feline yet, but we've done a lot of background work. It's not there, but it's certainly the background work now look extremely good. And we now have working in our third animal, we believe, humans, dogs and now cats, and now in the process of trying to show that it has clinical utility. But there's no -- you can't [indiscernible] clinical utility until you prove you can actually measure nucleosomes in cats. And that's now being done and we're now in the process of the clinical utility. Does that make sense?

Yes, that's perfect. And then one other question on the human cancers. There are a number of studies that are ongoing. Are there going to be any data publications or presentations coming up here in the next couple of quarters?

Absolutely. Huge numbers of both.

As an organization, we've always really prioritized papers, but obviously, they take a lot of background work in getting there. Louise is actually here and -- Andy is on the line. I'm sorry, Andy, our Chief Medical Officer. Andy, do you want to answer that question?

No, you're good, Andy.

You can go ahead.

Can you hear me now?

Yes, we can.

Thank you.

So we've got 2 large publications coming forward that are just about to be submitted, to be submitted by [indiscernible] by end of Q4 and the one very beginning of Q1, and that will take a while to go through a review process, but we're very excited by those. We started sharing some of the data that we've seen at our Satellite Symposium, but actually generate a lot of interest and we are very excited to be taking those forward. And that should lead to next opportunities around prospective studies and the licensing deals with partners that Cameron has been -- Cameron has alluded to repeatedly on the call.

I think it's really -- we've done a lot of work to optimize the test, and to pick up one of Cameron's points as well, it's really close to being a product. We now can test around quickly. We're starting to understand what the normal range is and key thresholds are, which is really critical for optimizing it in the clinical space. And it's really exciting work to take it forward. I hope that answers your question.

That was sepsis, Andy. Also oncology?

Oncology.

So we've got new tests in cancer, and we're working with a number of players to take those forward and on the licensing deal there as well. We've got work, particularly on lung cancer. Again, Cameron mentioned that, referring to access to screening programs and national screening programs that we're taking forward. And papers are close to being -- papers are drafted and actively going through the submission process at the moment.

There are no further questions at this time. I'd now like to hand the call back over to Cameron Reynolds for any closing remarks.

Thank you, everyone, and thank you for listening in on the call.

As we said, it's a critical time for the company. All the indicators are going in the right direction on the financial side as well as the burn and the income. And it's going to be a critical few next quarters as we really deliver on the human side.

We're working very closely on some licensing deals, which we're very hopeful we can we can close. And we're aiming for them to be similar to the ones in the vet space.

So it's going to be a very exciting time. I know for our shareholders it's been a long journey, also for us, of course. But we've absolutely managed to make a platform which I think will change the world of diagnostics in the human space as it has in the vet space.

So we're working tirelessly to take that last step on the humor licensing side and hope to have a lot more updates for you in the coming months and quarters.

So thank you very much for your time. Have a great day.

Thank you. This does conclude today's teleconference. We appreciate your participation.

You may disconnect your lines at this time. Enjoy the rest of your day.