VolitionRx Limited
Q3 2020 Earnings Call Transcript

Published: 16 Nov 2020

[Operator:]

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to VolitionRx Limited's Third Quarter 2020 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference call will be opened for questions. This conference call is being recorded today, November 13, 2020. I'd now like to turn the conference call over to Scott Powell, Executive President of Investor Relations. Please go ahead.

[Scott Powell:]

Thank you, and welcome everyone to today's earnings conference call for VolitionRx Limited. This call will cover Volition's financial and operating results for the third quarter of 2020, along with a discussion of our recent activities and key upcoming milestones. Following our prepared remarks, we will open the conference call to a question-and-answer session. Also on our call today are Mr. Cameron Reynolds, President and Chief Executive Officer; Mr. David Vanston, Chief Financial Officer and Dr. Jason Terrell, Chief Medical Officer.

[Cameron Reynolds:]

Thank you everyone for joining Volition's conference call today. I especially appreciate it, as always, given the busy earnings call season, and the ongoing pandemic and lockdowns. I would like to yet again to recognize the amazing commitment and hard work shown by our team over the past quarter during these difficult times allowing so much progress in so many areas. Thanks also to those that attended our recent virtual Capital Markets event. After such a great reception, we'll be sure to host another event in the New Year. I will start today by covering our financials and then get straight down to discussing the upcoming launch of our first product, the Nu.Q Vet Cancer Screening Test that we are targeting for the 30th of November, exciting times. We have strengthened our cash position this year, providing a great run rate to achieve our many milestones and give us flexibility during the continuing pandemic. We closed up the third quarter with approximately $21 million cash and cash equivalents compared with approximately $17 at the end of last year. We continue to manage our expenditures carefully, and as we approach commercialization, our burn rate is approximately $1.6 to $1.7 million per month which we expect to continue as we make additional investments towards our product launches and expansion of our platform.

[Operator:]

Thank you. We're now conducting a question-and-answer session. Our first question today is coming from Jason McCarthy from Maxim Group. Your line is now live.

[Jason McCarthy:]

Hey, thanks, guys. Thanks for taking the question.

[Cameron Reynolds:]

Good morning.

[Jason McCarthy:]

So, I'd like to ask about the NTU study. You mentioned that you completed 12 discovery-grade assays on the NTU subjects in both colorectal and lung cancer.

[Cameron Reynolds:]

That's right.

[Jason McCarthy:]

So, my question is how will you use datasets, and should we expect to see any of that data in the near-future, and also, are these in the plate or the beads format?

[Cameron Reynolds:]

Yes. Yes, you expect to see this in the short-term. They're eager to present them at so that's in a few months, in January, for the lung, and then when the conference comes around, and these are just subsets of the original population, so it's not the final trial, but it's fantastic to get some progress through in the pandemic on them, unlike the trial in the U.S. So yes, they're on the plates, so there's only -- originally on the plates, and on the magnetic beads. We started with one, and we've switched over to the both. So a little bit on the plates initially, and then everything else on the beads, and yes, we'll be presenting that as soon as we can. They're eager to present them at conference, so it'll be the lung, in January, and as soon as we can on the colorectal side as well.

[Jason McCarthy:]

Thank you, and then, so I wanted to ask about the -- the data in the canines, since the nucleosomes are considered for them as they're included in tests, will you expect to see a similar result that you saw in dogs in the large scale human trial?

[Cameron Reynolds:]

Actually, yes.

[Jason McCarthy:]

And also be the same, using it as a first lung test in at-risk patients who may not want a biopsy?

[Cameron Reynolds:]

Yes. So the short answer is it's been remarkable, the pre-analytics there, the process has been almost exactly the same in the dogs. Actually the kits we sent over were the human kits, the same kits with the CE-mark for the blood cancers. So yes, it's been remarkably similar. As you saw, it's superb results in the animal space, 97% and 87% AUC for the two cancers. We're in the high -- it's in the high 80s for the blood cancers, and Jason is on the line, perhaps he could go through the use of what they would be used, but yes, I think it is something that would be given to a lot of people, not just those. Jason, do you want to give a quick description of who would -- who you'd see the market being for the NHL blood test?

[Jason Terrell:]

Yes, hi, this is Jason. Yes, absolutely. So, Cameron talked a little bit about the problems of NHL just in general, in the U.S., mentioned that there's approximately 77,000 new diagnoses made every year, but the tricky thing about making a diagnosis of lymphoma is that the symptoms often mimic the symptoms of very common everyday illnesses, routine infections and autoimmune disease, and things of that nature. So the symptoms the patients present are very common everybody patients seen by primary care physicians. One of the most common lists of chief complaints that you'll see, fever, fatigue, things of that nature. So, even though there are 77,000 cases diagnosed in the U.S. every year, the market for patients who present with those symptoms that could be NHL is much, much larger, and one of the most common chief complaints of medicine, honestly.

[Cameron Reynolds:]

Okay, thanks, Jason. So, basically that was actually one of the real important things which we drove while we're driving NHL through now. So because of -- we can do it through a 510k, because it's not a screening test, it's not given to everybody, and NHL can be actually quite young when you get the cancer. So it's kind of in between, it is symptomatic in people, but it's much more broadly symptomatic, as Jason said, things which could be pretty much anybody. So, we don't know what the market size is going to be, and that's something we'll work on and during the trial and work it out, but I think very much like the vet space, if we show good data I think it's something which a lot of doctors will end up using in those quite nonspecific symptoms. And then the market could easily be in the millions of tests per year, and I think we charge a very similar amount to what we do in the vet space, and a very similar margin. So the addressable market is certainly in the hundreds of millions or billions of dollars a year. What we get of it will depend of course obviously on the results from trial, and the rollout and everything else, but it's by no means a micro market, and it's in a very good space for the company because you don't have to do a large PMA study, like in colorectal, but it's still a very, very large addressable market. So I think if we can show good data it could be an excellent product, and really put us on the map in the U.S., and timing wise, obviously, the first readout we hope to be the end of next year. So, it could well be a 2022 story when we have an FDA approved product that we could expect to be a very large addressable market. So, time will tell, but we're very encouraged with what we've seen so far.

[Jason McCarthy:]

Okay, thank you, and then I have one more, if you don't mind, on the as the pandemic subsides because even after the COVID pandemic, COVID is likely to remain with us for some time probably a smaller scale, but how would this product be applied in patients who do get it or for other diseases like influenza. Would it be largely patients, who have severe cases, and you're trying to determine whether they're progressing to critical. Could you go into a bit more detail on that?

[Cameron Reynolds:]

Yes, it's a very good question. So obviously we got into this market, NETs have been sort of on the cutting edge in the last few years, and they're much better understood now, and obviously with the pandemic, there has been a huge amount of focus back on them. So, during the COVID pandemic, the main use would be for NETosis tests, would be to say monitoring disease progression, and coming to hospital, we've shown from the data we presented that people with severe COVID have very, very high levels of NETs in their blood measured by our assay. People who are sick, but not very sick have medium levels, and people with low double COVID or asymptomatic have low levels of -- so it can monitor disease progression. We're thinking how good it is as the prognostic in longitudinal samples, which we'll have data on very soon, and I think, yes, I think it is going to progress probably for at least a few more years while we work this through, but the body's immune response, the NETosis is the driver in sepsis as well, and sepsis is the biggest killer in hospitals, and it's something which is really tricky for physicians, because it's very hard to know that it's actually an underweight, if you will. So, we're working on trials now for COVID in influenza, and I think obviously influenza has been with us for millennia. So, I think that's obviously going to continue. COVID I think will continue for a bit longer, but the validity of the NETosis tests stretches way beyond even just COVID and influenza into things like sepsis. We've spoken to a lot of groups that have therapies underway for sepsis for NETosis from sepsis COVID influenza, and they all say the same thing. There is absolutely no good companion diagnostic for the treatments. It's very hard to treat somebody if you don't know if it's working or not beyond some observations, there are some markets, but they don't work well. So, we've had a lot of interest from groups to see if we can see a companion diagnostic. So, all of those would be multiple tests on the same person. So the potential market is absolutely huge, and I think if we can prove any validity in influenza as with COVID as a massive ongoing market, and of course, sepsis would be huge because there is nothing out there, which can really monitor the progression or really tell you that is building up and happening, and we expect to have a lot of data on that in the next six months, because we have it set for now. It's very, very similar to the assays we have in for different things we've developed. So, it's something, which we are up and ready, if you will, we can launch things very quickly now. It's taken a lot of times to protect the platform, but now we couldn't be happier that it looks very useful in animals, range of animals, humans, cancers, and things as wide as NETosis. So, very good a year ahead of us I think, and I think NETosis would be a big part of us going forward, and we'll have a lot more data in the short-term. We've created a new small division within the company to focus on NETosis on the trials and the marketing side, and expect to see a lot more data soon, and we have very big expectations what does it going to look like.

[Jason McCarthy:]

All right. Thanks, Cam.

[Cameron Reynolds:]

Thank you. Have a good day.

[Operator:]

Thank you. Our next question today is coming from Kyle Mikson from Cantor Fitzgerald. Your line is now live.

[Kyle Mikson:]

Hi, thanks so much for taking the questions. Congrats on all the great progress here. Just want to jump just right into the Cancer Screening Test in the market, and Cameron, that was a great overview of the Cancer market here, the $20 million I think you said, you know, what testing penetration are you expecting kind of see like early on, maybe a year or two post-launch, you kind of get to that point in your kind of own thoughts here? This morning I want to get one more piece because it's ultimately like how long you think it'll take to get to maybe mid-single digit penetration, but 10% or so would be really incredible, but you mentioned like nearly the test per year, and so, I want to understand how that test to get there, and obviously it's super early, but if you could answer any of those questions, just comment on the different variables, that would be super helpful. Thanks a lot.

[Cameron Reynolds:]

Yes, that's a -- maybe a billion dollar question. We don't really know what that curve looks like, because this is really something very unique, very new. Cancer Screening in the U.S. it's not really common in dogs, purely because there isn't a test. A very high percentage of dogs go to the vet every year in the U.S. 70% to 80%. So the obvious addressable early market is the 20 odd million dogs who had geriatric meaning over seven years old. So -- and then you'd probably add a few million more dogs who are high risk. Also probably looked at presentation and your therapy monitoring is also a part of the solution I think going forward. So we're at zero today, I think that the general market either at least I think 10% to 20% of the addressable market, which would be 2 million to 3 million dogs. Now what does the curve look like? Is that going to take two years or three or five it's very hard to tell? We are doing a lot of aggressive marketing on the - the good news in this population unlike the cancer market in humans, it says only about just over a thousand veterinary oncologists in the U.S. So I think a large percentage of those will know who we are in the next six months. We thought it was Texas, because it's a very good discrete market of about 5000 vets. We lost the majority have been trying to Texas I think. So there is quite a good outside network if you will, between all of those people. So I think we can get a very large number of vets in Texas knows who we are. So we're attacking the - if you will the top, definitely oncologists through the lunch and learns to keep being in leaders, and they're all very positive, and then we're going into vets in Texas the first 5000, and were doing a beta launch. So, we're making the product available and then going through the marketing process now, which we've obviously begun, but then don't forget that's just one lab. We intend to roll out a wide range of labs, who some vendors their own marketing. We've already started to work in Asia. Dr. Clay has contacted some groups there. So we would expect to get some sales in the first half of the year in Asia as well, and then we'll of course, we've got a sales person starting in December 01 in Europe. We could also start the European process. So the short answer is, it's really hard to gauge what that curve looks like, but I think we have a fantastic test. We have fantastic partners at 100% and eight outfit for a test. This is a very, very common cancer in dogs. The price point we're at seems to be very something, which isn't going to be a big problem in United States, and there is always a temptation to try and charge a really large amount, but our ethos has always been to keep it affordable, but given our accuracy, I think where we asked is very achievable and we're a very good margins anyway. So I think it works for everyone. So we have the first order from Texas and they ask for indicative quote for the first $370,000 worth of kits. So that's just not, I'm not sure how long it's going to take them to go through that, but, yes, it's keeping it off, but it's really hard to say exactly what that curve looks like, but we're very bullish.

[Kyle Mikson:]

Got it, that was really helpful. Thanks a lot. I appreciate the color on the sales and marketing strategy as well. I guess, just turning to the blood test, the NHL test. Can you just kind of walk through the clinical regulatory pathway for that? I know you mentioned the trials and could take 22 months working with the CRO, but first of all, has the Trump gone enrollment yet? I wasn't quite there on that or when did that start, I guess, and then what milestones and points, benchmarks, are you looking for before you submit that first 510K for DLBCL? And I guess some of the medical backgrounds here on the line maybe that could be helpful?

[Cameron Reynolds:]

Yes, Jason. Good idea. Jason, do you want to answer those questions please?

[Jason Terrell:]

Yes, sure. So the trial has obviously gotten enrollment. We're still in the startup phases with IRB approvals and, protocol drafting and things like that. So it has not begun enrollment that should begin sometime in the following quarter. So hopefully sooner rather than later, but the strategy -- the very first strategy for the trial is to begin the trial, and after it's enrolled about 20% of the total patients that should probably be in the 35% to 40% of the total of diffuse large B-cell lymphomas that needed to be enrolled to complete the study, and once we have about a third of that diffuse large B-cells, we will go to the FDA at a pre-submission meeting, and at that time we'll present the interim data for this top trial. We'll present all the supporting evidence we have from all of our outside the U.S. trials and all the retrospective studies that we've done, and we'll ask the FDA to grant us approval for the 510K what's sufficient numbers of the diffuse large B-cell have been met. So, our hope is that we get the diffuse large B-cell 510K first. Then at that point, we'll use the same test in the same trial to get it approval of the subsequent less prevalent subtype. So as they accrued statistically significant numbers and pre-submission meetings accordingly as the trial progresses and gets narrowed to the end.

[Kyle Mikson:]

Perfect, excellent. So actually, Cameron, assuming you guys do close this Silver One acquisition in the near-term here, could just help us think about the rampant reagent revenue next year and 2022, I guess. I know it's complicated. Just sort of appreciate the color there and just given the size of the facility like, what do you estimate is like the -- I guess the run rate reagent revenue opportunity associated with Silver One. Again, I know it's tough, but you must know like it's on the size. What is the capacity cognitive -- anything there would be helpful. Thanks a lot.

[Cameron Reynolds:]

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I'd expect the first-half of next year for us to be sort of bedding in getting certifications the second half of the year, we will start to really guidance on what we think the CRO market, Nu.Q market could do be, but we're not -- we're trying to be conservative and really know what the answer is before we give anything, but I think it is going to be something which could have become very, very meaningful as epigenetics become very important, and I think that the huge amount of work we've now done to make our platform really robust, great ingredients will really pay-off in reagent sales as well as our own products, but also they forget when we licensed to where we'd speak into groups and charter and place them in others. We don't expect us to license. We also want to sell the key reagents to supply the Chinese market with nucleosomes and controls the people running our test data as well, could be a massive market as well, but yes, no guidance now, but we will certainly be in a position to do that once the lab's fully up and operational, and we've done the numbers ourselves and the comfortable, but that's going to be anything meaningful is not going to be until the back half of next year given the ramp up needed in the facility.

[Kyle Mikson:]

Okay, that's awesome. Thank you, and may be just one last one for me, you actually kind of touched on this in your answer there. Can you just kind of update us, remind us where you kind of stand with the epigenetic toolbox and Nu.Q Capture liquid biopsy platform. It's really interesting areas of your business, and I know it's maybe more longer term obviously from a commercial standpoint, but we're just curious, just tell us what we should be expecting maybe in 2021 and maybe beyond? Thanks.

[Cameron Reynolds:]

Yes, Kyle absolutely. We're unbelievably happy. It's actually makes us on just very young. I'm very excited is that the toolbox side, the Capture, and we're doing a lot of work on the math, the commentary and the sequencing, and actually you might have noticed those, a small bit in my presentation. We've opened a small laboratory in California where Dr. Terry will have assistance and that will grow slowly through the year, so that we have a team just focusing on the capture side. As Southern California is the key to a lot of this area. It's where our luminous headquarters and a lot of other companies. So we thought having a footprint there really helps us to become known in this space. So what you expect to see? We've gone back like we have to make sure that the platform we've got some very good results as you probably saw and we presented last quarter, but I think to launch a product we're doing exactly what we did on the bead and the plate side. We're just making sure everything's fully optimized because when it's not optimized, you get very good results and then things which changed around as we used to get in what we did in a basic format. So we're now just optimizing the platform pulling. So I'd expected that to be a lot more news on that in quarter one, quarter two as we go through that process, because we now optimize the other platforms. It should be quite quick and easy compared to what it used to be like to optimize this platform, but I think we should have a lot of news in the first half of next year and then second, all the way through next year as we optimize the platform, and just as a reminder what we're doing is separating loans from short nucleosomes and the short had been shown to be where the cancer is, and short DNA and domestic commentary. We've identified quite a few new biomarkers from mass spectrometry, as well as potentially that could be a product in soak in the years to come. So we're very keen to be pushing the products we are, but we're also spending a small amount of effort on this blue -sky work, which very much feeds off our basic work. So expect to see a lot in the next few quarters on that as well and something which could well lead to a product probably in the 2022 space, and if we can achieve what we are, it'll be a really important part of the sequencing world, if we can concentrate the way we were hoping to as a product.

[Kyle Mikson:]

Perfect. Yes, it's definitely an exciting time in the Cancer Screening industry. Really appreciate you kind of answered all the questions and look forward to hearing more than future here. Congrats on progress again. Thanks a lot.

[Cameron Reynolds:]

Thank you, Kyle.

[Operator:]

Thank you. Our next question is coming from Bruce Jackson from Benchmark Company. Your line is now live.

[Bruce Jackson:]

Hi, thanks for taking my questions. If we could go into the upcoming abstract presentation at IASLC, are these going to be the same offers that you put it on -- obviously with the plates, and is the data going to be coming off of the bead platform at this time?

[Cameron Reynolds:]

[.:]

[Bruce Jackson:]

Okay, good, and then to be perfectly clear on the FDA strategy for the Non-Hodgkin's Lymphoma test. Is this a de novo 510K that you're going after first?

[Cameron Reynolds:]

Yes, .

[Bruce Jackson:]

So, most likely the de novo 510K and then with the ones that followed after that, then you're hoping to make the first test the predicate device, and then just use like a standard 510K process for the remaining tests. Is that the strategy here?

[Cameron Reynolds:]

Yes, you're exactly right.

[Bruce Jackson:]

Okay, okay. Just want to clarify that, and then with the Nu.Q Capture, great progress, have you gotten any inbound interest from anyone one on that platform yet? It's a huge unmet need in terms of analyzing the cell-free DNA and circulating tumor DNA, given that there is an arms race right now in the space to get the assays working properly and spent curious to know if you're getting any interest.

[Cameron Reynolds:]

Yes, absolutely. Actually, we've got a lot of interest in this, then a lot of areas, we're certainly becoming a potential a lot of people, but I think where we were I guess six months a year ago with the assays, and we got some great results, but it's not a product until it's very stable and you've really optimized everything fully. So we've got very serious on that in the last couple of months. Dr. Terry is a real leader in the epigenetic field, and we're really glad she came onboard, and she's . She's out quarterbacking that now. We thought it was important to have a separate focus on cash to make sure that it's fully optimized as quickly as we can. You might have noticed in the queue, we're also taking on some expert help, from Israel, on the analysis side to make sure we really are doing this properly, and we're trying to get the best well defined samples we can on the -- to show how well it works. So yes, there's inbound interest. I can't talk about obviously and tell you unless anything comes of it, but I think, as before, we're in the fully optimizing stage products. And as I said, it shouldn't take that long because of the great work. We've become very experienced in optimizing this platform, and there's obviously quite a few of the key components that we -- what we use for everything else, so very exciting, and I think there'll be a lot more news on that over the next few quarters, but we're in that -- in the optimization stage now, and then when we're ready hopefully we can get some good publications, and as we say, we've been incredibly good tool in the epigenetic field, and it couldn't be possibly more than pleasant as you know, with the amount of money being thrown around in this space for that. So something we've, again, taken very seriously, and put some power on to it and some people doing nothing else to make sure that we get it done as quickly as possible, and then when we publish it could be something that could be a product very quickly because we're done the homework.

[Bruce Jackson:]

All right, that's great. That's it for me. Thank you very much.

[Cameron Reynolds:]

Thanks. Have a great day, Bruce. Thank you.

[Operator:]

Thank you. Our next question is coming from Jason Kolbert from Dawson James. Your line is now live.

[Jason Kolbert:]

Hi, guys, great progress. I just would like to focus in on Nu.Q at the veterinarian level. I mean I think the real incentive to achieve market penetration for the vets is both what is the competitive landscape, so what is this replacing at the veterinary level, and how much revenue could this contribute in terms of margin to the veterinary and themselves. Because clearly a lot of veterinarians are doing in-house diagnostics, in-house testing, and so they're very, very strategic about what things they adopt and how it will change the profitability of their practice themselves. So if you could address those issues it helps us understand the rate of market penetration in the future. Kind of a little bit of a follow-up on the direction that Dr. Okunewitch was going on the first few questions that he asked when you turned it over to him. Thanks.

[Cameron Reynolds:]

Hi, Jason. Yes, good questions, and that's something obviously we've spent a lot of time working through. Dr. Wilson-Robles, who we could perhaps set a call, and who could answer it in a lot more depth than I can, but I understand reasonably well, given where we are. So currently, it's with no diagnostic blood tests, as not that similar to humans, and things like scanning is much more difficult with a dog because obviously, I'm not sure if you have a dog, but they're very tough to keep still for a few minutes in a scanning machine. So you have to anesthetize them, and a dog cannot speak, obviously, and can't tell you they're having problems. Which is actually one of the reasons I think that the vet market has gone up so much during the pandemic is people are home with their dogs and notice them much more as they're home all day every day, and that they have problems, so they take them to the vet more often. So, the competitive landscape basically is completely bereft of anything good in the screening sense of the cancers. So, unlike the human field where there are quite a few good competition areas -- have a good competition, and the blood cancers are much more prevalent in dogs than in humans, and that's the blood cancers where we've had fantastic results just with a very, very simple product and assay. On regards to the doctors and different ways it can be used, at the moment it's the lab test. We're running it on plates. We can -- we plan on progressing into the bead sometime next year, and then it can be a much higher throughput, although where we are the plates are fine, and we're also working on a point of care, which would be a fingerprint -- well, I guess in the dog's place a paw print of blood. So a point of care is also very possible for the vet places, you said. Now, currently, the vets are very used to sending blood to the big oncology centers, like well, the big centers, like the GI Lab in Texas, and there's seven big ones in the U.S, and there are, I think, when I asked to do our lab there it's potentially possible for posting this out and where to send it to. The Texas A&M, they have relationships where they could actually send it to them if they wanted to, and we've also been very careful not to gauge everyone. We're making a very -- a fair profit for us, we think. We're selling it for roughly $45 for the test. The GI Lab does all the work of running the sample, and they look to be at about $122, but there's still a nice margin for the vet as well, and different vets charge very different amounts, but we'd expect if it's somewhere in the high and below 100%, the 50% to 70% margin the vet would charge around, as I said, in the $160 to $200 range. So I think -- and some vets charge a lot more depending on where you are. So it's something which the vets I think will be encouraged to do because of the accuracy of the test. The utility is very, very good. It can help them a lot to try and sort through who has cancer, but also shouldn't -- they should make a little bit of money from it as well, which obviously everyone likes to do. So I think all of that should make it a very good test for profitability and for the drive, and we're doing a lot of marketing. I think a large number of vets in the U.S. will know about the test in the coming months. It's a reasonably large community, but a reasonability small community in as they read a certain number of journals, and there's only, as I said just over a thousand oncologists in the space. So I think it's something certainly a very large number of vets will know about us. A very large number of vets can order the test if they want, but that's also the reason we're launching in one facility, and then to get sort of a hot zone of people who know about it, and then rolling it out to the other big centers, then they also start marketing it. They all have emails lists of thousands of doctors they work with who are used to ordering through them. So it's very tough to know what the take-up is going to be, but I think it's an excellent product, we have excellent partners. There's a real need. We've incentivized everyone along the way. So I guess time would tell, but I think, like anything, we could be surprised in the upside of how well they take to this, and very profitable. I mean the addressable market is multiple billion dollars. If you take 22 million dogs, it's a $200 test, our section of it is -- even that section of the addressable market is over a billion from just what we are, and because we don't have a sales force needed because it's through the vets and through the labs, we don't need a lab, we don't need a big sales force, so almost 85% goes straight to the bottom line. So it's very good potentially, we'll find out.

[Jason Kolbert:]

Does it make sense to kind of explore contracting with some consolidated veterinary processes, for example, like Veterinary Centers of America and other kind of such entities to establish proof of concept, where you get it contracted at that level, and you're instantly in 50 to 100 practices?

[Cameron Reynolds:]

Absolutely, I can't discuss on this call because, obviously, we're not public with all this, but we're looking at a lot of options. So this is the highest margin for us, $45 a test, but if someone can sell a large number of tests we can certainly be a part of that. Obviously there's the -- there's to big companies involved in this space, and IDEXX, which tend to control a lot of the area, as well as, as you said, a lot of consolidation going on. I think to get to -- if we do get into millions or even hopefully into the high millions of numbers of tests per year, which I think is possible if it goes moderately well, we're going to have to use different groups like that to, not just prove the concept, but also to roll out, but we'll be very flexible. We're -- our burn rate isn't very large, so all this revenue would be incredibly meaningful, so, and this is just one -- we've also been in discussions with launching potential products in the cat space, as well as those -- they don't have the same tests as dogs do, but that's supposedly changing. So I think we'll be very flexible and we're very adaptable, not just on our own, in the labs, but also potentially point of care which a doctor -- sorry, a vet could do in their own facility. So all that should be played for, but at the moment we're focusing on making the launch successfully in Texas. Again, not a micro market, there's 7.5 million dogs in Texas, and just under 5,000 vets, but I think there'll be a very large percentage of those who know who we are by the first quarter, and then we'll have a good indication of how it's going, I think.

[Jason Kolbert:]

Sure. Thanks for the update.

[Cameron Reynolds:]

Thank you. Thanks for your time, Jason.

[Operator:]

Thanks. The next question today is coming from Steven Ralston from Zacks. Your line is now live.

[Steven Ralston:]

Hello. Thank you for taking my questions. I'd like to concentrate on the top line. You mentioned that the first order of -- for the Nu.Q Vet product was roughly $370,000, which I calculate to be at 8,000 tests. When will you record those sales on the income statement?

[Cameron Reynolds:]

Sorry, just to be clear, that was an indicative price. How they, the big universities work, it's not the first order. What they do is they give us the request for a larger amount than they're ordering right now so that we maintain the price, and also goes through a review system to make sure -- university purchasing, make sure there's no fraud, and we're not -- so it's not related to the person buying it, all those kind of things. So the first order would be we'd expect that order sort of a month at a time, so that would be reported in the next filing. The $370,000 was just the first indicative, quite of what the -- they're hiring one person to run the tests in the first instance, in that one lab, and that's about what they can run in one year, so that's four or five places a week, but that would obviously ramp up if the demand is higher, and then we'd go through a lot of different universities and other chains. So we would be reporting that revenue. I'll be -- it will not be $370,000 in right now, that's the indicative quote for a longer period of time, which they are sort of, but it shows they're very serious. They're hiring technicians to run up just this test, and to really get it moving. So we've got the -- we'll have this first order which will be, as I said, the first couple of weeks, the first month's supply, and then they just keep chipping away at that indicative quote until it's finished, but it's more -- it's a mechanism for them to maintain price and make sure that there's -- everything is fully reported properly within their organization.

[Steven Ralston:]

Thank you, and looking at the Silver One facility, you mentioned that you're -- the first-half 2021 will be setup of this facility, and you'd expect to give or do some contract lab services in the second-half. When would you start resume shipping test kits?

[Cameron Reynolds:]

That's probably a good question for Gaetan. I'll get back to him. We're still in the process of working how long the certification will take and when -- so the key -- some key components you can actually do much quicker than that depending on who they are and what they're for, whether they're for research use or any sort of clinical use. Those are quite involved questions, and we're working through it now. We're also working how much resource on extra people in this situation, but I would say by the second-half of next year it should be at a level where we can do a very large number of things there. Now the fit-out is pretty close to being finished, so we will be doing some things in there from the end of this year, and then we'll look to ramp up through next year, but that's probably a question I can get offline from Gaetan, and a schedule as to what that all looks like, and would probably have a very good idea of that once we've fully resourced the facility, but the fit-out will be finished in the next few weeks, and we'll start doing work in there very soon, but the process from now -- by the end of the Q we'll be producing our own plates, our own antibodies, our own controls, the contract research facility incurred from that now, so maybe something which I guess we'll have to really fill in next quarter, but he's really running in there well. We're throwing a lot of resources at this because I think, from what I was saying to Jason, I think we might get surprised on the upside. You can always get surprised with the downsides of sales, but I want to be ready, that is if there is demand that picks up quickly for the dog test or the COVID test or in the process of the blood cancers that we can really meet demand with our own facility, where we make a much better margin. So we're taking it really, really carefully, but really quickly. So starting now, and finished by the end of next year, but we'll be doing the first things definitely this year in the lab.

[Steven Ralston:]

Thank you for taking my question.

[Cameron Reynolds:]

Thank you, Steven.

[Operator:]

Thank you. We've reached the end of our question-and-answer session. I'd like to turn the floor back over to management for any further or closing comments.

[Cameron Reynolds:]

Thanks everyone for being on the call. It's extremely exciting time for us, and then I'd like to thank the entire team for working during the pandemic to make sure we could launch our first product. It's something which we're extremely charged about, and I think it could well be the first of many, many products. We're in a fantastic space. We have a fantastic team, and our platform and intellectual property is just fantastic. So I think 2021 is going to be a great year. So I'm really looking forward to reporting actual earnings on the earnings call, the next call for the K. Thank you very much for your time.

[Operator:]

Thank you. That does conclude the teleconference. You may disconnect your line at time, and have a wonderful day. We thank you for your participation today.