Blood testing diagnostic group VolitionRx Ltd (NYSEMKT:VNRX) received a repeated 'buy' rating today from US broker Rodman, which expects it to start recognising European sales of its NuQ colorectal cancer (CRC) screening test in the second half of 2017.
The broker reckons the test could be priced at around €50 per procedure, and the market niche in the EU alone may be sufficient for VolitionRx achieve cash flow breakeven.
A successful 2016 for the firm was capped off by the award of a CE mark.
It means the test can now go on sale in all 28 European Union states.
Rodman notes that the initial launch is being scheduled in five countries, including Ireland, Scotland, Netherlands, France and Denmark.
Unlike in the US, where a screening test may need to be marketed from doctor to doctor, 14 of the 28 EU states have government-sponsored FIT (fecal immunochemical test) screening programs, which suggests that the firm only needs to work with the agencies and KOLs (key opinion leaders) in charge, the broker adds.
Combined with the fecal immunochemical test (FIT) score, the Nu.Q test is able to reduce colonoscopies by 25% while maintaining almost 97% detection of colorectal cancer.
Analyst Raghuram Selvaraju suggests that means VolitionRx will not need to hire a lot of sales reps, and so does not expect the biotech to incur significant marketing expenses for the test in Europe.
Taking pressure of the system
"Through enhancing the accuracy of the existing test regimen and avoiding unnecessary and expensive colonoscopy, the Nu.Q triage test could alleviate a burden in the healthcare system and may quickly ramp up market adoption, in our view," he said.
Last week, in its final results statement, VolitionRx revealed it had ended 2016 with the most cash it has ever ended a year with at US$21.7mln.
Chief executive Cameron Reynolds told Proactive Investors that the company was burning cash at a rate of US$2.5mln a quarter, “so we have a lot of runway ahead of us”.
The New-York listed firm reported a net loss of US$11.9mln, equivalent to 52 cents a share, versus a loss in 2015 of US$9.5mln, or 54 cents a share.
“In the coming months we expect to present the results of the full 8,000 subject data set for our Nu.Q colorectal cancer screening triage test as well as results from our other ongoing trials. We also expect to announce additional trial commitments over the course of the year,” Reynolds added.
Plans for the USA
Aside from Europe, VolitionRx also has plans for the USA.
Selvaraju said it was committed to developing independent colorectal cancer blood test panels stateside.
"We believe the company may pursue the 510(k) regulatory pathway for symptomatic patients, as well as the Pre-Market Approval (PMA) pathway for general screening in asymptomatic population. U.S. clinical trials could start before the end of 2017, in our view," the analyst said.
Rodman targets US$10 for the VolitionRx shares, which is more than double where they are at now at US$4.52.