Scott Powell – Vice President, Investor Relations Cameron Reynolds – Chief Executive Officer

Bruce Jackson – Lake Street Capital Markets Brian Marckx – Zacks Investment Research Yi Chen – HC Wainwright

Good day, and welcome to the VolitionRX Limited Second Quarter 2015 Earnings and Business Update Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Scott Powell, Vice President of Investor Relations. Please go ahead, sir.

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 three months ended June 30, 2015, along with the discussion of our key upcoming 2015 milestones. Following our prepared remarks, we will open up the conference call to a question-and-answer session. Speaking on our call today is Mr. Cameron Reynolds, Chief Executive Officer of VolitionRX. Before we begin our formal remarks, I'd like to remind everyone that some of the statements on this conference call may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that concern matters that involve risks and uncertainties that could cause actual results to differ materially from those anticipated or projected in the forward-looking statement. Words such as expects, anticipates, intends, plans, aims, targets, believes, seeks, estimates, optimizing, potential, goal, suggests and similar expressions identify forward-looking statements. These forward-looking statements relate to the effectiveness of the Company's bodily-fluid-based diagnostic tests, as well as the Company's ability to develop and successfully commercialize such test platforms for early detection of cancer. The Company's actual results may differ materially from those indicated in these forward-looking statements due to numerous risks and uncertainties. For instance, if we fail to develop and commercialize diagnostic products, we may be unable to execute our plan of operations. Other risks and uncertainties include the Company's failure to obtain necessary regulatory clearances or approvals to distribute and market future products in the clinical IVD market; a failure by the marketplace to accept the products in the Company's development pipeline or any other diagnostic products the Company might develop; the Company will face fierce competition and the Company's intended products may become obsolete due to the highly competitive nature of the diagnostics market and its rapid technological change; and other risks identified in the Company's most recent annual report on Form 10-K and quarterly report on Form 10-Q, as well as other documents that the Company files with the Securities and Exchange Commission. These statements are based on current expectations, estimates and projections about the Company's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are made as of the date of this conference call, and except as required by law, the Company does not undertake an obligation to update its forward-looking statements to reflect future events or uncertainties Nucleosomics or NuQ and Hypergenomics and their respective logos and trademarks and or service marks of VolitionRX Ltd and its subsidiaries, all other trademarks, service marks and trade names referred to on this call are the property of their respective owners. I'd now like to turn the call over to our Chief Executive Officer, Mr. Cameron Reynolds, who will discuss the second quarter of 2015 and our clinical and operational objectives for the remainder of the year. Cameron?

Thank you, Scott and thank you, everyone for joining VolitionRX's second quarter 2015 earnings conference call. I would very much like to thank you all for taking interest in VolitionRX. It is a very exciting time for us and I'll start with the admission, I became a first time father on Friday. So, it's not my normal starting, so I apologize. First of all, I'll start with a review of the important events in Q2. This included the purchase of three new automated liquid handling systems called Tecans as in our releases, which have expedited the analysis of samples form the ongoing large clinical trials evaluating our NuQ cancer detection platform and how this directly accelerated our clinical trials [indiscernible]. This increase in our infrastructure to four automated systems from one has enabled us to increase the throughput and the rate of sample analysis allowing for faster study timelines in development of our NuQ tests. As we discussed in the press release, we can do up to 20 plates a day now. So, we've gone from a capacity of about 2,000 assays per month to around 60,000. Now, that's all capacity running day and night, so the actual capacity we'll be doing in practice, will probably more like 40,000 or 50,000 assays a month, but either way, it's a massive step change in what we do and that was a very, very key milestone for us during the quarter. The second one is the initiation of the trial with Copenhagen and the same partners we've had before in the 800 patient retrospective precancerous polyp study. So, this is a very significant study for us as we've shown we've had very good results in polyps in the other studies and this is a dedicated one for polyps. Polyps are a type of precancerous growth with high [indiscernible] polyps serving as a warning for cancer, but if caught early enough and removed the risk of cancer is significantly reduced. In essence, you're getting ahead of the curve. We've had very good detection rates before in polyps but we've never had an ongoing trial targeting them specifically. This will allow us to study a very large number of different markets specifically targeting polyps alone and as we've discussed previously in all of our trials, early detection is the key and that means early stage cancers which we've been detecting very, very well and as I discussed, if you can get ahead of the curve and get the polyps, then you're in very good shape. So, that's a very exciting trial for us. The second point is, we've accelerated Dr. Holdenrieder's trial at the University of Bonn, looking into the 27 most prevalent cancers. We've now dedicated two of the previously mentioned Tecans to his laboratory, so he can do a very large scale, much quicker analysis of the samples. We'll be over 4,000 patients in the 27 most common cancers. So, he's aiming to start that in September, October. He's collected all the cancers and competing conditions. He's just broadening the healthy now to make sure we have a broader range of healthy patients as possible, but that's starting in the next month or two. So, it'll be a very, very key trial for us, and really so, what break we have through a very wide range of cancers, which we have not tried. The next point is our partnering with two consulting agencies in Europe, Decideum and MedPass to support our market access across Europe, once we've had the approval from CE mark. The first CE mark is in the panel of CE marks which we anticipate in the first half of next year. So, this is to maximize our ability to achieve seamless and optimal entry, pricing and reimbursement. This is why we're established with these two companies. To identify the best path forward, to penetrate U.K. market and facilitate the test uptake by physicians and hospitals once approved, including all key opinion leaders. In the rest of Europe, MedPass will be providing us with strategic guidance for the entry into multiple markets with emphasis on each country's particular economic and regulatory policies. Although there are a lot of commonalities with all EU countries, there are obviously quite a few differences. So, they're going to be picking for us the three countries we should begin with, once we have the full panel targeted in the middle of next year. The first CE mark. The engagement of Global Specimen Solutions is to support the initial U.S. market entry of our NuQ Colorectal Cancer Test and it's a given for the U.S. commercialization efforts. Under our agreement with GSS, we would target and select medical universities and U.S. commercial clinical laboratories, providing diagnostic testing services regulated under the clinical laboratory improvement amendments, the short for that is CLIA as strategic collaboration partners protesting of our NuQ Colorectal Cancer Test and a range of other cancers as they developed. GSS will also develop a strategic market access plan for implementing relationships with the selected CLIA labs including licensing and royalty modelling for CLIA laboratory development tests, LDTs, and strategic regulatory and clinical development for premarket approval, PMA which is a submission to the FDA. Through partnering with GSS, Volition aims to license its Nucleosomics biomarker panels to CLIA labs for LDT development in the U.S. in 2016 and prepare for FDA approval through the PMA process as we discussed. So, that's what going -- looking going backwards, going forwards, one of the milestones for the remainder of this year and the first part of next year, we have several very important milestones within reach and I'll go through them now. Firstly, the results from the 4,800 retrospective colorectal symptomatic population trial with our friends at Hvidovre Hospital in Denmark, anticipated in Q4 2015, a lot of people ask when will that be ready. We were targeting September, which is still possible, but I think it's probably more likely to be October now, we get that result through. It's processing well. We're getting through a lot of assays, but it's also summer time and it's important we get it very much right with the antibodies and the controllers, so, my thought is now it would most likely be finished in October, and then we can announce it. We're also working on the 14,000 prospective CIC trial with the same collaborators in Denmark. We have 2,500 samples from that set. We're expecting the next 2,500 in the next month or two and release results in Q1 of next year in the prospective screening trial from the first batch of that 14,000. Now, we can either release the first 2,500 or the 5,000 together and that will be determined by when we actually get the next lot of samples through, but, also a very key milestone and in the not too distant future, we expect it. We're also in the process of the filing for the CE mark on our first assay as discussed and we expect it to be approved in October or November of this year, hopefully more October than November but we'll find out, and as we said in the press release, with the final panel around mid-year so that we can launch our products in Europe, but of course, as we discussed in the press release, launching a product does not mean revenues immediately, it means you are legally allowed to sell. So, that's when the plans that we have in place in Europe, we aim to swing into action to begin the process of reimbursing and getting the product on the market. We also have potential of singing of larger trials in prostate and lung and pancreatic cancer, given the data and validation through papers in smaller trials in the next -- end of this year and early next year. There's also potential for some data on other cancers from the Danish trials. Obviously, when you're looking at large numbers of people as we are, there are other cancers which are known to be in this population, perhaps there's a possibility of that in the same time period as well. We also aim to have our EU commercialization strategy including upcoming milestones and timelines for European market access and sales of NuQ tests for colorectal cancer. We also aim to have our U.S. commercialization strategy, including the FDA, and CLIA strategy finalized this year and early next, with the first partner with GSS to enter the CLIA certified lab market and medical universities in the U.S. and we plan to initiate a bridging U.S. FDA endorsed trial with our ongoing large trials in Europe which will be designed to provide the clinical data with the patient populations more representative of the U.S. ethnicity to support the PMA submission for the potential FDA approval of our NuQ test for the early detection of colorectal cancer. In parallel, we aim to license our NuQ biomarker panels for the U.S. for development as an LDT in 2016, as we talked about through the CLIA labs and provide Volition with some revenue while proceeding with the FDA approval process. At the current IP position, we've filed two new patents, this in the second quarter and we're continuing to look for more patent opportunities and we are aiming to try to get our first U.S. patent issued in the same time frame, so that it should be another big milestone for the Company, but that's obviously not within our complete task, but we're pushing as hard as we can to get our first U.S. patents issued, which would be a huge milestone. We continue to believe that blood and other body floods, most notably sputum offer the best platform through which to screen for cancer, because the tests are non-invasive, convenient, have the opportunity for higher compliance versus other complicated unpleasant and/or invasive tests which often require separate doctor visits and/or advanced preparatory work such as for colonoscopy, x-ray or biopsy. Blood tests also tend to be quick and, ours' require just a fraction of a drop of blood which would allow our tests to be administered during regular scheduled blood draws and tested on the commonly used ELISA platform. Blood tests for a variety of cancers are proving to be accurate, cost effective, convenient and rapid with the ability to detect early stage cancers, which are still operable, thereby greatly improving patient outcomes. We're very excited about Volition's current status, clinically, commercially and financially and we look forward to delivering on these numerous milestones throughout the remainder of 2015 and 2016. We also have a very active upcoming investor relations calendar. We're presenting at Wedbush tomorrow in New York City, which is very exciting for us and thank you for the team at Wedbush for inviting us. This is the biggest conference we've ever been invited to. We're also presenting at the Rodman & Renshaw Conference in September 9 in New York and at the MicroCap Conference, October 8 in Detroit and perhaps with some more ones in the same time period this year as we continue to really get the message out there. And we also have a number of roadshows planned throughout September and October in New York, Boston, Philadelphia, Chicago and Milwaukee and Minneapolis as we continue to build investor awareness at VolitionRX. Thank you all very much for your interest in VolitionRX and for joining our second quarter 2015's earning conference call today. I'll open up for questions, but before I do, there is just one thing I wanted to mention. I think you noticed from our financials as at June 30, we still had over $9.3 million left in the bank in cash and equivalents. So, as you can see, we're very carefully managing the financial process. We're continuing to keep a very lean, very focused Company on getting the products out there, by doing a very large number of trials. I think our cash management and the ability to stick to the financial targets we have so far has been a very big strength of the Company and we will continue to be as careful as we can with all of our investors' money to make sure the money is used as wisely as it can be to get the best out of it we can from the trials and also through the process of launching our products as soon as we can once the trials are finished, assuming the data is good in Europe and in the U.S. and then worldwide. So, I think, it's been a very successful quarter financially as you can tell for the Company as well. So, thank you. I'd like to open up to any questions.

[Operator Instructions] We'll go first to Bruce Jackson with Lake Street Capital Markets.

Nice job on the expense control this quarter. If we could talk about some of the clinical trial milestones here with the two studies in Denmark, so now we're looking to have completion of the retrospective study in Q4 and then does that include the release of the data or would there be some additional time required to analyse the data?

No, I think it's very reasonable to assume Q4, hopefully in Q4, but we'll see, but that would be releasing of the data. So, that's a good point. I'm not saying when the trial's finished, that's data release time. So, yeah, data release time.

Thank you. Yeah, and then given that we're fairly close to the end of the trail, which you say that your line of sight on that completion date is, how confident are you in that completion date?

Reasonably -- yeah I think it's progressed extremely well. Our team's done a hell of a job in -- we've developed quite a few new assays and the antibodies as well as the controls. It's progressed very well. It's just -- I think October is a reasonably strong -- I've surely been involved with trials for a long period of time, but I would be reasonably confident in that timeframe.

Okay, as confident as you can be right, so?

Yeah. Things happen with public trials, but [indiscernible] very well, we've done a lot of assays. There's just a few things to tally up and there sometimes can be delays, but that would be a reason for strong expectation.

All right. Then, is there any linkage between the retrospective trial and the prospective trial? So, are they running in parallel or are they -- is it something where you get the prospective trial done first and then -- the retrospective trial done first and then you get the prospective sample?

Yeah, very good question, Bruce. Basically we have four Tecans now. Two, with Dr. Holdenrieder and two are in our lab. So, that's a massive increase, but we have a lot of trials going. So, we've definitely focussed in the 4,800 and we've done a few assays in the 2,500 of the prospective 14,000, so they are slightly concurrently, but obviously once we've finished the 4,800 trial there'll be a lot more capacity on the Tecans and with roughly half the number of samples, we currently have in the prospective compared to the symptomatic it can go a bit quicker, but -- so the short answer is they are being done at the same time, but obviously with a huge amount of data being done on the retrospective. When that is finished, the prospective will speed up a lot, but there's also other issues with the prospective, we need -- we're getting a larger number of samples coming in sometime in the next month or two, sometime in Q4, so then we'd want to think, do we want to release 2,500 or do the whole 5,000 just for a large sample size. So, that's decisions we'll make, but it will go a lot quicker once we've finished this big trial in the 4,800.

Okay.

Does that answer your question?

It does, and then, just one group of questions on the U.S. commercialization side. So, you've engaged the contract research organization to help with your LDT strategy. Does that strategy require that you have CE mark on the first panel in order to like start selling the kits?

No, the only key market is -- I guess you know a lot about it, but, LDTs are developed by the lab in the U.S. So, we licensed the knowledge to the lab, so, I'm not an expert on this area, but from what I understand, I can get you a full answer offline, but from what I understand they're not linked. You can develop an LDT and go through the process separately. That's my understanding.

Okay, and then any -- can you comment with any of the details on the U.S. regulatory pathway -- so, what are the -- for example, what will be the next steps you would want to take in order to move that forward?

Yeah, good question Bruce. So, basically the CLIA lab is concurrent with our FDA process. I think, we're licensing to CLIA labs to go to that process, but as we've always talked about, the FDA to us is very much the main game. So, we think our trials in Europe, particularly in Denmark are very, very good trials. They're about as good as you can get. We will most likely take on some, also full time FDA, not full time for us, but people who are specializing in just the FDA process and panel members to give us advice from the FDA, but what we're thinking, line of sight, what we're thinking now is we will get some more expert advice once we have the data from Denmark as we discussed in this call. We're also looking to do a -- I think the most reasonable request from the FDA would be for a bridging study in the U.S. partly focusing on different ethnicities, so we've had some discussions with different groups who can provide us with that and we'll get some very high level advises to see the package of retrospective, prospective and a bridging study, if that would be a very good package to take the FDA. Now, given everything else going on, I can't see us taking all that to the FDA much before sort of the first half of next year, but as you know how it works, you request a meeting, but we want to be fully with the trials in Europe and the plan for bridging study, so that if that is a concern of the FDA's which is possible, we can have that within -- already planned and the outline of what we would do, so it can be done very expeditiously.

Great. That's it for me. Thank you for taking my questions.

We'll go next to Brian Marckx with Zacks Investment Research.

Good morning, Cameron and congratulations on your new fatherhood.

Thank you, very much. Yes, it's a fantastic week.

In terms of the CE mark, you expect the initial CE mark in Q1 and the full panel by mid sort of --

Q4, the first one, I would think is a strong expectation of this year for the first one and then the first half of next year for the full panel.

Okay. How many additional markers are on the full panel and do you have to CE marked -- do you have to have each additional marker CE marked for the full panel?

Yeah, good question Brian. The data will determine what the best panel is and that's always a mixture of accuracy versus cost. Europe is quite cost sensitive as I'm sure you're aware. So, we'll make a determination once we have all the data as to what we think is the optimal number for the panel. Our estimation would be in the range of three or four assays at the moment, perhaps four or five. We'll see. It's not that much extra cost per one, but obviously when you're in a very price sensitive market, we're already very, very cheap but cost effective would be good just to see how that is, but that will be data driven and secondly on the point of the extra CE marks, the plan is we will CE mark each individual assays that come up and then based on the studies we have, we will also CE mark the first panel, now, we'd see ourselves improving the panels as we go, because we're doing a tremendous amount of ongoing work in the prospective as well as the 800 study and we have a lot of samples and we're developing new assays all the time. So, it was always our intent to -- once we have a product which we think is viable, we will launch and we'll continue to improve it, but that's a very good thing in Europe. It's not like the FDA process where it's not set in stone, but it's difficult to change year on year, but in Europe, because we can CE mark each individual assay and then as a panel, we can update that without a lot of work compared to the FDA, changing the actual nature of the assays. So, we would see ourselves launching the first one and then assuming we have better and better data on new assays, we could do the same thing again, CE mark each individual assay and then CE mark each panel as they become a product and so and the CE mark process is a lot of paperwork, but once you have the first one done, it becomes simpler and simpler for each one, because you've done -- a lot of it is repeatable paperwork. It's redoing the validation studies which are being done for us in Germany and preparing the paperwork. So, it is a considerable amount of work but it's a lot less for the second and third and fourth ones than the first one was, and of course, we're developing a lot of institutional experience and all that consultant work, so, I would see them being an easier process for the second, third and fourth than they were for the first. Is that -- is that how you see it Brian?

Yeah that's great. What are the other study data that will be used to support the follow on CE mark? I assume the CE mark's mostly going to be the 4,800 retrospect data and then the follow up --

Actually the CE mark -- the CE mark more pertains to they're produced properly, safely and the accuracy of each individual assay for the actual assays. So, for example, you can do it in the several hundred patients to get the CE mark, which will be a subset from the data samples, but obviously for reimbursement purposes, you want a big a study as possible, so that's where we'll use the data from the 4,800 and from the prospective, so there are really two different products so to keep in mind, the symptomatic population is the first product, the first samples and then we'll have CE marks for the panels we hope -- assume, as long as the data continues to support a screening product, which will be from the screening trial. So, you use several hundred patients to get the CE mark and then you, for reimbursement and for people actually want to buy large numbers of the tests we'll be publishing and putting the data in for the panels on the larger trials.

Do you have any insight in terms of reimbursement? Is there -- are there competitive tests in the market that you can kind of ballpark off of what to expect in terms of reimbursement in various parts of Europe?

Yeah, each country's a little bit different and some are insurance based, the national health here is very government based, so they are all different and they all have different programs. The markets for any other blood test currently be marketed for screening is epigenomics -- it's exactly -- it's in the region of EUR100 plus, I think to be really competitive, if we want to break into the large populations from the government programs we need to be a lot less than that. So, and again, we need to do a lot more market access, but we'd probably need to be reasonably competitive with FIT, FOBT and that would be in the EUR20 to EUR30 range. There are lots of costs involved in a fecal test, obviously if you're mailing it out in the process and following up, which you wouldn't have in a test, which is just given by your doctor, but I think to be competitive, my estimation would be, we need to be in that kind of range, but I think we've discussed before the cost of our tests are very cost effective to do. So, there's a very strong proper margin at those prices, but we need to do more market access. We're doing a lot of market analysis now in the countries which we're looking to target. So, it'll be driven a little bit by what's possible to be reimbursed by the governments and private payers as well as what the price points are and I think they're a little different in different countries, but that's why we've hired experts to tell us in MedPass and Decideum to make sure we hit the right notes, but any of those price points, we would see us being quite profitable, because when you're looking at analyser it's a very low cost production.

In terms of your initial thoughts on sales and marketing in Europe, are you leaning towards a direct sales force or distribution?

No, I don't think in any market, our preferred method would be -- I do not think in any market, our preferred method will be direct sales force. I think you've seen from Exact and they seemed to have quite a success doing it, but I don't see a need to do that. They're expensive. There are tremendous numbers of people who sell ELISA platform tests at a tremendous number of labs. I would see it that companies that have a new test which is not part of the existing infrastructure will need to have their own sales force as I would understand exactly, but I don't think there's any need for us to do that. I think, at the most, we would be hiring several key people to help us with key opinion leaders and dealing with providers in between, and when you're dealing with national programs there's no need for sales forces. Obviously, with national screening programs, the decline basically is one group, which is the government. So, there's no need for a large sales force, but our definitely preferred model in that will be borne out in our analysis from our experts, but I'm afraid model is only when very much needed to have any real sales forces ourselves and I do not see that being necessary in any or very many markets, because the infrastructure for ELISA tests or blood test is very large and pretty much any lab in the world can run ELISA. So, I don't see why we need to -- and they all have their own sales force typically depending on the groups, but every country and every group has companies which assist with this, so, I see our expertise very much being in the IP, developing the test and licensing and selling them through existing infrastructures.

All right. Thanks Cameron.

[Operator Instructions] We'll go next to Yi Chen with H.C. Wainwright.

Thank you for taking my question. Can you comment on whether there is any existing CPT code in Medicare that you can use for your tests?

Yeah, very good question. I'm no expert. I'll give you what advice we've been given and this is what I've tried to understand. There are existing CPT codes for ELISA and off the top of my memory it's around $17 per assay, but I'm not 100% certain, but that was what I was informed by a few people and a few consultants. So, if we -- the U.S. is probably more accuracy driven than just price, so if you were to stack four or five of those codes together with all the other costs, you're looking probably in the $80 to $100 range, that's my understanding of existing CPT codes. So, of course you can apply for a new one as a package, if you're looking to get more than that, but I think certainly once we're a mature product, assuming everything goes to plan, I would see ourselves wanting to be very widely used and in that cost range, because as we discussed before, the European tests, it's very profitable anywhere near that price point. So, I think our focus would very much be to try to get the test as widely used as possible, and make it as cost effective as possible given it's such a simple platform and it can be very much used in your normal clinical procedure. Is that answering your question?

Yes, thank you.

That concludes today's Q&A session. I will now turn the call back over to Cameron Reynolds.

I'd just like to thank you all for attending the conference call. As we discussed, it's a very exciting time for the Company and things are progressing extremely positively for us. We're really working through these trials and we're having some major data points through the end of this year and when they're released we'll obviously be informing the market and we're also doing a very extensive public relations investor relations process. So, thank you all very much for your interest in the Company and I look forward to speaking to you over the coming months. Thank you for your time.

That concludes today's conference call. Thank you for your participation.