Direct offering weighs on blood-based cancer test maker VolitionRx

Quotes on VolitionRx, a small-cap company developing a cancer test that requires only a drop of blood and could become as routine as a pregnancy test, slid almost 7% yesterday, March 26, closing at its lowest level since mid-August. The trigger was the company's announcement of a $2.3 million direct offering.

Yesterday, VolitionRx dropped almost 7% on the New York Stock Exchange to $0.51 per share, its lowest closing level since August 12, when it closed at $0.50 per share.

Earlier in the day, VolitionRx announced that it will issue and sell 2.36 million common shares to insiders — directors, executive officers, and certain existing shareholders — at $0.55 apiece. Other existing and new shareholders will also be offered nearly 1.74 million shares at $0.55 apiece, along with an equal number of five-year warrants granting the right to buy shares at $0.66 each. 

The company offered shares at the prevailing market price: For three consecutive days before the offering was announced, VolitionRx stock closed at $0.55 per share, according to Yahoo Finance.

VolitionRx expects to raise $2.3 million from the offering and an additional $1.1 million if all warrants are exercised (before offering expenses). The company plans to use the proceeds for product development, clinical trials, and working capital.

As mentioned, VolitionRx shares dropped to a similar level in August, when the company similarly announced a stock and warrant offering. Note that in September, Zacks Small-Cap Research spotlighted VolitionRx as undervalued.

VolitionRx develops and sells early-detection tests to help diagnose diseases in both humans and animals. The company claims that its Nu.Q technology can detect epigenetic changes before a standard biopsy and before the first symptoms appear. This technology underpins its veterinary cancer tests, which the company already sells in several countries through distributors. For example, VolitionRx has a distribution agreement with Fujifilm Vet Systems for the Japanese market.

Another VolitionRx test is designed to detect NETosis, a form of cell death found in patients with sepsis, cancer, and other conditions. The company has also recently announced that a new test in development showed the ability to detect various types of cancer — lung, breast, prostate, colon, and liver — at early stages with a low false-positive rate.

VolitionRx believes this test has the potential to “disrupt the multibillion-dollar liquid biopsy industry,” alluding to the current standard procedure for confirming cancer diagnoses. It is in “active discussions regarding our cancer portfolio with several large diagnostic and liquid biopsy companies, with the goal of signing multiple licensing agreements this year, including milestone payments in addition to ongoing revenue,” according to CCO Gael Forterre.

According to MarketWatch, out of the three analysts who cover VolitionRx, two have “buy” recommendations, while one rates it a “hold.” Their average target price of $3.37 per share suggests upside of more than 560% versus the last closing price.