10-Q/A: AXIM Biotechnologies Reports Q1 2024 Financial Results, Focuses on Dry Eye Disease Market

AXIM Biotechnologies reports increased revenue but continues to operate at a loss in Q1 2024, shifting strategic focus to commercializing its Dry Eye Disease (DED) diagnostic system.

Summary

• AXIM Biotechnologies, Inc. filed its Quarterly Report on Form 10-Q/A for the period ended March 31, 2024.
• The company reported revenues of $52,979 for the three months ended March 31, 2024, compared to $7,397 for the same period in 2023.
• The net loss for the quarter was $292,299, a significant decrease from the $2,762,628 loss in Q1 2023.
• Research and development expenses were $15,495, down from $20,336 in the prior year's quarter.
• Selling, general, and administrative expenses decreased to $331,040 from $590,940 in Q1 2023.
• The company's strategic focus is now on commercializing its FDA-cleared Dry Eye Disease (DED) diagnostic system.
• AXIM aims to penetrate the DED diagnosis market with its tear collection method and approved tests.
• The company is working towards generating positive cash flow through its DED program.
• As of May 20, 2024, there were 291,458,824 shares of common stock outstanding.
• The company has negative working capital of $4,706,095 and an accumulated deficit of $72,477,157.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While revenue increased and losses decreased, the company still faces significant financial challenges and is dependent on raising additional capital. The strategic shift to DED and potential for growth in that market are positive, but the overall outlook remains uncertain.

Positives

• Revenue increased significantly in Q1 2024 compared to Q1 2023.
• Net loss was substantially reduced in Q1 2024 compared to Q1 2023.
• The company is focusing on a high-potential market with its DED diagnostic system.
• AXIM has secured key supply agreements and a commercial partnership to support its DED business.
• The company is actively pursuing a CLIA waiver to expand market access for its DED tests.
• The company has developed a novel tear sample collector system and filed for a patent.
• The company has been notified by the USPTO of three patent allowances, including its rapid point of care neutralizing antibody test.
• Versa Ophthalmics placed an order for an additional 50 IUL Lateral Flow Readers.

Negatives

• The company continues to operate at a loss.
• The company has negative working capital and an accumulated deficit.
• The company's ability to continue as a going concern is dependent on raising additional capital or generating profitable operations.
• The company may not be able to meet its contractual obligations to Arizona State University regarding past research.
• The company may not be able to maintain its staff at current levels.

Risks

• The company's ability to continue as a going concern is dependent on raising additional capital or generating profitable operations.
• The company may not be able to meet its contractual obligations to Arizona State University regarding past research.
• The company may not be able to maintain its staff at current levels.
• The company faces competition from other companies in the biotechnology and pharmaceutical industries.
• The company is subject to government regulations, including FDA requirements and CLIA regulations.
• The company is exposed to risks related to the COVID-19 pandemic and global supply chain constraints.
• The company is exposed to risks related to inflation.

Future Outlook

AXIM plans to focus on its DED business, complete clinical trials for CLIA waivers, generate positive reviews from eye care professionals, penetrate the ophthalmologist and optometrist marketplace, identify strategic acquisition targets, and grow its DED business to reach a positive cash flow run rate by the end of 2024.

Management Comments

• The Company believes it offers the most potential for rapid and immediate growth, which could lead to ultimate profitability for the organization.
• With our partnership with Versea, AXIM is now commercializing a healthcare solution that holds the potential to truly revolutionize the world.
• With the sales launch of AXIMs diagnostic platform, AXIM is executing on our vision of penetrating a market where DED impacts over 350 million people worldwide.
• This strategy will enable our business to grow revenues and increase our earnings power to enhance shareholder value.

Industry Context

The report highlights AXIM's strategic shift to the Dry Eye Disease (DED) market, which is projected to grow significantly in the coming years. The company aims to capitalize on the increasing demand for better DED testing and diagnosis, especially at the point-of-care, by commercializing its FDA-cleared diagnostic system and developing new solutions.

Comparison to Industry Standards

• The report mentions that there are currently five FDA approved tests for DED, including AXIM's Lactoferrin and IgE tests.
• AXIM's tests provide quantitative analysis, which is preferred over qualitative analysis offered by some competitors like Quidel's MMP9 test.
• The company is also developing a quantitative MMP-9 test, which would be a significant advancement in the ability to measure the degree of inflammation affecting dry eye patients.
• The report also mentions that the barrier for entrance into the dry eye space is difficult and requires extensive clinical studies, large capital expense and FDA 510(k) clearance, which gives AXIM a competitive advantage with its two 510(k) cleared tests.

Management Changes

Legal Proceedings

• The company has entered into a Settlement Agreement with the Plaintiffs manager to fully resolve the matter in its entirety.
• Effective February 7, 2024, the Company entered into a confidential Global Settlement Agreement Pursuant to the Settlement, the Company agreed to pay the following compensation to IMS: a total cash payment of $100,000 payable in various payments over a 24 month period; a $0.35 cassette sales participation payment on all single dry eye lateral flow test cassettes sold by the Company up to a total of $475,000, with such payments having no limit as to the time it takes to reach $475,000; and the issuance of 20,000,000 restricted shares of Company common stock.
• These financial statements reflect a loss resulting from the settlement agreement in the amount of $955,000.

Related Party Transactions

• The Company has an employment agreement with Catalina Valencia at a rate of $15,000 per month commencing March 17, 2020.
• The Company has a consulting agreement with Glycodots LLC whereby it will provide the services of Dr. Sergei A. Svarovsky at a rate of $15,000 per month commencing March 17, 2020.
• Effective December 26, 2023, AXIM Biotechnologies, Inc. (the Company) entered into a Convertible Note Purchase Agreement (the Agreement) with Medical Marijuana, Inc (MJNA), currently an affiliate of the Company and one of its largest shareholders, for the purchase of up to $750,000 face value in convertible notes.

Stakeholder Impact

• Shareholders: The strategic shift to DED and potential for growth could benefit shareholders, but the company's financial challenges and dependence on raising additional capital create uncertainty.
• Employees: The company may not be able to maintain its staff at current levels, which could impact employees.
• Customers: The company's focus on commercializing its DED diagnostic system could improve access to better testing and diagnosis for patients with dry eye disease.
• Suppliers: The company's supply agreements for DED readers and test strips could benefit suppliers.
• Creditors: The company's ability to meet its contractual obligations and repay its liabilities is uncertain.

Next Steps

• The company plans to conduct a comparative clinical study for its AXIM Eye test system in the 2nd quarter of 2024.
• The company intends to file waiver applications with the FDA for the AXIM Eye System.
• The company intends to run a clinical study for MMP-9 in the 3rd quarter of 2024.

Key Dates

Keywords

Dry Eye Disease, DED, Diagnostics, Ophthalmology, Biotech, Financial Results, AXIM Biotechnologies, CLIA Waiver, Tear Collection, Patents