BICX.OIDBiocorrx INC
10-Q: BioCorRx Inc. Reports Third Quarter 2024 Results Amidst Ongoing Development and Financial Challenges
Sentiment:
Quarterly Report
BioCorRx Inc. reports a net loss for the third quarter of 2024, with ongoing research and development efforts and financial restructuring activities.
Capital raiseThe company intends to raise additional capital through private placements of debt and equity securities.The company is dependent on raising additional capital to fund its operations and development activities.
Worse than expectedThe company's revenue was minimal, while operating expenses and interest expenses increased significantly, leading to a larger net loss compared to the same period last year.
Summary
- BioCorRx Inc. reported a net loss of $1.51 million for the third quarter of 2024, and a net loss of $3.98 million for the nine months ended September 30, 2024.
- The company's revenue was minimal at $0 for the quarter and $7,665 for the nine-month period, primarily due to decreased sales and distribution income.
- Operating expenses increased significantly to $1.66 million for the quarter and $4.01 million for the nine-month period, driven by higher stock-based compensation, accounting and legal fees, and research and development costs.
- The company received $572,777 in grant income for the quarter and $1.2 million for the nine-month period, supporting its research and development activities.
- Interest expenses also increased substantially, reaching $148,999 for the quarter and $648,726 for the nine-month period, due to new debt and increased interest rates on existing debt.
- The company has a working capital deficit of $7.87 million and an accumulated deficit of $82.04 million, raising concerns about its ability to continue as a going concern.
- BioCorRx is actively seeking additional capital through private placements of debt and equity securities to fund its operations and development activities.
Sentiment
Score: 3
Explanation: The document presents a concerning financial situation with minimal revenue, high expenses, and a going concern warning. While there are positive aspects like grant funding, the overall sentiment is negative due to the company's financial instability and operational challenges.
Positives
- The company secured a grant of $11.03 million from the National Institutes of Health to support the research of BICX104.
- The company received $572,777 in grant income for the quarter and $1.2 million for the nine-month period, supporting its research and development activities.
- The company is actively seeking additional capital through private placements of debt and equity securities.
Negatives
- The company experienced a net loss of $1.51 million in Q3 2024 and $3.98 million for the nine months ended September 30, 2024.
- Revenue was minimal at $0 for the quarter and $7,665 for the nine-month period, primarily due to decreased sales and distribution income.
- Operating expenses surged to $1.66 million in Q3 2024 and $4.01 million for the nine-month period, driven by increased stock-based compensation, accounting and legal fees, and research and development costs.
- Interest expenses increased significantly to $148,999 in Q3 2024 and $648,726 for the nine-month period, due to new debt and increased interest rates on existing debt.
- The company has a working capital deficit of $7.87 million and an accumulated deficit of $82.04 million, raising concerns about its ability to continue as a going concern.
- The company's disclosure controls and procedures were deemed not effective as of September 30, 2024.
Risks
- The company's ability to continue as a going concern is in doubt due to its working capital deficit and accumulated losses.
- The company is dependent on raising additional capital through private placements, which may not be available on acceptable terms.
- The company's revenue is minimal and dependent on a small number of customers.
- The company faces significant financial challenges, including high operating expenses and increasing interest expenses.
- The company has identified material weaknesses in its internal control over financial reporting.
- The company is involved in ongoing legal proceedings with Pellecome, LLC, which could result in further financial liabilities.
Future Outlook
The company intends to raise additional capital through private placements of debt and equity securities, but there can be no assurance that these funds will be available on terms acceptable to the Company, or will be sufficient to enable the Company to fully complete its development activities or sustain operations.
Management Comments
- Management has concluded that the financial statements fairly present the company's financial condition, results of operations, and cash flows despite material weaknesses in internal controls.
- Management is actively seeking additional capital to fund operations and development activities.
Industry Context
The company operates in the addiction treatment and pharmaceutical development industries, which are characterized by high research and development costs, regulatory hurdles, and competition. The company's focus on developing a long-acting naltrexone implant for opioid and methamphetamine use disorders aligns with the growing need for effective treatment options in these areas.
Comparison to Industry Standards
- BioCorRx's financial performance is significantly below industry standards for revenue generation, as many pharmaceutical companies at this stage have some form of recurring revenue from existing products or services.
- The company's high operating expenses, particularly in research and development, are typical for clinical-stage pharmaceutical companies, but the lack of revenue makes it difficult to sustain without external funding.
- The company's reliance on grants and private placements for funding is common in the biotech industry, but the level of debt and the going concern warning indicate a higher level of financial risk compared to peers.
- Compared to companies like Alkermes (ALKS), which markets Vivitrol, a naltrexone injection, BioCorRx is still in the development phase and has not yet achieved commercialization.
- Companies like Indivior (INDV), which focuses on addiction treatment, have established revenue streams from their marketed products, which BioCorRx currently lacks.
- The company's financial metrics are not comparable to established pharmaceutical companies with marketed products, but are more similar to early-stage biotech companies that are heavily reliant on external funding and grants.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| President | Brady Granier | Lou Lucido | 2024-02-01 | Resignation of previous President |
| Board Member | Harsha Murthy | 2024-04-02 | Resignation of Board Member | |
| Board Member | Brady Granier | 2024-03-31 | Resignation of Board Member |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Auditor Change | The Board of Directors dismissed Marcum LLP and approved the engagement of M&K CPAS, PLLC as the company's independent registered public accounting firm. | 2024-07-08 | This change may impact investor confidence and requires careful monitoring of the new auditor's performance. |
Legal Proceedings
- The company is involved in ongoing legal proceedings with Pellecome, LLC, which could result in further financial liabilities. The company has accrued $323,184 as a loss contingency for this matter.
Related Party Transactions
- The company has significant related party transactions, including advances from and promissory notes payable to directors and officers.
- The company entered into Exchange Agreements with Mr. Lucido and Lourdes Felix, exchanging debt and director fees for common stock.
Stakeholder Impact
- Shareholders face significant risk due to the company's financial instability and going concern warning.
- Employees may be impacted by potential cost-cutting measures or restructuring.
- Customers may be affected by the company's ability to continue operations and provide services.
- Creditors face increased risk of non-payment due to the company's financial challenges.
- Suppliers may be impacted by the company's ability to pay for goods and services.
Next Steps
- The company will continue to seek additional funding through private placements of debt and equity securities.
- The company will continue its research and development efforts for BICX104.
- The company will work to improve its internal controls over financial reporting.
Key Dates
| Date | Description |
|---|---|
| 2013-01-22 | Promissory note issued to Kent Emry. |
| 2015-12-10 | Royalty agreement with Alpine Creek Capital Partners LLC. |
| 2016-06-10 | Senior Secured Convertible Promissory Note issued to BICX Holding Company LLC. |
| 2016-07-28 | BioCorRx Pharmaceuticals, Inc. formed. |
| 2018-05-15 | Board of Directors approved and adopted the BioCorRx Inc. 2018 Equity Incentive Plan. |
| 2018-10-12 | BioCorRx Pharmaceuticals Inc. acquired six patent families. |
| 2019-01-17 | Company received a Notice of Award from the United States Department of Health and Human Services for a grant from the National Institutes of Health (NIH). |
| 2019-05-24 | Company entered into a Master Services Agreement (MSA) with Charles River Laboratories, Inc. |
| 2019-09-30 | Company entered into a Conversion Agreement with BICX Holding Company LLC. |
| 2020-07-17 | Company executed loan documents for Economic Injury Disaster Loan (EIDL). |
| 2020-10-31 | Company entered into a management services agreement with Joseph DeSanto MD, Inc. |
| 2021-09-09 | Company issued an unsecured promissory note payable to Kent Emry. |
| 2021-09-22 | BioCorRx Inc. and BioCorRx Pharmaceuticals, Inc. entered into a Inter-Company License Agreement. |
| 2022-01-11 | Company entered into a Master Clinical Trial Agreement (MCTA) with Orange County Research Center. |
| 2022-04-22 | Board of Directors approved and adopted the BioCorRx Inc. 2022 Equity Incentive Plan. |
| 2022-10-06 | Company issued an unsecured promissory note payable to a third party. |
| 2022-11-01 | Company issued an unsecured promissory note payable to Louis C Lucido. |
| 2023-01-25 | Company issued an unsecured promissory note payable to a third party. |
| 2023-04-03 | Company entered into the Louis 2023 Exchange Agreement. |
| 2023-08-29 | Company issued an unsecured promissory note payable to Louis C Lucido. |
| 2023-09-06 | Company issued an unsecured promissory note payable to one third party. |
| 2023-10-30 | Board approved Brady Graniers request for a paid administrative leave of absence. |
| 2023-11-09 | Company entered into Subscription Agreements with J and R Galligan Revocable Trust and Louis C Lucido. |
| 2023-11-10 | Company issued an unsecured promissory note payable to a third party. |
| 2023-12-08 | Company issued an unsecured promissory note payable to a third party. |
| 2023-12-29 | Brady Granier submitted his letter of resignation as President of the Company and Chief Executive Officer of BioCorRx Pharmaceuticals. |
| 2024-01-05 | California Superior Court for Orange County entered an amended judgement of $332,503 in favor of Pellecome. |
| 2024-01-31 | Brady Granier's resignation as President of the Company and Chief Executive Officer of BioCorRx Pharmaceuticals became effective. |
| 2024-02-01 | Lou Lucido transitioned to President of the Company. |
| 2024-03-01 | BioCorRx Pharmaceuticals Inc. was awarded a grant of $11,029,977 from the National Institutes of Healths National Institute on Drug Abuse. |
| 2024-03-08 | Company entered into an amendment agreement to a promissory note. |
| 2024-03-14 | Company issued an unsecured promissory note payable to a third party. |
| 2024-03-25 | Company entered into an amendment agreement to a promissory note. |
| 2024-03-29 | Harsha Murthy submitted his letter of resignation from his position as a member of the Board. |
| 2024-03-31 | Brady Granier submitted his letter of resignation from his position as a member of the Board. |
| 2024-04-02 | Harsha Murthy's resignation from the Board became effective. |
| 2024-04-09 | Company and its landlord agreed that the Company would move to a larger space within the building. |
| 2024-04-24 | Company entered into Exchange Agreements with Mr. Lucido and Lourdes Felix. |
| 2024-07-08 | Board of Directors dismissed Marcum LLP as the Companys independent registered public accounting firm and approved the engagement of M&K CPAS, PLLC. |
| 2024-07-11 | Company entered into an amendment agreement to a promissory note. |
| 2024-08-23 | Company entered into an amendment agreement to a promissory note. |
| 2024-09-30 | End of the reporting period for the quarterly report. |
| 2024-10-07 | Company entered into a promissory note amendment agreement. |
| 2024-10-14 | Company entered into three stock grant award agreements and two promissory note amendment agreements. |
| 2024-10-14 | Company entered into an Exchange Agreement with Mr. Louis Lucido. |
| 2024-11-14 | Date of the quarterly report. |
Keywords
BioCorRx, BICX104, Naltrexone, Addiction Treatment, Opioid Use Disorder, Methamphetamine Use Disorder, Pharmaceuticals, Clinical Trial, Financial Results, Going Concern, Debt, Equity, Grants, Research and Development
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