CNBX.OIDCnbx Pharmaceuticals INC
10-Q: CNBX Pharmaceuticals Reports Q3 2024 Results: Revenue Declines, Losses Narrow Amid Cost-Cutting Efforts
Sentiment:
Quarterly Report
CNBX Pharmaceuticals' Q3 2024 results show a decrease in revenue but a reduced net loss compared to the same period last year, driven by lower operating expenses.
Capital raiseThe company expects to incur a minimum of $1,000,000 in expenses during the next twelve months of operations.The company will have to raise funds to pay for its expenses.The company may have to borrow money from shareholders, issue equity or enter into a strategic arrangement with a third party.There can be no assurance that additional capital will be available to the company.
Worse than expectedThe company's revenue decreased significantly compared to the previous year, indicating challenges in generating income.
Summary
- CNBX Pharmaceuticals Inc. reported its financial results for the third quarter of fiscal year 2024, ending May 31, 2024.
- The company's revenue decreased to $130,074 for the nine months ended May 31, 2024, compared to $310,165 for the same period in 2023.
- Operating expenses decreased by $419,366, from $1,080,046 to $660,680, primarily due to reductions in general and administrative expenses, sales and marketing expenses, and research and development expenses.
- The net loss for the nine months ended May 31, 2024, was $634,614, a significant decrease from the $3,136,680 loss reported for the same period in 2023.
- As of May 31, 2024, CNBX had $73,406 in cash and cash equivalents, compared to $129,696 on August 31, 2023.
- The company expects to incur a minimum of $1,000,000 in expenses over the next twelve months and will need to raise additional funds to cover these costs.
- CNBX's independent auditors have raised concerns about the company's ability to continue as a going concern.
- The company is focused on developing RCC-33, a drug candidate for colorectal cancer, and hopes to begin Phase I/II clinical trials in 2024.
Sentiment
Score: 4
Explanation: The sentiment is cautiously negative. While the company has reduced its net loss and operating expenses, the decrease in revenue, limited cash reserves, and auditor concerns about its ability to continue as a going concern raise significant concerns. The potential of RCC-33 offers some hope, but the company faces substantial financial challenges.
Positives
- The company significantly reduced its net loss compared to the previous year, indicating improved financial management.
- Operating expenses were substantially decreased, reflecting successful cost-cutting efforts.
- CNBX is progressing with the development of RCC-33, a potential treatment for colorectal cancer, with plans to begin clinical trials.
- The company realized $114,673 from the sale of equipment.
Negatives
- Revenue decreased significantly compared to the previous year, highlighting challenges in generating income.
- The company's cash reserves have decreased, raising concerns about its short-term financial stability.
- Auditors have expressed doubt about the company's ability to continue as a going concern, indicating significant financial risks.
- The company incurred a capital loss of $88,934 from the realization of fixed assets.
Risks
- The company's limited cash reserves and the need for additional funding pose a significant risk to its operations.
- The uncertainty surrounding the company's ability to generate revenue and achieve profitability raises concerns about its long-term viability.
- The development of RCC-33 is subject to regulatory approvals and clinical trial outcomes, which are inherently uncertain.
- The company's dependence on related party transactions could create conflicts of interest or unfavorable terms.
Future Outlook
The company plans to advance its drug candidate RCC-33 through clinical studies and opportunistically add programs in areas of high unmet medical needs. They hope to start first in human Phase I/II clinical trials in 2024. However, the company's ability to continue as a going concern is dependent on generating revenues, raising investment capital, and implementing its business plan.
Management Comments
- The company hopes to start first in human Phase I/II clinical trials in 2024.
- We expect to incur a minimum of $1,000,000 in expenses during the next twelve months of operations.
- We will have to raise funds to pay for our expenses.
- We may have to borrow money from shareholders, issue equity or enter into a strategic arrangement with a third party.
Industry Context
CNBX Pharmaceuticals operates in the competitive biopharmaceutical industry, focusing on oncology and specifically colorectal cancer. The company's efforts to develop RCC-33 align with the growing demand for innovative cancer treatments. However, the industry is characterized by high research and development costs, regulatory hurdles, and the need for substantial capital investment.
Comparison to Industry Standards
- Comparing CNBX Pharmaceuticals to industry peers is challenging due to its pre-clinical stage and smaller size.
- Larger pharmaceutical companies like Pfizer, Merck, and Roche invest billions in R&D annually, dwarfing CNBX's R&D spending.
- Companies like Novocure, which focuses on cancer treatment using electric fields, have achieved market capitalization in the billions, demonstrating the potential upside in the oncology space.
- However, many small biotech companies fail to secure funding or achieve clinical success, highlighting the risks involved.
- CNBX's ability to secure partnerships or funding will be crucial for its long-term success, as many similar companies rely on collaborations to advance their drug candidates.
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Audit Committee | The Company has maintained an Audit Committee to better review our internal financial reporting. | N/A | Improved oversight of financial reporting. |
Related Party Transactions
- During the nine months ending May 31, 2024, the Company paid $ 73,732 in salaries, including socials benefits, to two directors, compared to $ 7,000 for the nine months ending May 31, 2023.
- During the nine months ending May 31, 2024 the Company accrued $ 242,500 in salaries, including socials benefits, to two directors compared to $ 334,658 for the nine months ending May 31, 2023.
- As of May 31, 2024, the Company had a balance outstanding payable to two directors: Gabriel Yariv and Eyal Barad in the total of $ 824,389 under Accounts payable and accrued liabilities.
- The Company had a balance outstanding at May 31, 2024 and at May 31, 2023 of $ 223,645 , payable to Cannabics, Inc.
- During the nine months ending May 31, 2024, the Company recorded a non-cash expense of $ 104,745 in share-based payment, to the company chairman, board members and advisor.
Stakeholder Impact
- Shareholders face the risk of further dilution if the company issues additional equity to raise capital.
- Employees may be affected by cost-cutting measures or potential layoffs if the company's financial situation does not improve.
- Customers of the company's laboratory services may experience disruptions if the company faces financial difficulties.
- Creditors face the risk of non-payment if the company is unable to generate sufficient revenue or secure additional funding.
Next Steps
- The company plans to continue the development of RCC-33 and initiate Phase I/II clinical trials in 2024.
- CNBX will need to secure additional funding to cover its operating expenses and capital requirements.
- The company will likely explore strategic partnerships or collaborations to advance its drug development programs.
Key Dates
| Date | Description |
|---|---|
| 2004-09-15 | CNBX Pharmaceuticals Inc. was incorporated in the State of Nevada. |
| 2010-09-30 | The company increased its authorized capital and effected a 20-for-1 reverse split of its common stock. |
| 2014-04-25 | Cannabics, Inc. acquired a majority of the issued and outstanding common stock of the Company. |
| 2014-05-21 | The Company changed its name to CNBX Pharmaceuticals Inc. |
| 2014-06-19 | FINRA granted final approval of Change of Name & Ticker Symbol of the Corporation from American Mining Corporation to CNBX PHARMACEUTICALS INC., with the new Ticker Symbol of CNBX. |
| 2014-08-25 | The Company organized G.R.I.N. Ultra Ltd. (GRIN), an Israeli corporation, as a wholly-owned subsidiary. |
| 2017-07-24 | The Company announced its establishment of a genetics laboratory to develop diagnostic tools based on human genome, tumor genetics and specific cannabinoids. |
| 2020-08-20 | The Company announced the creation of a new Division for its Anti-Tumor drug candidate RCC-33, for the treatment of colorectal cancer. |
| 2020-12-16 | We entered into a Securities Purchase Agreement (SPA) with an institutional investor for a private placement of senior secured convertible notes totaling up to an aggregate of $2,750,000 to be issued in three tranches subject to the achievement of certain milestones. |
| 2020-12-21 | We closed the first tranche and issued a note in the amount of $ 825,000 (the Initial Note). |
| 2021-02-22 | We closed the second tranche and issued a second note in the amount of $ 550,000 (the Second Note). |
| 2021-04-23 | We closed the third tranche and issued a third note in the amount of $ 1,375,000 (the Note). |
| 2021-10-18 | The Company filed 2 new Provisional Patent applications on Compositions and Methods for treating cancer, including colorectal cancer and early intervention therapy for colorectal cancer patients. |
| 2022-02-13 | The company established a Nomination and Governance Committee. |
| 2022-02-15 | We entered into a forbearance agreements with the institutional investor relating to that certain Senior Secured Note. |
| 2022-03-16 | We issued to the investor a demand promissory note (the Demand Note) in the principal amount of $ 280,000 (the Principal) with an original issue discount of $40,000. |
| 2022-05-10 | The Company filed a certificate of change (the Certificate) with the Secretary of State of the State of Nevada. Pursuant to the Certificate, the Company effectuated a one-for-one hundred twenty (1:120) reverse split of the issued and outstanding shares of common stock of the Company without changing the par value of the stock. |
| 2022-06-15 | The Company entered into a Securities Purchase Agreement providing for the issuance of the Convertible Promissory Note in the principal amount of $ 154,250 .00. ($154,000 net of issuance expenses). |
| 2022-08-31 | End of the fiscal year for which the company's independent auditors included an explanatory paragraph in their report regarding concerns about our ability to continue as a going concern. |
| 2022-11-28 | We entered into a forbearance agreements with the institutional investor relating to that certain Senior Secured Note. |
| 2023-01-31 | We entered into a forbearance agreements with the institutional investor relating to that certain Senior Secured Note. |
| 2023-03-31 | In the period of January through March 2023, the Company entered into a Securities Purchase Agreement providing for the issuance of the Convertible Promissory Note in the principal amount of $ 35,000 .00. ($ 35,000 net of issuance expenses). |
| 2023-05-12 | The Company effected a reverse-split of its common stock on a 1:120 basis. |
| 2023-06-12 | The Company entered into a Securities Purchase Agreement providing for the issuance of the Convertible Promissory Note in the principal amount of $ 65,000 .00. ($165,000 net of issuance expenses). |
| 2023-08-01 | Convertible Promissory Note carry interest of 5% and due on August 1, 2023. |
| 2023-08-24 | The warrants expired on August 24, 2023. |
| 2023-10-13 | The Company entered into a Securities Purchase Agreement providing for the issuance of the Convertible Promissory Note in the principal amount of $24,993 ($25,000 net of issuance expenses). |
| 2023-11-30 | Form 10-K as filed on November 30th, 2023, for a discussion of our critical accounting policies and estimates. |
| 2024-01-01 | The Convertible Promissory Note carry interest of 5% and due on January 1, 2024. |
| 2024-02-15 | The Company realized all of its fixed assets in consideration of $ 114,673 and recorded a capital loss of $ 88,934 . |
| 2024-02-29 | The lease was terminated at the end of February 2024. |
| 2024-05-31 | End of the quarterly period. |
| 2024-06-01 | The company issued 1,000,000 shares as a result of a convertible of a loan at the total of $11,491. |
| 2024-07-14 | As of July 14, 2024, the registrant had 31,111,352 shares of its Common Stock, $0.0001 par value, outstanding. |
| 2024 | The Company hopes to start first in human Phase I/II clinical trials in 2024. |
| 2025-08-31 | Q3 |
Keywords
pharmaceuticals, CNBX, financial results, colorectal cancer, RCC-33, clinical trials, biopharmaceutical, oncology, revenue, net loss, operating expenses, going concern, liquidity, capital resources
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