It has to be frustrating for shareholders who believe in the long-term value of BioCurex Inc. (OTCBB: BOCX) as the biotechnology company focusing on the development of products based on patented and proprietary technology in the area of cancer diagnostics continues to struggle with their share price despite positive press releases concerning recent developments. It may be hard to fault those who took last week’s announcement from the company regarding results of its RECAF blood test for cancer as an opportunity to unload shares at more than double the opening price but what it really shows is that there is little faith in the company’s ability to reach its vision, that being a developer and marketer of non-automated clinical laboratory tests, through the development of rapid, point-of-care test formats, and through marketing of its OncoPet RECAF test for cancer in companion animals.
Having been stuck around the 0.02 – 0.03 range for some time share shot to a high of 0.0523 on September 8, 2011, the day BOCX announced results indicating that their RECAF blood test for cancer could prevent 70% of unnecessary prostate biopsies. The entire tone of that press release was positive; highlighting the performance of RECAF compared to the FDA approved free-PSA test in discriminating prostate cancer from benign prostate hyperplasia (BPH). According to BOCX the RECAF test “outperformed the established free-PSA test by approximately 600% in its ability to prevent unnecessary prostate biopsies.”
While the free-PSA test was developed to reduce unwanted prostate biopsies, a procedure that comes with its own set of risks and drawbacks, the press release stated that “the number of unnecessary biopsies prevented by the free-PSA test is only 11-28% as shown in the approved FDA applications from large diagnostic companies.” Compare that to BOCX’s ability to prevent 70% of the unnecessary biopsies and it would appear that the RECAF test has a significant edge up on the established FDA approved procedure.
Just looking at the figures provided by BOCX the financial impact that the company could see from a commercialized RECAF test would be tremendous. As stated in the September 8 press release, “The standard PSA blood test costs between $20 and $60. The free-PSA blood test costs about $100. Medicare and most health insurers typically cover PSA tests for men over 50. It is estimated that in the USA alone – which represents 5% of the worldwide population – over 1.5 million men are eligible for a free-PSA test and therefore also for a RECAF test.”
Dr. Ricardo Moro-Vidal, President and CEO of BOCX, expressed optimism about the recent results, noting “We are very excited because we have received a very positive response from a number of prospect licensees and strategic alliance partners to whom we have shown these results.”
This is where shareholders begin to get disillusioned. BOCX already has already signed licensing agreements for its cancer detection blood tests with Abbott Laboratories (NYSE: ABT) and with Alere (NYSE: ALR), formerly Inverness Medical Innovations, and the fruits of those deal shave yet to ripen. Given the fact that BOCX has stated “Our objective is to receive cash from licensing fees, milestone payments, and royalties from such partnerships which support continued development of our cancer diagnostic portfolio” the outcome thus far has been disappointing at best.
BOCX has outlined their primary objectives for the 12-month period ending June 30, 2012 and this includes:
grant one additional license for our cancer detection blood test;
commercialize veterinary applications of RECAF testing technology through our wholly-owned subsidiary, OncoPet Diagnostics;
finish development for our rapid, point of care cancer test; and
commercialize other test formats through our wholly-owned subsidiary in China, BioCurex China Co., Ltd.
To do this BOCX has estimated that their capital requirements will be around $2,150,000, the bulk of which will go towards research and development and general and administrative expenses. How BOCX goes about raising this money is another source of contention for shareholders. At present time there are few options for BOCX that won’t dilute value for its shareholders because they are not drawing significant revenue from their licensing agreements and there is no indication that the situation will change in the near future.
BOCX has found commercialization much more difficult than initially thought. As described by the company the strategy early on was “was to obtain proof of concept for an application, demonstrate it to large companies and then license the technology to them, who would then develop it further into a commercial product and market it. Once an application was licensed, the idea was to move to the next application covered by our patents, obtain proof of concept and repeat the process.” Unfortunately things haven’t gone as planned and so now BOCX is focusing on presenting current and future licensees with a turnkey test. Back in June the company stated that as part of this new strategy they would file a 510K application later this year for marketing approval with the FDA, a necessary step to market the test in the U.S. The company has yet to provide an update on their plans to file for marketing approval.
Of course BOCX doesn’t have to worry about FDA approval for the marketing of their OncoPet RECAF test for cancer in companion animals yet that has done little in the way of building revenue stream for the company. BOCX needs money to maintain their operations and as a developmental stage biotechnology company they have accumulated a deficit of more than $25 million.
What’s difficult for shareholders to ignore is the fact that while BOCX has signed licensing agreements with two major companies neither one of the companies is advancing with RECAF. All is not lost for those shareholders who climbed in around the 0.045 – 0.050 range as BOCX’s most recent study, detailed in their September 8, 2011 press release, will be presented at the ISOBM (International Society of Oncology and Biomarkers) annual meeting in October. This could provide a boost to the share price but given the company’s history it appears unlikely that they will be able to maintain any elevated level for long.
