Bioxytran Inc. (OTCMKTS: BIXT) is perhaps one of the most undervalued biotechs in OTC. There is a real chance that if this drug is approved people can all say goodbye to the jab. Americans know the jabs are worth tens of billions of dollars to big pharma so what is a company that disrupts that worth? They recently announced that their lead candidate ProLectin-M has broad-spectrum antiviral activity. A solution for the tripledemic, yet the stock went nowhere on the transformative news announcement. Only after the ZeroHedge article positioned the drug as a realistic alternative to the vaccines, did the volume and price rocket higher. The stock attracted a lot of flippers and shorts and has since given up all its gains. The questions on investors’ minds are why the volatility, what is holding it down, and is it time to buy now? This article is going to unpack the situation and look at some valuation metrics for this biotech.
Price and Volume Spike
On March 8th the stock hit a high of $1.05 early in trading and closed up 17% on the day at $0.53. The upside volatility of over a 100% move was clearly triggered by the ZeroHedge article but the company seems to have some legacy shareholders selling into these rallies. In an EmergingGrowth interview, the CMO discussed this.
“We have one seller, the good news is we kind of knew who it was. the bad news is that it was selling, that we don’t necessarily know the motivation of the seller. We can speculate on it, based on the investor’s age. It’s probably an estate planning thing, but over the past six months what I can tell investors is that they’ve been responsible for 47.5% of all sales. We crunched the numbers we know what it is. Now that’s a lot of shares and it’s not something that we anticipated in our plan, but I want to be very transparent with our investors that we believe that he’s close to the end of his selling.”
Based on the dearth of volume leading up to the ZeroHedge article, the pattern is clear that the seller is patient and comes out to play when the volume spikes by feeding offers into the rallies instead of hitting bids. The one menu item not on the table is dilution. On March 2, 2023 the company withdrew its S-1 registration statement which means no registered stock is making its way into the float.
The company currently has 123 million in the outstanding shares 19 million in the float. The float has indeed expanded from 12 million to 19 million since Sept 2022. It’s possible that these shareholders were fatigued and did a little selling into the rally as well. The dollar volume of stock according to DDAmanda hit a new high with $717,775 on March 8th. The other observations are the number of days trading under $10,000 dollar volume. The shareholder base of BIXT is very solid because a $50 million market cap company should have at least .5% churn rate of $250,000. The real float in BIXT is extremely tiny ($1.0 – $2.0 mil est) and once the momentum starts the only thing that could stop it is a large offer.
Large Insider Ownership
Approximately 60% of the company is controlled by the top 3 executives at Bioxytran. Insider ownership at this level in a biotech is extremely rare. Biotechs are typically money pits and require the scientists who start them to give large portions of the company to venture capitalists in exchange for money to run the clinical trials. It’s rare to see a CEO with ownership over 5% by the time it’s ready for a phase 3. This management team is very cost-efficient and has completed clinical trials at a fraction of the cost that is typical. It follows suit that this management team is highly motivated to increase the value of equity in the company. Last year they forgave a couple of years of accrued salaries to clean up the balance sheet. The point to drive home about management is that they seem to be wanting to avoid dilution at all costs.
Saying Goodbye to the Jab
If there is one universal rally cry it’s got to be ending the jab for all those that really don’t like needles. The technology in this company renders COVID vaccines and very likely influenza vaccines obsolete. Instead of getting a jab that prevents “death or dying” people will now have a therapeutic that essentially makes them feel better within a day and importantly stops their contagion by 3 days so they don’t infect anyone else. Even with the virus’s high transmissible viral load, this drug delivers a crippling blow to the virus that needs that window of infectivity to perpetuate its existence. ProLectin-M appears to be a drug that you take as soon as you have symptoms.
How it Works
Their drug is an entry inhibitor which means it never lets the virus inside the cell. Almost all antivirals mess with the replication of the virus once in the cell. Only a few drugs have that elusive classification as entry inhibitors which explains their eye-opening results. Instead of trying to get the immune system to work more efficiently, they developed a molecule with magnetic-like attraction to the spike protein that neutralized the virus on contact without any side effects. The drug was shown with nuclear precision that it binds to the spike protein of the virus. For all intents and purposes, it defangs or neutralizes the virus on contact. This binding prevents the virus from entering the cell and the carbohydrate drug attached to it is then filtered out by the liver with the viruses attached. In theory, the drug prevents the immune system from kicking in and binds to the spike protein which means that if Long Covid is really due to viral persistence or fragments this experimental drug has the potential to treat it.
Weak Balance Sheet
The company appears to be at a Phase 3 ready state but its financials are weak. Among other things, this inability to raise money has been giving investors pause. The company is operating on fumes, but in the past has always found a way to do shareholder-friendly financing with long-term shareholders. Another possible option was telegraphed during the EmergingGrowth interview which suggested they were targeting companies with large cash balances.
In an Emerging Growth Interview, the CCO did an excellent job of making the case for a much higher valuation. One methodology was to look at the historical values of biotechs and the clinical stage of development they were in. Since BIXT is phase 3 ready their valuation should be in the range of $250 – $500 million for a drug without blockbuster potential. The reality is that their drug has blockbuster potential, which should put the existing valuation over $1.0 billion. Given this large valuation gap, investors appear to be concerned that there might be something that they overlooked and are reluctant to buy even though the stock has virtually no downside on a fundamental basis and 10X potential on the upside. BIXT fits most of the parameters of an ideal OTC stock.
Another way to look at the company is on a comparable basis using big pharma deals in the same disease indication. Early in the pandemic, Merck (NYSE: MRK) purchased a Phase 2 COVID-19 antiviral from OncoImmune for $425 million and eventually wrote the asset off. MRK is working on an RSV vaccine for infants. They purchased the RSV asset for $830 million in phase 2. BIXT has perhaps another couple million dollars of additional development in terms of a label expansion in RSV to get it to the same stage and the market would be much larger since it’s targeting both adults and the pediatrics. It’s difficult to value phase 2 antivirals because the big pharma deals between Roche Holdings (OTCMKTS: RHHBY) and Atea (NASDAQ: AVIR) for $350 million were complete failures. The most promising antiviral in late-stage development is Molecular Partners (NASDAQ: MOLN) collaboration with Novartis (NYSE: NVS) for $580 million. These early-stage comparables are massively discounted compared to Pfizer’s (NYSE: PFE) leading antiviral Paxlovid, which is expected to do $8.0 Billion, and MRK’s Molnupiravir which is expected to do $1.0 billion. The bottom line is that an approved antiviral is worth billions if not tens of billions, and there is a really good chance of approval of ProLectin-M this year.
The intellectual property to quickly make drug candidates to treat viruses has no comparable this century. Only when we go back to the late 20s with the discovery of penicillin do we see a drug discovery platform of such profound importance. Investors have been taking a ho-hum attitude thinking that this antiviral platform technology is not that big of a deal because the stock price hasn’t gone up. Investors should realize, the stock is at a tipping point and doesn’t reflect Bioxytran’s true value. As the company explained there were long-term shareholders exiting that have been controlling the narrative for months. The recent price action suggests that the seller might be done and that the stock is ready for some price discovery. There are a number of catalysts that could catapult the stock. The company could start the dose optimization study that will inform the dose of the Phase 3. The company has also been working the past year on filing a Phase 2 IND with the FDA in COVID-19. There is also the possibility of more research on other viruses.
The elephant in the room is the money to advance the clinical trials, and the investors may be losing sight of the forest for the trees. Even small financing (<$3 million) could get them to a licensing endpoint that was worth 10’s if not 100’s of millions. Investors need to be thinking of the big picture and not sitting on the sidelines waiting for financing. Bioxytran has a treatment for Covid, Influenza, RSV, and possibly Long Covid. At a $55 million market cap investors should be getting as many shares of this low floater as they can because when the overhang is gone the stock’s run could be explosive.
WHEN INSIDER FINANCIAL HAS A STOCK ALERT, IT CAN PAY TO LISTEN. AFTER ALL, OUR FREE NEWSLETTER HAS FOUND MANY TRIPLE-DIGIT WINNERS FOR OUR SUBSCRIBERS. WE SPECIALIZE IN FINDING MOMENTUM BEFORE IT HAPPENS!
Disclosure: Insider Financial and its owners do not have a position in the stocks posted and have posted this article for free without editorial input. This article was written by a guest contributor and solely reflects his opinions.