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OXIS International, Inc. (OXIS) is a biotech company focused on developing cannabis based drug treatments. Shares of OXIS have performed well during 2015 and the stock is up 23% year-to-date.
After doing some research into the company’s recent developments, our analysts determined that OXIS will face a lot of hurdles if they want to get a drug approved by the Food and Drug Administration (FDA).
OXIS recently released its 2014 operating results which were in line with both our expectations and our concerns. The company is led by Anthony J. Cataldo, CEO, who likes to compare OXIS to GW Pharmaceuticals (GWPH) and INSYS Therapeutics (INSY). OXIS, however, is not GWPH nor INSY.
Technical420 attended the World Moneyshow Convention in Orlando this past February and we were surprised by some of his comments.
At the Moneyshow, Cataldo said, “OXIS has better technology and better management than GW Pharmaceuticals (GWPH) and INSYS Therapeutics (INSY).”
Our concern was how is a company that has been around for less than one year and has a $22 million market cap better than a company that has been around for 16 years and has a $1.5 billion dollar market cap? OXIS for now, does not have better technology or better management. The company only has 2 full time employees; GWPH and INSY have 294 and 382 employees respectively.
Here are some highlights from OXIS’s 2014 Operating Report
Operational Highlights
In late 2014, OXIS entered into patent license agreement with ID4. The company received a non-exclusive, worldwide license to certain intellectual property, including that related to treating multiple myeloma.
On March 10, 2015, OXIS executed a definitive licensing and development agreement with MultiCell Immunotherapeutics (MCIT) for the exclusive rights to three antibody-drug conjugates (ADCs) that MCIT will prepare for further evaluation by OXIS. Under the terms of the agreement, MCIT will develop three ADC product candidates which contain OXIS lead drug candidates OXS-2175 and OXS-4235.
Financial Highlights
- Incurred $2.4 million in selling, general and administrative expenses ($935,000 in 2013). This was due to an increase in stock based compensation and consulting fees.
- Interest expenses were $5.1 million in 2014 ($1.2 million in 2013). The increase is due to additional notes payable incurred in 2014.
- $885,000 in cash and cash equivalents as of December 31, 2014.
- OXIS has a $28.9 million working capital deficit.
- OXIS has an accumulated deficit of $112,956,000 through December 31, 2014.
- OXIS stated that the cash on hand is sufficient to fund administrative expenses for the next 12 months. The company obtained over $2,000,000 in funding through a private placement of convertible debentures with attached warrants and OXIS plans to raise additional capital in 2015.
Financing Deals
- April 2013: OXIS entered into a securities purchase agreement with one accredited investor to sell 10% convertible debentures with an initial principal balance of $75,000.
- October and November 2013: OXIS entered into a securities purchase agreement with four accredited investors to sell 10% convertible debentures with an initial principal balance of $172,000 and warrants to acquire up to 24,571,429 shares of common stock at an exercise price of $0.01 per share.
- December 2013: OXIS entered into a convertible demand promissory note with an initial principal balance of $189,662 convertible at $.007 per share and warrants to acquire up to 27,094,571 shares of the common stock at an exercise price of $0.01 per share.
- July 24, 2014: OXIS entered into a securities purchase agreement with ten accredited investors to sell 10% convertible debentures with an initial principal balance of $1,250,000 and warrants to acquire up to 178,571,429 shares of the common stock at an exercise price of $0.01 per share.
- October 15, 2014: OXIS entered into a securities purchase agreement with three accredited investors to sell 10% convertible debentures, with an exercise price of $0.01, an initial principal balance of $1,250,000 and warrants to acquire up to 100,000,000 shares of the common stock at an exercise price of $0.02 per share.
- March 13, 2015: OXIS entered into a securities purchase agreement with seven accredited investors to sell 10% convertible debentures, with an exercise price of $0.025, an initial principal balance of $2,050,000 and warrants to acquire up to 82,000,000 shares of the common stock at an exercise price of $0.03 per share.
Outlook
Investors need to understand that there are significant costs associated with pre-clinical and clinical testing. OXIS will need to continue to raise capital through all of 2015 if they want to execute on their business plan. The financing section shows that OXIS has been consistently raising money through a number of purchase agreements which will prove to be dilutive to existing shareholders.
OXIS has been a good short term investment for investors who have been able to capitalize on the stock’s volatility. Shares of OXIS tend to bounce between the $0.03-$0.05 range and short term investors can take advantage of this volatility. We do not recommend OXIS as a long term investment.Technical420 thinks that OXIS could be successful in the cannabis industry, but for now the risks outweigh the rewards and fort that reason we remain on the sidelines.
Disclosures
Technical420 LLC is not a FINRA member firm. Technical420 LLC is responsible for the preparation and distribution of research created in the United States. Technical420 LLC is located at 40 SW 13th St. Suite 1002, Miami, FL 33130.
Technical 420 LLC, and any of its directors, officers, employees, affiliates, or subsidiaries does not accept any form of compensation from companies in return for writing reports on them. Also Technical 420 LLC, and any of its directors, officers, employees, affiliates, or subsidiaries do not hold any stock positions in companies covered by Technical420LLC.
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