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   Biotech / Medicalbiocircuits BIOC


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To: Craig Rodkin who wrote (42)7/19/1997 7:02:00 PM
From: Steve Robinett
   of 65
 
Craig, et al,
I just got a letter dated July 3, '97 via my broker from BIOC. Evidently they failed to meet the performance benchmarks for the 2nd tranche of the April financing, i.e., placing 88 units. The April financing people pulled the plug on the deal but some of them went into a private placement (July financing) that gives BIOC about the same amount of money, about $5 million. This time, there are no performance requirements and the warrants are exercisable immediately at $.75. That has to be the volume we've seen recently, these guys flipping the warrants for a 50% profit.

As of 18 July 97, there are four new and very interesting Edgar filings. The 10Q/A2 states:
"On July 3, 1997, the Company closed the July Financing in which the Company sold 6,853,567 units at $0.75 per unit, each unit consisting of one share of common stock and one warrant to purchase one share of common stock at $0.75 per share. The warrants issued in the July Financing expire eighteen months after July 3, 1997, subject to certain adjustments. The July Financing resulted in gross proceeds to the Company of approximately $5.1 million. With these funds, the Company believes its cash resources will be adequate to satisfy its requirements until the end of the second quarter of 1998."

edgar-online.com

Will the $5 million get BIOC through to Q2 of '98? Only if they get a reasonable level of sales. The burn-rate is higher than $5 mill and all their filings say expenses are going up.
Share dilution and potential dilution is also going up, as is typical of last ditch efforts by a company to stay alive. For example, of interest is BIOC's failure to meet the performance guarantees in the letter of credit that got them a bank loan. This, too, was renegotiated, resulting in a reduction of funds available under the letter of credit by 2/3 to about a quarter million and lowering of the warrants associated with the letter of credit to an exercise price of $2 from $6.
Getting past $2/shr seems to me currently next to impossible. Even getting to it is almost impossible. Which, of course, doesn't mean you can't make a couple of bucks between $.75 and, say, $1-3/8
Best,
Steve

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To: T.L.Smith who wrote (44)7/20/1997 4:33:00 PM
From: Steve Robinett
   of 65
 
T.L. et al #2

After skimming over BIOC's latest filings, especially the impact of their recent financing activities as shown in the July 18 S3/A, my opinion on whether this dog can hunt has again changed, this time, back to no. The financing has come at a terrible dilution price. With the equivalant of 25 million shares now outstanding and subtracting the company's cash (the $5 million and change from the July financing), I get a ballpark valuation--being generous--of about $.05/share, a burn-rate of about $3.5 million a quarter and the prospect of rising expenses.
Any thoughts? I only gave the filings a quick read and may have missed something.
Best,
Steve

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To: Steve Robinett who wrote (46)7/22/1997 11:13:00 AM
From: Craig Rodkin
   of 65
 
Steve,

I really don't think this is as bad as it appears. We needed the financing and we received it. We all knew shares would be issued for the second tranche thus diluting the value of shares, the problem is that they were at .75 and not a $1.

What we need is a 10Q with some sales and decreased spending. I expect sales to be down from expectations (we didn't meet the requirements for tranche #2), but to be promising due to the BD oral pact

I took a long weekend and just glanced at the paperwork today. I give everything a read today and comment tomorrow.

-Craig

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To: Craig Rodkin who wrote (48)7/22/1997 3:00:00 PM
From: Steve Robinett
   of 65
 
Craig,
You may be right but BIOC itself says costs will be rising. The current burn rate worries me. Staying alive until Q2 '98 may be a problem. Dilution worries me. 25 million shares. The hole they have to dig out of gets deeper. Even taking everything at face value, the company itself just lowered valuation again. In any case, we'll see.
I look forward to your thoughts after you check out the recent filings.
Best,
Steve

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To: Steve Robinett who wrote (49)7/23/1997 8:44:00 AM
From: Craig Rodkin
   of 65
 
Steve,

The only good news (and it's at face value only) is BIOC per share loss will be lower this quarter (dilution of stock).

Bad news time. The $5m July financing probably will last until Q4; this is providing that BIOC pick up sales of 80 units (400k) for Q2 and 200 units ($1.2m) for Q3. If and only if BIOC reaches these figures and they have no delays in manufacturing (Sept 1996), do they have an actual shot at staying alive without further financing.

During the readings what really surprised me was the total accumulated debt. On Dec. 31 it was $51.5m and on March 31 it was $55.1m.

BD won't help either. The "hand shake" contract doesn't start until 1998.

This stock might be good for rides from 3/4 to 1-1/2. I'm in at 7/8 now and will take profits on the next run. Then buy back when it trickles down again. I figure BIOC has 2-3 good runs left.

-Craig

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To: Craig Rodkin who wrote (50)7/23/1997 9:27:00 AM
From: Steve Robinett
   of 65
 
Craig,
Sounds like we've got roughly the same take on BIOC. The BD deal does free them up to play to their strengths, i.e., developing new assays for the test menu but the recent financing makes the situation like a juggler juggling more and more eggs when someone tosses in a bowling ball. I agree more or less with your trading range comments.
Best,
Steve

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To: Steve Robinett who wrote (51)7/23/1997 11:01:00 AM
From: Craig Rodkin
   of 65
 
Steve ,

Below is the statement that was released for the Q. NOTE THE TOTAL AMOUNT OF SHARES USED TO DETERMINE LOSS/SHARE. This is fishy since they just stated (previously released statements) they had 15+M as of July 16 and a potential 6+m exercizable.

-Craig

----------------------------------------------------------------------

Wednesday July 23 10:26 AM EDT

Company Press Release

Source: Biocircuits Corporation

Biocircuits Corporation Announces Second Quarter 1997
Financial Results

SUNNYVALE, Calif., July 23 /PRNewswire/ -- Biocircuits Corporation (Nasdaq:BIOC) announced
today its financial results for the second quarter ended June 30, 1997. The company reported a net
loss of approximately $2.3 million, or $0.23 per share compared to a net loss of $3.7 million, or
$0.80 per share recorded in the second quarter of 1996. The second quarter results also compare
favorably to the first quarter 1997 when a loss of $3.5 million or $0.41 per share was reported.

``The $1.4 million reduction in losses is a direct result of the actions taken in April to reduce the burn
rate,'' stated John Kaiser, President and CEO. Mr. Kaiser further stated that, ``While placements of
IOS(R) units in end user sites during the second quarter did not meet the criteria for the second
tranche of the April financing, placements were approximately three times the first quarter
placements and the installed base of IOS systems has more than doubled since the first of the year.
Placement of units in end users substantially exceeded purchases by distributors, reducing distributor
inventory to a level well below first quarter levels.''

Mr. Kaiser also stated that, ``The improvement in end user placements and the previously announced
signing of the non-binding letter of intent with Becton Dickinson allowed the Company to
successfully close a $5.1 million financing to replace the funds that the Company would have
received in the second tranche of the April financing.''

BIOCIRCUITS CORPORATION
(a development stage company)

STATEMENTS OF OPERATIONS
(in thousands except per share data)
(unaudited)

Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
Revenues
Product sales $205 $111 $438 $156
Operating costs and expenses
Cost of sales 583 742 1,617 1,049
Research and development 1,027 1,662 2,507 4,015
Sales, general and
administrative 921 1,430 2,237 2,680
2,531 3,834 6,361 7,744
Loss from operations (2,326) (3,723) (5,923) (7,588)
Other income and expense 14 22 62 25
Net loss $(2,312) $(3,701) $(5,861) $(7,563)
Net loss per share $(0.23) $(0.80) $(0.63) $(1.77)
Shares used in computing net
loss per share 10,048 4,626 9,320 4,264
Pro forma net loss per share $(0.18) $(0.45) $(0.47) $(0.97)
Shares used in computing
pro forma net loss per
share (A) 12,985 8,249 12,345 7,758

(A) Including outstanding convertible preferred stock on an if converted basis

BIOCIRCUITS CORPORATION
(a development stage company)

CONDENSED BALANCE SHEETS
(in thousands)
(unaudited)

June 30, December 31,
1997 1996

Assets
Current assets:
Cash, cash equivalents and

short-term investments $ 87 $4,944
Other current assets 2,312 1,987
Total current assets 2,399 6,931
Property and equipment, net 1,349 1,375
Restricted cash 255 376
Other assets 52 44
$4,055 $8,726
Liabilities and stockholders' equity
Current liabilities $1,258 $1,576
Long-term obligations -- 72
Total liabilities 1,258 1,648
Stockholders' equity 2,797 7,078
$4,055 $8,726

SOURCE: Biocircuits Corporation
Contact: John Kaiser, President & CEO of Biocircuits Corporation, 408-752-8706

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To: Craig Rodkin who wrote (52)7/23/1997 4:32:00 PM
From: Steve Robinett
   of 65
 
Craig, this does make sense, though it doesn't reflect the company as of today. Their quarter closed on June 30. The dilutive financing closed after the end of the quarter, in July. Effectively, they now have twice as many shares outstanding as at the end of the quarter.
Again, I notice the burn rate, now $2.5 million/quarter even with last quarter's sales. The $5 million July financing will evaporate quickly at that rate and the July 18th filings says expenses are likely to go up going forward. Their suggestion that the July financing gets them to Q2 '98 still looks highly optimistic to me.
Best,
Steve

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To: Steve Robinett who wrote (53)7/23/1997 4:37:00 PM
From: Craig Rodkin
   of 65
 
Steve,

I won't believe any of the numbers until we see the SEC filing. I noticed that 2 form 144s were filed today. I took this to be a bad thing and put in a sell order for 1-1/8 (GTC). Hopefully it went through. I'll know tomorrow.

-Good luck
Craig

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To: Craig Rodkin who wrote (54)7/23/1997 4:42:00 PM
From: Steve Robinett
   of 65
 
Craig, The sell order sounds like the right decision to me. The 144s are probably from the July financing--sell the stock, get your money back and a small profit, maybe hang onto the warrants.
Steve

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