BICX: Pandemic surge leads to worsening trend in opioid deaths

By Beth Senko, CFA

OTC:BICX

READ THE FULL BICX RESEARCH REPORT

Overdose deaths have more than doubled since 2015 according to the latest numbers from the US Centers for Disease Control and Prevention (CDC). For the 12-months ended April 2021, overdose deaths totaled almost 98,000, of which 75% were from opioids. Researchers attribute the increase to psychological distress arising from the prolonged pandemic and more fentanyl in the drug supply.

Policymakers are working to improve access to Medication Assisted Treatment (MAT) for opioid use disorder (OUD), but many patients still face the patchwork of complex federal, state and local regulations to treatment. At the federal level, the Drug Enforcement Administration (DEA), recently eased registration regulations for providers to dispense MAT and to dispense up to 28 days of medication to patients who are undergoing treatment and stable.

BioCorRx, Inc. BICX develops and markets medication-assisted treatment and behavioral therapy programs to treat opioid use disorder (OUD), alcohol use disorder (AUD), and weight-management. The Company's offerings combine proprietary cognitive-behavioral-therapy (CBT) and peer support with medications (primarily naltrexone) prescribed by a physician which can enable them to provide customizable solutions to their patients. BioCorRx has sold its Beat Addiction Recovery program for OUD and AUD since 2010.

BioCorRx is seeking approval for its subcutaneous naltrexone pellet (BICX104) for the treatment of opioid use (OUD) and alcohol use (AUD) disorders under the US FDA 505(b)(2) pathway. The upcoming clinical trial focuses on local safety and pharmacokinetics of BICX104. The phase 1, six-month open label trial will enroll 24 healthy volunteers. (A Randomized, Open Label, Single Dose Pharmacokinetic and Safety Study of Implantable Long Acting 3-month Naltrexone Subcutaneous Pellets Compared to Naltrexone IM Injection (Vivitrol) in Healthy Volunteers). Patients in the experimental arm will receive a single BICX104, subcutaneous naltrexone implant and monitored for 84 days. Patients in the active comparator arm will receive Vivitrol intramuscular injection containing 380 mg of naltrexone. Three consecutive doses will be administered once every 28 days for 84 days.

The trial will compare patients in both arms on pharmacokinetic parameters (drug and plasma levels of naltrexone over time) and safety (primarily incidence and severity of adverse events related to implantation). If all goes according to plan, the goal is to dose the first patient in late Q1/early Q2 this year depending on manufacturing timelines and volunteer recruitment.

BioCorRx will devote the next few years to seeking approval for BICX104, working to gain payer reimbursement for its addiction treatment program and building out sales of UnCraveRx, for weight management. During the next two years, we expect catalysts to come from several areas:

• Clinical milestones for BICX104 and progress towards filing for FDA approval.

• Public health and policymaker actions to educate the public and providers on the benefits of MAT.

• Expanded access to MAT in office-based settings.

• Fewer hurdles to insurance reimbursement for MAT in both private and public payer programs.

We are lowering our near-term expectations for BioCorRx based on management's focus towards filing for approval of the BICX104 implant rather than promoting its existing technology.

For 2021, our revenue assumption is now $43,000, down from $188,000. Our new earnings estimate is $(0.76) from $(0.57) and driven entirely by lower revenues on largely stable expenses. We expect largely similar results for 2022. Our 2022 revenue estimate is now $66,000, down from $403,000, and we look for earnings of $(0.72), slightly better than our previous estimate of $(0.92). The change in earnings is based on more modest SG&A spending and lower royalty payments for the UnCraveRx weight management program based on what we continue to see as a transitional year for consumer spending.

Our valuation model is based on the BICX104 implant, addiction recovery program, and UnCraveRx weight management program in the US market. For 2024, we forecast product sales of $1.7 million, growing to $4.8 million by 2025. We've modeled BICX104 product sales at $34 million and UnCraveRx sales of $1.2 million by 2031.

We've lowered our discount rate in our NPV model from 15% to 11% and increased the probability of success from 75% to 90% for BICX104. As a result of the slower revenue ramp and higher shares outstanding, our target valuation falls slightly from $5.65 to $5.10.

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