Bioaffinity Technologies, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; unaudited consolidated results. The company develops lung-disease diagnostics and early-stage cancer therapeutics. Its CyPath Lung test is marketed as a laboratory-developed test through its CAP-accredited, CLIA-certified laboratory; it has not obtained FDA marketing authorization. The September 2023 acquisition of Precision Pathology Laboratory Services materially expanded laboratory operations, limiting comparability with Q1 2023.
Financial highlights
| Metric | Q1 2024 | Q1 2023 / prior date |
|---|---|---|
| Revenue | $2.406 million | $921 |
| Operating expenses | $4.352 million | $1.559 million |
| Operating loss | $1.945 million | $1.558 million |
| Net loss | $1.962 million | $1.533 million |
| Net loss per share, basic and diluted | $0.20 | $0.18 |
| Net cash used in operations | $2.346 million | $1.529 million |
| Cash and cash equivalents | $2.453 million at March 31 | $2.822 million at December 31, 2023 |
| Working capital | $2.160 million | Not stated for comparable date |
Q1 2024 revenue comprised $2.149 million in patient service fees, $238,000 in histology fees, $16,000 in medical director fees, and approximately $3,000 from Department of Defense observational studies. Patient service fees included about $47,700 related to CyPath Lung. The filing does not report a gross margin.
Total liabilities were $2.792 million, including $27,723 of notes payable and $1.467 million of lease liabilities (operating and finance, current and long-term). Current assets were $3.931 million and current liabilities were $1.772 million. Stockholders’ equity was $5.257 million; accumulated deficit was $46.566 million.
Material changes versus the prior comparable period
- Revenue rose substantially, primarily because the acquired laboratory’s patient and histology services are consolidated; Q1 2023 revenue was only $921 and largely predates that acquisition.
- Operating expenses increased $2.793 million, principally from acquired laboratory costs: direct costs were $1.573 million versus $87, and selling, general and administrative expense rose about 90% to approximately $2.186 million. Research and development rose 6% to $394,000; clinical development rose to $49,000.
- Net loss widened by approximately $429,000. Lower interest income and higher lease-related interest expense contributed to the deterioration in non-operating results.
- Operating cash use increased by approximately $817,000. Management attributed part of the increase to a temporary billing delay during the transition to a new medical billing provider, which contributed to a $312,000 increase in receivables.
- Cash fell by $368,000 during the quarter despite approximately $2.019 million of net financing cash inflow, including net proceeds from the March offering.
Outlook, risks and unusual items
- Going concern: Management concluded there is substantial doubt about the company’s ability to continue as a going concern for at least 12 months after issuance of the statements. The filing says cash resources, without additional financing or a significant revenue increase, were expected to support operations only through August 2024. Management anticipates continued losses and expects revenue to increase, but provides no specific financial guidance.
- The company may need additional equity or debt financing, strategic arrangements, grants, or warrant exercises. If funding is unavailable on acceptable terms, it may curtail development or commercialization plans, delay trials, cease operations, or seek bankruptcy protection.
- On March 8, 2024, the company sold 1.6 million shares and issued warrants for 1.6 million shares in a concurrent private placement. Gross proceeds were $2.5 million and net proceeds were approximately $2.005 million; placement-agent warrants covered another 32,000 shares. The new warrants have a $1.64 exercise price and require stockholder approval to become exercisable. The financing also triggered an adjustment to certain older warrant terms.
- At March 31, 8.839 million warrants were outstanding, with a weighted-average exercise price of $3.53; 618,847 options were also outstanding. Potential dilution is material relative to the 11.216 million common shares reported outstanding on the balance sheet at quarter-end.
- Key business risks include clinical and commercial execution, payer collections and revenue-estimation judgments, access to capital, competition, intellectual-property protection, and regulatory changes. CyPath Lung is currently offered as an LDT, not an FDA-authorized test; the company identifies potential future FDA and European regulatory pathways.
- No material pending legal proceedings were reported. Disclosure controls were assessed as effective at March 31, 2024. The company entered into a six-year office lease in April 2024, commencing September 1, 2024.
Important facts for investors to verify
- Cash runway, monthly cash burn, and financing needs after the stated August 2024 expected cash horizon.
- Collections, receivable aging, and whether the medical-billing transition’s temporary delay was resolved.
- Revenue growth, CyPath Lung test volumes and economics, and the laboratory’s contribution to operating results.
- Stockholder approval and exercise status of the March warrants, future dilution, and any additional capital raised.
- Regulatory and clinical milestones, including any progress toward FDA authorization or other commercialization pathways.