Bioniche’s current board and management have had many years and numerous opportunities to address the issues facing Bioniche and have completely failed to do so.
- Destruction of Shareholder Value. Bioniche’s management and board have a dismal record. Bioniche has a consistent history of annual losses, with not one year of positive earnings – ever. The share price has lost over 96% of its value since 1996. The following chart is a clear demonstration of the record of Bioniche’s management and board.
Notes: Annual Income (Losses) data sourced from publicly available financial statements of the Company available at bioniche.com and sedar.com. Share prices sourced from yahoofinance and were adjusted for share splits. 2013 Net Losses based on the first 6-month results ended December 31, 2012 and annualized.
- Despite this sustained failure, Mr. McRae has managed the company for more than 25 years while no discernible action has been taken by the board of directors. Bioniche’s long-suffering shareholders deserve better. Bioniche today is in dire straits. The company is over indebted, burning cash and rapidly running out of reserves. Notwithstanding repeated promises by management of a brighter tomorrow, revenues are declining. Consolidated revenues for the quarter ending March 31, 2013 were $7.4 million as compared to $8.7 million for the same quarter in fiscal 2012, a 16% decrease. Bioniche had an average monthly burn rate for the first three quarters of fiscal 2013 of $1.4 million as compared to $1.2 million for the same period of fiscal 2012. Bioniche had an accumulated deficit of $136.1 million as of March 31, 2013, and a current loss of $17.3 million for the nine months ending March 31, 2013;
- Bioniche board has run out of ideas. The board’s latest idea is to sell the core of Bioniche, its animal health business. It is the only part of the company that produces revenues and positive cash flows and is highly scalable. The announced plan to sell the animal health business will fundamentally change Bioniche. The company will cease to have sales revenue. It will in effect have been converted into a pre-revenue stage biotech company with substantial and ongoing operating costs. It’s a bad idea and needs to be stopped.
- Bioniche’s board wants to roll the dice with shareholder money. The board plans to take the proceeds from the sale of animal health, repay debt incurred in previous bad deals and spend the rest on its remaining development programs, centered around Econiche™ and Urocidin™. These programs produce no revenues, have troubled development histories, burn cash and have large, idle manufacturing facilities. These programs have destroyed shareholder value with no payoff visible for years, if ever.
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