'BioGenix', a biotechnology firm, has exhausted its retained earnings after funding extensive R&D. According to the Pecking Order Theory of capital structure, what should be BioGenix's next preferred source of finance?

The Pecking Order Theory suggests that firms prioritize their sources of financing based on the principle of least effort and lowest asymmetric information costs. The order is: 1) Internal funds (retained earnings), 2) Debt, and 3) New equity as a last resort. Since BioGenix has exhausted retained earnings, straight debt is the next preferred source.