Business Context and Reporting Period
Company: Sunshine Biopharma Inc. (formerly Mountain West Business Solutions, Inc.)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Quarter and nine months ended September 30, 2010
Status: Development Stage Company / Smaller Reporting Company
Business Overview: Following a reverse merger in October 2009, the company pivoted from management consulting to a pharmaceutical focus. It is developing Adva-27a (difluoro-etoposide), an anti-tumor compound licensed from Advanomics Corporation, with plans to enter Phase I clinical trials in 2011.
Key Financial Metrics
| Metric | 9 Months Ended Sep 30, 2010 | 3 Months Ended Sep 30, 2010 | Balance Sheet (Sep 30, 2010) |
|---|---|---|---|
| Revenue | $0 | $0 | N/A |
| Net Loss | $(160,435) | $(1,512,274) | N/A |
| Cash and Equivalents | N/A | N/A | $108,148 |
| Total Assets | N/A | N/A | $108,148 |
| Total Liabilities | N/A | N/A | $23,781 |
| Shareholders' Equity | N/A | N/A | $84,367 |
| Operating Cash Flow | $(103,968) | N/A | N/A |
| Financing Cash Flow | $100,000 | N/A | N/A |
Note: The 3-month net loss of $(1,512,274) is heavily influenced by a reversal of stock issuance for services valued at $1,527,500.
Material Changes vs. Prior Period
- Expense Reduction: General and administrative expenses for the nine months ended September 30, 2010, were $160,435, a significant decrease of $972,694 compared to the $1,133,129 incurred in the prior period (inception through September 30, 2009).
- Non-Recurring Items: The prior period included $945,974 in write-downs of intangible assets and $155,150 in merger costs, neither of which were present in the current nine-month period.
- Stock Issuance Reversal: In September 2010, the company reversed the issuance of 1,625,000 shares previously issued for services, resulting in a $1,527,500 adjustment to professional fees and equity.
- Capital Raise: The company raised $100,000 in cash through the issuance of 166,667 shares of common stock at $0.60 per share during the quarter.
Guidance, Outlook, and Risks
- Plan of Operation: The company intends to initiate Phase I clinical trials for Adva-27a in Canada in 2011, targeting small-cell lung cancer and multi-drug resistant breast cancer.
- Capital Requirements: Management estimates a need for approximately $5 million in debt or equity capital to fully implement the business plan. There are no assurances this funding will be secured.
- Current Offering: A private offering was commenced on September 30, 2010, to sell up to 6,000,000 shares at $0.60 per share (targeting $3.6 million gross proceeds). As of the filing date, $100,000 had been raised.
- Liquidity Risk: The company has no revenue and relies on external financing. Current cash ($108,148) is insufficient to cover anticipated costs for clinical trials. Failure to raise capital will materially adversely affect operations.
- Regulatory Risk: No assurances are provided regarding the success of clinical trials or the receipt of marketing approval from the FDA or Canadian authorities.
Investor Verification Checklist
- Capital Sufficiency: Verify if the $108,148 cash balance is sufficient to sustain operations until the next funding round, given the lack of revenue.
- Stock Reversal Validity: Confirm the accounting treatment and legal validity of the $1.5 million reversal of stock issued for services in September 2010.
- Financing Progress: Monitor the status of the private offering (targeting $3.6M) and the $5M total capital requirement.
- Clinical Trial Timeline: Validate the feasibility of entering Phase I trials in 2011 given current cash constraints.
- Intellectual Property: Review the status of the exclusive license from Advanomics and the pending patent applications (PCT/FR2007/000697).