Sunshine Biopharma Inc. — Q2 2012 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2012. The interim financial statements are unaudited. Sunshine Biopharma is a development-stage pharmaceutical company focused on cancer drug development.
Financial results and position
| Metric | Three months ended June 30, 2012 | Six months ended June 30, 2012 | Comparable 2011 period |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| General and administrative expenses | $102,692 | $142,017 | $16,490 and $65,706, respectively |
| Net loss | $103,067 | $142,408 | $16,490 and $65,706, respectively |
| Basic loss per share | Less than $0.01 | Less than $0.01 | Less than $0.01 |
| Cash used in operating activities | Not stated separately | $59,949 | $61,150 for six months |
- Six-month G&A increased $76,311 year over year, chiefly due to $98,000 of financial consulting fees and approximately $16,000 of additional legal expense. Management said $17,500 of consulting fees was returned after June 30.
- Cash was $63,243 at June 30, compared with $60,692 at December 31, 2011. Current assets were $108,988, current liabilities $29,393, and shareholders’ equity $79,595.
- Liabilities included a $12,500 note payable bearing 12% interest, due August 31, 2012, and $391 of accrued interest. Accounts payable were $16,502.
- Six-month financing cash inflows were $62,500: $50,000 from common stock issuance and $12,500 from the note. Investing cash flow was zero. No operating margin is meaningful because the company had no revenue.
Business, outlook, and risks
- The lead candidate, Adva-27a, is being developed for multidrug-resistant breast cancer. The company reported completion of early preclinical studies in late 2011 and planned GMP manufacturing, IND-enabling studies, regulatory filing, and Phase I trials.
- Subject to financing, management expected Phase I trials to begin in late 2013 or early 2014, with trials anticipated to conclude by late 2014. These are forward-looking expectations, not assurances.
- The company estimated it would need approximately $5 million in debt and/or equity to implement its business plan. It reported no financing commitment or strategic funding agreement and said it lacked sufficient funds for anticipated increased expenses.
- Management cited potential compassionate-use access or partnering/licensing after successful trials, while acknowledging there was no assurance of trial success, regulatory approval, financing, or a transaction with a pharmaceutical company.
- In July 2012, the company accepted subscriptions for 840,000 shares and received $210,000, intended for scale-up and manufacturing of Adva-27a. The filing also notes the $17,500 consulting-fee return after quarter-end.
- Management concluded disclosure controls were effective at the reasonable-assurance level and reported no material change in internal control over financial reporting. No legal proceedings were reported.
Important facts for investors to verify
- Reconcile the share issuance disclosures: the financial statements describe 250,000 shares for $50,000 cash plus 230,000 shares for $69,000 of services, while Part II says 280,000 shares were issued for aggregate net proceeds of $56,000.
- Confirm receipt and terms of the reported July subscriptions, and whether subsequent financing was sufficient to meet near-term obligations and planned development costs.
- Verify the status of the August 31, 2012 note maturity and the timing and amount of the $17,500 consulting-fee refund.
- Assess the clinical, regulatory, manufacturing, and financing milestones underlying the proposed Adva-27a timetable; the filing provides no assurance that these milestones will be achieved.
- The filing reports 49,208,842 common shares outstanding at June 30 and 50,092,842 as of August 3, 2012; verify subsequent share changes and potential dilution.