Sunshine Biopharma Inc. — Q1 2011 Form 10-Q
Reporting period: Three months ended March 31, 2011. Financial statements are unaudited. Sunshine Biopharma is a development-stage pharmaceutical company focused on cancer drug research and development.
Financial performance and position
| Metric | Q1 2011 | Q1 2010 |
|---|---|---|
| Revenue | $0 | $0 |
| General and administrative expenses | $49,216 | $84,649 |
| Net loss | $49,216 | $84,649 |
| Operating cash used | $44,330 | $1,284,106 |
| Investing cash flow | $0 | $0 |
| Financing cash flow | $0 | $0 |
- At March 31, 2011, cash and cash equivalents were $118,061; total current assets were $159,334, including $41,273 of prepaid expenses.
- Total liabilities were $330, consisting of accounts payable. The filing reports no debt balance.
- Shareholders’ equity was $159,004; accumulated development-stage deficit was $1,787,728. Basic loss per share was reported as less than $0.01.
- No gross profit or operating margin is meaningful because the company had no revenue.
Changes from the comparable period and quarter-end
- Net loss fell by $35,433 year over year. Management attributed the lower expense to the absence of a $50,000 intangible-asset write-down recorded in Q1 2010 and reduced legal and accounting costs, partly offset by higher office and public-relations expenses and $17,650 in research and development costs.
- Operating cash use declined substantially from the prior-year quarter. The cash flow statement reports no financing proceeds in either quarter.
- Cash declined $44,330 from December 31, 2010, while accounts payable fell from $11,404 to $330. The company issued 20,000 common shares for services, valued at $12,000, during the quarter.
Outlook, risks and other matters
- Lead candidate Adva-27a remained in preclinical development. Management said Phase I trials for breast and prostate cancer in the United States were expected by mid-to-late 2012, with completion targeted for mid-to-late 2013; these plans depended on obtaining financing. The company was also negotiating with Montreal’s Jewish General Hospital on Canadian lung-cancer trials.
- A January 2011 research agreement with the SUNY Research Foundation covers development work for Adva-27a or Adva-32a, including preclinical studies and planned Phase I trials for breast and prostate cancer. The agreement is funding-dependent and may terminate if sufficient funding is not obtained. Binghamton University has an option to continue development through later trial stages on terms to be agreed.
- The company estimated it would need approximately $7.5 million in debt and/or equity to implement its business plan. It had no definitive commitment for that financing and stated that it lacked sufficient funds for anticipated increased costs. It planned to seek private-placement proceeds, short-term borrowing and grants.
- Management anticipated that overhead would increase as research and clinical work expanded. The filing cautions that interim results are not necessarily indicative of full-year results. Management reported disclosure controls effective at March 31, 2011 and no material change in internal control over financial reporting.
- No legal proceedings or defaults upon senior securities were reported. The company issued 20,000 shares under a private offering at $0.60 per share; it was offering up to 6,000,000 shares.
Important facts for investors to verify
- Reconcile the Q1 2010 cash-flow figures: the statement reports ending cash of negative $1,171,990 despite beginning cash of $112,116 and operating cash used of $1,284,106; this does not align with the reported cash-balance presentation and needs clarification.
- Confirm the financing required, any committed funding or grants, and whether the stated $7.5 million need remains current.
- Verify trial timing, funding conditions, research-agreement status, and any regulatory or commercialization progress for Adva-27a.
- Review the company’s share count and potential dilution: 30,711,342 common shares were outstanding as of May 10, 2011, in addition to 850,000 preferred shares, each convertible into 20 common shares according to the filing.