Sunshine Biopharma Inc. 10-Q Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 30, 2010, and the six-month period from inception (August 17, 2009) through June 30, 2010. Sunshine Biopharma Inc. is a smaller reporting company and a development stage company. Following a reverse merger in October 2009, the company shifted from a management consulting business to a pharmaceutical entity focused on researching and developing cancer treatments, specifically the lead compound Difluoro-Etoposide (Adva-27a).
Key Financial Metrics
| Metric | 3 Months Ended June 30, 2010 | 6 Months Ended June 30, 2010 | Inception to June 30, 2010 |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Net Loss | $(1,588,060) | $(1,672,709) | $(2,873,839) |
| Loss Per Share (Basic) | $(0.05) | $(0.06) | N/A |
| Cash and Equivalents (Ending) | $16,291 | $16,291 | $16,291 |
| Total Assets | $16,291 | $16,291 | $16,291 |
| Total Liabilities | $16,698 | $16,698 | $16,698 |
| Shareholders' Equity | $(407) | $(407) | $(407) |
| Net Cash Used in Operations | $(95,825) | $(95,825) | $(2,207,209) |
Material Changes and Unusual Items
- Significant Non-Cash Expense: The majority of the net loss for the three and six-month periods ($1,574,500) resulted from a one-time charge for consulting fees paid via the issuance of 1,675,000 shares of common stock. This transaction did not involve cash outflow.
- Cash Depletion: Cash and cash equivalents decreased from $112,116 at December 31, 2009, to $16,291 at June 30, 2010, representing a decline of approximately 85%.
- Intangible Asset Write-down: The six-month period included a $50,000 write-down of intangible assets.
- Stock Issuances: In June 2010, the company issued restricted common stock to various consultants for advertising, financial consulting, and public relations services.
Guidance, Outlook, and Risks
Plan of Operation: The company intends to initiate Phase I clinical trials for its lead compound, Difluoro-Etoposide, in Canada during 2010. These trials are expected to be completed by late 2011, pending financing.
Liquidity and Capital Needs: The company has no revenue and insufficient cash to fund its business plan. Management estimates a need for approximately $5 million in debt or equity capital to fully implement its plan. There are no assurances that this capital will be raised.
Risks:
- Going Concern: The company's ability to continue operations is dependent on obtaining external financing. Failure to raise funds will have a material adverse effect on the company.
- Regulatory Approval: No filings have been made with the FDA or Health Canada as of the filing date. Approval for clinical trials and eventual marketing is not guaranteed.
- Development Stage: The company has no history of profitable operations and is entirely dependent on the success of its drug development program.
Investor Verification Checklist
- Verify the status of the $5 million financing requirement and any signed agreements with investors.
- Confirm the timeline and regulatory status of the Phase I clinical trials for Difluoro-Etoposide in Canada.
- Review the valuation of the 1,675,000 shares issued for services in June 2010 to ensure fair market value was applied.
- Monitor the company's cash burn rate given the current cash balance of only $16,291.
- Check for any updates on the exclusive license agreement with Advanomics Corporation.