Sunshine Biopharma Inc (SBFM)

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Press Release
10-Q: SUNSHINE BIOPHARMA, INC
Published: Aug. 19, 2020 at 1:22 p.m. ET
The MarketWatch News Department was not involved in the creation of this content.

(EDGAR Online via COMTEX) -- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our consolidated financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on our behalf. We disclaim any obligation to update forward looking statements.

Overview and History

We were incorporated in the State of Colorado on August 31, 2006 under the name "Mountain West Business Solutions, Inc." Until October 2009, our business was to provide management consulting with regard to accounting, computer and general business issues for small and home-office based companies.

In October 2009, we acquired Sunshine Biopharma, Inc., a Colorado corporation holding an exclusive license (the "License") to a new anticancer drug bearing the laboratory name, Adva-27a. As a result of this transaction we changed our name to "Sunshine Biopharma, Inc." and our officers and directors resigned their positions with us and were replaced by Sunshine Biopharma, Inc.'s management at the time, including our current CEO, Dr. Steve N. Slilaty, and our current CFO, Camille Sebaaly each of whom remain part of our current management. Our principal business became that of a pharmaceutical company focusing on the development of our licensed Adva-27a anticancer compound. In December 2015 we acquired all issued and pending patents pertaining to our Adva-27a technology and terminated the License.

In July 2014, we formed a wholly owned Canadian subsidiary, Sunshine Biopharma Canada Inc. ("Sunshine Canada"), for the purposes of offering generic pharmaceutical products in Canada and elsewhere around the world. In April and June 2016 Sunshine Canada signed licensing agreements for four (4) generic prescription drugs for the treatment of breast cancer, prostate cancer and BPH (Benign Prostatic Hyperplasia).

In January 2018, we acquired all of the issued and outstanding shares of Atlas Pharma Inc. ("Atlas"), a Health Canada certified company dedicated to chemical analysis of pharmaceutical and other industrial samples. Effective April 1, 2019, we re-assigned all of our stock in Atlas back to the original owner in exchange for the Atlas related debt. See "Discontinued Analytical Chemistry Services Operations" below for a more detailed explanation of this acquisition and the subsequent disposition thereof in April 2019.

In March 2018, we formed NOX Pharmaceuticals, Inc., a wholly owned Colorado corporation, and assigned all of our interest in our Adva-27a anticancer compound to that company. NOX Pharmaceuticals, Inc.'s mission is to research, develop and commercialize proprietary drugs including Adva-27a.

In December 2018, we completed the development of a new nutritional supplement which we trademarked Essential 9tm. This new supplement is an over-the-counter tablet comprised of the nine amino acids which the human body cannot make. Essential 9tmhas been authorized for marketing by Health Canada under NPN 80089663. On March 12, 2019 Essential 9tmbecame available for sale on Amazon.ca and shortly thereafter on Amazon.com.

Effective February 1, 2019, we completed a 20 to 1 reverse split of our $0.001 par value Common Stock reducing the issued and outstanding shares of Common Stock from 1,713,046,242 to 85,652,400 (the "First Reverse Stock Split"). The number of authorized shares of our $0.001 par value Common Stock remained at 3,000,000,000 shares.

In November 2019, we received Health Canada approval for a new Calcium-Vitamin D supplement. Health Canada issued NPN 80093432 through which it authorized us to manufacture and sell the new Calcium-Vitamin D supplement under the brand name Essential Calcium-Vitamin Dtm.

Effective April 6, 2020, we completed another 20 to 1 reverse split of our $0.001 par value Common Stock, reducing the issued and outstanding shares of Common Stock from 1,193,501,925 to 59,675,417 (the "Second Reverse Stock Split"). The authorized capital of our Common Stock remained as previously established at 3,000,000,000 shares. Except in the paragraphs describing the reverse stock splits, all references in this Report to our Common Stock as well as the price per share of Common Stock are presented on a post First and Second Reverse Stock Splits basis.

On May 22, 2020, we filed a patent application in the United States for a new treatment for Coronavirus infections, including COVID-19. Our patent application covers composition subject matter pertaining to small molecules for inhibition of the main Coronavirus protease (Mpro), an enzyme that is essential for viral replication. The small molecules covered by the patent application were computer modelled and designed by Dr. Steve N. Slilaty, our CEO. The patent application has a priority date of May 22, 2020.

On June 17, 2020, we filed an amendment to our Articles of Incorporation (the "Amendment") with the Secretary of State for the State of Colorado, to eliminate the Series "A" Preferred Shares consisting of Eight Hundred and Fifty Thousand (850,000) shares, par value $0.10 per share, and the designation thereof, such shares to be returned to the status of undesignated shares of Preferred Stock. In addition, the Amendment also increased the number of authorized Series "B" Preferred Shares from Five Hundred Thousand (500,000) to One Million (1,000,000) shares.

Also on June 17, 2020, our Board of Directors authorized the issuance of Five Hundred Thousand (500,000) shares of our Series "B" Preferred Stock in favor of Dr. Steve N. Slilaty, our CEO and a director, in consideration for his development of a new treatment for Coronavirus infections, including COVID-19. The Series "B" Preferred Stock is non-convertible, non-redeemable, non-retractable and has a superior liquidation value of $0.10 per share. Each share of Series "B" Preferred Stock is entitled to 1,000 votes per share. This stock issuance brought Dr. Slilaty's holdings of our Series B Preferred Stock to One Million (1,000,000) shares.

Our principal place of business is located at 6500 Trans-Canada Highway, 4th Floor, Pointe-Claire, Quebec, Canada H9R 0A5. Our phone number is [phone] and our website address is www.sunshinebiopharma.com.

We have not been subject to any bankruptcy, receivership or similar proceeding.

Plan of Operation
Despite the fact that we now are generating revenues, we have elected to include a Plan of Operation to discuss our ongoing research and development activities relating to our proprietary drug development operations, as well as, our other business activities.

Proprietary Drug Development Operations

Coronavirus Treatment

On May 22, 2020, we filed a patent application in the United States for a new treatment for Coronavirus infections, including COVID-19. Our patent application covers composition subject matter pertaining to small molecules for inhibition of the main Coronavirus protease (Mpro), an enzyme that is essential for viral replication. The small molecules covered by the patent application were computer modelled and designed by Dr. Steve N. Slilaty, our CEO. The patent application has a priority date of May 22, 2020.

Viruses carry minimal genetic information as they rely, for the most part, on host cellular machinery to multiply. Coronavirus has a positive-sense RNA genome consisting of approximately 30,000 nucleotides, a size that places Coronavirus among the larger sized viruses. A positive-sense RNA genome is effectively a messenger RNA which allows the virus to express its genes immediately upon gaining entry into the host cell without the need for any prior replication or transcription steps as is the case with negative-sense RNA or DNA viruses. This is part of what makes Coronavirus a highly aggressive pathogen. Many of the causative agents of serious human diseases are positive-sense RNA viruses, including Hepatitis C, Zeka, Polio, West Nile, Dengue, Cardiovirus, and many others. Some positive-sense RNA viruses, such as the rhinoviruses that cause the common cold, are less clinically serious but they are responsible for widespread morbidity on a yearly basis.

The initial genome expression products of Severe Acute Respiratory Syndrome Coronavirus 2 (SARS-CoV-2), the causative agent of COVID-19, are two large polyproteins, referred to as pp1a and pp1ab. These two polyproteins are cleaved at 13 specific sites by the main Coronavirus virus encoded protease (Mpro or 3CLpro) to generate a number of mature viral proteins essential for viral replication. Mpro represents an attractive anti-viral drug development target as it plays a central role in the early stages of viral replication. The crystal structure of Mpro shows the presence of an active site Cysteine (Cys145) and a coordinated active site Histidine (His41), both of which are essential for the enzyme's proteolytic activity. We have designed and filed a patent application for a series of Mpro inhibitors which we plan to synthesize and test for potential viral replication inhibitory activity soon.

Adva-27a Anticancer Drug

Since inception, our proprietary drug development activities have been focused on the development of a small molecule called Adva-27a for the treatment of aggressive forms of cancer. A Topoisomerase II inhibitor, Adva-27a has been shown to be effective at destroying Multidrug Resistant Cancer cells including Pancreatic Cancer cells, Breast Cancer cells, Small-Cell Lung Cancer cells and Uterine Sarcoma cells (Published in ANTICANCER RESEARCH, Volume 32, Pages 4423-4432, October 2012). Sunshine Biopharma is direct owner of all issued and pending worldwide patents pertaining to Adva-27a including U.S. Patents Number 8,236,935 and 10,272,065.

Adva-27a is a GEM-difluorinated C-glycoside derivative of Podophyllotoxin (see Figure 1). Another derivative of Podophyllotoxin called Etoposide is currently on the market and is used to treat various types of cancer including leukemia, lymphoma, testicular cancer, lung cancer, brain cancer, prostate cancer, bladder cancer, colon cancer, ovarian cancer, liver cancer and several other forms of cancer. Etoposide is one of the most widely used anticancer drugs. Adva-27a and Etoposide are similar in that they both attack the same target in cancer cells, namely the DNA unwinding enzyme, Topoisomerase II. Unlike Etoposide however, Adva-27a is able to penetrate and destroy Multidrug Resistant Cancer cells. Adva-27a is the only compound known today that is capable of destroying Multidrug Resistant Cancer. In addition, Adva-27a has been shown to have distinct and more desirable biological and pharmacological properties compared to Etoposide. In side-by-side studies using Multidrug Resistant Breast Cancer cells and Etoposide as a reference, Adva-27a showed markedly greater cell killing activity.

These and other preclinical data have been published in ANTICANCER RESEARCH, a peer-reviewed International Journal of Cancer Research and Treatment. The publication which is entitled "Adva-27a, a Novel Podophyllotoxin Derivative Found to Be Effective Against Multidrug Resistant Human Cancer Cells"

We have been delayed in our clinical development program due to lack of funding. Our fund raising efforts are continuing and as soon as adequate financing is in place we will continue our clinical development program of Adva-27a by conducting the following next sequence of steps:

Adva-27a's initial indication will be Pancreatic Cancer for which there are currently little or no treatment options available. We are planning to conduct our clinical trials at McGill University's Jewish General Hospital in Montreal, Canada. All aspects of the clinical trials in Canada will employ FDA standards at all levels.

According to the American Cancer Society, nearly 1.5 million new cases of cancer are diagnosed in the U.S. each year. While particularly effective against Multidrug Resistant Cancer, we believe Adva-27a can potentially treat all cancer types as it is general chemotherapy drug. We believe that upon successful completion of Phase I Clinical Trials we may receive one or more offers from large pharmaceutical companies to buyout or license our drug. However, there are no assurances that our Phase I Trials will be successful, or if successful, that any pharmaceutical companies will make an acceptable offer to us. In the event we do not consummate such a transaction, we will require significant capital in order to manufacture and market our new drug on our own.

Pharmaceuticals Generic Operations

In 2016, our Canadian wholly owned subsidiary, Sunshine Biopharma Canada Inc. ("Sunshine Canada"), signed Licensing Agreements with a major pharmaceutical company for four prescription generic drugs for the treatment of Breast Cancer, Prostate Cancer and Enlarged Prostate. We have since been working towards commencement of marketing of these pharmaceutical products under our own, Sunshine Biopharma, label. :

Sunshine Canada is currently in the process of securing a Drug Identification Number ("DIN") for each of these products from Health Canada. We are also required to obtain a Drug Establishment License ("DEL") from Health Canada. Upon receipt of the DEL and DIN's, we will be able to accept orders for our own label SBI-Anastrozole, SBI-Letrozole, SBI-Bicalutamide and SBI-Finasteride. We cannot estimate the timing for our obtaining either the DIN's or the DEL due to variables involved that are out of our control.

We currently have a number of additional Generic Pharmaceuticals under review for in-licensing. While no assurances can be provided that we will acquire the rights to any additional generic drugs, we believe that a larger product portfolio will provide us with more opportunities and a greater reach into the marketplace.

Various publicly available sources indicate that the worldwide sales of generic pharmaceuticals are approximately $200 billion per year. In the United States and Canada, the sales of generic pharmaceuticals are approximately $50 billion and $5 billion, respectively. The generic pharmaceuticals business is fairly competitive and there are several multinational players in the field including Teva (Israel), Novartis - Sandoz (Switzerland), Hospira (USA), Mylan (Netherlands), Sanofi (France), Fresenius Kabi (Germany) and Apotex (Canada). While no assurances can be provided, with our offering of Canadian approved products we believe that we will be able to access at least a small percentage of the generic pharmaceutical marketplace.

Nutritional Supplements Operations

In December 2018, we completed the development of Essential 9tm, the first in a line of essential micronutrients products that we are planning to launch. On December 14, 2018, Health Canada issued NPN 80089663 through which it authorized Sunshine Biopharma Inc. to manufacture and sell the Essential 9tm product. Our Essential 9tm nutritional supplement tablets contain a balanced formula of the 9 Essential Amino Acids that the human body cannot make. Essential Amino Acids are 9 out of the 20 amino acids required for protein synthesis. Proteins are involved in all body functions - From the musculature and immune system to hormones and neurotransmitters. Like vitamins, Essential Amino Acids cannot be made by the human body and must be obtained through diet. Deficiency in one or more of the 9 Essential Amino Acids can lead to loss of muscle mass, fatigue, weight gain and reduced ability to build muscle mass in athletes. Sunshine Biopharma's Essential 9tm provides all 9 Essential Amino Acids in freeform and in the proportions recommended by Health Canada. Essential 9tmis currently available on Amazon.com and Amazon.ca.

In November 2019, we received Health Canada approval for another nutritional supplement, a new Calcium-Vitamin D tablets. Health Canada issued NPN 80093432 through which it authorized us to manufacture and sell the new Calcium-Vitamin D supplement under the brand name Essential Calcium-Vitamin D(TM).

Vitamin D is a group of steroid-like molecules responsible for increasing intestinal absorption of calcium, magnesium, and phosphate. They are also involved in multiple other biological functions, including promoting the healthy growth and remodeling of bone, cell growth, neuromuscular and immune functions, and reduction of inflammation. The most important compounds in this group are Vitamin D2 (ergocalciferol) and Vitamin D3 (cholecalciferol). Sunshine Biopharma's Essential Calcium-Vitamin D(TM) tablets contain both of these compounds as well as Calcium for optimum health benefits. We anticipate that Essential Calcium-Vitamin D(TM) will be available on Amazon.ca in the third quarter of 2020.




Discontinued Analytical Chemistry Services Operations

On January 1, 2018, we acquired all of the issued and outstanding shares of Atlas Pharma Inc. ("Atlas"), a privately held Canadian company providing analytical chemistry testing services ("Atlas Business"). The purchase price for the shares was $848,000 Canadian ($676,748 US). The purchase price included a cash payment of $100,500 Canadian ($80,289 US), plus the issuance of 50,000 shares of the Company's Common Stock valued at $238,000, and a promissory note in the principal amount of $450,000 Canadian ($358,407 US), with interest payable at the rate of 3% per annum ("Atlas Note").

Effective April 1, 2019, we disposed of Atlas by re-assigning all of our stock in Atlas back to the original owner in exchange for the Atlas Note. As a consequence of the sale, the operating results and the assets and liabilities of the discontinued Atlas Business are presented separately in the Company's financial statements as Discontinued Operations. In additions, prior period balances have been reclassified to present the operations of the Atlas Business as Discontinued Operations.

Results Of Operations

Comparison of Results of Operations for the Six Months ended June 30, 2020 and 2019

During the six months ended June 30, 2020, we generated revenues of $26,247 from the sale of products generated by our Nutritional Supplements Operations which we launched in March 2019. The direct cost for generating these revenues was $9,044. We generated $3,239 in revenues during the comparable period in 2019, which included a little over three months of sales activities. The direct cost for generating these revenues was $1,572.

General and Administrative Expenses during the six months ended June 30, 2020 was $183,471, compared to $190,073 during the six months ended June 30, 2019, a decrease of $6,602. The reason for this relatively small decrease was due to our continuing effort to reduce expenses across the board. In terms of specific expense categories that saw a relatively large change were executive compensation which increased by $11,878 due to the issuance of Series B Preferred Stock to our CEO and consulting which decreased by $18,108 owing to our ongoing cost cutting effort.

We incurred $550,390 in losses arising from debt conversion during the six months ended June 30, 2020, compared to $65,094 in losses from debt conversion during the similar period in 2019. This large increase was due to the specific structure of our convertible debt combined with recent volatility in our stock price. We also incurred $36,719 in interest expense during the six months ended June 30, 2020, compared to $64,639 in interest expense during the similar period in 2019. The decrease was a result of a more rapid rate of conversion by our debt holders. In addition, we incurred $582,237 in losses from discontinued operations during the six month ended June 30, 2019 as a result of the sale of Atlas Pharma Inc. and termination of our Analytical Chemistry Services Operations. We did not incur this loss during the similar period in 2020.

As a result, we incurred a Net Loss of $732,572 ($0.01 per share) during the six month period ended June 30, 2020, compared to a net loss of $913,432 ($0.07 per share) during the six month period ended June 30, 2019.

Comparison of Results of Operations for the Three Months Ended June 30, 2020 and 2019

During the three months ended June 30, 2020, we generated $15,145 in revenues, compared to $3,033 in revenues for the same three months period of 2019, an increase of $12,112. All of these revenues were generated from our new Nutritional Supplements Operations which we launched in March 2019. The direct cost for generating these revenues was $5,161 for the period ended June 30, 2020, compared to $1,460 for the same period in 2019. Our gross profit increased to $9,984 for the period ended June 30, 2020, compared to a gross profit of $1,573 for the same period in 2019.

General and Administrative expenses during the three month period ended June 30, 2020 were $138,553, compared to General and Administrative expense of $67,770 incurred during the three month period ended June 30, 2019, an increase of $70,783. Nearly all categories of our General and Administrative expenses saw an increase during the three month period ended June 30, 2020, compared to the same period in 2019, except for consulting which decreased by $8,756. The expense categories that increased included accounting fees by $13,060, legal fees by $14,038, office expenses by $4,633, and officer and director compensation by $48,249. The increase in officer and director compensation was due to the issuance of Series B Preferred Stock to our CEO. Overall, we incurred a loss of $138,553 from our operations in the three month period ended June 30, 2020, compared to a loss of $67,770 in the similar period of 2019.

In the area of other expenses, we incurred $20,363 in interest expense during the three months ended June 30, 2020, compared to $18,342 in interest expense during the similar period in 2019. In addition, we incurred $498,997 in losses arising from debt conversion during the three months ended June 30, 2020, compared to $42,786 in losses from debt conversion during the similar period in 2019.

As a result, we incurred a net loss of $638,313 ($0.01 per share) for the three month period ended June 30, 2020, compared to a net loss of $710,890 ($0.03 per share) during the three month period ended June 30, 2019.

Liquidity and Capital Resources

As of June 30, 2020, we had cash or cash equivalents of $85,593.

Net cash used in operating activities was $113,050 during the six month period ended June 30, 2020, compared to $281,423 for the six month period ended June 30, 2019. We anticipate that overhead costs and other expenses will increase in the future as we move forward with our Proprietary Drug Development activities and expansion of ourGeneric Pharmaceuticals and Nutritional Supplements operations discussed above.

Cash flows provided by financing activities were $159,007 for the six month periods ended June 30, 2019, compared to $219,428 during the six months ended June 30, 2019. Cash flows used in investing activities were $-0- for both the six month period ended June 30, 2020, compared to $12,976 during the six month period ended June 30, 2019.

During the six months ended June 30, 2020, we issued a total of 156,390,606 shares of our Common Stock valued at $807,909 for the conversion of outstanding notes payable, reducing the debt by $230,074 and interest payable by $27,445 and generating a loss on conversion of $550,390.

During the six month period ended June 30, 2019, we issued a total of 931,751 shares of our Common Stock valued at $151,169 for the conversion of outstanding notes payable, reducing debt by $83,000 and interest payable by $3,841 and generating a loss on conversion of $65,094.

During the six months ended June 30, 2020, we did not sell any of our capital stock for cash; however, we entered into the following new debt arrangements:

On April 27, 2020, we received a Paycheck Protection Program loan in the principal amount of $50,655 from the US Small Business Administration as part of the US government's COVID-19 relief program. This loan accrues interest at the rate of 1% per annum. We are obligated to make payments of principal and interest totaling $2,133 each month commencing November 27, 2020, with any remaining balances due and payable on or before April 27, 2022. The proceeds derived from this loan may only be used for payroll costs, interest on mortgages, rent and utilities ("Admissible Expenses"). In addition, the Paycheck Protection Program provides for conditional loan forgiveness if we utilize at least 75% of the proceeds from the loan to pay Admissible Expenses. As of the date of this Report, all of the proceeds from this loan have been utilized for Admissible Expenses and we believe that we will qualify for forgiveness of the entire amount of the loan.

On June 1, 2020, we received monies in exchange for a Note Payable having a Face Value of $42,000 with interest accruing at 8% is due June 1, 2021. The Note is convertible after 180 days from issuance into Common Stock at a price 35% below market value.

On June 9, 2020, we received monies in exchange for a Note Payable having a Face Value of $37,000 with interest accruing at 8% is due June 9, 2021. The Note is convertible after 180 days from issuance into Common Stock at a price 35% below . . .

Aug 19, 2020

https://www.marketwatch.com/press-release/10-q-sunshine-biopharma-inc-2020-08-19

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