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. Sunshine Canada has signed licensing
agreements for four (4) generic prescription drugs for the
treatment of breast cancer, prostate cancer and BPH (Benign
Prostatic Hyperplasia). We have applied for and are currently
awaiting the issuance by Health Canada of a Drug Establishment
License and a Drug Identification Number for each of our four (4)
generic products in order to begin marketing of the
same.
In
January 2018, we acquired Atlas Pharma Inc. (“Atlas”),
a Canadian privately held analytical chemistry company offering
sample testing services to the pharmaceutical and other industrial
sectors. Effective April 1, 2019, we assigned all of our interest
in the Atlas securities back to the seller in exchange for the
Atlas related debt.
In
March 2018, we formed NOX Pharmaceuticals, Inc., a 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 nutritional supplement is an over-the-counter tablet comprised
of the nine essential amino acids which the human body cannot
synthesize. Essential 9tm
has been authorized for marketing by Health Canada under NPN
80089663.
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 “Reverse
Stock Split”). All references in this report to our issued
and outstanding Common Stock as well as the price per share of
Common Stock are presented on a retroactive post Reverse Stock
Split basis.
On
March 12, 2019 Essential 9tm
became available for sale on Amazon.ca and later on Amazon.com in
the United States and elsewhere around the world. On March 23, 2019
we recorded our first revenues of Essential 9tm
sales.
On
April 30, 2019, we were issued United States Patent Number:
10,272,065, a new patent extending proprietary coverage of our
Adva-27a anticancer drug until 2033.
Our
principal place of business is located at 6500 Trans-Canada Highway, 4th Floor,
Pointe-Claire, Quebec, Canada H9R 0A5. Our phone number is
(514) 426-6161and 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 currently are generating revenue, we have elected
to include a Plan of Operation to discuss our ongoing business
activities.
Proprietary Drug Development Operations
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. Patent Numbers 8,236,935 and
10,272,065.
Figure
1
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, and other anti-tumor drugs
currently in use, Adva-27a is able to 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 (see Figure 2).
Figure
2
Our
preclinical studies to date have shown that:
●
Adva-27a is effective at killing different types
of Multidrug Resistant cancer cells, including Pancreatic Cancer
Cells (Panc-1), Breast Cancer Cells (MCF-7/MDR), Small-Cell Lung
Cancer Cells (H69AR), and Uterine Sarcoma Cells
(MES-SA/Dx5).
●
Adva-27a is unaffected by P-Glycoprotein, the
enzyme responsible for making cancer cells resistant to anti-tumor
drugs.
●
Adva-27a has excellent clearance time (half-life
= 54 minutes) as indicated by human microsomes stability studies
and pharmacokinetics data in rats.
●
Adva-27a clearance is independent of Cytochrome
P450, a mechanism that is less likely to produce toxic
intermediates.
●
Adva-27a is an excellent inhibitor of
Topoisomerase II with an IC50 of only 13.7 micromolar (this number
has recently been reduce to 1.44 micromolar as a result of
resolving the two isomeric forms of Adva-27a).
●
Adva-27a has shown excellent pharmacokinetics
profile as indicated by studies done in rats.
●
Adva-27a does not inhibit tubulin
assembly.
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” [ANTICANCER RESEARCH
32: 4423-4432 (2012)] is available on our website at www.sunshinebiopharma.com.
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:
●
GMP Manufacturing
of 2 kilogram for use in IND-Enabling Studies and Phase I Clinical
Trials
●
Regulatory Filing
(Fast-Track Status Anticipated)
●
Phase I
Clinical Trials (Pancreatic Cancer Indication)
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 a 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. The following, Figure 3, is a
space-filling molecular model of our Adva-27a.
Figure 3
Generic Pharmaceuticals 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 securing regulatory approval to commence marketing these
pharmaceutical products under our own, Sunshine Biopharma, label.
These four generic products are as follows:
●
Anastrozole (brand
name Arimidex® by AstraZeneca) for treatment of Breast
Cancer;
●
Letrozole (brand
name Femara® by Novartis) for treatment of Breast
Cancer;
●
Bicalutamide (brand
name Casodex® by AstraZeneca) for treatment of Prostate
Cancer;
●
Finasteride (brand
name Propecia® by Merck) for treatment of BPH (Benign
Prostatic Hyperplasia)
Figure
4 below shows a draft of our Generic Pharmaceuticals label using
Anastrozole as an example.
Figure
4
We are
currently looking into a number of additional Generic
Pharmaceuticals for possible in-licensing. No assurances can be
provided that we will acquire the rights to all or any of these
generic drugs. We believe that a larger product portfolio will
provide us with more opportunities and a greater reach into the
marketplace. We hope to further build our Generic Pharmaceuticals
portfolio over time. There are no assurances this will
occur.
Various
publicly available sources indicate that the worldwide sales of
generic pharmaceuticals are approximately $250 billion per year. In
the United States and Canada, the sales of generic pharmaceuticals
are approximately $70 billion and $7 billion, respectively. The
generic pharmaceuticals business is very competitive. There are
several multinational players in the field including Teva (Israel),
Novartis - Sandoz (Switzerland), Hospira (USA), Mylan
(Netherlands), Sanofi (France), Fresenius Kabi (Germany) and
Pharmascience (Canada). While no assurances can be provided, with
our offering of Canadian approved products we believe that we will
be able to access a small percentage of the generic pharmaceuticals
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
dietary 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 9tm
is currently available on Amazon.com, Amazon.ca and soon other
Amazon sites. Figure 5 below shows our 60-Tablet Essential
9tm
product.
Figure 5
Results Of Operations
Comparison of Results of Operations for the Nine Months ended
September 30, 2019 and 2018
During
the nine months ended September 30, 2019, we generated revenues of
$10,565 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 $6,865. We did not generate
any revenues during the comparable period in 2018.
General
and Administrative Expenses during the nine months ended September
30, 2019 was $394,746, compared to $1,020,579 during the nine
months ended September 30, 2018, a decrease of $625,833. The reason
for this relatively large decrease was an effort to reduce expenses
across the board. Specifically, executive compensation decreased by
$601,879, accounting by $37,031, legal by $31,560 and office by
$10,649. The only category that saw an increase was consulting
expenses which increased by $42,438 as a result of the launching of
our Nutritional Supplements products and our continuing effort to
raise capital to fund our Proprietary Drug Development program. In
addition, we incurred $15,204 in research and development (R&D)
expenses during the nine months ended September 30, 2019 compared
to no R&D expenses incurred during the similar period in
2018.
We
incurred $185,814 in losses arising from debt conversion during the
nine months ended September 30, 2019, compared to $685,348 in
losses from debt conversion during the similar period in 2018. We
also incurred $92,486 in interest expense during the nine months
ended September 30, 2019, compared to $115,910 in interest expense
during the similar period in 2018. The decrease in both of these
two expense categories was a result of some convertible notes
having been paid off or reduced prior to maturity. In addition, we
incurred a loss of $582,237 during the nine months ended September
30, 2019, compared to $8,847 in losses from discontinued operations
during the similar period in 2018 as a result of termination of our
Analytical Chemistry Services Operations and sale of Atlas Pharma
Inc.
As a
result, we incurred a Net Loss of $1,263,673 ($0.01 per share) for
the nine month period ended September 30, 2019, compared to a Net
Loss of $1,817,500 ($0.04 per share) during the nine month period
ended September 30, 2018.
Comparison of Results of Operations for the Three Months Ended
September 30, 2019 and 2018
For the
three months ended September 30, 2019, we generated $7,326 in
revenues, compared to no revenues for the same three months period
of 2018. All of these revenues were generated from our newly
launched Nutritional Supplements Operations. The direct cost for
generating these revenues was $5,293.
General
and Administrative Expenses during the three month period ended
September 30, 2019 were $204,673, compared to General and
Administrative Expenses of $288,825 incurred during the three month
period ended September 30, 2018, a decrease of $84,152. The reason
for this decrease was an effort to reduce expenses across the
board. Specifically, executive compensation decreased by $121,400,
office by $19,925 and legal by $11,444. The two categories that saw
an increase were accounting which increased by $5,929 and
consulting by $48,222 as a result of the launching of our
Nutritional Supplements products and our continuing effort to raise
capital to fund our Proprietary Drug Development program.
In
addition, we incurred $15,204 in R&D expenses during the three
months ended September 30, 2019 compared to no R&D expenses
incurred during the similar period in 2018.
We
incurred $27,847 in interest expense during the three months ended
September 30, 2019, compared to $20,546 in interest expense during
the similar period in 2018. We also incurred $120,720 in losses
arising from debt conversion during the three months ended
September 30, 2019, compared to $591,763 in losses from debt
conversion during the similar period in 2018. Both of these
decreases were a result of decreased borrowings or prepayment of
principal balances prior to maturity. In addition, we incurred a
loss of $-0- during the three months ended September 30, 2019,
compared to $5,278 in income from discontinued operations during
the similar period in 2018 as a result of termination of our
Analytical Chemistry Services Operations and sale of Atlas Pharma
Inc.
As a
result, we incurred a Net Loss of $350,241 ($0.00 per share) for
the three month period ended September 30, 2019, compared to a Net
Loss of $907,556 ($0.02 per share) during the three month period
ended September 30, 2018.
Liquidity and Capital Resources
As
of September 30, 2019, we had cash or cash equivalents of
$81,973.
Net cash used in Operating Activities was $367,959
during the nine month period ended September 30, 2019, compared to
$396,759 for the nine month period ended September 30,
2018. 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 our
Generic Pharmaceuticals, and Nutritional Supplements operations as
discussed above.
Cash
flows provided by Financing Activities were $352,100 for the nine
month period ended September 30, 2019, compared to $354,853 during
the nine months ended September 30, 2018. Cash Flows
used in Investing Activities were $14,416 for the nine month period
ended September 30, 2019 compared to $22,370 during the same nine
month period in 2018.
During
the nine months ended September 30, 2019, we issued a total of
225,773,660 shares of $0.001 par value Common Stock for the
conversion of outstanding notes payable, reducing the debt by
$241,160 and interest payable by $11,402 and generating a loss on
conversion of $221,813.
During
the nine months ended September 30, 2019, we entered into the
following new debt arrangements:
●
On January 8, 2019,
we received net proceeds of $50,500 in exchange for a note payable
having a face value of $54,000 and accruing interest at the rate of
8% per annum. The note, due on January 8, 2020, is convertible
after 180 days from issuance into $0.001 par value Common Stock at
a price 35% below market value.
●
On January 10,
2019, we received net proceeds of $38,000 in exchange for a note
payable having a face value of $40,660 and accruing interest at the
rate of 8% per annum. The note, due on October 10, 2019, is
convertible after 180 days from issuance into $0.001 par value
Common Stock at a price 35% below market value. Through September 2019, the holder
of this note elected to convert a total of $40,660 in principal and
$1,693 in accrued interest into 32,096,307 shares of $0.001 par
value Common Stock valued at $75,469 leaving a principal balance of
$-0- and incurring a loss on conversion of $33,116.
●
On February 5,
2019, we received net proceeds of $35,000 in exchange for a note
payable having a face value of $37,450 and accruing interest at the
rate of 8% per annum. The note, due on October 10, 2019, is
convertible after 180 days from issuance into $0.001 par value
Common Stock at a price 35% below market value.
●
On February 11,
2019, we received net proceeds of $50,000 in exchange for a note
payable having a face value of $52,000 and accruing interest at the
rate of 8% per annum. The note, due on November 30, 2019 is
convertible after 180 days from issuance into $0.001 par value
Common Stock at a price 35% below market value. Through September 2019 the holder of
this note elected to convert a total of $52,000 in principal and
$2,080 in accrued interest into 45,763,500 shares of $0.001 par
value Common Stock valued at $81,990 leaving a principal balance of
$-0- and incurring a loss on conversion of $27,910.
●
On March 18, 2019,
we received net proceeds of $38,000 in exchange for a note payable
having a face value of $40,660 and accruing interest at the rate of
8% per annum. The note, due on December 18, 2019 is convertible
after 180 days from issuance into $0.001 par value Common Stock at
a price 35% below market value. Through September 2019 the holder of
this note elected to convert a total of $11,500 in principal into
12,945,591 shares of $0.001 par value Common Stock valued at
$22,008 leaving a principal balance of $29,160 and incurring a loss
on conversion of $10,508.
●
On March 18, 2019,
we received net proceeds of $38,000 in exchange for a note payable
having a face value of $40,660 and accruing interest at the rate of
8% per annum. The note, due on December 18, 2019 is convertible
after 180 days from issuance into $0.001 par value Common Stock at
a price 35% below market value.
●
On July 2, 2019, we
received net proceeds of $38,000 in exchange for a note payable
having a face value of $40,000 and accruing interest at the rate of
8% per annum. The note, due on April 30, 2020 and is convertible
after 180 days from issuance into $0.001 par value Common Stock at
a price 35% below market value.
●
On July 26, 2019,
we received net proceeds of $47,500 in exchange for a note payable
having a face value of $50,000 and accruing interest at the rate of
8% per annum. The note, due on July 26, 2020 and is convertible
after 180 days from issuance into $0.001 par value Common Stock at
a price 35% below market value.
●
On September 12,
2019, we received net proceeds of $41,000 in exchange for a note
payable having a face value of $43,000 and accruing interest at the
rate of 8% per annum. The note, due on July 15, 2020 and is
convertible after 180 days from issuance into $0.001 par value
Common Stock at a price 35% below market value.
We are not generating adequate revenues from our
operations to fully implement our business plan as set forth
herein. As a result, our future success will depend on the future
availability of financing, among other things. Such financing will
be required to enable us to expand our Nutritional Supplements
Business and further develop our Generic Pharmaceuticals Operations
and Proprietary Drug Development Program. We intend to raise funds
through private placements of our Common Stock and/or debt
financing. We estimate that we will require approximately $7
million (approximately $2 million for the Nutritional Supplements
and Generic Pharmaceuticals Operations and approximately $5 million
for the Proprietary Drug Development Program) to fully implement
our business plan in the future and there are no assurances that we
will be able to raise this capital. Our inability to obtain
sufficient funds from external sources when needed will have a
material adverse effect on our plan of operation, results of
operations and financial condition. Our plan is to fund our
Proprietary Drug Development Program through the sales of Generic
Drugs and Nutritional Supplements if we are unable to find any
additional financing. There are also no assurances that we will
generate sufficient revenues and profits from our products sales
program to accomplish these objectives.
Our
cost of operations is expected to increase as we move forward with
implementation of our business plan. We do not have sufficient
funds to cover the anticipated increase in the relevant expenses.
We need to raise additional capital in order to continue our
existing operations and finance our expansion plans for the next
year. If we are successful in raising additional funds, we expect
our operations and business efforts to continue and expand. There
are no assurances this will occur.
Subsequent Events
On
October 1, 2019 the holder of a note payable dated December 31,
2018 elected to convert $30,000 in principal into 30,000,000 shares
of Common Stock leaving a principal balance of
$106,744.
On
October 1 and 17, 2019, the holder of a note payable dated March
18, 2019 elected to convert a total of $28,594 in principal into
30,526,493 shares of Common Stock leaving a principal balance of
$12,066.
On
October 16, 2019 the holder of a note payable dated October 23,
2018 elected to convert a total of $6,000 in principal and $469 in
accrued interest into 7,282,716 shares of Common Stock leaving a
principal balance of $-0-.
On
October 23 and November 7, 2019, the holder of a note payable dated
December 24, 2018, elected to convert a total of $28,000 in
principal and $1,902 in accrued interest into 42,228,183 shares of
Common Stock leaving a principal balance of $59,000.
On
November 4 and 6, 2019, the holder of a note payable dated March
18, 2019, elected to convert a total of $17,500 in principal and
$1,967 in accrued interest into 32,668,293 shares of Common Stock
leaving a principal balance of $11,660.
Off Balance Sheet Arrangements
None