On March 22, 2019 Sun BioPharma, Inc. (OTCQB: SNBP), a clinical stage biopharmaceutical company developing disruptive therapeutics for the treatment of pancreatic diseases, reported financial results for the year ended December 31, 2018 (Press release, Sun BioPharma, MAR 22, 2019, View Source [SID1234534568]).
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Front-Line Combination PDA Study
The Company’s clinical team, working in conjunction with its medical advisors and physician investigators, have been enrolling patients in the second cohort in its study, "SBP-101 Administered in Combination with Gemcitabine and Nab-paclitaxel in Newly Diagnosed Patients with Metastatic Pancreatic Ductal Adenocarcinoma." The study includes a dose-escalation phase with sequential cohorts of patients receiving treatment at each of three dose levels. The dose-escalation phase is to be followed by an expansion phase at the optimal dose level. Contract research organizations have been engaged to assist in managing the study at one site in the United States (Courante Oncology), the University of Florida where SBP-101 was invented, and at three sites in Australia (Novotech).
Dr. Suzanne Gagnon, Chief Medical Officer remarked, "We appreciate the enthusiastic commitment of our current investigators and are now in the process of evaluating additional investigational sites for the expansion phase of the study, which we hope to commence later this year. Expanding in both the US and Australia will allow more patients to have access to SBP-101 while receiving gemcitabine and nab-paclitaxel."
Company Names Founder and Executive Chairman as Chief Executive Officer
Effective October 31, 2018, Michael T. Cullen, MD, MBA, the company’s Executive Chairman, has accepted the additional responsibilities of President and CEO of Sun BioPharma, Inc. and its wholly owned subsidiary, Sun BioPharma Australia Pty Ltd.
"Pleased with our progress, and encouraged by the success of our amazing team, I am honored to resume leadership of this exciting project as we seek to improve the prognosis of patients with life-threatening pancreatic disease," stated Dr. Cullen.
Private Placement of Convertible Promissory Notes
On December 21, 2018, the Company entered into Securities Purchase Agreements for the purchase of convertible promissory notes ("2018 Notes") and warrants to purchase common stock in the Company with a number of accredited purchasers. Additional agreements were entered into on December 31, 2018 and several dates in January of 2019. Pursuant to these closings under the Securities Purchase Agreements we issued 2018 Notes with a principal balance of $2.2 million and we also issued warrants to purchase up to an aggregate of 1,243,510 additional shares, resulting in gross proceeds of $1.3 million received by the Company in December 2018 and $0.9 received in January of 2019.
"We are most grateful for the loyal support of long-term shareholders, and the confidence exhibited by new investors in our work," noted Dr. Cullen.
Financial Results for the Three Months and Full Year Ended December 31, 2018
General and administrative (G&A) expenses decreased 71.9% to $329,000 in the fourth quarter of 2018, compared with $1.2 million in the fourth quarter of 2017. G&A expenses decreased 38.4% to $2.1 million in 2018, down from $3.4 million in 2017. The decrease in the fourth quarter was caused primarily by reduced stock-based compensation expense, reduced salary expense due to staff reductions and by costs incurred in 2017 that were not incurred in 2018 in connection with efforts to complete a public offering in the fourth quarter of 2017. The decrease for the full year of 2018 is primarily the result of a decrease in stock-based compensation, fewer staff members in the year and voluntary salary reductions taken at the end of 2018.
Research and development (R&D) expenses decreased 51.7% to $308,000 in the fourth quarter of 2018 down from $638,000 in the fourth quarter of 2017. R&D expenses for the full year of 2017 decreased 31.2% to $1.8 million as compared with $2.6 million for 2017. The decrease in fourth quarter resulted from decreased staff costs associated with fewer staff and voluntary salary reductions taken in the 4th quarter of 2018 as well as decreased clinical trial and related costs for our Phase 1a clinical trial. The full year decrease in R&D expenses resulted from a decrease in salary expense versus the prior year due to lower staff levels and less spending on clinical studies as the spending on the 2018 clinical trial did not begin until mid-2018.
Other expense, net, was $286,000 in the current quarter compared to $428,000 in the fourth quarter of 2017. Other expense, net, decreased to $2.3 million for the full year 2018, down from $4.9 million in the prior year. The decrease in the current quarter was primarily due to decreased interest expense resulting from the amortization of the discount on the 2017 convertible notes payable which converted to equity in May of 2018. For the full year the decrease was due primarily to charges recorded in 2017 related to the induced conversion of debt. The debt which converted in 2018 was not induced and therefore no loss on the conversion was recorded.
Net loss for the quarters ended December 31, 2018 and 2017 was $0.8 million and $2.2 million, or $0.16 and $0.58 per diluted share, respectively. The net loss for the full year 2018 was $5.9 million, or $1.27 per diluted share, compared to a net loss of $10.4 million, or $2.91 per diluted share, for 2017.
Balance Sheet and Cash Flow
Total cash resources were $1.4 million as of December 31, 2018, compared to $152,000 as of December 31, 2017. Total current assets were $1.8 million and $767,000 as of December 31, 2018, and December 31, 2017, respectively. These increases resulted primarily from the proceeds raised from the sale of equity securities in the first half of the year totaling $2.3 million and the sale of convertible promissory notes in December of 2018 offset in part by the Company’s use of cash to fund operations in the current year.
Current liabilities decreased to $1.6 million as of December 31, 2018, compared to $4.2 million as of December 31, 2017. The decrease in current liabilities resulted primarily from the conversion in May of 2018 of approximately $3.3 million of previously outstanding debt and accrued interest into 750,742 shares of our common stock and warrants to purchase 646,279 shares of common stock partially offset by the accreted carrying value of the convertible promissory notes sold during December of 2018.
Net cash used in operating activities was $2.4 million for the year ended December 31, 2018, compared to $3.4 million for the year ended December 31, 2017. The net cash used in each of these periods primarily reflects the net loss for these periods and was partially offset by stock-based compensation expense and amortization of debt discount as well as by the effects of changes in operating assets and liabilities. In the year ended December 31, 2017, the net loss is also offset by non-cash charges recorded for the loss on induced debt conversion.
About SBP-101
SBP-101 is a first-in-class, proprietary, polyamine compound designed to exert therapeutic effects in a mechanism specific to the pancreas. Sun BioPharma originally licensed SBP-101 from the University of Florida Research Foundation in 2011. The molecule has been shown to be highly effective in preclinical studies of human pancreatic cancer models, demonstrating superior activity to existing FDA-approved chemotherapy agents. Combination therapy potential has also been shown for pancreatic cancer. SBP-101 differs from current pancreatic cancer therapies in that it specifically targets the exocrine pancreas and has shown efficacy against primary and metastatic disease in animal models of human pancreatic cancer. Therefore, management believes that SBP-101 may effectively treat both primary and metastatic pancreatic cancer, while leaving the insulin-producing islet cells and non-pancreatic tissue unharmed. The safety and metabolic profile demonstrated in our first-in-human safety study further supports evaluation of the potential for additive or synergistic effects in combination with current standard pancreatic cancer treatment.