On November 15, 2019 Sun BioPharma, Inc. (OTCQB: SNBP), a clinical stage biopharmaceutical company developing disruptive therapeutics for the treatment of patients with pancreatic cancer, reported financial results for the quarter ended September 30, 2019 (Press release, Sun BioPharma, NOV 15, 2019, View Source [SID1234551379]).
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First-Line Combination Pancreatic Cancer Dose Escalation Study Expanded
The Company’s second clinical trial, a Phase 1a/1b combination of SBP-101 with gemcitabine and nab-paclitaxel in patients previously untreated for metastatic pancreatic ductal adenocarcinoma ("PDA"), completed enrollment of patients in the third dose level cohort in October. Following an upcoming meeting of the Data Safety Monitoring Board ("DSMB") the Company plans to add a fourth cohort to the study protocol to examine an alternative and more convenient dosing schedule.
In anticipation of continued clinical development new sites are now being added in the U.S. The Company has opened new clinical sites at the University of Rochester in Rochester, New York and Scripps MD Anderson Cancer Center in San Diego, California. Several additional sites are planned to be open in the first half of 2020.
Dr. Darren Sigal, director of GI Oncology and Principal Investigator at Scripps Clinic and Scripps MD Anderson commented, "We are pleased to be joining the Sun BioPharma study of SBP-101 for the treatment of patients with pancreatic cancer. More effective treatments remain urgently needed."
Sale of Common Stock and Warrants to Purchase Common Stock Raised $3.1M
The Company completed a private offering of common stock and warrants in September that raised approximately $3.1 million to support ongoing clinical trials. A total of 902,067 shares of common stock were issued as well as warrants to purchase an equal number of shares of common stock.
Amendment to Worldwide Exclusive License of SBP-101 Eliminates Milestone Payments and Reduces Future Royalty Obligations
In early October, Sun BioPharma and the University of Florida Research Foundation ("UFRF") entered into a second amendment to the License Agreement effective December 22, 2011. The license agreement continues to entitle the Company to a worldwide exclusive license from UFRF for the polyamine analogue compound (SBP-101). The second amendment eliminated the Company’s obligation to make any future milestone or minimum royalty payments to UFRF. It also reduced the period during which Sun BioPharma is required to pay royalties on future commercial sales of SBP-101.
Financial Results for the Three and Nine months ending September 30, 2019
Operating Results
General and administrative ("G&A") expenses increased 33.2% to $622,000 in the third quarter of 2019 up from $467,000 in the second quarter of 2018. G&A expenses decreased 15.4% to 1.5 million in the nine months ended September 30, 2019, down from $1.8 million in the nine months ended September 30, 2018. The increase in the quarter is primarily associated with higher stock compensation expense offset in part by reduced headcount versus the same quarter in the prior year. For the nine-months ended September 30, 2019 the decrease is due to a combination of lower salary expense and lower stock compensation expense.
Research and development ("R&D") expenses increased 60.0% to $720,000 in the third quarter of 2019 up from $450,000 in the third quarter of 2018. R&D expense increased 7.0% to $1.6 million in the nine months ended September 30, 2019, up from $1.5 million in the nine months ended September 30, 2018. The increase in the quarter ended September 30, 2019 was due primarily to incremental expenses associated with a manufacturing study, increased cost of the clinical trial and higher stock compensation expense. The increase in the nine-months ended September 30, 2019 was due to manufacturing and preclinical studies, offset in part by reduced stock compensation expense.
Other net expense was $222,000 and $63,000 for the three months ended September 30, 2019 and 2018, respectively. Other expense in the third quarter of both years is primarily a foreign currency translation loss. Other net expense increased 19.3% to $2.5 million in the nine months ended September 30, 2019. This increase is due primarily to the increase in interest expense associated with the amortization the debt discount on notes sold in December 2018 and January 2019. The debt discount was fully amortized in the first half of 2019 and converted to common stock on June 30, 2019.
Net loss in the third quarter of 2019 was $1.4 million, or $0.23 per diluted share, compared to a net loss of $0.9 million, or $0.18 per diluted share, in the third quarter of 2018. The net loss for the nine months ended September 30, 2019 was $5.2 million, or $0.97 per diluted share, compared to a net loss of $5.2 million, or $1.14 per diluted share, for the first nine months of 2018.
Balance Sheet and Cash Flow
Total cash was $3.4 million and $1.4 million as of September 30, 2019 and December 31, 2018, respectively. Total current assets were $3.8 million and $1.8 million as of September 30, 2019, and December 31, 2018, respectively. During the nine months ended September 30, 2019 proceeds of $810,000 from the sale of unsecured convertible promissory notes in January and proceeds of approximately $3.1 million in the third quarter from a private sale of 902,067 shares of common stock and warrants to purchase an additional 902,067 shares was partially offset by cash used in operations of $1.9 million.
Current liabilities decreased to $689,000 as of September 30, 2019, compared to $1.6 million as of December 31, 2018. The decrease in current liabilities is primarily the result of a vendor payable balance moving to a zero-interest, unsecured promissory note payable on December 31, 2020.
Net cash used in operating activities was $1.9 million in the nine-months ended September 30, 2019, compared to $2.2 million in the same period of the prior year. The net cash used in each of these periods primarily reflects the net loss for these periods and was partially offset by the effects of changes in operating assets and liabilities.
About SBP-101
SBP-101 is a first-in-class, proprietary, polyamine analogue designed to induce polyamine metabolic inhibition (PMI), exploiting a high affinity for the compound specific to the exocrine pancreas and pancreatic ductal adenocarcinoma. 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 and complementary activity to existing FDA-approved chemotherapy agents. SBP-101 is expected to differ from current pancreatic cancer therapies in that it specifically targets the exocrine pancreas and pancreatic adenocarcinoma, demonstrating 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 unharmed. The safety and PMI profile demonstrated in Sun BioPharma’s first-in-human safety study further supports evaluation of the potential for additive or synergistic effects in combination with current standard pancreatic cancer treatment.