Sunshine Biopharma (NASDAQ:SBFM) is a pharmaceutical company focused on the research, development and commercialization of oncology and antiviral drugs. In addition, Sunshine is engaged in the development and commercialization of science-based nutritional supplements. Sunshine has already shown good progress in creating a cancer-fighting drug that would, if approved, likely be game changer in the cancer-fighting world. Additionally, the company is making progress on a Covid-19 treatment that attacks the virus in a different way—and may have implications beyond the current epidemic. And uniquely, this late-stage pre-clinical company has revenues coming in, which management plans to grow by expanding the marketing campaign for the supplement the company produces called Essential 9. This diverse portfolio is what sets Sunshine apart from many other biopharma companies at this stage of life and makes the company an intriguing investing story.
The Portfolio—Adva-27a
The most important work the company is doing is the development of Adva-27a, which is the company's lead anticancer drug that has shown great promise and is now being positioned for Phase I trials for pancreatic cancer. The study will take place in Canada but will employ FDA standards at all levels. The company estimates the trial will take approximately 12-18 months and notes that if Phase I trials are successful, it is likely Sunshine will be required to make Adva-27a available to patients under "compassionate-use" guidelines.
The American Cancer Society notes that there are almost 1.5 million new cases of cancer diagnosed in the US each year and the company believes that Adva-27a can potentially treat all types of cancer. Management notes that a successful Phase I trial could result in large pharmaceutical companies offering to purchase or license the drug.
Getting a little more into the science of Adva-27a:
• Adva-27a is a 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).
• 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. 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, as shown in the picture below.
Additionally on the cancer-fighting front, the company has also recently initiated a new research project involving the use of certain mRNA molecules as anti-cancer agents. Data the company has collected to date have shown certain mRNA molecules are capable of destroying cancer cells in vitro. In April 2022, Sunshine filed a provisional patent application in the US covering the subject mRNA and plans to commence mice xenograft studies within approximately the next twelve months.
Coronavirus- SBFM-PL4 targets a completely different part of the virus.
An American reader may think that there are already vaccines and treatments for Covid-19 and that Sunshine is late to the "party" but there are many places in the world that are still in the depths of the pandemic that could benefit from an additional virus fighter. Also, the research being done has the potential to have wider ranging consequences that could be a benefit to both society and the company.
There are four types of Coronaviruses belonging to the family Coronaviridae, and one of those is The Betacoronavirus. Betacoronaviruses are comprised of three strains—SARS-CoV (mortality rate 10-15%), MERS-CoV (mortality rate 34-37%), and SARS-CoV-2 (mortality rate 2-3%), which is the causative agent of Covid-19.
In addition to the main protease (Mpro), which is shared among all coronaviruses, the Betacoronaviruses have a second virus-encoded protease called papain-like protease (PLpro). These two proteases are responsible for cleaving the initial expression products of the viral genome (polyproteins 1a and 1ab) at 15 different sites to produce 16 mature virus proteins essential for viral replication. While Mpro cleaves the viral polyproteins 1a and 1ab at 12 different locations, PLpro cleaves polyprotein 1a at only 3 sites. PLpro, however, is also involved in cleaving specific host proteins (various ubiquitinated proteins and ISG15), resulting in suppression of the human immune response. It is believed that PLpro is responsible for the enhanced pathogenicity of the Betacoronaviruses. The COVID-19 Treatment the company is working on is an inhibitor of PLpro.
The company recently expanded research effort into finding additional PLpro inhibitors by entering into a collaboration agreement with the University of Arizona.
The Supplement—Essential 9
As mentioned above, Sunshine is the rare "late stage pre-clinical" company that has revenue from sales coming in. The company has a supplement known as Essential 9—that provides the nine essential amino acids that are often lacking in humans—especially as they age. The essentials of Essential 9 are as follows:
• Proteins perform all biological functions in the body.
• Proteins are made up of 20 different amino acids.
• 9 of these amino acids can't be made by the human body.
• Essential 9 is a tablet that contains all nine of these amino acids.
• Deficiency in on or more of these amino acids can lead to loss of muscle mass, fatigue, weight gain, weakened immune system and generally reduced wellness.
With 4.5 star reviews on Amazon (AMZN), the supplement appears to be popular with those who use it and with Sunshine management noting that they are planning on large scale marketing campaign, it seems more than reasonable that the company can build on the revenues it has seen thus far.
The Company
Sunshine Biopharma is a late-stage pre-clinical company that has a solid cash position that enables the company to continue pushing ahead towards approval without needing to obtain new funding in the near future. As of March 31, 2022, Sunshine had cash in the amount of just over $13 million, and the company added $16.8 million to that through a sale of common stock and warrants in a private placement. The company estimates they have enough cash on hand to fund operations for at least the next 24 months—a cushion that is quite attractive in this market environment.
Further, Sunshine revenue increased to $122,645 in the first quarter 2022 from $40,058 during the year ago period. All revenue was generated from sales of the nutritional supplement. Management is attributing the increase to a "slightly widened advertising program," which indicates, in our view, that a bigger marketing push should result in an even bigger leap in revenue. The margins are also attractive as the direct costs for this 1Q2022 revenue were $59,845, resulting in margins of 48.8% for Essential 9. Overall cash flow from operating activities in the first quarter were a negative $1.2 million.
Risks
The major risk we see, as with most companies such as this, is that the company's pipeline, especially their anti-cancer drug, fails to get approved, which is a higher risk at this stage than it would be as Adva-27a moves through the process. Investors should be aware of other risks, such as legal, loss of key personnel and competition.
Conclusion
Sunshine Biopharma has an exciting portfolio of treatments that could be medical game-changers on a variety of fronts, while also promoting societal health to prevent sickness through the company's nutritional supplement. With an attractive portfolio, a solid balance sheet and operational security assumed for the next two years, SBFM could be worth a look for investors with a higher risk tolerance.
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