Sun BioPharma, Inc. (OTCQB:SNBP), a biopharmaceutical company developing disruptive therapies for the treatment of patients with pancreatic diseases, today released financial results for its third quarter ended September 30, 2016 and provided an update on its therapeutic candidate’s clinical progress.
“This has been a busy and productive quarter for our team,” said Michael Cullen, Executive Chairman. “Our lead therapeutic candidate SBP-101 has made significant clinical trial progress. In addition, we are encouraged by the enthusiasm for the Phase 1 trial at our study sites as evidenced by the rapid enrollment in the trial’s third patient cohort and the identification and screening of potential patients for the fourth cohort. The combination of this rapid enrollment with the earlier DSMB review is accelerating the pace of the study. As a result, we could complete the Phase 1a study by Q2 2017, which is significantly earlier than we had anticipated when the trial started.”
“From a corporate perspective, listing our shares on the OTCQB is a significant achievement for Sun BioPharma and will help raise the awareness of our progress as well as provide the potential for enhanced shareholder liquidity,” commented David B. Kaysen, President and CEO. “In addition, our shares can now be traded electronically, which expands the types of investors who can now consider our shares for investment. These efforts complement the improvements we’ve made in our corporate structure and the continued progress in our Phase 1 clinical study of SBP-101 for pancreatic cancer.”
As previously announced on August 15, 2016 and October 3, 2016, the Company’s Data Safety Monitoring Board (the “DSMB”), completed its independent safety review of the data from the second and third cohorts, respectively in the Company’s Phase 1 clinical study. In both cases, based upon their review of the data, the DSMB approved the Company’s progression to the next patient cohort in the dose escalation phase of this study evaluating the safety of SBP-101 in patients previously treated for pancreatic cancer. The Company is currently enrolling patients in the fourth cohort of this study, which was designed to enroll up to eight cohorts in the dose escalation phase.
From June through September 2016, the Company sold approximately $2.2 million of equity securities in four closings under a private placement agreement. On October 3, 2016 the Securities and Exchange Commission declared effective the Company’s registration statement on Form S-1, registering the sale of up to 3,331,500 shares of common stock issuable to investors in this private placement.
As of September 28, 2016, the Company’s common stock began trading on the OTCQB Venture Marketplace tier of the over-the-counter markets administered by the OTC Markets Group, Inc. The Company’s shares will continue trading under the symbol “SNBP.” In addition, the Company secured DTC Eligibility, from The Depository Trust Company, for its shares to trade electronically.
General and administrative (“G&A”) expenses increased 16.3% to $499,000 in the third quarter of 2016 up from $429,000 in the third quarter of 2015. G&A expenses decreased 37.1% to $1.4 million down from $2.2 million for the nine months ended September 30, 2016 and 2015, respectively. The increase in the current quarter was related primarily to an increase in staff and salary increases implemented in the fourth quarter of 2015, partially offset by decreased legal fees relating to the Company’s September 2015 merger with Cimarron Medical, Inc. The decrease on a year-to-date basis was due primarily to a reduction in stock-based compensation and decreased legal and accounting fees relating to the September 2015 merger, partially offset by increased salaries and reporting and compliance costs associated with being a public company during 2016.
Research and development (“R&D”) expenses increased 86.5% to $636,000 in the third quarter of 2016, up from $341,000 in the third quarter of 2015. R&D expenses decreased 14.4% to $1.7 million in the nine months ended September 30, 2016, down from $1.9 million in the nine months ended September 30, 2015. The increase in the current quarter was driven primarily by increased costs associates with conducting the Phase 1 clinical trial of SBP-101, the Company’s initial product candidate, as the pace of enrollment increased. Increased staff and salaries implemented in the fourth quarter of 2015 also contributed to the increase. The overall decrease in R&D expense for the nine months ended September 30, 2016 was due primarily to decreased costs of preclinical studies, other product development costs and stock-based compensation, partially offset by increased clinical trial costs.
Net loss in the third quarter of 2016 was $1.1 million, or $0.03 per diluted share, compared to a net loss of $793,000, or $0.06 per diluted share, in the third quarter of 2015. The net loss for the first nine months of 2016 was $2.9 million, or $0.09 per diluted share, compared to a net loss of $4.2 million, or $0.49 per diluted share, for the first nine months of 2015.
Balance Sheet and Cash Flow
Total cash and cash equivalents were $1.2 million as of September 30, 2016, compared to $925,000 as of December 31, 2015. In May 2016, the Company received a $772,000 tax rebate under the Australian R&D Incentive Rebate program related to 2015 research and development activities. From June through September, 2016, pursuant to Securities Purchase Agreements, the Company received aggregate gross proceeds of $1.9 million from four closings under a private placement agreement.
Total current assets were $1.6 million and $1.7 million as of September 30, 2016 and December 31, 2015, respectively. The decrease was driven primarily by cash used to fund clinical development activities and operations during the period partially offset by the proceeds received from the Australian tax rebate and the sales of equity securities.
Current liabilities increased to $2.1 million as of September 30, 2016, compared to $1.4 million as of December 31, 2015. The increase in current liabilities resulted from costs incurred but unpaid related to the Company’s clinical development activities, the deferral of compensation by senior management and other operating expenses.
Net cash used in operating activities was $1.6 million in the nine months ended September 30, 2016, compared to $3.0 million in the nine months ended September 30, 2015. The net cash used in each of these periods primarily reflects the net loss for these periods, and is partially offset by the effects of changes in operating assets and liabilities and, in the nine-months ended September 30, 2015, by non-cash charges recorded for stock-based compensation.
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 in 2011. The molecule has been shown to be highly effective in 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 is expected to differ 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.
About the Phase 1 Safety Study of SBP-101 in Patients with Previously Treated Pancreatic Cancer
Sun BioPharma is currently conducting a clinical trial of SBP-101 in patients with previously treated locally advanced or metastatic pancreatic cancer. This is a Phase 1, first-in-human study with a dose-escalation phase and an expansion phase at the anticipated recommended treatment dose. This study is being conducted at clinical sites in both Australia and the United States including The Mayo Clinic Scottsdale and HonorHealth in Scottsdale, AZ, the Austin Health Cancer Trials Centre and the Box Hill Hospital in Melbourne, Australia and the Ashford Cancer Centre in Adelaide, Australia.
About Sun BioPharma
Sun BioPharma Inc. is a clinical-stage biopharmaceutical company developing disruptive therapeutics for urgent unmet medical needs. The Company’s development programs target diseases of the pancreas, including pancreatic cancer and pancreatitis; the Company’s initial product candidate is SBP-101 for the treatment of patients with pancreatic cancer. SBP-101 was invented by Ray Bergeron, Ph.D. Distinguished Professor Emeritus, University of Florida. Sun BioPharma has scientific collaborations with pancreatic disease experts at Cedars Sinai Medical Center in Los Angeles, the University of Miami, the University of Florida, the Mayo Clinic Scottsdale, the Austin Health Cancer Trials Centre and the Box Hill Hospital in Melbourne, Australia and the Ashford Cancer Centre in Adelaide, Australia. Further information can be found at: www.sunbiopharma.com. Sun BioPharma’s common stock is currently quoted on the OTCQB tier of the over-the-counter markets administered by the OTC Markets Group, Inc. under the symbol: SNBP.