Sunshine Biopharma (SBFM) is a Canada-based pharmaceutical and nutritional supplement company that is engaged in the research and development of anticancer drugs. The company’s lead product candidate is Adva-27a, a GEM-difluorinated C-glycoside derivative of Podophyllotoxin that is being developed to treat various forms of cancer. The company also develops and markets one nutritional supplement product through its wholly-owned Canadian subsidiary, Sunshine Biopharma Canada Inc.
Since the beginning of the year, shares of Sunshine Biopharma have dropped about 48%, underperforming the broader market and its benchmark, the SPDR S&P Biotech ETF (XBI), which has slid about 22% during the same period. However, in the past month, the company's share price rallied more than 100% after it had announced that two of its mRNA molecules were efficient against cancer cells.
In today’s article, I am going to analyze Sunshine Biopharma to see whether the stock deserves a place in investors’ portfolios.
Recent Developments
On April 5th, Sunshine Biopharma announced that its newly designed mRNA molecules had proven anticancer effects against multidrug-resistant cancer cells. The company added that the molecules could be delivered to patients via mRNA vaccine technology. Moreover, toxicity tests revealed that the molecules "had little or no cytotoxic effects." The company will utilize the results to file a patent request in the foreseeable future. The company's CEO, Dr. Steve Slilaty, said, "The potential use of mRNA to treat cancer opens the door to many possibilities for patients, including convenience, reduced toxicity, and enhanced efficacy." This announcement caused shares to surge to a new 2022 high on April 7th of $9.87.
Sunshine Biopharma's Financial Performance
Sunshine is currently bringing in only limited revenues, which is typical for a clinical-stage biotech company, while they spend notable amounts of money on research and development (R&D) and general and administrative expenses (G&A). At this point, let’s dive deeper into the company's recent 10-K report and analyze key operating metrics and growth prospects.
In 2021, the company's revenue was reported at $228,426, representing an increase of 219.89% on a year-over-year basis. The revenue was due to sales of its nutritional supplements.
As of the fiscal year ended December 31st, 2021, General and Administrative expenses (excluding R&D) for SBFM registered at $1.88 million compared to $0.62 million in a year-ago period. The 203.2% year-over-year G&A increase is related to an overall increase in Sunshine Biopharma's business activities.
SBFM’s R&D expenses stood at $672,209 compared to its year-ago figure of $1,728. The increase was related to the development of its anticancer drugs, which included clinical trial expenses, manufacturing costs, as well as unallocated employee & other costs.
The company’s net loss was $12.44 million in 2021, significantly up from a loss of about $2.78 million in 2020.
Cash used to run the company's operations during the fiscal year of 2021 was roughly $1.83 million, up from $0.66 million in 2020. As of December 31st, 2021, the company reported a healthy balance sheet with approximately $2.05 million in cash and cash equivalents. I expect the company will continue to spend significant amounts on R&D and G&A related to its clinical trials.
However, Sunshine Biopharma raised additional cash of about $6.8 million from the sale of common stock and warrants in an underwritten public offering in February and $6.8 million from a stock offering in March. With this in mind, I would expect the cash on hand to be sufficient for at least by the year-end.
Finally, Sunshine currently trades with a P/S (TTM) of 68.95x and P/B (TTM) of 139.93x and looks significantly overvalued compared to the sector median threshold of 5.72x and 2.54x, respectively.
The Bottom Line
I remain neutral on SBFM stock. The positive developments regarding its mRNA molecules have already been reflected in the share price. It is also important to note that the preliminary success in early-stage trials does not guarantee the same effect in late-stage studies. In addition, the company does not have any drugs in late clinical studies, which moves the timeline of potential revenue generation away. Therefore, I believe SBFM should be avoided until the company is more established.
SBFM shares were trading at $6.03 per share on Monday morning, down $0.00 (0.00%). Year-to-date, SBFM has declined -48.46%, versus a -6.50% rise in the benchmark S&P 500 index during the same period.
About the Author: Oleksandr Pylypenko
Oleksandr Pylypenko has more than 5 years of experience as an investment analyst and financial journalist. He has previously been a contributing writer for Seeking Alpha, Talks Market, and Market Realist.
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