N@N

Bradmer announces 2010 first quarter financial results

^{Published on 2010-05-13 13:16:05 - Market Wire}
 

 Bradmer Pharmaceuticals Inc. Balance Sheets (Expressed in United States Dollars) ------------------------------------------------------------------------- March 31 December 31 Note 2010 2009 ------------------------------------------------------------------------- (audited) Assets Current Cash $ 1,342,438 $ 860,460 Amounts receivable 8,529 1,944 Prepaid expenses 58,527 14,246 ------------------------------------------------------------------------- $ 1,409,494 $ 876,650 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities Current Accounts payable and accrued liabilities $ 20,978 $ 66,225 ------------------------------------------------------------------------- Shareholders' Equity Capital stock 4 1,754,314 1,076,755 Warrants 6 795,486 783,988 Contributed surplus 7 1,480,061 1,474,503 Deficit (2,641,345) (2,524,821) ------------------------------------------------------------------------- 1,388,516 810,425 ------------------------------------------------------------------------- $ 1,409,494 $ 876,650 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Bradmer Pharmaceuticals Inc. Statements of Operations and Deficit For the Three Months Ended March 31 (Expressed in United States Dollars) (unaudited) ------------------------------------------------------------------------- 2010 2009 ------------------------------------------------------------------------- Expenses Research and development $ 19,082 $ 1,421,972 General and administrative 108,075 764,203 Amortization of patents - 16,095 Foreign exchange (gain)/loss (10,386) 10,813 ------------------------------------------------------------------------- 116,771 2,213,083 Interest income 247 20,978 ------------------------------------------------------------------------- Net loss (116,524) (2,192,105) Deficit at beginning of period (2,524,821) (25,665,493) ------------------------------------------------------------------------- Deficit at end of period $ (2,641,345) $(27,857,598) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted net loss per share $ (0.02) $ (0.16) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of shares outstanding 6,491,624 13,488,215 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Bradmer Pharmaceuticals Inc. Statements of Cash Flows For the Three Months Ended March 31 (Expressed in United States Dollars) (unaudited) ------------------------------------------------------------------------- 2010 2009 ------------------------------------------------------------------------- Cash flows from operating activities Loss for the period $ (116,524) $ (2,192,105) Add items not affecting cash Amortization of patents - 16,095 Stock-based compensation/(recovery) 5,558 (1,847) ------------------------------------------------------------------------- (110,966) (2,177,857) Changes in non-cash working capital items Amounts receivable (6,585) 727 Prepaid expenses (44,281) (38,377) Accounts payable and accrued liabilities (45,247) (42,766) ------------------------------------------------------------------------- (207,079) (2,258,273) ------------------------------------------------------------------------- Cash flows from investing activities Investment in patent rights - (4,859) ------------------------------------------------------------------------- Cash flows from financing activities Issuance of capital stock, net of share issue costs 677,559 - Issuance of warrants, net of issue costs 11,498 - ------------------------------------------------------------------------- 689,057 - ------------------------------------------------------------------------- Increase/(Decrease) in cash during the period 481,978 (2,263,132) ------------------------------------------------------------------------- Cash and cash equivalents at beginning of period 860,460 8,245,455 ------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 1,342,438 $ 5,982,323 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Bradmer Pharmaceuticals Inc. Notes to Financial Statements March 31, 2010 (Expressed in United States Dollars) (unaudited) ------------------------------------------------------------------------- 1. NATURE OF OPERATIONS Until the third quarter of 2009, Bradmer Pharmaceuticals Inc. ("BMR" or the "Company") was focused on developing proprietary drugs to treat cancer. The Company did not earn revenues from its drug candidates and was therefore considered to be in the development stage. Given the current economic environment and changes to its relationship and agreement with its clinical research organization, the Company completed the wind down of its operations including the termination of its Phase III clinical trial for Neuradiab. The Company terminated all of its staff complement in 2009 to conserve cash. The Company is currently in dormancy and is seeking a business transaction for the unencumbered cash. There are currently no substantial outstanding bills or contract related liabilities and the Company envisions minimal spending until the Company enters into a transaction. On March 26, 2010, the Company issued and sold, on a private placement basis, 8,369,947 common shares, at a price of CDN$0.095 (approximately US$0.092) per share, for gross proceeds of approximately CDN$795,000 (approximately US$773,000). After share issue costs, net cash proceeds were $678,000. The Company will use the proceeds of the financing primarily for working capital and general corporate purposes. The common shares of Bradmer were delisted from the Toronto Stock Exchange on March 26, 2010, and were listed on the NEX Board of the TSX Venture Exchange on March 29, 2010. 2. SIGNIFICANT ACCOUNTING POLICIES These unaudited interim financial statements are expressed in United States dollars and do not include all of the disclosures required by Canadian generally accepted accounting principles for annual financial statements and, accordingly, should be read in conjunction with the Company's audited financial statements. These financial statements have been prepared using accounting policies consistent with the Company's audited annual financial statements and notes thereto for the year ended December 31, 2009. Recent Accounting Pronouncements Issued and Not Yet Applied In February 2008, the Canadian Accounting Standards Board confirmed that publicly accountable entities would be required to adopt International Financial Reporting Standards ("IFRS"). The Company must prepare its interim and annual financial statements in accordance with IFRS for periods beginning on January 1, 2011. The Company has formally established an IFRS project team which is lead by BMR's Chief Financial Officer. The team is currently studying the impacts of IFRS on the Company's accounting policies, information systems, internal controls over financial reporting and contractual arrangements and covenants. The initial assessment of the process indicates that the most significant areas of difference applicable to the Company include lease accounting, stock-based compensation and the more extensive presentation and disclosure requirements under IFRS. 3. PATENT RIGHTS --------------------------------------------------------------------- March 31 December 31 2010 2009 --------------------------------------------------------------------- (audited) Balance, beginning of period $ - $ 711,054 Additions - 9,208 Amortization - (47,397) Write-down of patent rights - (672,865) --------------------------------------------------------------------- Balance, end of period $ - $ - --------------------------------------------------------------------- --------------------------------------------------------------------- As at March 31, 2010 the total cost of the patent rights is $Nil (2009 - $Nil) and the accumulated amortization is $Nil (2009 - $Nil). Given the uncertainty surrounding the future of the Company, the remaining net book value of the patent rights of approximately $673,000 was written off in 2009 to reflect the impairment in value of these patents. Under a license agreement with Duke University, North Carolina, U.S.A ("Duke"), the Company holds an exclusive license to a proprietary treatment developed at Duke University Medical Center for a particularly aggressive form of brain cancer. The licensed treatment includes the rights to thirty-one issued patents and twenty-eight patents which are pending in the United States and in other jurisdictions. Under the terms of the Agreement, the Company must pay annual license maintenance fees of $50,000 on September 26. On September 14, 2009, Duke agreed to postpone the timing of payment of the 2009 fee until February 28, 2010. The parties have further agreed to postpone the timing of this fee until May 30, 2010 and to reassess the circumstances which may result in a full waiver of this payment, a further deferral of the payment, or agreement on alternate payment terms at that time. As at March 31, 2010, the Company has consolidated 10 issued patents and 14 pending patent applications not including Patent Cooperation Treaty applications that have entered National phase review. 4. CAPITAL STOCK --------------------------------------------------------------------- Number Amount --------------------------------------------------------------------- Balance, December 31, 2008 13,488,215 $ 31,026,728 Reduction of stated capital(i) - (28,616,848) Repurchase of common shares(ii) 7,461,588 (1,333,126) --------------------------------------------------------------------- Balance, December 31, 2009 6,026,627 $ 1,076,755 Shares issued for private placement(iii) 8,369,947 773,120 Share issue costs(iii) - (84,063) Value ascribed to agent's warrants(iii) - (11,498) --------------------------------------------------------------------- --------------------------------------------------------------------- Balance, March 31, 2010 14,396,574 $ 1,754,314 --------------------------------------------------------------------- --------------------------------------------------------------------- (i) Stated capital reduction Pursuant to a special resolution passed by shareholders on June 25, 2009, the Company reduced its stated capital amount by CDN$32,900,000 ($28,616,848) and applied this against the deficit account. (ii) Substantial issuer bid On July 17, 2009, the Company announced that it was proceeding with a substantial issuer bid pursuant to which the Company would offer to purchase for cancellation up to 8,300,000 of its outstanding common shares at a price of CDN$0.20 (approximately US$0.183) per share or an aggregate amount of CDN$1,660,000. The Offer expired on August 28, 2009 and on September 8, 2009 the Company repurchased for cancellation 7,461,588 shares tendered to the Offer. This represented approximately 55.3% of Bradmer's issued and outstanding common shares as of September 8, 2009. The shares were purchased for approximately $1,366,000 exclusive of approximately $88,000 in related transaction costs paid out of cash on hand. The aggregate amount of approximately $1,333,000 was allocated to capital stock. The excess of the cost of redemption over the average stated capital amounted to approximately $121,000 and was debited to contributed surplus (see Note 7). (iii) Private placement financing On March 26, 2010, the Company issued and sold, on a private placement basis, 8,369,947 common shares, at a price of CDN$0.095 (approximately US$0.092) per share, for gross proceeds of approximately CDN$795,000 (approximately US$773,000). After share issue costs, net cash proceeds were $689,000. The Company will use the proceeds of the financing primarily for working capital and general corporate purposes. In connection with the financing, Wildlaw Capital Markets Inc. received a cash commission of $38,656, being 5% of the gross proceeds of the financing. It also received warrants exercisable to acquire 418,497 common shares, being that number of common shares as is equal to 5% of the number of common shares sold under the financing, at a price of $0.095 per share, for a period of 24 months following the closing date of the private placement. 5. STOCK OPTIONS In May 2007, the Company amended its Stock Option Plan. Each option granted allows the holder to purchase one common share at an exercise price equal to the five-day average closing price of the Company's common shares on The Toronto Stock Exchange (or such other exchange on which the common shares are then listed) prior to the grant of the option. At the Annual and Special Meeting of Shareholders on May 8, 2008, the shareholders approved a resolution to increase the aggregate number of common shares reserved for issuance pursuant to the Stock Option Plan from 10% to 12.5% of the total number of common shares outstanding from time to time. This action increased the options available for issuance by 337,000 shares. As a result of the substantial issuer bid completed in September 2009, the number of common shares outstanding was reduced to 6,026,627. In order to remain in compliance with the Stock Option Plan ceiling of 12.5% of shares outstanding, option holders agreed voluntarily to surrender 726,990 options for cancellation. Options granted have a maximum term of ten years and generally vest over a period of up to three years. As at March 31, 2010, there were approximately 1,200,000 (December 31, 2009 - 1,000) options available for grant. The Company has issued stock options to acquire common shares as follows: --------------------------------------------------------------------- March 31, 2010 December 31, 2009 --------------------------------------------------------------------- (audited) Weighted Weighted Average Average Number Exercise Number Exercise of Price of Price Options (CDN) Options (CDN) --------------------------------------------------------------------- Outstanding, beginning of year 752,500 $ 0.28 1,231,990 $ 2.09 Issued - $ - 655,000 $ 0.16 Forfeited/cancelled (153,500) $ 0.48 (1,134,490) $ 2.28 --------------------------------------------------------------------- Outstanding, end of year 599,000 $ 0.23 752,500 $ 0.28 --------------------------------------------------------------------- --------------------------------------------------------------------- Exercisable, end of year 580,667 $ 0.21 714,167 $ 0.25 --------------------------------------------------------------------- --------------------------------------------------------------------- --------------------------------------------------------------------- Weighted Average Weighted Remaining Weighted Average Contractual Average Exercise Number Exercise Life Number Exercise Price Outstanding Price (years) Exercisable Price --------------------------------------------------------------------- $0.14-$0.16 555,000 $ 0.16 9.2 555,000 $ 0.16 $0.25-$2.65 44,000 $ 1.18 7.4 25,667 $ 1.36 --------------------------------------------------------------------- 599,000 $ 0.23 9.1 580,667 $ 0.21 --------------------------------------------------------------------- --------------------------------------------------------------------- The fair value of the stock-based compensation was estimated at the grant date or the date when it became measurable using the Black- Scholes option-pricing model under the following weighted average assumptions: --------------------------------------------------------------------- March 31 December 31 2010 2009 --------------------------------------------------------------------- (audited) Dividend yield 0% 0% Weighted average risk-free interest rates 1.35% 1.90% Volatility factor of the expected market price of the Company's common shares 116% 111% Weighted average expected life of options 5 years 5 years The Company has assumed no forfeiture rate as adjustments for actual forfeitures are made in the year they occur. The resulting weighted average grant date fair value per share of options issued in the three month period ended March 31, 2010 was n/a (December 31, 2009 - $0.13). The total stock-based compensation expense for the period was $5,558 (December 31, 2009 - $339,352). The above options were not included in the computation of diluted net loss per share as they are anti-dilutive. 6. WARRANTS --------------------------------------------------------------------- March 31 December 31 2010 2009 --------------------------------------------------------------------- (audited) Balance, beginning of period $ 783,988 $ 881,488 Value ascribed to expired broker warrants - (97,500) Value ascribed to agent's warrants 11,498 - --------------------------------------------------------------------- Balance, end of period $ 795,486 $ 783,988 --------------------------------------------------------------------- --------------------------------------------------------------------- The Company had issued warrants to acquire common shares as follows: --------------------------------------------------------------------- March 31, 2010 December 31, 2009 --------------------------------------------------------------------- (audited) Weighted Weighted Average Average Number Exercise Number Exercise of Price of Price Warrants (CDN) Warrants (CDN) --------------------------------------------------------------------- Outstanding, beginning of period 2,893,435 $ 5.60 3,240,647 $ 5.43 Expired - - (347,212) $(4.00) Issued 418,497 $0.095 - - --------------------------------------------------------------------- Outstanding, end of period 3,311,932 $ 4.90 2,893,435 $ 5.60 --------------------------------------------------------------------- --------------------------------------------------------------------- The Company had the following warrants outstanding at March 31, 2010: --------------------------------------------------------------------- Number of Warrants Exercise Price Expiry Date --------------------------------------------------------------------- 2,893,435 CDN $ 5.60 June 22, 2011 418,497 CDN $ 0.095 March 26, 2012 --------------------------------------------------------------------- --------------------------------------------------------------------- The above warrants were not included in the computation of diluted net loss per share as they are anti-dilutive. 7. CONTRIBUTED SURPLUS --------------------------------------------------------------------- March 31 December 31 2010 2009 --------------------------------------------------------------------- (audited) Balance, beginning of year $ 1,474,503 $ 1,158,886 Stock-based compensation (Note 5) 5,558 339,352 Value ascribed to expired broker warrants (Note 6) - 97,500 Excess of the cost of redemption over the average stated capital (Note 4(ii)) - (121,235) --------------------------------------------------------------------- Balance, end of year $ 1,480,061 $ 1,474,503 --------------------------------------------------------------------- --------------------------------------------------------------------- 8. RELATED PARTY TRANSACTIONS Transactions with related parties are incurred in the normal course of business and are measured at the exchange amount which is the amount of consideration established and approved by the related parties. Such transactions are conducted under normal business terms. Related party transactions have been listed below. During the three-month period, the Company incurred legal fees of approximately $65,000 (2009 - $85,000) of which $45,000 was related to the private placement financing, to a law firm in which a director of the Company is a partner. Included in accounts payable and accrued liabilities as at March 31, 2010 is $Nil (December 31, 2009 - $2,000) owing to this firm. 9. FINANCIAL INSTRUMENTS The carrying value of cash and cash equivalents, amounts receivable, accounts payable and accrued liabilities approximates fair value due to the relatively short-term maturities of these instruments. 10. CAPITAL RISK MANAGEMENT The Company's primary objective when managing capital is to maintain its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders. The Company does not plan to raise additional funds through the issuance of equity and warrants, but will continue to explore business development opportunities. The Company includes equity, comprised of issued common shares, warrants, contributed surplus and deficit, in the definition of capital. The Company is not subject to externally imposed capital requirements and there has been no change with respect to the overall capital risk management strategy during the period ended March 31, 2010. 11. FINANCIAL RISK MANAGEMENT The Company is exposed to a variety of financial risks by virtue of its activities: market risk (including currency risk, credit risk and interest rate risk) and liquidity risk. The overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on financial performance. Risk management is carried out by the finance department under policies approved by the Board of Directors. This department identifies and evaluates financial risks in close cooperation with management. The finance department is charged with the responsibility of establishing controls and procedures to ensure that financial risks are mitigated in accordance with the approved policies. (a) Market Risk (i) Currency Risk The Company operates internationally and is exposed to foreign exchange risk from various currencies, primarily Canadian dollars. Foreign exchange risk arises from purchase transactions as well as recognized financial assets and liabilities denominated in foreign currencies. The Company's main objective in managing its foreign exchange is to maintain Canadian cash on hand to support Canadian forecasted cash flows over a 12-month horizon. To achieve this objective the Company monitors forecasted cash flows in foreign currencies and attempts to mitigate the risk by modifying the nature of cash held or by entering into foreign exchange contracts with Canadian chartered banks. Foreign exchange contracts are only entered into for purposes of managing foreign exchange risk and not for speculative purposes. Balances in foreign currencies at March 31, 2010 are as follows: ----------------------------------------------------------- CDN$ ----------------------------------------------------------- Cash $ 540,000 Accounts payable and accrued liabilities $ 12,000 ----------------------------------------------------------- Fluctuations in the Canadian dollar exchange rate could have a significant impact on the Company's results from operations. However, they would not impair or enhance the ability of the Company to pay its foreign currency- denominated expenses, as cash and accounts payable and accrued liabilities would be similarly affected. (ii) Credit Risk Credit risk is the risk of a financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligation. The maximum exposure to credit risk of the Company at period-end is the carrying value of its cash and cash equivalents. The Company manages credit risk by maintaining bank accounts with Schedule I banks in Canada and major banks in the United States and investing only in cash and cash equivalents and short-term investments. Cash totaling $1.1 million (December 31, 2009 - $0.7 million) is held with one Canadian chartered bank. The Company's cash is not subject to any external restrictions. (iii) Interest Rate Risk Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Financial assets and financial liabilities with variable interest rates expose the Company to cash flow interest rate risk. The Company's cash and cash equivalents and short-term investments earn interest at market rates. The Company manages its interest rate risk by maximizing the interest income earned on excess funds while maintaining the liquidity necessary to conduct operations on a day-to-day basis. The Company's policy limits the investing of excess funds to liquid government and corporate debt instruments having a single "A" credit rating or greater. Fluctuations in market rates of interest do not have a significant impact on the Company's results of operations as the rate of interest paid is based primarily on the 90- day U.S. Treasury bill rate. A 1.0% increase in interest rates would impact the Company's annual interest income by approximately $8,000. (b) Liquidity Risk Liquidity risk is the risk that the Company will not be able to meet its obligations as they fall due. The Company manages its liquidity risk by forecasting cash flows from operations, anticipated investing and financing activities. Senior management is also actively involved in the review and approval of planned expenditures. As at March 31, 2010, the Company has accounts payable and accrued liabilities of $21,000 due within 12 months and has cash of $1,181,000 to meet its current obligations. As a result, the Company has minimal liquidity risk at this time.