Investors with a very high appetite for risk and seeking ultra-high-growth stocks can find potential opportunities within the pharma and biotech domain. Investing in development-stage biopharma companies is a typical high-risk, high-return bet that can end up providing multi-bagger returns if the company’s research is successful. The key is to invest in biopharma players with diversified pipelines and decent liquidity to fund their research.
I recently came across one such high-potential, development-stage biopharma company making excellent progress in its oncological research as well as anti-Covid research. It also happens to have an active revenue stream in the form of dietary supplement tablets. It is Sunshine Biopharma Inc. (SBFM, Financial).
Company overview
Sunshine Biopharma is a biopharmaceutical company specializing in oncology and antiviral drug development, commercialization and research. Adva-27a, a GEM-difluorinated C-glycoside byproduct of Podophyllotoxin, and SBFM-PL4, an anti-Covid treatment compound, are the two main candidates under development.
Its Adva-27a treats several forms of cancer, including leukemia, lymphoma, brain, lung, urinary bladder, testicular, prostate, colon, liver and others. The drug also aims to kill cancer cells that are resistant to multiple drugs, such as pancreatic cancer, breast cancer, uterine sarcoma cells and small-cell lung cancer.
On the SARS-CoV-2 front, the company has also made significant advancements with its candidate called SBFM-PL4.
Apart from research, Sunshine Biopharma has a significant revenue stream from Essential 9, a dietary supplement tablet that it sells alongside generic prescription drugs for breast cancer, benign prostatic hyperplasia and prostate cancer.
The company was founded in 2006 and is headquartered in Pointe-Claire, Canada.
Oncological research
Sunshine Biopharma’s focus in anti-cancer research is on Adva-27a, which has been shown to kill multiple drug-resistant cancer cells. Since the company's inception, this has been its primary anti-cancer compound. The candidate may enter Phase I clinical trials for pancreatic cancer and breast cancer after completing GMP manufacturing and formulation of a 2-kg quantity for injection.
Management says Adva-27a kills cancer cells by inhibiting a key cell-cycle enzyme known as Topoisomerase II. Unlike other anti-tumor drugs currently available on the market, Adva-27a could possibly kill multidrug-resistant cancer cells. Management has also highlighted that P-Glycoprotein, the enzyme that makes cancer cells resistant to anti-tumor drugs, might not affect Adva-27a. Furthermore, both human microsomal stability studies and rat pharmacokinetics data show that Adva-27a has a very fast clearance time.
The clinical trials will take place at McGill University's Jewish General Hospital in Montreal, following the U.S. Food and Drug Administration's standards at all levels. The company estimates that the Phase I process should take 18 to 24 months from start to finish, after which Adva-27a could well be made available to patients under compassionate-use guidelines. Sunshine Biopharma is the sole and exclusive owner of this patent, as well as all other Adva-27a-related patents worldwide. This could have huge future upside assuming the trials are successful, so the company could easily become an acquisition target given its application in a domain like cancer research, which has a lot of overlap with big pharma.
Science-based nutrition as an active revenue stream
Sunshine Biopharma is one of the few research-oriented biopharma companies with an active revenue stream, which comes from its science-based nutrition division.
The company offers a protein supplement called Essential 9. As per scientific research, proteins are made up of 20 different amino acids, nine of which the human body cannot produce and has to consume through food. Valine, threonine, histidine, isoleucine, methionine, leucine, lysine, phenylalanine and tryptophan are some of the amino acids that must be consumed through protein-rich foods. Their presence in the body is critical for muscle repair, energy, healthy digestion, blood sugar regulation and overall healthy living. Essential 9 aims to provide these amino acids in exact, scientifically verified proportions. The product is vegan-certified and appears to be appealing to a large audience since it has already started generating a positive top-line for the company. These revenues provide an excellent cushion for management to fund their research, and the Essential 9 business could also have good growth potential.
SARS-CoV-2 treatment
Sunshine Biopharma's SARS-CoV-2 research commenced in early 2020, and it was able to file a patent application in the U.S. for a novel coronavirus treatment that will be available in tablet form and can be taken home. It would be competing against the likes of Pfizer's (PFE, Financial) Paxlovid and Merck's (MRK, Financial) molnupiravir.
The research team used its patented technology to synthesize four different potential inhibitors of the coronavirus protease, then screened each of these compounds to find SBFM-PL4, which is its lead anti-Covid-19 drug candidate. This candidate is being developed in collaboration with the University of Georgia. In addition, management has signed a licensing agreement with the University of Georgia to develop two anti-coronavirus compounds in parallel with SBFM-PL4. The company said that it had mapped the Delta mutations as well as other known variants of concern.
Sunshine Biopharma's findings have suggested that the PLpro inhibitors, currently being developed at the University of Georgia, would work against all relevant Covid-19 variants. The company has decided to proceed with its mouse studies after its recent research. While the company’s SARS-CoV-2 research is still in the pre-IND stage, we believe it has enormous potential.
Final thoughts
In February, Sunshine Biopharma was uplisted to the Nasdaq and has seen a correction in its stock price. The company has reported $310,000 in revenue for the trailing 12-month period from the Essential 9 supplement sales.
After its recent fundraising, the company has more than $13 million of liquidity on its balance sheet. Additionally, it has been burning less than $3 million each year. Even with the ongoing trials, it is likely the company has enough liquidity to finance its research for at least the next couple of years even if we exclude the cash profits it generates from the Essential 9 sales. Overall, I believe that in the universe of the high-risk, zero-revenue, development-stage biopharma companies, Sunshine Biopharma appears to be a sound potential investment opportunity.
