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| BZYR > SEC Filings for BZYR > Form 10-Q on 14-Jan-2013 | All Recent SEC Filings |
14-Jan-2013
Quarterly Report
The following is a discussion of the financial condition of the Company as of November 30, 2012, and the results of operations comparing the three and nine months ended November 30, 2012 and 2011. It should be read in conjunction with the financial statements and the notes thereto included elsewhere in this report and in conjunction with the Annual Report on Form 10-K for the year ended February 29, 2012.
Introduction
The Company is primarily engaged as a research and development facility of drugs currently being tested for the use in the treatment of cancer, and provides consulting services. The Company is currently conducting one FDA-approved clinical trial. The Company holds the exclusive right in the United States, Canada and Mexico to use, manufacture, develop, sell, distribute, sublicense and otherwise exploit all the rights, titles and interest in Antineoplaston drugs used in the treatment and diagnosis of cancer, once an Antineoplaston drug is approved for sale by the FDA.
On September 3, 2004, the FDA granted the Company's request for "orphan drug designation" ("ODD") for the Company's Antineoplastons (A10 & AS2-1 Antineoplaston) for treatment of patients with brain stem glioma and, on October 30, 2008, the FDA granted the Company's request for ODD for Antineoplastons (A10 and AS2-1 Antineoplaston) for the treatment of gliomas.
On January 13, 2009, the Company announced that the Company had reached an agreement with the FDA for the Company to move forward with a pivotal Phase III clinical trial of combination Antineoplaston therapy plus radiation therapy in patients with
newly diagnosed, diffuse, intrinsic brainstem gliomas (DBSG). The agreement was made under the FDA's Special Protocol Assessment procedure, meaning that the design and planned analysis of the Phase III study is acceptable to support a regulatory submission seeking new drug approval. On February 23, 2010, the Company entered into an agreement with Cycle Solutions, Inc., dba ResearchPoint ("ResearchPoint") to initiate and manage a pivotal Phase III clinical trial of combination Antineoplastons A10 and AS2-1 plus radiation therapy (RT) in patients with newly-diagnosed, diffuse, intrinsic brainstem glioma. ResearchPoint is currently conducting a feasibility assessment. ResearchPoint has secured interest and commitments from a number of sites selected. Upon completion of this assessment, a randomized, international phase III study will commence. The study's objective is to compare overall survival of children with newly-diagnosed DBSG who receive combination Antineoplastons A10 and AS2-1 plus RT versus RT alone.
Results of Operations
Three Months Ended November 30, 2012 Compared to Three Months Ended November 30, 2011
Research and development costs were approximately $1,430,000 and $1,764,000 for the three months ended November 30, 2012 and 2011, respectively. The decrease of $334,000 or 19% was due to decreases in material costs of $433,000, facility and equipment costs of $20,000, and other research and development costs of $3,000, offset by an increase in personnel costs of $79,000 and consulting and quality control costs of $43,000.
General and administrative expenses were approximately $99,000 and $75,000 for the three months ended November 30, 2012 and 2011, respectively. The increase of $24,000 or 32% was due to an increase in legal and professional fees.
The Company had net losses of approximately $1,530,000 and $1,840,000 for the three months ended November 30, 2012 and 2011, respectively. The decrease in the net loss from 2011 to 2012 is primarily due to the overall decrease in research and development expenses, offset by an increase in general and administrative expenses of the Company described above.
Nine Months Ended November 30, 2012 Compared to Nine Months Ended November 30, 2011
Research and development costs were approximately $4,466,000 and $4,940,000 for the nine months ended November 30, 2012 and 2011, respectively. The decrease of $474,000 or 10% was due to decreases in material costs of $906,000 and facility and equipment costs of $59,000, offset by an increase in personnel costs of $383,000 and consulting and quality control costs of $108,000.
General and administrative expenses were approximately $538,000 and $186,000 for the nine months ended November 30, 2012 and 2011, respectively. The increase of $352,000 or 189% was due to an increase in legal and professional fees.
The Company had net losses of approximately $5,004,000 and $5,126,000 for the nine months ended November 30, 2012 and 2011, respectively. The decrease in the net loss from 2011 to 2012 is primarily due to the overall decrease research and development expenses, offset by an increase in general and administrative expenses of the Company described above.
Liquidity and Capital Resources
The Company's operations have been funded entirely by contributions from Dr. Burzynski and from funds generated from Dr. Burzynski's medical practice. Effective March 1, 1997, the Company entered into a Research Funding Agreement with Dr. Burzynski (the "Research Funding Agreement"), pursuant to which the Company agreed to undertake all scientific research in connection with the development of new or improved Antineoplastons for the treatment of cancer and Dr. Burzynski agreed to fund the Company's Antineoplaston research for that purpose. Under the Research Funding Agreement, the Company hires such personnel as is required to conduct Antineoplaston research, and Dr. Burzynski funds the Company's research expenses, including expenses to conduct the clinical trials. Dr. Burzynski also provides the Company laboratory and research space as needed to conduct the Company's research activities. The Research Funding Agreement also provides that Dr. Burzynski may fulfill his funding obligations in part by providing the Company such administrative support as is necessary for the Company to manage its business. Dr. Burzynski pays the full amount of the Company's monthly and annual budget of expenses for the operation of the Company, together with other unanticipated but necessary expenses which the Company incurs. In the event the research results in the approval of any additional patents for the treatment of cancer, Dr. Burzynski shall own all such patents, but shall license to the Company the patents based on the same terms, conditions and limitations as are in the current license between Dr. Burzynski and the Company.
The amounts which Dr. Burzynski is obligated to pay under the agreement shall be reduced dollar for dollar by the following: (1) any income which the Company receives for services provided to other companies for research and/or development of other products, less such identifiable marginal or additional expenses necessary to produce such income, or (2) the net proceeds of any
stock offering or private placement which the Company receives during the term of the agreement up to a maximum of $1,000,000 in a given Company fiscal year.
The Research Funding Agreement, as amended, contains an annual automatic renewal provision providing for an additional one-year term, unless one party notifies the other party at least thirty days prior to the expiration of the then current term of the agreement of its intention not to renew the agreement. Subject to the foregoing, the term of the Research Funding Agreement was renewed and extended until February 29, 2013. It is expected that the Research Funding Agreement will continue to renew each year prospectively unless terminated under the provisions of the agreement.
The Research Funding Agreement automatically terminates in the event that Dr. Burzynski owns less than fifty percent of the outstanding shares of the Company, or is removed as President and/or Chairman of the Board of the Company, unless Dr. Burzynski notifies the Company in writing of his intention to continue the agreement notwithstanding this automatic termination provision.
The Company estimates that it will spend approximately $1,500,000 during the remaining quarter of the fiscal year ending February 28, 2013. The Company estimates that ninety-five percent (95%) of this amount will be spent on research and development and the continuance of FDA-approved clinical trials. While the Company anticipates that Dr. Burzynski will continue to fund the Company's research and FDA-related costs, there is no assurance that Dr. Burzynski will be able to continue to fund the Company's operations pursuant to the Research Funding Agreement or otherwise. The Company believes Dr. Burzynski will be financially able to fund the Company's operations for at least the next year. In addition, Dr. Burzynski's medical practice has successfully funded the Company's research activities over the last 25 years and, in 1997, his medical practice was expanded to include traditional cancer treatment options such as chemotherapy, gene-targeted therapy, immunotherapy and hormonal therapy in response to FDA requirements that cancer patients utilize more traditional cancer treatment options in order to be eligible to participate in the Company's Antineoplaston clinical trials. As a result of the expansion of Dr. Burzynski's medical practice, the financial condition of the medical practice has improved Dr. Burzynski's ability to fund the Company's operations.
The Company may be required to seek additional capital through equity or debt financing or the sale of assets until the Company's operating revenues are sufficient to cover operating costs and provide positive cash flow; however, there can be no assurance that the Company will be able to raise such additional capital on acceptable terms to the Company. In addition, there can be no assurance that the Company will ever achieve positive operating cash flow.
Forward-Looking Statements
Certain matters discussed in this quarterly report, except for historical information contained herein, may constitute "forward-looking statements" that are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Forward-looking statements provide current expectations of future events based on certain assumptions. These statements encompass information that does not directly relate to any historical or current fact and often may be identified with words such as "anticipates," "believes," "expects," "estimates," "intends," "plans," "projects" and other similar expressions. Management's expectations and assumptions regarding Company operations and other future results are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements.
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