The following is a discussion of the financial condition of the Company as of
February 29, 2020 and February 28, 2019 and the results of operations for the
fiscal years ended February 29, 2020 and February 28, 2019. It should be read in
conjunction with the financial statements and the notes thereto included
elsewhere in this report. The following discussion contains forward-looking
statements.
Introduction
The Company has generated no significant revenue since its inception, and does
not expect to generate any operating revenues until such time, if any, as
Antineoplastons are approved for use and sale by the FDA. The Company's sole
source of funding is Dr. Burzynski, who funds the Company's operations from his
medical practice pursuant to certain agreements between Dr. Burzynski and the
Company. See "Certain Relationships and Related Transactions, and Director
Independence." Funds received by the Company from Dr. Burzynski are reported as
additional paid-in capital to the Company.
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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. All clinical trials were closed for enrollment by the
Company as of September 24, 2012. The Company is currently conducting one FDA
approved clinical trial.
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 all 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 (SPA)
procedure, meaning that the design and planned analysis of the Phase III study
of combination Antineoplastons A10 and AS2-1 ("ANP therapy") plus radiation
therapy ("RT") in patients with newly-diagnosed, diffuse, intrinsic brainstem
glioma (protocol "BT-52"), is acceptable to support a regulatory submission
seeking new drug approval. Protocol BT-52, at the FDA's request, was revised in
2014 to study only patients with diffuse, intrinsic pontine gliomas (DIPG),
which accounts for ~80% of brainstem gliomas. The study is a randomized,
international phase III study of combination ANP therapy + RT vs. RT alone in
patients with newly diagnosed DIPG in order to assess overall survival and
tolerability. The study's objective is to evaluate overall survival of patients
with newly-diagnosed DIPG who receive combination Antineoplastons A10 and AS2-1
plus RT versus RT alone. Safety is also being assessed. The study of BT-52 will
commence upon availability of funds.
On September 16, 2013, the Company notified the FDA that it had withdrawn
protocol BT-54 from further consideration. This was to be a randomized phase III
study of combination Antineoplaston therapy vs. Temozolomide in children ages >
6 months to < 18 years with recurrent and/or progressive optic pathway glioma,
after Carboplatin or Cisplatin Therapy, in order to assess progression free
survival and tolerability. However, after SPA, the FDA advised the Company that
it would not receive approval for the proposed BT-54 Phase III clinical trial.
Results of Operations
Fiscal Year Ended February 29, 2020 Compared to Fiscal Year Ended February 28,
2019
Research and development costs were approximately $1,203,000 and $1,146,000 for
the fiscal years ended February 29, 2020 and February 28, 2019, respectively.
The increase of $57,000 or 5% was due to an increase in personnel costs of
$39,000, consulting and quality control costs of $17,000, facility and equipment
costs of $3,000, and other research and development costs of $18,000, offset by
a decrease in material costs of $20,000, as a result of requirements imposed by
the Food and Drug Administration.
General and administrative expenses were approximately $431,000 and $491,000 for
the fiscal years ended February 29, 2020 and February 28, 2019. The decrease of
$60,000 or 12% was due to a decrease in legal and professional fees of $83,000,
offset by an increase in other general and administrative expenses of $23,000,
as a result of a reduction in requests from regulatory agencies.
The Company had net losses of approximately $1,600,000 for each of the years
ended February 29, 2020 and February 28, 2019 respectively. The net loss from
2019 to 2020 was primarily static due to an overall increase in research and
development costs offset by a decrease in general and administrative expenses of
the Company as described above. As of February 29, 2020, the Company had a total
stockholders' deficit of approximately $(153,000).
Liquidity and Capital Resources
The Company's operations have been funded entirely by Dr. Burzynski with 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. Dr. Burzynski has unlimited
and free access to all equipment which the Company owns, so long as such use
does not conflict with the Company's use of such equipment, including without
limitation, all equipment used in the manufacturing of Antineoplastons used in
the clinical trials. 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.
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The Company entered into a third amendment to the Research Funding Agreement,
effective March 1, 2007, whereby the Company and Dr. Burzynski extended the term
thereof until February 28, 2008, with an automatic renewal for an additional
one year term, unless one party notifies the other party at least thirty days
prior to the expiration of the 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 28, 2021, which is also
automatically renewable for an additional one year term unless one party
notifies the other party at least thirty days prior to the expiration of the
term of the agreement of its intention not to renew the agreement.
The Research Funding Agreement automatically terminates in the event that
Dr. Burzynski owns less than fifty percent (50%) 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 $1,200,000 in the fiscal
year ending February 28, 2021. 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. 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, immunotherapy, hormonal therapy and gene targeted 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.
Because the Company currently is entirely dependent upon the contributions for
research provided by Dr. Burzynski under the Research Funding Agreement, the
Company would not be able to continue conducting its clinical trials if
Dr. Burzynski ceased funding the Company's research. In such event, the Company
would be required to find immediate funding which may not be available on
acceptable terms or at all. If this were to occur and the Company were not able
to find adequate sources of funding, the Company would be required to cease
operations. Even with Dr. Burzynski's continued contributions under the Research
Funding Agreement, 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.
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