2015 was not a good year for shareholders of PharmaCyte Biotech (OTCMKTS:PMCB). They just could not catch a break as shares made a new 52 week low to close out 2015.Driving this move lower was the company's disclosure to the SEC about its previously issued financial statements. According to PMCB:
"The Company's management recommended to the Board that the financial statements should be restated because the Company had inadvertently accounted for certain warrants with a cashless exercise provision as liabilities when they should have been accounted for as equity. The Company is working with its former and current auditors to restate and refile the Annual Report on Form 10-K for the year ended April 30, 2015 and the Quarterly Reports on Form 10-Q for the quarters ended July 31, 2015 and October 31, 2015 as soon as reasonably possible."
How bad is this? Really not bad at all. It's just an accounting error that the company is correcting. Here is how it will impact the company.Year ended April 30, 2015By using the equity method of accounting instead of the liability method previously used to value the cashless warrants, the reported net loss of the Company will change in an amount to be determined.The total current liabilities on the balance sheet were overstated by $492,049. With the restatement, the total current liabilities on the balance sheet will decrease by $492,049 to a liability balance of $1,520,366 at April 30, 2015.Quarter ended July 31, 2015By using the liability method instead of the equity method, the Company reported a net loss of $546,164 for the three months ended July 31, 2015. Using the equity method, the net loss would have been $1,008,467 for the three months ended July 31, 2015.The total current liabilities on the balance sheet were overstated by $29,746. With the restatement, the total current liabilities on the balance sheet will decrease by $29,746 to a total liability balance of $1,156,440 at July 31, 2015.Quarter ended October 31, 2015By using the liability method instead of the equity method, the Company reported a net loss of $1,099,263 for the three months ended October 31, 2015. Using the equity method, the net loss would have been $1,129,009 for the three months ended October 31, 2015.By using the liability method instead of the equity method, the Company reported a net loss of $1,645,425 for the six months ended October 31, 2015. Using the equity method, the net loss would have been $2,137,474 for the six months ended October 31, 2015.The restatement will have no effect on current liabilities on the balance sheet as of October 31, 2015.
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Now as usual when anything like this happens, you get the shorts and the ambulance chasing lawyers all crying foul. However, the company caught the error and reported it like it's supposed to. It does sort of suck that PMCB did it on the last day of year, but at least it's out of the way and the company and its shareholders can focus on 2016 where there's a lot happening.
The fact remains that PMCB is the real deal and is developing targeted treatments for cancer and diabetes using its signature live-cell encapsulation technology, Cell-in-a-Box. PMCB just announced a complete redesign of its clinical trial in advanced pancreatic cancer. After consulting with world-renowned experts in the filed of pancreatic cancer; including, Dr. Mathias Löhr, Dr. Manuel Hidalgo, and experts at Translational Drug Development (TD2), PharmaCyte’s Phase 2b clinical trial was completely redesigned in an attempt to satisfy a critical unmet medical need that exists for patients with inoperable, but not metastatic, pancreatic cancer whose tumors no longer respond after 4 to 6 months of treatment with the current “gold standard” for the disease, the combination of Abraxane® plus gemcitabine. In most cases, therapy consisting of another chemotherapy agent plus radiation is given to such patients. However, the beneficial effects of these treatments are marginal at best.
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The clinical trial will now be conducted in the United States by TD2 with study sites in both Europe and Australia. Eligible patients will be randomly placed into two groups. Group 1 will receive PharmaCyte’s pancreatic cancer treatment of Cell-in-a-Box® plus low doses of ifosfamide. Group 2 will receive treatment with the combination of capecitabine + radiation. The primary endpoints for the trial will be: (i) progression-free survival (PSF); and (ii) the side effects that occur in the patients. PSF is the time that elapses from the first day of treatment until the disease gets worse. The trial design also includes several secondary endpoints; the most important of which are: (i) the onset of pain and the patient’s need for pain medications; (ii) whether the inoperable tumors become operable as a result of the treatment; (iii) the change in tumor size; and (iv) the patients’ overall quality of life during the treatment.
PMCB is in the critical trial phase. Noted pancreatic experts are on its advisory board. In addition, PharmaCyte is developing a treatment for Type 1 diabetes and Type 2 insulin-dependent diabetes. PharmaCyte plans to encapsulate a human cell line that has been genetically engineered to produce, store and release insulin in response to the levels of blood sugar in the human body. The encapsulation will be done using the Cell-in-a-Box®technology.
PMCB is on the cusp of some possibly great things. With a market cap of only $34 million, PMCB could attract the attention of some big pharma companies looking to get a hold of its Cell-in-a-Box technology. We think big things are about to happen with PMCB. Get the latest updates on PMCB by signing up below.
Disclosure: We own no shares of PMCB, but may initiate a position within the next 72 hours. We have not been compensated for this article.
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