Bradmer announces 2010 first quarter financial results
TSX: BMR
TORONTO, May 13 /CNW/ - Bradmer Pharmaceuticals Inc. ("Bradmer" or the "Company") today announced its 2010 first quarter financial results.
Operational Highlights
On March 26, 2010, the Company issued and sold, on a private placement basis, an aggregate of 8,369,947 common shares, at a price of $0.095 per share, for aggregate gross proceeds to the Company of approximately Cdn$795,000 (the "Offering"). The proceeds of the Offering will be used primarily for working capital and general corporate purposes.
In connection with the Offering, Wildlaw Capital Markets Inc. received a cash commission equal to 5% of the gross proceeds of the Offering and warrants exercisable to acquire 418,497 common shares at a price of $0.095 per share for a period of 24 months following the closing date of the Offering.
The common shares of Bradmer were delisted from the Toronto Stock Exchange as of the close of business on March 26, 2010, due to the Company's failure to meet applicable continued listing standards. The common shares of Bradmer were listed on the NEX Board of the TSX Venture Exchange on March 29, 2010.
The Company has continued to execute on its cash conservation plan in the first quarter after the termination of all staff and the elimination of clinical trial related expenses. Dr. Alan Ezrin and Paul Van Damme continue to serve as Chief Executive Officer and Chief Financial Officer, respectively, on a part-time consultancy basis.
Financial Results
Amounts in US dollars, unless specified otherwise, and results expressed in accordance with Canadian Generally Accepted Accounting Principles (Canadian GAAP).
For the three months ended March 31, 2010, we recorded a net loss of $117,000 or $0.02 per common share based on the weighted average outstanding shares of 6,491,624 during the period, compared to a net loss of $2,192,000 or $0.16 per common share for the three months ended March 31, 2009 based on the weighted average outstanding shares of 13,488,215. The decreased loss in 2010 was due to the wind-down of the Company's lead clinical program, Neuradiab, in preparation for the planned dormancy of the Company as well as the reduction in the Company's staffing and administrative functions during this period.
Research and development expenses totalled $19,000 in the three months ended March 31, 2010, compared to $1,422,000 in the first quarter of 2009. The decrease was primarily due to the complete cessation of the clinical trial and related manufacturing activities during 2009. Expenses in 2010 consisted of patent fees and drug storage costs. Stock-based compensation amounted to $5,000 in 2010.
General and administrative expenses were $108,000 in the first quarter of 2010 compared to $764,000 in the same period of 2009 as a result of the wind-down of the Company's operations. As at December 31, 2009, all employees had been terminated and their employment contracts satisfied. The Chief Executive Officer continues to serve on a consultancy basis without compensation and the Chief Financial Officer continues to serve on a consultancy basis and is paid a per diem. Expenses in 2010 consisted primarily of consulting and legal fees, administrative support and directors and officers' liability insurance.
At March 31, 2010, we had working capital of $1,388,000, as compared to $810,000 at December 31, 2009. We had available cash of $1,342,000 at March 31, 2010, compared to cash of $860,000 at December 31, 2009. The increase was due to the private placement financing partially offset by the operating loss incurred in the period and the reduction in accounts payable and accrued liabilities.
As at March 31, 2010, there were 14,369,574 common shares issued and outstanding, 3,311,932 warrants and 599,000 stock options.
Additional information about the Company, including the MD&A and financial results may be found on SEDAR at www.sedar.com.
About Bradmer Pharmaceuticals Inc. (www.bradmerpharma.com)
Bradmer Pharmaceuticals' lead clinical candidate, Neuradiab, was developed at Duke University Medical Center as a proprietary therapy for a particularly aggressive form of brain cancer, glioblastoma multiforme (GBM). Neuradiab was granted Orphan Drug Status by both the U.S. Food and Drug Administration and the European Medicines Agency. Bradmer suspended enrolment of primary GBM patients in its Phase III multi-center clinical trial of Neuradiab in the first quarter of 2009. The Company seeks a change in business during the coming months.
Bradmer Pharmaceuticals Inc.'s common shares have not been registered under the Securities Act of 1933, as amended (the "Securities Act") or any state regulatory agency in the United States. The resale or transfer by a U.S. investor of such common shares of Bradmer Pharmaceuticals Inc. is subject to the requirements of Rule 904 of Regulation S of the Securities Act or such other applicable exemption thereunder, and other applicable state securities laws.
Except for historical information, this news release may contain forward-looking statements, which reflect the Company's current expectation regarding future events. These forward-looking statements involve risk and uncertainties, which may cause but are not limited to, changing market conditions, the establishment of corporate alliances, the impact of competitive products and pricing, new product development, uncertainties related to the regulatory approval process and other risks detailed from time to time in the Company's ongoing quarterly and annual reporting.
Financial results are included below:
Bradmer Pharmaceuticals Inc.
Interim Financial Statements
(Expressed in United States Dollars)
March 31, 2010
To the Shareholders of
Bradmer Pharmaceuticals Inc.
Notice to Reader:
Management has prepared the accompanying unaudited financial statements of Bradmer Pharmaceuticals Inc. for the three-month period ended March 31, 2010 and the Audit Committee of the Company has approved them. The Company's independent auditors have not reviewed these statements.
Bradmer Pharmaceuticals Inc.
Balance Sheets
(Expressed in United States Dollars)
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March 31 December 31
Note 2010 2009
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(audited)
Assets
Current
Cash $ 1,342,438 $ 860,460
Amounts receivable 8,529 1,944
Prepaid expenses 58,527 14,246
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$ 1,409,494 $ 876,650
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Liabilities
Current
Accounts payable and accrued
liabilities $ 20,978 $ 66,225
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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)
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1,388,516 810,425
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$ 1,409,494 $ 876,650
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Bradmer Pharmaceuticals Inc.
Statements of Operations and Deficit
For the Three Months Ended March 31
(Expressed in United States Dollars)
(unaudited)
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2010 2009
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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
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116,771 2,213,083
Interest income 247 20,978
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Net loss (116,524) (2,192,105)
Deficit at beginning of period (2,524,821) (25,665,493)
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Deficit at end of period $ (2,641,345) $(27,857,598)
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Basic and diluted net loss per share $ (0.02) $ (0.16)
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Weighted average number of shares outstanding 6,491,624 13,488,215
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Bradmer Pharmaceuticals Inc.
Statements of Cash Flows
For the Three Months Ended March 31
(Expressed in United States Dollars)
(unaudited)
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2010 2009
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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)
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(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)
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(207,079) (2,258,273)
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Cash flows from investing activities
Investment in patent rights - (4,859)
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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 -
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689,057 -
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Increase/(Decrease) in cash during the period 481,978 (2,263,132)
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Cash and cash equivalents at
beginning of period 860,460 8,245,455
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Cash and cash equivalents at end of period $ 1,342,438 $ 5,982,323
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Bradmer Pharmaceuticals Inc.
Notes to Financial Statements
March 31, 2010
(Expressed in United States Dollars)
(unaudited)
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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
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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)
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Balance, end of period $ - $ -
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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
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Number Amount
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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)
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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)
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Balance, March 31, 2010 14,396,574 $ 1,754,314
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(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:
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March 31, 2010 December 31, 2009
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(audited)
Weighted Weighted
Average Average
Number Exercise Number Exercise
of Price of Price
Options (CDN) Options (CDN)
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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
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Outstanding, end
of year 599,000 $ 0.23 752,500 $ 0.28
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Exercisable, end
of year 580,667 $ 0.21 714,167 $ 0.25
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Weighted
Average
Weighted Remaining Weighted
Average Contractual Average
Exercise Number Exercise Life Number Exercise
Price Outstanding Price (years) Exercisable Price
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$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
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599,000 $ 0.23 9.1 580,667 $ 0.21
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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:
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March 31 December 31
2010 2009
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(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
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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 -
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Balance, end of period $ 795,486 $ 783,988
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The Company had issued warrants to acquire common shares as follows:
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March 31, 2010 December 31, 2009
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(audited)
Weighted Weighted
Average Average
Number Exercise Number Exercise
of Price of Price
Warrants (CDN) Warrants (CDN)
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Outstanding,
beginning of
period 2,893,435 $ 5.60 3,240,647 $ 5.43
Expired - - (347,212) $(4.00)
Issued 418,497 $0.095 - -
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Outstanding,
end of period 3,311,932 $ 4.90 2,893,435 $ 5.60
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The Company had the following warrants outstanding at March 31, 2010:
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Number of Warrants Exercise Price Expiry Date
---------------------------------------------------------------------
2,893,435 CDN $ 5.60 June 22, 2011
418,497 CDN $ 0.095 March 26, 2012
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The above warrants were not included in the computation of diluted
net loss per share as they are anti-dilutive.
7. CONTRIBUTED SURPLUS
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March 31 December 31
2010 2009
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(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)
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Balance, end of year $ 1,480,061 $ 1,474,503
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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:
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CDN$
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Cash $ 540,000
Accounts payable and accrued liabilities $ 12,000
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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.
%SEDAR: 00023367E
For further information: Bradmer Pharmaceuticals Inc., Alan Ezrin, PhD, President & Chief Executive Officer, Phone: (305) 321-4333, E-mail: [email protected], Internet: www.bradmerpharma.com; Investor Relations, Ross Marshall, The Equicom Group Inc., Phone: (416) 815-0700 (Ext. 238), Fax: (416) 815-0080, E-mail: [email protected]
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