Neurokine Pharmaceuticals Inc (NEUKF) SEC Quarterly Report (10-Q) for Q4 2015

This report on Form 10-Q contains certain forward-looking statements. All statements other than statements of historical fact are "forward-looking statements" for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.

These forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs and the risk of declining revenues. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking statements. The following discusses our financial condition and results of operations based upon our unaudited financial statements which have been prepared in conformity with accounting principles generally accepted in the United States. It should be read in conjunction with our financial statements and the notes thereto included elsewhere herein.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars (CDN$) and all references to "common shares" refer to the common shares in our capital stock.

As used in this quarterly report, the terms "we", "us", "our" and "our company" mean Pivot Pharmaceuticals Inc., unless otherwise indicated.

General Overview

We are a development stage pharmaceutical company. We were incorporated in the Province of British Columbia, Canada under the name "649186 B.C. Ltd.", on June 10, 2002. On September 9, 2003, we changed our name to "Xerxes Health Corp." and on June 26, 2007, we changed our name to "Neurokine Pharmaceuticals Inc.".

Effective June 4, 2014, we filed with the British Columbia Registrar of Companies a Form 11, Notice of Alteration, wherein we have increased our authorized share capital from 500,000,000 common shares without par value to an unlimited number of common shares without par value. The increase of authorized capital was approved by our stockholders at the annual and special meeting held on June 3, 2014.

On September 26, 2014, our company held a special meeting of stockholders to approve the removal of our company's Pre-Existing Company Provisions, the cancellation of our current Articles and the adoption of new Articles and to approve a reverse stock split on the basis of up to 1:100.

Effective October 8, 2014, we filed with the British Columbia Registrar of Companies a Form 11, Notice of Alteration, wherein we have removed our Pre-Existing Company Provisions.

Effective April 7, 2015, we filed with the British Columbia Registrar of Companies a Form 11, Notice of Alteration, wherein we changed our name to "Pivot Pharmaceuticals Inc.".

Effective at the opening of trading on April 20, 2015, as approved by FINRA, our company effected a reverse stock split of our issued and outstanding common shares on a 10 old for 1 new share basis.

On November 20, 2015, we completed the acquisition of IndUS Pharmaceuticals, Inc. ("IndUS"), a Delaware corporation, pursuant to an Agreement and Plan of Merger and Acquisition Agreement dated as of November 4, 2015 among our company, Pivot Pharma U.S. Inc., our wholly owned subsidiary, IndUS and Sindu Research Laboratories Pvt Ltd. As consideration for the purchase, we issued 4,512,500 shares of common stock on November 23, 2015 and 237,500 shares of common stock on December 4, 2015. As part of the acquisition, we appointed Dr. Pravin Chaturvedi as our new Chief Executive Officer and Director.

IndUS is an emerging United States-India cross-border pharmaceutical company located in the Greater Boston area, which is engaged in conducting research and development activities for advancing novel therapeutics in the areas of oncology, infectious diseases and diabetes.

Our principal executive office is located at 1275 West 6th Avenue, Vancouver, B.C. Canada V6H 1A6. Our telephone number is (978) 973-5271.

We are engaged in the development and commercialization of therapeutic pharmaceutical products to address unmet medical needs in women's health including cancers affecting women. We have a two-pronged strategy that includes: emphasis on research and development to towards identifying new applications for existing drugs; and developing novel therapies for women's cancers that are resistant to existing treatments due to inherent or acquired mutations.. Thus, our research and development activities are i) focused on developing hypotheses concerning new therapeutic uses for approved drugs, and conducting experimentation and clinical research to test those hypotheses; and ii) advancing novel drug candidates for the treatment of women's cancers including, but not limited to metastatic endometrial cancer and triple-negative breast cancer, which have limited treatment options. Where appropriate, we intend to depart from these two strategies to develop new variants of, or delivery methods for, or new dosage regimens for existing drugs or compounds as well as opportunistically acquire novel treatment options to address unmet or under-served medical needs in women's health.

Our business model currently includes the following activities:

Our Current Business

We are a development stage biopharmaceutical company engaged in the development and commercialization of therapeutic pharmaceutical products, with a two-pronged strategy of identifying new therapeutic uses for existing drugs to address unmet medical needs in women's health including but not limited to urological and/or gynecological disturbances; and advancing novel anticancer drug candidates to provide new treatment options for metastatic cancers in women that do not have adequate treatment options or have poor response to existing treatment options due to inherent or acquired mutations. Thus our research and development activities are focused on i) developing hypotheses concerning new therapeutic uses for approved drugs, and conducting experimentation and clinical research to test those hypotheses; and ii) advancing novel drug candidates for the treatment of women's cancers including, but not limited to metastatic endometrial cancer and triple-negative breast cancer, which have limited treatment options. Where appropriate, we intend to depart from these two strategies to develop new variants of, or delivery methods for, existing drugs or compounds as well as opportunistically acquire novel treatment options to address unmet or under-served medical needs in women's health.

Our two-pronged R&D strategy of repurposing approved drugs and developing novel treatment options to address unmet medical needs, although not uncommon amongst pharmaceutical companies, differs from traditional drug development practices in two ways: 1) focusing on unmet medical needs in women's health including but not limited to urological and gynecological disturbances; and 2) addressing unmet or under-served medical needs in women's cancers such as metastatic endometrial or triple-negative breast cancer that have inherent or acquired mutations rendering them resistant to existing treatment options.

Our initial focus is on developing therapeutic applications for existing drugs for the treatment of diseases and conditions specific to urological and/or gynecological disturbances in women. The diseases and conditions that are the subject of our R&D program focused on re-purposing approved drugs and addressing resistant women's cancers include:

Our planned research and development for the next 12 months will focus on development activities for PVT-005 and PVT-006 to support the filing of an Investigational New Drug (IND) application to support in first-in-human (FIH) clinical trials as well as develop new therapeutic uses for approved drugs through the use of novel delivery options to address unmet medical needs in urological and/or gynecological disturbances in women.

Our Research and Development ("R&D") Strategy: A Focus on Addressing Unmet Medical Needs in Urological and Gynecological Disturbances and Resistant Cancers in Women

Our highly experienced management team has implemented a business-minded and cost-conscious approach to product research and development by focusing on development of novel therapies to address unmet needs in women's health. Our R&D strategy will develop new therapeutic uses for existing drugs to address needs in women's health as well as advance some of its patented and proprietary novel anticancer drugs through its recent acquisition of IndUS.

In order for a drug to be successful, it must be both efficacious and acceptably safe. Therefore, before a drug may be commercially marketed, it must be scrutinized and approved by applicable health authorities (such as the FDA in the United States) in each country or jurisdiction where it is sought to be sold. In pharmaceutical research and development, clinical trials are conducted to allow safety and efficacy data to be collected for new drugs or devices. Health authorities then scrutinize the clinical trial results and determine, based on the results, whether a drug may be sold to the public. Similarly, clinical trials may only take place once satisfactory information has been gathered on the quality of the product and its non-clinical safety, and approval to conduct the trials has been granted by the health authority in the country where the trial is scheduled to take place.

Clinical trials involving new drugs are commonly classified into four phases. Each phase of the drug approval process is treated as a separate clinical trial. The drug-development process will normally proceed through all four phases over many years. If the drug successfully passes through Phases I, II, and III, it will usually be approved by the national regulatory authority for use in the general population. Phase IV trials are 'post-approval' studies. Due to the considerable cost that may be required to complete a full series of clinical trials, the burden of paying for all the necessary people and services is usually borne by the sponsor, who may be the pharmaceutical or biotechnology company that developed the drug that is the subject of the study. Since the diversity of roles may exceed the resources of the sponsor, clinical trials are often managed by outsourced partners such as contract research organizations. Furthermore, approval rates for new drugs at each clinical trial stage are prohibitively low, which may require the sponsor to finance additional trials or abandon the drug under development altogether.

Our initial R&D strategy of finding new therapeutic uses for approved drugs seeks to avoid the cost of repeating one or more pre-clinical or clinical, safety, pharmacokinetic or or other tests by applying existing drug research to new indications. In doing so, a company may reduce the time required to complete the necessary research and development activities, which can typically take in excess of 10 years, by more than half, as well as reduce the corresponding development costs. Significantly, an existing drug, if efficacious for its new indication, is also more likely to be approved by an applicable health authority because it has already been shown to meet regulated safety standards that the vast majority of developmental drugs fail to achieve. If a re-positioned drug is no longer protected by patent, no relationship between the original owner or developer of the drug and the new therapeutic use of the drug need exist. However, it may in some circumstances be beneficial for the us to obtain a license from the original owner of the drug where there exists an opportunity to receive development, manufacturing, marketing or financing assistance from such owner.

We anticipate that our re-profiling approach will result in faster, more efficient clinical trials and dramatically increase the chance of obtaining regulatory approval at each clinical trial stage. In some cases, we anticipate that we may be able to obtain a regulatory waiver and bypass certain clinical trial stages as a result of basing our products on re-profiled drugs.

Our recent acquisition of Greater Boston-based IndUS has provided us with a portfolio of patented and proprietary, novel anticancer drug candidates from multiple chemical classes of molecules referred to as pyrrolobenzodiazepine dimers ("PBD"). These molecules have shown excellent anticancer potential through their initial testing conducted at the National Cancer Institute (NCI) in Bethesda, MD. Subsequent to their initial biological evaluation, chemical scale-up and formulation studies were conducted to evaluate their pharmacokinetics in rats and two novel and patented PBDs were prioritized for advancement through preclinical studies to support first-in-human (FIH) studies. PVT-005 and PVT-006 provide novel treatment options in combination with existing chemotherapeutic regimens to address unmet medical needs in women's cancers. Our initial focus for PVT-005 is in metastatic endometrial cancer which harbors genomic mutations in DNA replication and repair pathways that render them resistant to existing chemotherapy options. It is estimated that approximately 50,000 women in the United States have metastatic endometrial cancer that would become eligible for new therapy options following their initial treatments. Similarly, PVT-006, a novel and patented PBD, distinct from PVT-005, has been identified as a lead candidate to address unmet medical needs of women with triple-negative breast cancer ("TNBC"). Triple-negative breast cancer is a very aggressive form of breast cancer that affects younger women, predominantly of African-American descent and it is estimated that approximately 170,000 women in the United States have TNBC. Five different molecular subtypes of TNBC have been identified and basal-like (BL) subtype of TNBC affects up to 40,000 women in the United States. PVT-006 is more likely to be effective, in combination with existing anticancer agents, in BL-TNBC subtype due to their mutations in DNA repair and replication pathways.

Preclinical safety studies will be conducted over the next 12 months to advance at least one of these candidates to an IND-stage to allow initiation of clinical studies in these highly unmet medical needs in women's cancer.

Issuances of Securities

On January 31, 2015, we issued 299,202,532 pre-split (29,920,253 post-split) shares of our common stock to six subscribers at the price of US$0.001 per share in full conversion of six outstanding convertible promissory notes held by the subscribers with an aggregate value US$299,203.53 including principal and accrued interest. We originally issued the convertible promissory notes for cash consideration on December 11, 2014, June 27, 2014, April 26, 2013, December 4, 2011, February 23, 2011, and December 16, 2010, respectively. 47,649,500 pre-split (4,764,950 post-split) of the common shares were issued to Sassel Investments Inc., a corporation beneficially owned and controlled by Hamid Doroudian, a former officer and director of our company.

On March 6, 2015, 100,000,000 pre-split (10,000,000 post-split) shares of common stock were issued to directors, officers and a consultant for services. An additional 300,000,000 pre-split (30,000,000 post-split) shares of common stock were held in escrow to be released as follows: 100,000,000 pre-split (10,000,000 post-split) shares of common stock on each of August 25, 2015, February 25, 2016 and February 25, 2017. On August 25, 2015, 100,000,000 pre-split (10,000,000 post-split) shares of common stock were released. In October 2015, these individuals returned 200,000,000 pre-split (20,000,000 post-split) shares of common stock that were received which, together with the 200,000,000 pre-split (20,000,000 post-split) shares of common stock held in escrow, have been cancelled by our company.

On April 15, 2015, the Company issued 2,500,000 shares of common stock to a service provider and an officer for services.

In April 2015, 400,000 shares of common stock were issued for cash proceeds of $48,844. In July 2015, 1,000,000 shares of common stock were issued for cash proceeds of $261,036.

On August 1, 2015, 25,000 shares of common stock were issued pursuant to an advisory board agreement for our advisory board member. An additional 75,000 shares of common stock were held in escrow to be released as follows: 25,000 shares of common stock on each of January 31, 2016, July 31, 2016 and January 31, 2017.

On August 24, 2015, 100,000 shares of common stock were issued pursuant to an investor relations agreement for services.

On November 23, 2015 and December 4, 2015, 4,512,500 and 237,500 shares of common stock, respectively, were issued pursuant to the acquisition of IndUS under the Agreement and Plan of Merger and Acquisition Agreement dated as of November 4, 2015 among our company, Pivot Pharma U.S. Inc., our wholly owned subsidiary, IndUS and Sindu Research Laboratories Pvt Ltd. 250,000 shares of common stock of our company will be issued upon closing of the acquisition of Sindu Research Laboratories Pvt Ltd.

Results of Operations

The following summary of our results of operations should be read in conjunction with our financial statements for the quarter ended October 31, 2015, which are included in this quarterly report on Form 10-Q.

Our operating results for the three and nine months ended October 31, 2015 and 2014 are summarized as follows: