UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MAY 31, 2004
EVOLVE ONCOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
(Exact name of registrant as specified in its charter)
DELAWARE 13-4047693
---------- ------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
712 Fifth Avenue, New York, NY, 10019
--------------------------------- -------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (646) 723-8941
Check whether the registrant: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 3 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [_]
Class Outstanding at June 14 2004
----- ------------------------------
Common stock, $0.001 par value 43,402,984
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
EVOLVE ONCOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
MAY 31, 2004
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 0
Prepaid expenses and other assets 367
------------
TOTAL CURRENT ASSETS $ 367
Intangible assets 15,984,795
------------
TOTAL ASSETS 15,985,162
============
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 800,223
Accrued expenses and other liabilities 27,543
Bank overdraft 0
------------
TOTAL CURRENT LIABILITIES 827,766
------------
Other liabilities 0
TOTAL LIABILITIES 827,766
============
COMMITMENTS
STOCKHOLDERS' EQUITY
Common stock, $.001 par value;
authorized 100,000,000 shares;
43,402,984 issued and outstanding 43,403
Preferred stock, $.001 par value;
Authorized 25,000,000 shares;
0 issues and outstanding 0
Additional paid in capital 16,406,709
Deficit accumulated in the development stage (1,219,341)
Accumulated other comprehensive loss (73,374)
------------
TOTAL STOCKHOLDERS' EQUITY 15,157,396
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 15,985,162
============
The accompanying notes are an integral part of these financial statements.
1
EVOLVE ONCOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS FROM INCEPTION
ENDED FEB. 15, 2001
MAY 31, TO MAY 31,
--------------------------- ------------
2004 2003 2004
REVENUES $ 0 $ 0 $ 0
COST OF GOODS SOLD $ 0 $ 0 $ 0
GROSS PROFIT $ 0 $ 0 $ 0
COSTS AND EXPENSES
GENERAL AND ADMINISTRATIVE 316,509 0 1,002,253
RESEARCH AND DEVELOPMENT 0 0 207,088
TOTAL OPERATING EXPENSES 316,509 0 1,219,341
LOSS FROM OPERATIONS 316,509 0 1,219,341
FOREIGN CURRENCY
TRANSLATION ADJUSTMENT (3,825) 0 (73,374)
------------ ------------ ------------
Total comprehensive loss (320,334) 0 (1,292,716)
NET (LOSS) PER COMMON SHARE,
BASIC AND DILUTED $ (.008) $ 0
============ ============
WEIGHTED AVERAGE
SHARES OUTSTANDING 42,862,984 2
============ ============
The accompanying notes are an integral part of these financial statements.
2
EVOLVE ONCOLOGY INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Accumulated
Common Stock Additional Other
------------ Paid-in Accumulated Comprehensive Stockholders
Amount Shares Amount Capital Deficit Income/loss Equity
$
Balance at February
28,2003 15,814,992 $ 15,815 0 (181,465) (5,558) (171,208)
===============================================================================================================
10:1 Reverse split
Of Common Stock
March 1,2003 (14,233,500) (14,234) (14,234)
Shares issued for
Acquisition of
EU Laboratories 15,000,000 15,000 15,000
March 1,2003
Net Loss May 30,2003 ` (62,840) (62,840)
Translation adjustment
May 30, 2003 (8,132) (8,132)
Balance at May 30,
2003 16,581,492 16,581 0 (244,305) (13,690) (241,414)
===============================================================================================================
Net Loss August 31, (210,069) (210,069)
2003p
Translation adjustment (1) (1)
Balance August 30,
2003 16,581,492 16,581 0 (454,374) (13,691) (451,484)
===============================================================================================================
Net Loss November 30,
2003p (321,900) (321,900)
Translation Adjustment --
Common stock issued
To Consultants
November 30, 2003 350,000 350 262,150 262,500
Balance November 30
2003 16,931,492 16,931 262,150 (776,274) (13,691) (510,884)
===============================================================================================================
Net Loss February 29,
2004p (126,558) (126,558)
Translation Adjustment (55,858) (55,858)
Common stock issued for
Acquisition of Antibody
Technologies 4,500,000 4,500 15,964,030 15,968,530
Balance February 29
2004 21,431,492 21,431 16,226,180 (902,832) (69,549) 15,275,230
===============================================================================================================
Stock issued to
consultants
March 2004 270,000 270 202,230 202,500
Share issuance
2 for 1 forward
stock split
April 7, 2004 21,701,492 21,701
Net Loss May 31,
2004
(316,509) (3,825) (320,334)
Balance May 31
2004 43,402,984 43,403 16,428,410 (1,219,341) (73,374) 15,157,396
===============================================================================================================
The accompanying notes are an integral part of these financial statements.
3
EVOLVE ONCOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
May 31 From
2004 2003 Inception
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (316,509) $ 0 (1,219,341)
Adjustments to reconcile net (loss) to
net cash (used) in operating activities
Issuance of common stock for services 202,500 0 465,000
Changes in operating assets and liabilities 117,834 (3) 827,766
----------- ----------- -----------
NET CASH (USED) IN OPERATING ACTIVITIES 3,825 (3) 73,425
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES 0 0 (15,985,162)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Common Stock 0 3 15,985,111
----------- ----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 0 3 15,985,111
----------- ----------- -----------
EFFECT OF EXCHANGE RATE CHANGES (3,825) 0 (73,374)
----------- ----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 0 0 0
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 0 0 0
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 0 0 0
=========== =========== ===========
The accompanying notes are an integral part of these financial statements.
4
EVOLVE ONCOLOGY, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial information presented includes the Fiscal quarterly period ended
May 31, 2004.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries, EU Laboratories Limited and Antibody Technologies
Inc.
COMPREHENSIVE INCOME
Comprehensive income / (loss) represents net income / (loss) plus the effect of
translation adjustments on consolidation.
RECENT ACCOUNTING PRONOUNCEMENTS
On June 29, 2001, the Financial Accounting Standards Board (FASB) approved for
issuance Statement of Financial Accounting Standards (SFAS) 141, Business
Combinations, and SFAS 142, Goodwill and Intangible Assets. Major provisions of
these Statements are as follows: all business combinations initiated after June
30, 2001 must use the purchase method of accounting; the pooling of interest
method of accounting is prohibited except for transactions initiated before July
1, 2001; intangible assets acquired in a business combination must be recorded
separately from goodwill if they arise from contractual or other legal rights or
are separable from the acquired entity and can be sold, transferred, licensed,
rented or exchanged, either individually or as part of a related contract, asset
or liability; goodwill and intangible assets with indefinite lives are not
amortized but are tested for impairment annually, except in certain
circumstances, and whenever there is an impairment indicator; all acquired
goodwill must be assigned to reporting units for purposes of impairment testing
and segment reporting; effective January 1, 2002, goodwill will no longer be
subject to amortization.
In June 2001, the FASB issued Statement of Financial Accounting Standards No.
143 "Accounting for Asset Retirement Obligations" (Statement 143). Statement 143
requires that the fair value of a liability for an asset retirement obligation
be recognized in the period in which it is incurred if a reasonable estimate of
fair value can be made. We are required to adopt Statement 143, for the year
beginning January 1, 2002. The adoption of Statement 143 is not expected to have
a material effect on our consolidated financial position or results of
operations.
The FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets," in August 2001. SFAS No. 144, which addresses financial
accounting and reporting for the impairment of long-lived assets and for
long-lived assets to be disposed of, supercedes SFAS No. 121 and is effective
for fiscal years beginning after December 15, 2001. While the Company is
currently evaluating the impact the adoption of SFAS No. 144 will have on its
financial position and results of operations, it does not expect such impact to
be material.
NATURE OF BUSINESS
The Company's business strategy is to develop its existing pharmaceutical
products, acquire additional pharmaceutical, early-mid stage product candidates,
predominantly in the `life sciences' sector, selectively license its technology
and establish strategic collaborations to advance its product pipeline.
RESEARCH AND DEVELOPMENT
Costs and expenses that can be clearly identified as research and development
are charged to expense as incurred in accordance with FASB statement No. 2,
"Accounting for Research and Development Costs."
FOREIGN CURRENCY TRANSLATION
The Company's primary functional currency is the British Pound. Assets and
liabilities are translated using the exchange rates in effect at the balance
sheet date. Expenses are translated at the average exchange rates in effect
during the year. Translation gains and losses not reflected in earnings are
reported in accumulated other comprehensive losses in stockholders' deficit.
SIGNIFICANCE OF ESTIMATES
The preparation of these consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America require
management to make estimates and assumptions that affect the reported amounts
and disclosures contained in these financial statements. Actual results could
differ from those estimates.
GOING CONCERN
The accompanying consolidated financial statements have been prepared on the
basis of accounting principles applicable to a going concern, which assume that
the Company will continue in operation for at least one year and will be able to
realize its assets and discharge its liabilities in the normal course of
operations. However, as of May 31, 2004, the Company did not have significant
cash or other material assets, nor did it have an established source of revenues
sufficient to cover its operating costs and to allow it to continue as a going
concern. The Company's future capital requirements will depend on numerous
factors including, but not limited to, continued progress in developing its
products, market penetration and profitable operations from the sale of its
products. These financial statements do not reflect adjustments that would be
necessary if the Company were unable to continue as a going concern. While
management has been successful in raising capital and plans to raise additional
equity capital, there can be no assurance that these plans will be achieved.
CONCENTRATIONS OF CREDIT RISK
The Company has no significant off-balance-sheet concentrations of credit risk
such as foreign exchange contracts, options contracts or other foreign hedging
arrangements.
STOCK BASED COMPENSATION
None.
LOSS PER SHARE
In accordance with SFAS No. 128, Earnings Per Share, and SEC Staff Accounting
Bulletin (SAB) No. 98, basic net loss per common share is computed by dividing
net loss for the period by the weighted average number of common shares
outstanding during the period. Under SFAS No. 128, diluted net income (loss) per
share is computed by dividing the net income (loss) for the period by the
weighted average number of common and common equivalent shares, such as stock
options and warrants, outstanding during the period. Such common equivalent
shares have not been included in the computation of net loss per share as their
effect would have been anti-dilutive
Three Months Ended From
May 31, Inception
2004 2003
----------- ----------- -----------
Numerator - Net loss $ (320,334) $ 0 $(1,292,716)
Denominator - Weighted average shares outstanding 42,862,984 2
Net loss per share $ (.008) $ 0
INCOME TAXES
Income taxes are recorded in accordance with SFAS No. 109, Accounting for Income
Taxes. This statement requires the recognition of deferred tax assets and
liabilities to reflect the future tax consequences of events that have been
recognized in the financial statements or tax returns. Measurement of the
deferred items is based on enacted tax laws. In the event the future
consequences of differences between financial reporting bases and tax bases of
the Company assets and liabilities result in a deferred tax asset, SFAS No. 109
requires an evaluation of the probability of being able to realize the future
benefits indicated by such assets. A valuation allowance related to a deferred
tax asset is recorded when it is more likely than not that some portion or all
of the deferred tax asset will not be realized.
The Company is subject to income taxes in the United States of America, United
Kingdom, and the state of New York. As of May 31, 2004 and 2003, the Company had
net operating loss carry forwards for income tax reporting purposes of $320,334
and $0, respectively, that may be offset against future taxable income through
2024. Current tax laws limit the amount of loss available to be offset against
future taxable income when a substantial change in ownership occurs. Therefore,
the amount available to offset future taxable income may be limited. No tax
benefit has been reported in the financial statements because the Company
believes there is a 50% or greater chance the carry-forwards will expire unused.
Accordingly, the potential tax benefits of the loss carry-forwards are offset by
a valuation allowance of the same amount.
COMMITMENTS
The Company leases its office facilities in New York and London for aggregate
monthly rents of approximately $4,635 on a month-to-month basis.
The company entered into a License Agreement with Clinical Resource Management
plc on 7th November 2002, in relation to EVO 022, EVO 033 and EVO 044, this
agreement provides for a royalty of 10% on future sales of the marketed
products. A License Agreement and Research agreement was entered into with Queen
Mary & Westfield College, University of London on 25th September, 2003 by
Antibody Technologies Inc, which was acquired by the Company on 4th February
2004, in relation to EVO 011. The License agreement provides for a total of
$1,489,250 upon certain milestones being achieved and a royalty fee of 10% on
sales of marketed products. The research agreement is for a period of three
years and provides for total expenditure of $1,438,659 over the course of the
three years.
NOTE B - BASIS OF PRESENTATION AND REALIZATION OF ASSETS
The financial statements have been prepared on a basis that contemplates the
Company's continuation as a going concern and the realization of our assets and
liquidation of our liabilities in the ordinary course of business. . The
Company's continued existence is dependent on its ability to obtain additional
financing sufficient to allow it to meet its obligations as they become due and
to achieve profitable operations.
The Company's viability as a going concern is dependent upon raising additional
capital, and ultimately, having net income. The Company's limited operating
history, including its losses, primarily reflect the operations of its early
stage.
The Company requires additional capital principally to meet its costs for the
implementation of its business plan. Should the Company's business plan not work
then it is not anticipated that the Company will be able to meet its financial
obligations through internal net revenue in the foreseeable future. Therefore,
future sources of liquidity will be limited to the Company's ability to obtain
additional debt or equity funding.
Based on our operating plan, we are seeking arrangements for long-term funding
through additional capital raising activities. The Company is actively reviewing
various avenues to raise finance and we are currently visiting with and meeting
a number of potential investors.
NOTE C - PROVISION FOR INCOME TAXES
Due to the continuing losses, the company does not have any taxable income and
accordingly no tax expense has been recorded.
The Company has available for carry forward approximately $1,292,716 of income
tax losses.
NOTE D - BASIS OF PRESENTATION AND REALIZATION OF ASSETS
The financial statements have been prepared on a basis that contemplates the
Group's continuation as a going concern and the realization of our assets and
liquidation of our liabilities in the ordinary course of business. We have an
accumulated deficit of $1,219,341 at May 31, 2004, and negative working capital
of $1,292,716 at May 31, 2004. These matters, among others, raise substantial
doubt about our ability to remain a going concern for a reasonable period of
time. The financial statements do not include any adjustments relating to the
recoverability or classification of assets or the amounts and classification of
liabilities that might result from the outcome of this uncertainty. The Group's
continued existence is dependent on its ability to obtain additional financing
sufficient to allow it to meet its obligations as they become due and to achieve
profitable operations.
The Group's viability as a going concern is dependent upon raising additional
capital, and ultimately, having net income. The Group's limited operating
history, including its losses, primarily reflect the operations of its early
stage.
The Group requires additional capital principally to meet its costs for the
implementation of its business plan. Should the Group's business plan not work
then it is not anticipated that the Group will be able to meet its financial
obligations through internal net revenue in the foreseeable future. Therefore,
future sources of liquidity will be limited to the Group's ability to obtain
additional debt or equity funding.
Based on our operating plan, we are seeking arrangements for long-term funding
through additional capital raising activities. The Group is actively reviewing
various avenues to raise finance and we are currently visiting with and meeting
a number of potential investors.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no disagreements with accountants on accounting and financial
disclosure matters.
During the two most recent fiscal years there were no reportable events (as
defined in Regulation S-B Item 304(a)(1)(vi)).
ITEM 8A. CONTROLS AND PROCEDURES
As of April 30, 2004, an evaluation was performed by our Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures. Based on that evaluation, our Chief Financial Officer
and our Chief Executive Officer concluded that our disclosure controls and
procedures were effective as of April 30, 2004. There have been no significant
changes in our internal controls or in other factors that could significantly
affect internal controls subsequent to April 30, 2004.
FORWARD LOOKING STATEMENTS: NO ASSURANCES INTENDED
This Form 10-QSB contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. This filing includes statements regarding our plans,
goals, strategies, intent, beliefs or current expectations. These statements are
expressed in good faith and based upon a reasonable basis when made, but there
can be no assurance that these expectations will be achieved or accomplished.
Sentences in this document containing verbs such as "believe," "plan," "intend,"
"anticipate," "target," "estimate," "expect," and the like, and/or future-tense
or conditional constructions ("will," "may," "could," "should," etc.) constitute
forward-looking statements that involve risks and uncertainties. Items
contemplating, or making assumptions about, actual or potential future sales,
market size, collaborations, trends or operating results also constitute such
forward-looking statements.
Although forward-looking statements in this Report on Form 10-QSB reflect the
good faith judgment of management, such statements can only be based on facts
and factors currently known by management. Consequently, forward-looking
statements are inherently subject to risks and uncertainties, and actual results
and outcomes may differ materially from the results and outcomes discussed in,
or anticipated by, the forward-looking statements. Factors that could cause or
contribute to such differences in results and outcomes, include without
limitation, those discussed in our Annual Report on Form 10-KSB for the year
ended February 29, 2004. Readers are urged not to place undue reliance on these
forward-looking statements, which speak only as of the date of this Report. We
undertake no obligation to revise or update any forward-looking statements in
order to reflect any event or circumstance that may arise after the date of this
Report. Readers are urged to carefully review and consider the various
disclosures made by us in our Annual Report on Form 10-KSB for the year ended
February 29, 2004, which attempt to advise interested parties of the risks and
factors that may affect our business, financial condition, results of operation
and cash flows.
The following discussion should be read along with the Consolidated Financial
Statements and Notes to our audited financial statements for the fiscal year
ended February 29, 2004.
OVERVIEW
Evolve Oncology Inc is a company that is acquiring and developing products to
fight cancer. The global cancer market is forecast to grow from $29.4bn in 2001
to $42.8bn in 2007. In this period the innovative cancer therapy market is
forecast to triple from $4.3bn in 2001 to $12.3bn in 2007.The Company's focus on
innovative treatments should benefit from the fact that the leading
pharmaceutical companies in the oncology market will all suffer from multiple
patent expiries in the next four years with existing cytostatic and hormonal
therapies. This creates a clear market opportunity for niche drug discovery
companies focusing on innovative technologies as the large pharmaceutical
companies will be looking to enhance their existing portfolios with new
products.
Management believes by focusing on innovative cancer therapies it will be
possible to develop multiple drug candidates. Evolve Oncology will take
development stage candidates which have commercial potential and take these
products through early stage clinical trials to prove efficacy and safety.
Evolve Oncology will then look to license the products to partners who will take
the economic burden of multi center clinical trials. Evolve Oncology will look
to license US rights whilst maintaining the European rights.
Although the US is the single most lucrative market the European market is
extremely valuable. The European market is broken down into five main
marketplaces UK, Germany, France, Italy and Spain. These five marketplaces have
a prevalent patient population of approximately 3.4mn as compared to 3.3mn in
the US (by main disease area excluding skin cancer).Innovative Oncology will
look to establish niche oncology sales forces in these markets whilst licensing
its products in other smaller European territories. Evolve Oncology Inc will
also look to develop niche drugs which large pharmaceutical companies will not
develop as they do not have potential blockbuster status
EU Laboratories Limited has a current portfolio of four products aimed at
cancer.
EVO 011 - MONOCLONAL ANTIBODY
The Company's lead compound is EVO 011 is a monoclonal antibody which targets
most forms of cancer. This is being developed by Queen Mary University London
for Evolve Oncology. EVO 011 is a monoclonal antibody that is a receptor
blocker. EVO 011 stops cancer cell proliferation, and inhibits cancer cells from
metasizing, blocking Angiogenesis II. It significantly reduces cancer invasion
and will be used as an adjunct therapy. This drug may also have a use in
cardiovascular disease.
Substances foreign to the body, such as disease-causing bacteria and viruses and
other infectious agents, known as antigens, are recognized by the body's immune
system as invaders. Our natural defenses against these infectious agents are
antibodies, proteins that seek out the antigens and help destroy them.
Antibodies have two very useful characteristics. First, they are extremely
specific; that is, each antibody binds to and attacks one particular antigen.
Second, some antibodies, once activated by the occurrence of a disease, continue
to confer resistance against that disease; classic examples are the antibodies
to the childhood diseases chickenpox and measles.
The second characteristic of antibodies makes it possible to develop vaccines. A
vaccine is a preparation of killed or weakened bacteria or viruses that, when
introduced into the body, stimulates the production of antibodies against the
antigens it contains.
It is the first trait of antibodies, their specificity, that makes monoclonal
antibody technology so valuable. Not only can antibodies be used
therapeutically, to protect against disease; they can also help to diagnose a
wide variety of illnesses, and can detect the presence of drugs, viral and
bacterial products, and other unusual or abnormal substances in the blood. Given
such a diversity of uses for these disease-fighting substances, their production
in pure quantities has long been the focus of scientific investigation. The
conventional method was to inject a laboratory animal with an antigen and then,
after antibodies had been formed, collect those antibodies from the blood serum
(antibody-containing blood serum is called antiserum). There are two problems
with this method: It yields antiserum that contains undesired substances, and it
provides a very small amount of usable antibody.
Monoclonal antibody technology allows the production of large amounts of pure
antibodies in the following way: Cells can be obtained that produce antibodies
naturally and also have the ability to grow continually in cell culture. If a
hybrid is formed that combines the characteristic of "immortality" with the
ability to produce the desired substance, there would be, in effect, a factory
to produce antibodies that worked around the clock.
In monoclonal antibody technology, tumor cells that can replicate endlessly are
fused with mammalian cells that produce an antibody. The result of this cell
fusion is a "hybridoma," which will continually produce antibodies. These
antibodies are called monoclonal because they come from only one type of cell,
the hybridoma cell; antibodies produced by conventional methods, on the other
hand, are derived from preparations containing many kinds of cells, and hence
are called polyclonal. An example of how monoclonal antibodies are derived is
described below.
A myeloma is a tumor of the bone marrow that can be adapted to grow permanently
in cell culture. When myeloma cells were fused with antibody-producing mammalian
spleen cells, it was found that the resulting hybrid cells, or hybridomas,
produced large amounts of monoclonal antibody. This product of cell fusion
combined the desired qualities of the two different types of cells: the ability
to grow continually, and the ability to produce large amounts of pure antibody.
Because selected hybrid cells produce only one specific antibody, they are more
pure than the polyclonal antibodies produced by conventional techniques. They
are potentially more effective than conventional drugs in fighting disease,
since drugs attack not only the foreign substance but the body's own cells as
well, sometimes producing undesirable side effects such as nausea and allergic
reactions. Monoclonal antibodies attack the target molecule and only the target
molecule, with no or greatly diminished side effects.
EVO 022 BREAST CANCER COMBINATION THERAPY
EVO 022 is a combination drug therapy which is focused on the treatment of
breast cancer. EVO 022 is a combination therapy for breast cancer consisting of
two anti-estrogen compounds, the First compound stops or slows cell growth, and
the second compound has a Novel mode of action on estrogen receptor; increases
binding to ER beta and allosteric inhibition of ER alpha. The combination
Increases efficacy & reduces side effects.
It is thought that a combination therapy can be devised from the combination of
these two products. One of which is the most popular and effective endocrine
treatment currently available for advanced breast cancer, and is appropriate
initial endocrine treatment in both premenopausal and postmenopausal patients.
It competitively binds to ERs, blocking estrogen binding and inhibiting
estrogen-dependent cell growth. Eventually, however, cells develop resistance to
this compound. The second compound has been shown to have an effect on patients
that have become resistant, so by combining these two compounds in a formulated
dosage it is felt that this could provide greater patient benefit.
EVO 033 ORAL REFORMULATION OF ANTI MICROTUBULE AGENT
EVO 033 is a reformulation of an off patent novel anti microtubule agent
targeted against breast cancer. This agent is actually a naturally occuring
substance in the slow growing evergreen YEW tree. The YEW bush grows throughout
northern temperate climates. The Yew shrubs constituents contain a mixture of
alkaloids known as taxine, and also diterpenes, lignans, tanin and resin. The
agent inhibits cell division.
The way that the anticancer drug works is that it inhibits tumors through
multiple cytotoxic and cytostatic mechanisms. Independently of these mechanisms,
it induces distinct immunological efficacy when it acts as a second signal for
activation of tumoricidal activity by interferon gamma (IFN gamma)-primed murine
normal host macrophages. It has been reported that tumor-distal macrophages,
which mediate immunosuppression through dysregulated nitric oxide (NO) and tumor
necrosis factor alpha (TNF alpha) production, are differentially regulated by
this product. Because it influences tumor cell growth dynamics and activates
immune cell populations, it is assessed the ex vivo immunosuppressive and
antitumor activities of the treated normal host and tumor-bearing host (TBH)
macrophages. Pretreatment of such cells with this product partly reconstituted T
cell alloantigen reactivity, suggesting that it mediates a limited reversal of
TBH macrophage immunosuppressive activity. Treated TBH macrophages significantly
suppressed the growth of fibrosarcoma cells (Meth-KDE) through soluble effector
molecules and promoted direct cell-mediated cytotoxicity, indicating that the
agent enhanced tumor-induced macrophage antitumor activities. Tumor-induced
helper T cells, however, showed a higher sensitivity to direct induced
suppression. These data demonstrated that this product exerts pleiotropic
effects on antitumor immune responses with the capacity to abate the
immunosuppressive activities of macrophages and promote macrophage-mediated
antitumor activities simultaneously, but also directly modulating T cell
reactivity. Collectively, these studies suggest that this antineoplastic drug
may impart antitumor activity through an immunotherapeutic capacity.
Currently this product is only available by intravenous delivery, and Evolve are
currently working on developing a reformulated oral version of the product with
enhanced efficacy and a better safety profile.
EVO 044 - STEM CELL TECHNOLOGY
EVO 044 utilises a stem cell technology to form bone marrow. Stem cells have the
remarkable potential to develop into many different cell types in the body.
Serving as a sort of repair system for the body, they can theoretically divide
without limit to replenish other cells as long as the person or animal is still
alive. When a stem cell divides, each new cell has the potential to either
remain a stem cell or become another type of cell with a more specialized
function, such as a muscle cell, a red blood cell, or a brain cell.
Common terms describing stem cells group them according to how many different
types of cells they have the potential to produce. A fertilized egg is
considered totipotent, meaning that its potential is total; it gives rise to all
the different types of cells in the body. Pluripotent stem cells can give rise
to any type of cell in the body except those needed to develop a fetus. Stem
cells that can give rise to multiple different cell types are generally called
multipotent. Stem cells have potential in many different areas of health and
medical research. To start with, studying stem cells will help us to understand
how they transform into the dazzling array of specialized cells that make us
what we are. Some of the most serious medical conditions, such as cancer and
birth defects, are due to problems that occur somewhere in this process. Another
potential application of stem cells is making cells and tissues for medical
therapies. Today, donated organs and tissues are often used to replace those
that are diseased or destroyed. Unfortunately, the number of people suffering
from these disorders far outstrips the number of organs available for
transplantation. Stem cells offer the possibility of a renewable source of
replacement cells and tissues to treat myriad diseases, conditions, and
disabilities including Parkinson's and Alzheimer's diseases, spinal cord injury,
stroke, burns, heart disease, diabetes, osteoarthritis and rheumatoid arthritis.
There is almost no realm of medicine that might not be touched by this
innovation.
Blood-forming stem cells in bone marrow called hematopoietic stem cells (HSCs)
are currently the only type of stem cell commonly used for therapy. Doctors have
been transferring HSCs in bone marrow transplants for over 40 years. More
advanced techniques of collecting, or "harvesting", HSCs are now used in order
to treat leukemia, lymphoma and several inherited blood disorders. The clinical
potential of stem cells has also been demonstrated in the treatment of other
human diseases that include diabetes and advanced kidney cancer. However, these
newer applications have involved studies with a very limited number of patients,
using stem cells that were harvested from people.
Pluripotent stem cells have been isolated from human embryos that are a few days
old. Cells from these embryos can be used to create pluripotent stem cell
"lines", cultures that can be grown indefinitely in the laboratory. Multipotent
stem cell lines have also been developed from fetal tissue obtained from
terminated pregnancies.
Stem cells can also be isolated from adult tissue. Thus far, these cells have
been multipotent. Adult stem cells have not been found for all types of tissue,
but discoveries in this area of research are increasing. For example, until
recently it was thought that stem cells were not present in the adult nervous
system, but in recent years such stem cells have been found in the brain.
Once a stem cell line is established from a cell in the body, it is essentially
immortal, no matter how it was derived. That is, it does not have to be created
again from the original embryo or adult. Once established, it can be grown in
the laboratory indefinitely and widely distributed to other researchers.
In addition, before any type of stem cell for transplantation, attempts must be
made to overcome a problem of the patient's immune system rejecting the
transplant. Human stem cell lines might in the future be modified with gene
therapy or other techniques to overcome this immune rejection. It might also be
possible to replace damaged genes or add new genes to stem cells in order to
give them new characteristics that can ultimately help to treat diseases.
Pluripotent stem cells, while having great therapeutic potential, face
formidable technical challenges. First, scientists must learn how to control
their development into all the different types of cells in the body. Second, the
cells now available for research are likely to be rejected by a patient's immune
system. Another serious consideration is that the idea of using stem cells from
human embryos or human fetal tissue troubles many people on ethical grounds.
Until recently, there was little evidence that stem cells from adults could
change course and provide the flexibility that researchers need in order to
address all the medical diseases and disorders they would like to. New findings
in animals, however, suggest that even after a stem cell has begun to
specialize, it may be more flexible than previously thought.
There are currently several limitations to using adult stem cells. Although many
different kinds of multipotent stem cells have been identified, the evidence
that adult stem cells could give rise to all cell and tissue types is not yet
conclusive. Adult stem cells are often present in only minute quantities and can
therefore be difficult to isolate and purify. There is also evidence that they
may not have the same capacity to multiply as embryonic stem cells do. Finally,
adult stem cells may contain more DNA abnormalities -- caused by sunlight,
toxins and errors in making more DNA copies during the course of a lifetime.
These potential weaknesses might limit the usefulness of adult stem cells.
EVO 044 is a project on which Evolve Oncology is currently developing to look at
deriving a stem cell product for various cancer related therapies.
COMPANY STATUS
The Company has made significant progress in developing its product portfolio.
We have incurred losses during this emerging stage. We anticipate that the
success of our immediate product development strategy will permit us to further
develop our other products and potential products currently in our portfolio. A
major element of the Company's product development strategy is to use
third-party or contract research organizations ("CROs") to assist in the conduct
of safety and efficacy testing and clinical studies, to assist the Company in
guiding products through the FDA and EMEA regulatory review and approval
processes, and to manufacture and distribute any FDA and EMEA approved products.
The Company believes that maintaining a limited infrastructure will enable it to
develop products efficiently and cost effectively.
The reader should consider the likelihood of our future success to be highly
speculative in light of our limited operating history, as well as the limited
resources, problems, expenses, risks and complications frequently encountered by
similarly situated companies. To address these risks, we must, among other
things:
o advance our lead product candidates and technology platforms;
o obtain required government and other public and private approvals on a
timely basis;
o enter into corporate partnerships;
o license additional technology;
o maintain a proprietary position in our technologies and products; and
o attract and retain key personnel.
The Company may not be successful in addressing these risks. If we are unable to
do so, our business prospects, financial condition and results of operations
would be materially adversely affected. The likelihood of our success must be
considered in light of the development cycles of pharmaceutical and
biopharmaceutical products and technologies and the competitive and regulatory
environment in which we operate.
RESULTS OF OPERATIONS
During the first quarter ended May 31, 2004, work continued on the product
development programs as planned and the individual items are detailed below. In
the quarter ended May 31, 2003 there were no general and administrative
expenses. In the quarter ended May 31 2004 they were $316,509. The main reason
for the increase was the commencement of corporate activity and development of
the company's infrastructure to support its planned growth. Such costs were
primarily wages and consulting fees, in particular for regulatory, licensing and
patent advice.
Liquidity & Capital Resources - We are actively seeking strategic alliances in
order to develop and market our range of products. In November 3, 2003, the
Company entered into an agreement with Bioaccelerate Inc ("Bioaccelerate"), a
related party, to provide up to $2.0 million in funding. By way of inducement to
provide the facility, the Company granted Bioaccelerate options to purchase 1
million shares of its common stock at the lower of the market price of such
stock, if publicly traded, or at such price sold to investors in any financing
arrangement.
We believe that the credit facility provided by Bioaccelerate Inc will last the
company through the next 12 months, However, a failure to raise additional
capital would raise substantial doubt about our ability to remain a going
concern for a reasonable period of. The financial statements do not include any
adjustments relating to the recoverability or classification of assets or the
amounts and classification of liabilities that might result from the outcome of
this uncertainty. Our existence is dependent on our ability to obtain additional
financing sufficient to allow us to meet our obligations as they become due and
to achieve profitable operations.
We plan to meet our working capital needs in the coming fiscal year through a
combination of the Bioaccelerate facility, financing and licensing of products
from EU Laboratories Limited. There can be no assurance as to whether or when we
will generate material revenues or achieve profitable operations.
We have insufficient relevant operating history upon which an evaluation of our
performance and prospects can be made. We are still subject to all of the
business risks associated with a new enterprise, including, but not limited to,
risks of unforeseen capital requirements, lack of fully-developed products,
failure of market acceptance, failure to establish business relationships,
reliance on outside contractors for the manufacture and distribution, and
competitive disadvantages against larger and more established companies. The
likelihood of our success must be considered in light of the development cycles
of new products and technologies and the competitive environment in which we
operate.
The Company's viability as a going concern is dependent upon raising additional
capital, and ultimately, having net income. Our limited operating history,
including our losses, primarily reflect the operations of its early stage.
Before our operating plan can be effected, we will require additional financing.
Furthermore, in the event our plans change or our assumptions change or prove to
be inaccurate, we could be required to seek additional financing sooner than
currently anticipated. Any additional financing may not, however, be available
to us when needed on commercially reasonable terms, or at all. If this were to
occur, our business and operations would be materially and adversely affected.
Based on our operating plan, we are seeking arrangements for long-term funding
through additional capital raising activities. The Company is actively reviewing
various avenues to raise finance and we are currently visiting with and meeting
a number of potential investors.
ITEM 3. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Our Chief Executive Officer and Chief Financial Officer have, as of the end of
the period covered by this Report, reviewed our process of gathering, analyzing
and disclosing information that is required to be disclosed in our periodic
reports (and information that, while not required to be disclosed, may bear upon
the decision of management as to what information is required to be disclosed)
under the Exchange Act of 1934, including information pertaining to the
condition of, and material developments with respect to, our business,
operations and finances. Based on this evaluation, our Chief Executive Officer
and Chief Financial Officer have concluded that our process provides for timely
collection and evaluation of information that may need to be disclosed to
investors.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There have been no significant changes in the Company's internal controls over
financial reporting that occurred during the quarter ended May 31, 2004, that
have materially affected, or are reasonably likely to materially affect our
internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may be involved in litigation relating to claims arising
out of our operations in the normal course of business. We currently are not a
party to any legal proceedings, the adverse outcome of which, in management's
opinion, individually or in the aggregate, would have a material adverse effect
on our results of operations or financial position.
ITEM 2. CHANGES IN SECURITIES
On March 12, 2004, security holders were asked to vote on to authorize and
approve: (i) an amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares of common stock, par value $.001 of the
Company from 25,000,000 shares to 100,000,000 and authorize 25,000,000 shares of
preferred stock, par value $.001 of the Company, which may be issued in one or
more series, with such rights, preferences, privileges and restrictions as shall
be fixed by the Company's Board of Directors from time to time; and, (ii) an
amendment to the Company's Certificate of Incorporation to affect a two (2) for
one (1) forward split of the Company's issued and outstanding shares as of March
1, 2004 with all fractional shares rounded to the nearest whole. A majority of
security holders voted in favor of the transaction with an effective date of
April 7, 2004.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On March 12, 2004, security holders were asked to vote on to authorize and
approve: (i) an amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares of common stock, par value $.001 of the
Company from 25,000,000 shares to 100,000,000 and authorize 25,000,000 shares of
preferred stock, par value $.001 of the Company, which may be issued in one or
more series, with such rights, preferences, privileges and restrictions as shall
be fixed by the Company's Board of Directors from time to time; and, (ii) an
amendment to the Company's Certificate of Incorporation to affect a two (2) for
one (1) forward split of the Company's issued and outstanding shares as of March
1, 2004 with all fractional shares rounded to the nearest whole. A majority of
security holders voted in favor of the transaction with an effective date of
April 7, 2004.
ITEM 5. OTHER INFORMATION
There is no other information to report that is material to the Company's
financial condition not previously reported.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
Exhibit No. Description
- ----------- -----------------------------------------------------------------
32 Certification of CEO Pursuant to Securities Exchange Act Rules
13a-14 and 15d-14, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.1 Certification of CFO Pursuant to Securities Exchange Act Rules
13a-14 and 15d-14, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(B) REPORTS ON FORM 8-K
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned.
/s/ Alan Bowen
------------------------------------
Alan Bowen
President & Chief Financial Officer