QR is out
August 19, 1998
SANGUINE CORP (SGNC)
Quarterly Report (SEC form 10QSB)
Management's Discussion and Analysis or Plan of Operation.
Plan of Operation.
The Company has conducted all of its business operations through its majority owned subsidiary,
Sanguine Corporation, a California corporation ("Sanguine California"). Sanguine California is
engaged in the development of a synthetic red blood cell product called "PHER-O2." The
development of this product presently comprises its sole business operations. PHER-O2 is
composed of perfluoro-decalin molecules (i.e., synthetic red blood cells), purified water and a
proprietary, synthetic, fluorinated surfactant to hold the emulsion together. Perfluoro-decalin has
great oxygen-carrying capacity, yet it can be as much as 900 times smaller than a red blood cell.
Management believes that PHER-O2 may carry three to four times the oxygen of human blood per
unit volume. This increased oxygen-carrying capacity may make PHER-O2 useful in the treatment
of heart attacks, strokes, cancer and other diseases for which increased oxygenation is beneficial.
Furthermore, the Company believes that perfluoro-decalin may be effective as an imaging agent
in X-ray imaging, nuclear magnetic resonance (NMR) imaging and CAT scans, without side
effects. Management also believes that PHER-O2 has several other advantages over human
blood: it can be sterilized to be free of disease; is believed to have the quality of a universal
match for all blood types; can be mass-produced; and may be stored much longer than human
blood.
Battelle Memorial Institute, through its Battelle Columbus Operations ("Battelle"), was retained
to assist the Company in completing the emulsion of perfluoro-decalin and the synthetic
surfactants that make up PHER-O2; it is anticipated that on completion of the compounding of
PHER-O2, Battelle will perform initial gross animal tests, which do not require regulatory
approval prior to commencement; however, the data gathered from any such tests will be subject
to regulatory review in the future. The Company anticipates that it will manufacture experimental
doses of PHER-O2 required to conduct gross animal testing.
It is anticipated that continued research and development of PHER-O2 will depend upon the
Company's ability to obtain substantial additional equity or debt funding, as to which no
assurance can be given. See the captions "Business Development," "Future Capital
Requirements; Uncertainty of Future Funding" and "Patents, Trademarks, Licenses, Franchises,
Concessions, Royalty Agreements or Labor Contracts" of the Company's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1997, which has previously been filed with the
Securities and Exchange Commission.
In its second phase of operations, management intends to continue developing the
perfluorocarbon compounds in PHER-O2 in order to optimize its quality, and expects to begin
animal safety and efficacy trials in accordance with guidelines of the United States Food and
Drug Administration ("FDA") and comparable foreign regulatory requirements.
In the final phase of the Company's proposed business operations, it intends to complete its
United States testing of PHER-O2, receive all necessary FDA approvals and begin American
and Canadian sales for cancer treatment and angioplasty; and complete overseas testing, begin
overseas sales and begin the construction of manufacturing facilities. Sanguine California has
previously licensed BioLogix Development Partners, an unaffiliated California limited
partnership, to manufacture and market PHER-O2 in Canada, including any future Canadian
patent rights, and the exclusive right to market PHER-O2 in U.S. military pre-hospital markets. In
this final phase, the Company also intends to continue trials to test PHER-O2 for other
applications, including transplant organ preservation and the treatment of carbon monoxide
poisoning, sickle cell anemia, heart attack and stroke. The Company will be required to conduct
similar rigorous testing and clinical trials of PHER-O2 for each desired application for which it
is sought to be used.
PHER-O2 is still in the research and development stage. It has not been tested on animals or
humans; nor has any application been submitted to any federal, state or foreign agency to seek
authority for such testing. This development process will be time consuming, costly, subject to
extreme governmental regulation and must prove that this product is safe and efficacious for
human use. Until then, the Company will have no potential for revenues from operations. No
assurance can be given that the Company will be able to raise the capital it will need to develop
PHER-O2, or that if sufficient funds are raised, the Company will ever receive requisite federal,
state or foreign agency approval to manufacture or market this product. See the captions
"Business Development," "Special Risk Factors," "Principal Products or Services and their
Markets," "Competition," "Patents, Trademarks, Licenses, Franchises, Concessions, Royalty
Agreements or Labor Contracts" and "Governmental Approval of Principal Products or
Services" of the Company's Registration Statement on Form 10-SB-A1, which has previously
been filed with the Securities and Exchange Commission, and which is incorporated herein by
reference.
Results of Operations.
During the quarterly period ending June 30, 1998, the Company's only business operations were
those of Sanguine California. During this period, the Company received total revenues of $0 and
sustained a net loss of $123,439.
Liquidity.
During the quarterly period ended June 30, 1998, the Company had total expenses of $123,439,
while receiving $0 in revenues.
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