0001683168-26-003819
SEC filingSunshine Biopharma's Q1 2026 net loss widened to $1.24M as a 9.1% revenue decline and gross margin compression offset reduced operating expenses.
Sunshine Biopharma reported a net loss of $1,243,869 for the first quarter of 2026, compared to a net loss of $1,179,771 in the same period of 2025. The $64,098 increase in net loss was driven by a decline in gross profit, partially offset by lower operating expenses and a one-time other income item.
Total sales for Q1 2026 were $8,088,765, a decrease of $812,576, or 9.1%, from $8,901,341 in Q1 2025. Management attributed this decline largely to the termination of distribution agreements effective December 31, 2025, which reduced the number of drugs on the market from 71 to 60.
Cost of sales was $5,907,775 (73.0% of sales) compared to $6,170,915 (69.3% of sales) in the prior year. This resulted in a gross profit of $2,180,990, a decrease of $549,436, or 20.1%, from $2,730,426 in Q1 2025. The gross margin contracted by 370 basis points to 27.0% from 30.7%, indicating a less favorable product mix following the termination of the lower-margin distribution agreements.
Total general and administrative expenses decreased by $449,589 to $3,576,587 from $4,026,176. Notable changes included a $222,139 decrease in consulting fees, a $183,038 decrease in R&D expenses, a $148,138 decrease in marketing expenses, and a $117,950 decrease in accounting fees. These were partially offset by a $183,038 increase in salaries and a $61,877 increase in legal fees. The loss from operations was $1,395,597, compared to $1,295,750 in Q1 2025.
Total other income was $151,728, up from $75,818 in the prior year. This increase was primarily due to a one-time payment of $103,320 received as part of a class-action lawsuit settlement against the company's previous auditor, BF Borgers CPA PC. Interest income decreased to $48,426 from $75,367 due to lower cash balances.
Basic loss per share was $0.25, compared to a loss of $0.44 per share in Q1 2025. The per-share loss narrowed despite a larger net loss due to a significantly higher weighted average number of shares outstanding (4,905,945 vs. 2,703,293), reflecting equity issuances throughout 2025.
As of March 31, 2026, total assets were $27,930,375, down from $30,079,167 at December 31, 2025. The decrease was primarily driven by a $2,210,295 reduction in cash and cash equivalents, which fell to $6,913,013 from $9,123,308.
Current assets totaled $24,783,176, including $4,011,632 in accounts receivable (up from $3,459,864) and $13,168,430 in inventory (down slightly from $13,472,025). The increase in accounts receivable contributed to the negative operating cash flow for the quarter.
Total liabilities decreased to $6,413,781 from $7,040,707, driven by a reduction in accounts payable and accrued expenses to $5,104,868 from $5,664,212. Shareholders' equity was $21,516,594, down from $23,038,460, reflecting the net loss and a $277,997 foreign exchange translation loss.
Management stated that existing cash on hand, together with cash generated from sales, will be sufficient to fund operations for the next 17 months. The company has no committed sources of capital and anticipates needing to raise additional capital in the future for expansion and further R&D.
Net cash used in operating activities was $2,072,100 for Q1 2026, compared to $1,695,002 in Q1 2025. The $377,098 increase in cash used was largely attributed to an increase in Nora Pharma's accounts receivable, which consumed $609,601 in cash compared to a $426,673 source of cash in the prior year.
Cash flows used in investing activities were $104,518, down from $212,017, reflecting fewer purchases of equipment and intangible assets (drug licenses) by Nora Pharma. There were no cash flows from financing activities in Q1 2026, compared to $355,297 in warrant exercise proceeds in Q1 2025.
Free cash flow, calculated as operating cash flow less capital expenditures, was approximately -$2.18M for the quarter.
Management is focused on increasing sales and streamlining operations to reduce expenses, with the goal of reaching breakeven and reducing dependence on capital markets. The company currently generates approximately $8 million in revenue per quarter and incurs a quarterly deficit of approximately $1.2 million.
The company has 22 additional drugs in its pipeline, including 12 anticipated for launch during the remainder of 2026. These products address various therapeutic areas including cardiovascular, oncology, gastroenterology, central nervous system, diabetes, urology, endocrinology, anti-infective, and anti-inflammatory. Management believes these additions will strengthen the company's presence in the Canadian $11.2 billion generic drug market.
On the proprietary drug development front, the company's K1.1 mRNA anti-cancer program and SBFM-PL4 antiviral program remain in animal testing. A Notice of Allowance was received from the USPTO for the SBFM-PL4 patent, with an issue date of May 12, 2026, and an expiration date of April 6, 2043.
The company operates as a single reportable segment, with all operations conducted in Canada. The commercial business is focused on generic prescription drugs, with 60 products currently on the market. OTC supplement sales represent less than 3% of total annual sales.
A legal matter remains outstanding with the former president of Nora Pharma, who was terminated on April 14, 2025. The former executive is demanding approximately $5.3 million USD. The company has stated the demands are unfounded and intends to defend itself vigorously. No provision or accrual has been made in the financial statements for this matter.
Subsequent to the quarter end, on April 14, 2026, the company issued 100,000 restricted shares of common stock under its 2023 Equity Incentive Plan to a director for services.
Inventory includes an allowance for obsolescence of $867,318 as of March 31, 2026, up from $475,797 at December 31, 2025, indicating potential challenges with product sell-through. Intangible assets, net of accumulated amortization, were $1,917,812, reflecting the purchase of additional drug licenses and dossiers.