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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

 

Commission file number  000-23425

 

Burzynski Research Institute, Inc.

(Exact name of Registrant as specified in its charter)

 

 

9432 Old Katy Road, Suite 200, Houston, Texas  77055

(Address of principal executive offices)

 

(713) 335-5697

(Registrant’s telephone number)

 

 

(Former name, former address, and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 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 o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.  (Check one):

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).  Yes  o    No  x

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  Yes  o    No  o

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date:  As of November 30, 2008, 131,388,444 shares of the Registrant’s Common Stock were outstanding.

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

 

Large accelerated filer o		Accelerated filer o
Non-accelerated filer o		Smaller reporting company x

(Do not check if a smaller reporting company)

 

 

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BURZYNSKI RESEARCH INSTITUTE, INC.

 

Form 10-Q

 

Table of Contents

 

PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation
Item 4.	Controls and Procedures
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings
Item 5.	Other Information
Item 6.	Exhibits

 

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CONDENSED BALANCE SHEETS

BURZYNSKI RESEARCH INSTITUTE, INC.

 

		November 30,			February 29,
		2008			2008
		(Unaudited)
ASSETS
Current assets
Cash and cash equivalents		$	8,629		$	3,161
TOTAL CURRENT ASSETS		8,629			3,161
Property and equipment, net of accumulated depreciation		6,040			7,150
TOTAL ASSETS		$	14,669		$	10,311
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable		$	40,407		$	33,430
Accrued liabilities		16,789			35,127
CURRENT AND TOTAL LIABILITIES		57,196			68,557
Commitments and contingencies
Stockholders’ deficit
Common stock, $.001 par value; 200,000,000 shares authorized, 131,388,444 issued and outstanding		131,389			131,389
Additional paid-in capital		83,194,745			79,264,295
Discount on common stock		(100		)	(100		)
Retained deficit		(83,368,561		)	(79,453,830		)
TOTAL STOCKHOLDERS’ (DEFICIT)		(42,527		)	(58,246		)
TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT)		$	14,669		$	10,311

 

See accompanying notes to financial statements.

 

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CONDENSED STATEMENTS OF OPERATION

BURZYNSKI RESEARCH INSTITUTE, INC.

(UNAUDITED)

 

		Three Months Ended
		November 30,			November 30,
		2008			2007
Operating expenses
Research and development		$	1,287,762		$	1,005,723
General and administrative		54,148			23,124
Depreciation		162			498
Total operating expenses		1,342,072			1,029,345
Net (loss) before income tax		(1,342,072		)	(1,029,345		)
Provision for income tax State tax		185			—
NET (LOSS)		$	(1,342,257	)	$	(1,029,345	)
Earnings per share information:
Basic and diluted (loss) per common share		$	(0.01	)	$	(0.01	)
Weighted average number of common shares outstanding		131,388,444			131,388,444

 

		Nine Months Ended
		November 30,			November 30,
		2008			2007
Operating expenses
Research and development		$	3,754,621		$	3,132,710
General and administrative		155,613			109,275
Depreciation		1,110			1,494
Total operating expenses		3,911,344			3,243,479
Net (loss) before income tax		(3,911,344		)	(3,243,479		)
Provision for income tax
State tax		3,387			—
NET (LOSS)		$	(3,914,731	)	$	(3,243,479	)
Earnings per share information:
Basic and diluted (loss) per common share		$	(0.03	)	$	(0.02	)
Weighted average number of common shares outstanding		131,388,444			131,388,444

 

See accompanying notes to financial statements.

 

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STATEMENTS OF STOCKHOLDERS’ DEFICIT

BURZYNSKI RESEARCH INSTITUTE, INC.

(UNAUDITED)

 

					Additional			Discount on
		Common			Paid-in			Common			Retained
		Stock			Capital			Stock			Deficit
Balance February 29, 2008		$	131,389		$	79,264,295		$	(100	)	$	(79,453,830	)
Cash contributed by S.R. Burzynski, M.D., Ph.D.		—			325,000			—			—
FDA clinical trial expenses paid directly by S.R. Burzynski, M.D., Ph.D.		—			3,605,450			—			—
Net (loss)		—			—			—			(3,914,731		)
Balance November 30, 2008		$	131,389		$	83,194,745		$	(100	)	$	(83,368,561	)

 

See accompanying notes to financial statements.

 

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STATEMENTS OF CASH FLOWS

BURZYNSKI RESEARCH INSTITUTE, INC.

(UNAUDITED)

 

		Nine Months Ended
		November 30,			November 30,
		2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss)		$	(3,914,731	)	$	(3,243,479	)
Adjustments to reconcile net income to net cash (used in) operating activities:
Depreciation		1,110			1,494
FDA clinical trial expenses paid directly by S.R. Burzynski, M.D., Ph.D.		3,605,450			2,974,251
Increase (decrease)
Accounts payable		6,977			4,954
Accrued liabilities		(18,338		)	15,362
NET CASH (USED IN) OPERATING ACTIVITIES		(319,532		)	(247,418		)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		—			(6,838		)
NET CASH (USED) BY INVESTING ACTIVITES		—			(6,838		)
CASH FLOWS FROM FINANCING ACTIVITIES
Additional paid-in capital		325,000			245,000
NET CASH PROVIDED BY FINANCING ACTIVTIES		325,000			245,000
NET INCREASE (DECREASE) IN CASH		5,468			(9,256		)
CASH AT BEGINNING OF PERIOD		3,161			10,650
CASH AT END OF PERIOD		$	8,629		$	1,394
Supplemental Disclosures
Cash paid during the period for state taxes		$	2,211		$	—

 

See accompanying notes to financial statements

 

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NOTES TO CONDENSED FINANCIAL STATEMENTS

BURZYNSKI RESEARCH INSTITUTE, INC.

 

NOTE  A.      BASIS OF PRESENTATION

 

The financial statements of Burzynski Research Institute, Inc., a Delaware corporation (the “Company”), include expenses incurred directly by S.R. Burzynski, M.D., Ph.D.

 

(“Dr. Burzynski”) within his medical practice, related to the conduct of U.S. Food and Drug Administration (“FDA”) approved clinical trials for Antineoplaston drugs used in the treatment of cancer. These expenses have been reported as research and development costs and as additional paid-in capital.  Other funds received from Dr. Burzynski have also been reported as additional paid-in capital. Expenses related to Dr. Burzynski’s medical practice (unrelated to the clinical trials) have not been included in these financial statements.  Dr. Burzynski is the President, Chairman of the Board and owner of over 80% of the outstanding stock of the Company, and also is the inventor and original patent holder of certain drug products known as “Antineoplastons”, which he has licensed to the Company.

 

The Company and Dr. Burzynski have entered various agreements which provide the Company the exclusive right in the United States, Canada and Mexico to use, manufacture, develop, sell, distribute, sublicense and otherwise exploit all the rights, titles and interest in Antineoplaston drugs used in the treatment of cancer, once an Antineoplaston drug is approved for sale by the FDA.

 

The Company is primarily engaged as a research and development facility for Antineoplaston drugs being tested for the use in the treatment of cancer.  The Company is currently conducting clinical trials on various Antineoplastons in accordance with FDA regulations. At this time, however, none of the Antineoplaston drugs have received FDA approval; further, there can be no assurance that FDA approval will be granted. In September 2004, the Company announced that the FDA awarded orphan drug status to Antineoplastons A10 and AS2-1 for the treatment of brainstem glioma. In November 2008, the FDA extended the orphan drug status to Antineoplastons A10 and AS2-1 for the treatment of all gliomas.

 

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Certain disclosures and information normally included in financial statements have been condensed or omitted. In the opinion of management of the Company, these financial statements contain all adjustments necessary for a fair presentation of financial position as of November 30, 2008 and February 29, 2008, and results of operations for the three months and nine months ended November 30, 2008 and 2007, and cash flows for the nine months ended November 30, 2008 and 2007.  All such adjustments are of a normal recurring nature.  The results of operations for interim periods are not necessarily indicative of the results to be expected for a full year.  These statements should be read in conjunction with the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-KSB for the year ended February 29, 2008.

 

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NOTES TO CONDENSED FINANCIAL STATEMENTS - continued

BURZYNSKI RESEARCH INSTITUTE, INC.

 

NOTE  B.      ECONOMIC DEPENDENCY

 

The Company has not generated significant revenues since its inception and has suffered losses from operations, has a working capital deficit and has an accumulated deficit.  Dr. Burzynski has funded the capital and operational needs of the Company through his medical practice since inception, and has entered into various agreements to continue such funding.

 

The Company is economically dependent on its funding through Dr. Burzynski’s medical practice.  A portion of Dr. Burzynski’s patients are admitted and treated as part of the clinical trial programs, which are regulated by the FDA.  The FDA imposes numerous regulations and requirements regarding these patients and the Company is subject to inspection at any time by the FDA.  These regulations are complex and subject to interpretation and though it is management’s intention to comply fully with all such regulations, there is the risk that the Company is not in compliance and is thus subject to sanctions imposed by the FDA.

 

In addition, as with any medical practice, Dr. Burzynski is subject to potential claims by patients and other potential claimants commonly arising out of the operation of a medical practice.  The risks associated with Dr. Burzynski’s medical practice directly affect his ability to fund the operations of the Company.

 

It is also the intention of the directors and management to seek additional capital through the sale of securities.  The proceeds from such sales will be used to fund the Company’s operating deficit until it achieves positive operating cash flow.  There can be no assurance that the Company will be able to raise such additional capital.

 

NOTE  C.      STOCK OPTIONS

 

At November 30, 2008, the Company had one stock-based employee compensation plan, which is described below.

 

On September 14, 1996 the Company granted 600,000 stock options, with an exercise price of $.35 per share, to an officer who is no longer with the Company.  The options vested as follows:

 

 

The options are valid in perpetuity.  In addition, for a period of 10 years from the grant date, they increase in the same percentage of any new shares of stock issued; however, no additional shares have been issued since September 14, 1996.  None of the options have been exercised as of November 30, 2008.

 

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NOTES TO CONDENSED FINANCIAL STATEMENTS - continued

BURZYNSKI RESEARCH INSTITUTE, INC.

 

NOTE  C.      STOCK OPTIONS - continued

 

Effective March 1, 2006, the company adopted the fair value recognition provisions of FASB Statement No. 123(R), Share-Based Payment, using the modified-prospective-transition method.  Under that transition method, compensation cost recognized after March 1, 2006 includes: (a) compensation cost for all share-based payments granted prior to, but not yet vested as of March 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of Statement 123, and (b) compensation cost for all share-based payments granted subsequent to March 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of Statement 123(R).

 

The company did not grant any options and no options previously granted vested in any of the periods presented in these financial statements.  Due to this fact there was no effect on net income and earnings per share if the company had applied the fair value recognition provisions of Statement 123 to options granted under the company’s stock option plan in all periods presented.

 

NOTE  D.      INCOME TAXES

 

The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, on March 1, 2007.  As of March 1, 2007 the total amount of unrecognized tax benefits was $-0-.  As a result of the implementation of Interpretation 48, the Company had no material change in the amounts of unrecognized tax benefits as a result of tax positions taken during a prior period or the current period.

 

The federal income tax returns of the Company for 2007, 2006, and 2005 are subject to examination by the IRS, generally for three years after they are filed.

 

The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.

 

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NOTES TO CONDENSED FINANCIAL STATEMENTS - continued

BURZYNSKI RESEARCH INSTITUTE, INC.

 

NOTE  D.      INCOME TAXES - continued

 

The actual provision for income tax for the three and nine months ended differ from the amounts computed by applying the U.S. federal income tax rate of 34% to the pretax income as a result of the following:

 

		Three Months
		November 30,			November 30,
		2008			2007
Expected (benefit)		$	(456,305	)	$	(349,977	)
Taxed directly to Dr. Burzynski		456,368			349,969
Nondeductible expenses and other adjustments		(13,007		)	471
Change in valuation allowance		12,944			(463		)
State taxes		185			—
Provision for income tax		$	185		$	—

 

		Nine Months
		November 30,			November 30,
		2008			2007
Expected (benefit)		$	(1,329,857	)	$	(1,102,783	)
Taxed directly to Dr. Burzynski		1,331,009			1,102,775
Nondeductible expenses and other adjustments		(6,497		)	8,238
Change in valuation allowance		5,345			(8,230		)
State taxes		3,387			—
Provision for income tax		$	3,387		$	—

 

NOTE  E.      SUBSEQUENT EVENT

 

On January 13, 2009, the Company announced that it had reached an agreement with the FDA for the Company to move forward with a Phase III clinical trial of combination Antineoplaston therapy plus radiation therapy in patients with newly diagnosed, diffuse, intrinsic brainstem gliomas. The agreement was made under the FDA’s Special Protocol Assessment procedure, meaning that the design and planned analysis of the Phase III study is acceptable to support a regulatory submission seeking new drug approval. The Company intends to enter into a clinical development agreement with a contract research organization for services relating to the Phase III clinical study, including initially a feasibility analysis of the patient enrollment and site requirements of the planned study.

 

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Item 2.           Management’s Discussion and Analysis of Financial Condition and Results of Operation

 

The following is a discussion of the financial condition of the Company as of November 30, 2008, and the results of operations comparing the three and nine months ended November 30, 2008 and November 30, 2007.  It should be read in conjunction with the financial statements and the notes thereto included elsewhere in this report.

 

Introduction

 

The Company was incorporated under the laws of the State of Delaware in 1984 in order to engage in the research, production, marketing, promotion and sale of certain medical chemical compounds composed of growth-inhibiting peptides, amino acid derivatives and organic acids which are known under the trade name “Antineoplastons.”  The Company believes Antineoplastons are useful in the treatment of human cancer and is currently conducting Phase II clinical trials of Antineoplastons relating to the treatment of cancer.  The Company has generated no significant revenue since its inception, and does not expect to generate any operating revenues until such time, if any, as Antineoplastons are approved for use and sale by the FDA.  The Company’s sole source of funding is S.R. Burzynski, M.D., Ph.D. (“Dr. Burzynski”), the Company’s President and Chief Executive Officer.  Dr. Burzynski funds the Company’s operations from his medical practice pursuant to certain agreements between Dr. Burzynski and the Company.  Funds received by the Company from Dr. Burzynski are reported as additional paid-in capital to the Company.

 

The Company is primarily engaged as a research and development facility of drugs currently being tested for the use in the treatment of cancer, and provides consulting services.  The Company is currently conducting 19 FDA-approved clinical trials.  The Company holds the exclusive right in the United States, Canada and Mexico to use, manufacture, develop, sell, distribute, sublicense and otherwise exploit all the rights, titles and interest in Antineoplaston drugs used in the treatment and diagnosis of cancer, once an Antineoplaston drug is approved for sale by the FDA.

 

In September 2004, the Company announced that the FDA awarded orphan drug status to Antineoplastons A10 and AS2-1 for treating patients with brainstem gliomas. In November 2008, the FDA extended the orphan drug status to Antineoplastons A10 and AS2-1 for the treatment of all gliomas.

 

On January 13, 2009, the Company announced that the Company had reached an agreement with the FDA for the Company to move forward with a Phase III clinical trial of combination Antineoplaston therapy plus radiation therapy in patients with newly diagnosed, diffuse, intrinsic brainstem gliomas.  The agreement was made under the FDA’s Special Protocol Assessment procedure, meaning that the design and planned analysis of the Phase III study is acceptable to support a regulatory submission seeking new drug approval.  The Company intends to enter into a clinical development agreement with a contract research organization for services relating to the Phase III clinical study, including initially a feasibility analysis of the patient enrollment and site requirements of the planned study.

 

Results of Operations

 

Three Months Ended November 30, 2008 Compared to Three Months Ended November 30, 2007

 

Research and development costs were approximately $1,288,000 and $1,006,000 for the three months ended November 30, 2008 and 2007, respectively.  The increase of $282,000 or 28% was due to increases in personnel cost of $14,000, material costs of $211,000, facility and equipment costs of $47,000, consulting and quality control costs of $7,000 and other research and development costs of $3,000.

 

General and administrative expenses were approximately $54,000 and $23,000 for the three months ended November 30, 2008 and 2007, respectively.  The increase of $31,000 or 134% was due to increases in legal and professional fees of $30,000, and other general and administrative expenses of $1,000.

 

The Company had net losses of approximately $1,342,000 and $1,029,000 for the three months ended November 30, 2008 and 2007, respectively.  The increase in the net loss from 2007 to 2008 is primarily due to the increases in research and development costs due to increases in personnel costs, material costs, facility and equipment costs, consulting and quality control costs and other research and development costs; and increases in general and administrative expenses due to increases in legal and professional fees and other general and administrative cost.

 

Nine Months Ended November 30, 2008 Compared to Nine Months Ended November 30, 2007

 

Research and development costs were approximately $3,755,000 and $3,133,000 for the nine months ended November 30, 2008 and 2007, respectively.  The increase of $622,000 or 20% was due to increases in material costs of $568,000 and facility and

 

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equipment costs of $154,000 offset by decreases in personnel costs of $97,000, consulting and quality control costs of $1,000 and other research and development costs of $2,000.

 

General and administrative expenses were approximately $156,000 and $109,000 for the nine months ended November 30, 2008 and 2007, respectively.  The increase of $47,000 or 43% was due to increases in legal and professional fees of $41,000, and in other general and administrative expenses of $6,000.

 

The Company had net losses of approximately $3,915,000 and $3,243,000 for the nine months ended November 30, 2008 and 2007, respectively.  The increase in the net loss from 2007 to 2008 is primarily due to the increases in research and development costs due to increases in material costs and facility and equipment costs offset by decreases in research and development costs due to decreases in personnel costs, consulting and quality control costs and other research and development costs; and increases in general and administrative expenses due to increases in legal and professional fees and other general and administrative cost and increases in the provision for state income tax.

 

Liquidity and Capital Resources

 

The Company’s operations have been funded entirely by Dr. Burzynski with funds generated from Dr. Burzynski’s medical practice.  Effective March 1, 1997, the Company entered into a Research Funding Agreement with Dr. Burzynski (the “Research Funding Agreement”), pursuant to which the Company agreed to undertake all scientific research in connection with the development of new or improved Antineoplastons for the treatment of cancer and Dr. Burzynski agreed to fund the Company’s Antineoplaston research for that purpose.  Under the Research Funding Agreement, the Company hires such personnel as is required to conduct Antineoplaston research, and Dr. Burzynski funds the Company’s research expenses, including expenses to conduct the clinical trials.  Dr. Burzynski also provides the Company laboratory and research space as needed to conduct the Company’s research activities.  The Research Funding Agreement also provides that Dr. Burzynski may fulfill his funding obligations in part by providing the Company such administrative support as is necessary for the Company to manage its business.  Dr. Burzynski pays the full amount of the Company’s monthly and annual budget of expenses for the operation of the Company, together with other unanticipated but necessary expenses which the Company incurs.  In the event the research results in the approval of any additional patents for the treatment of cancer, Dr. Burzynski shall own all such patents, but shall license to the Company the patents based on the same terms, conditions and limitations as are in the current license between Dr. Burzynski and the Company.

 

Dr. Burzynski has unlimited and free access to all equipment which the Company owns, so long as such use does not conflict with the Company’s use of such equipment, including without limitation, all equipment used in the manufacturing of Antineoplastons used in the clinical trials.  The amounts which Dr. Burzynski is obligated to pay under the agreement shall be reduced dollar for dollar by the following: (1) any income which the Company receives for services provided to other companies for research and/or development of other products, less such identifiable marginal or additional expenses necessary to produce such income, or (2) the net proceeds of any stock offering or private placement which the Company receives during the term of the agreement up to a maximum of $1,000,000 in a given Company fiscal year.

 

The Company entered into a third amendment to the Research Funding Agreement, effective March 1, 2007, whereby the Company and Dr. Burzynski extended the term thereof until February 29, 2008, with an automatic renewal for additional one-year terms, unless one party notifies the other party at least thirty days prior to the expiration of the then current term of the agreement of its intention not to renew the agreement.

 

The Research Funding Agreement automatically terminates in the event that Dr. Burzynski owns less than fifty percent of the outstanding shares of the Company, or is removed as President and/or Chairman of the Board of the Company, unless Dr. Burzynski notifies the Company in writing of his intention to continue the agreement notwithstanding this automatic termination provision.

 

The Company estimates that it will spend approximately $1,300,000 during the remaining quarter of the fiscal year ending February 28, 2009.  The Company estimates that ninety-five percent (95%) of this amount will be spent on research and development and the continuance of FDA-approved clinical trials.  While the Company anticipates that Dr. Burzynski will continue to fund the Company’s research and FDA-related costs, there is no assurance that Dr. Burzynski will be able to continue to fund the Company’s operations pursuant to the Research Funding Agreement or otherwise.  The Company believes Dr. Burzynski will be financially able to fund the Company’s operations at least through the fiscal year ending February 28, 2009.  In addition, Dr. Burzynski’s medical practice has successfully funded the Company’s research activities over the last 22 years and, in 1997, his medical practice was expanded to include traditional cancer treatment options such as chemotherapy, immunotherapy and hormonal therapy in response to FDA requirements that cancer patients utilize more traditional cancer treatment options in order to be eligible to participate in the Company’s Antineoplaston clinical trials.  As a result of the expansion of Dr. Burzynski’s medical practice, the financial condition of the medical practice has improved Dr. Burzynski’s ability to fund the Company’s operations.

 

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The Company may be required to seek additional capital through equity or debt financing or the sale of assets until the Company’s operating revenues are sufficient to cover operating costs and provide positive cash flow; however, there can be no assurance that the Company will be able to raise such additional capital on acceptable terms to the Company.  In addition, there can be no assurance that the Company will ever achieve positive operating cash flow.

 

Forward-Looking Statements

 

Certain matters discussed in this quarterly report, except for historical information contained herein, may constitute “forward-looking statements” that are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.  Forward-looking statements provide current expectations of future events based on certain assumptions.  These statements encompass information that does not directly relate to any historical or current fact and often may be identified with words such as “anticipates,” “believes,” “expects,” “estimates,” “intends,” “plans,” “projects” and other similar expressions.  Management’s expectations and assumptions regarding Company operations and other future results are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements.

 

Item 4.           Controls and Procedures

 

Within the 90 days prior to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s principal executive officer (who is also the Company’s principal financial officer), of the effectiveness of the Company’s disclosure controls and procedures pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as amended.  Based on that evaluation, the Company’s principal executive officer (who is also the Company’s principal financial officer) concluded that the Company’s disclosure controls and procedures are effective in timely alerting him to material information required to be included in periodic filings with the Securities and Exchange Commission.  A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.  There were no significant changes in the Company’s internal controls or in other factors that could significantly affect internal controls subsequent to the date of evaluation above.

 

PART II — OTHER INFORMATION

 

Item 1.           Legal Proceedings

 

The Company’s activities are subject to regulation by various governmental agencies, including the FDA, which regularly monitor the Company’s operations and often impose requirements on the conduct of its clinical trials and other aspects of the Company’s business operations.  The Company’s policy is to comply with all such regulatory requirements.  From time to time, the Company is also subject to potential claims by patients and other potential claimants commonly arising out of the operation of a medical practice.  The Company seeks to minimize its exposure to claims of this type wherever possible.

 

Currently, the Company is not a party to any material pending legal proceedings.  Moreover, the Company is not aware of any such legal proceedings that are contemplated by governmental authorities with respect to the Company or any of its properties.

 

Item 5.           Other Information

 

On January 13, 2009, the Company announced that it had reached an agreement with the FDA for the Company to move forward with a Phase III clinical trial of combination Antineoplaston therapy plus radiation therapy in patients with newly diagnosed, diffuse, intrinsic brainstem gliomas.  The agreement was made under the FDA’s Special Protocol Assessment procedure, meaning that the design and planned analysis of the Phase III study is acceptable to support a regulatory submission seeking new drug approval.  The Company intends to enter into a clinical development agreement with a contract research organization for services relating to the Phase III clinical study, including initially a feasibility analysis of the patient enrollment and site requirements of the planned study.

 

Item 6.           Exhibits

 

3.1		Certificate of Incorporation of the Company, as amended (incorporated by reference from Exhibits 3(i) — (iii) to Form 10-SB filed with the Securities and Exchange Commission on November 25, 1997 (File No. 000-23425)).
3.2		Amended Bylaws of the Company (incorporated by reference from Exhibit 3(iv) to Form 10-SB filed with the Securities and Exchange Commission on November 25, 1997 (File No. 000-23425)).

 

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31.1		Certification of Chief Executive Officer and Principal Financial Officer pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934, as amended, filed herewith.
32.1		Certification of Chief Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
99.1		Press Release Regarding Phase III Clinical Trial

 

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SIGNATURES

 

In accordance with the requirements of the Exchange Act, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	BURZYNSKI RESEARCH INSTITUTE, INC.
	By:	/s/ Stanislaw R. Burzynski
		Stanislaw R. Burzynski,
		President, Secretary, Treasurer and
		Chairman of the Board of Directors
		(Chief Executive Officer and
		Principal Financial Officer)

 

Date: January 14, 2009

 

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