Actinium Pharmaceuticals, Inc. — Q3 2018 Form 10-Q
Reporting period: Three and nine months ended September 30, 2018. Unaudited interim financial statements. Actinium is a clinical-stage biopharmaceutical company developing antibody radio-conjugates for targeted conditioning and cancer treatment. Its lead candidate, Iomab-B, was enrolling patients in the pivotal Phase 3 SIERRA trial; the company had no approved products or commercial revenue.
Financial results and liquidity
| Metric | Q3 2018 | Q3 2017 | Nine months 2018 | Nine months 2017 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $4.22 million | $5.03 million | $12.01 million | $14.05 million |
| General and administrative expense | $1.96 million | $1.66 million | $5.42 million | $7.61 million |
| Total operating expenses | $6.20 million | $6.70 million | $17.46 million | $21.70 million |
| Net loss | $6.15 million | $6.32 million | $17.33 million | $21.44 million |
| Basic and diluted loss per share | $0.06 | $0.09 | $0.17 | $0.34 |
As of September 30, cash and cash equivalents were $14.81 million; including restricted cash, total cash, cash equivalents and restricted cash were $15.24 million. Current assets were $15.16 million, total liabilities $4.12 million, and stockholders’ equity $11.58 million. The filing reports no debt. The company had an accumulated deficit of $180.54 million. Gross and operating margins are not meaningful given zero revenue.
For the first nine months, operating cash use was $16.28 million, investing cash use $0.09 million, and financing cash provided $13.82 million. Cash, cash equivalents and restricted cash declined by $2.55 million. Management stated that available cash was expected to fund operations for the next 12 months.
Changes versus comparable periods
- Nine-month net loss fell by about $4.10 million year over year, reflecting lower R&D and G&A expenses. R&D costs declined primarily due to lower Iomab-B expenses and Astellas collaboration payments recorded as a reduction of R&D expense. G&A fell mainly because of lower stock-based compensation and payroll.
- In Q3, R&D declined about $0.81 million, but G&A rose about $0.31 million, primarily due to bonus-payment timing and stock-option compensation.
- Operating cash use improved by about $2.10 million year over year, while financing proceeds fell by about $4.97 million.
- Common shares outstanding increased from 80.07 million at December 31, 2017 to 110.47 million at September 30, 2018, primarily reflecting the March 2018 financing.
Outlook, financing, and risks
- The company planned to advance the Phase 3 SIERRA trial, prepare commercial-scale Iomab-B manufacturing and regulatory submissions, progress Actimab-A studies, and develop its Iomab-ACT and AWE platform programs. No revenue or profitability guidance was provided.
- In March 2018, Actinium raised approximately $13.8 million net from a unit offering of 30.24 million common shares plus Series A and B warrants. Full exercise of the offering warrants could provide an estimated $20.4 million in gross proceeds, before costs.
- After quarter-end, Actinium entered into a Lincoln Park equity purchase agreement allowing up to $32.5 million of stock sales, subject to conditions and limits. Lincoln Park purchased $2.5 million of shares initially; through November 8, the company reported electing to sell an additional 1.0 million shares for $705,000. Further sales may dilute existing shareholders.
- Material risks include ongoing losses and need for additional capital; clinical-trial enrollment, safety, efficacy and regulatory uncertainty; reliance on contract manufacturers and third-party clinical research organizations; and supply continuity for radioactive isotopes, particularly Ac-225. The DOE supply contract for Ac-225 ran through year-end 2018 and required renewal.
- Notable commitments included approximately $3.7 million remaining under the Medpace Iomab-B study agreement and $0.9 million under the George Clinical Actimab-A agreement. The filing disclosed no legal proceedings and no material off-balance-sheet arrangements.
- Warrants with down-round provisions were reclassified from derivative liabilities to equity following adoption of ASU 2017-11; this removed warrant fair-value gains or losses from 2018 results. Disclosure controls were deemed effective, with no material change in internal control reported.
Important facts for investors to verify
- Progress, enrollment and outcomes of the Phase 3 SIERRA trial and the status of planned regulatory submissions.
- Actual cash burn and runway relative to management’s 12-month estimate, and whether additional financing will be required.
- Terms, remaining capacity and potential dilution from the Lincoln Park agreement and outstanding warrants.
- Renewal and adequacy of Ac-225 supply, as well as manufacturing readiness and lintuzumab batch-release status.
- Remaining clinical-trial and manufacturing commitments, and the amount and timing of future collaboration payments from Astellas.