Actinium Pharmaceuticals, Inc. — Q3 2016 Form 10-Q
Reporting period: Three and nine months ended September 30, 2016. The interim financial statements are unaudited. Actinium is a clinical-stage biotechnology company developing radioimmunotherapy candidates; it reported no commercial revenue.
Key financial metrics
| Metric | Q3 2016 / September 30, 2016 | Comparable period / prior year-end |
|---|---|---|
| Revenue | $0 | $0 in Q3 2015 and first nine months of 2015 |
| Research and development expense | $5.69 million for Q3; $13.60 million for nine months | $2.83 million and $10.71 million, respectively |
| General and administrative expense | $1.39 million for Q3; $6.36 million for nine months | $1.79 million and $9.15 million, respectively |
| Net loss | $6.60 million for Q3; $17.63 million for nine months | $3.95 million and $14.48 million, respectively |
| Net loss per share | $0.14 for Q3; $0.38 for nine months | $0.10 and $0.39, respectively |
| Operating cash used | $16.55 million for nine months | $14.58 million for nine months of 2015 |
| Cash and cash equivalents | $15.53 million | $25.64 million at December 31, 2015 |
| Total assets / liabilities | $17.26 million / $3.03 million | $26.59 million / $4.61 million at December 31, 2015 |
| Debt | No notes payable outstanding | $0.27 million at December 31, 2015 |
No meaningful revenue margin was reported because revenue was zero. The company had an accumulated deficit of $129.86 million. Its derivative liabilities were $0.43 million, measured using Level 3 inputs.
Changes versus comparable periods
- Q3 R&D expense rose about $2.86 million year over year, primarily from Actimab-A Phase 2 start-up and Phase 1 closeout costs, and Iomab-B Phase 3 clinical costs.
- Nine-month R&D expense increased about $2.88 million; lower Iomab-B spending partly offset higher Actimab-A costs.
- Nine-month G&A expense fell about $2.79 million, mainly due to lower salaries and stock-based compensation.
- Q3 net loss increased about $2.65 million. Nine-month net loss increased about $3.14 million despite operating expenses being nearly flat, as the gain from revaluing warrant derivative liabilities fell to $2.40 million from $5.43 million. This gain is a valuation item, not operating revenue.
- Operating cash use increased about $1.97 million, while financing cash inflows declined to $6.53 million from $32.66 million, reflecting substantially lower equity issuance proceeds.
Liquidity, funding and outlook
Actinium funded operations primarily through common-stock sales. During the first nine months, it received approximately $6.8 million net from its at-the-market program. Management said September 30 cash was sufficient for at least the next 12 months, while also warning that continued development would require additional capital and could dilute shareholders.
On October 4, 2016, after quarter-end, the company sold 8 million shares at $1.25 per share for $10 million gross proceeds, before offering costs; it reported cash of $25.53 million after the offering, before those costs. Common shares outstanding were 55,747,108 as of October 28, compared with 47,746,108 at September 30.
Management estimated direct costs to complete the Iomab-B Phase 3 trial at $25–30 million, with completion anticipated in 2018, and estimated about $7 million to complete the ongoing Actimab-A Phase 2 trial. It expected Actimab-A interim analysis in mid-2017 and topline results in the second half of 2017. The company said it expected R&D and G&A costs to rise.
Business developments, risks and contingencies
- Iomab-B: pivotal, randomized Phase 3 trial initiated in June 2016, planned for 150 relapsed or refractory AML patients aged 55 and older. Primary endpoint is durable complete remission; overall survival at one year is secondary. A successful trial is intended to support a BLA.
- Actimab-A: Phase 2 trial initiated in September 2016, planned for 53 patients, evaluating complete response; overall survival is secondary. The protocol uses Actimab-A as monotherapy and includes specified management of high peripheral blast burden.
- Both programs remain investigational; approval, trial success, recruitment, safety, manufacturing, reimbursement and commercialization are uncertain. The company depends on third parties for clinical research and manufacturing, and identified limited Ac-225 supply as a risk.
- Actimab-A carries contractual AbbVie milestone obligations, including a $750,000 Phase 2 milestone accrued as R&D expense in September, plus potential future milestones and royalties. Iomab-B is not patent protected, according to the filing.
- Warrant revaluation produced a material, noncash gain and is sensitive to share price and other assumptions. MSKCC, a significant shareholder and related party through its affiliated institute, was permitted to sell shares after the Actimab-A Phase 2 trial began; the filing reports sales of 992,826 shares through its report date.
- The filing reported no legal proceedings, defaults on senior securities, or material off-balance-sheet arrangements. Management stated disclosure controls were effective and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether the October offering’s net proceeds, subsequent cash balance and share count reconcile after underwriting costs and other issuances.
- Actual cash burn and funding needs against management’s 12-month runway statement and the estimated Phase 2 and Phase 3 trial costs.
- Enrollment, timing, safety findings and interim or topline results for both clinical programs.
- Ac-225 supply continuity, contract-manufacturing capacity and any changes to trial budgets or schedules.
- Warrant derivative valuation assumptions, future dilution from outstanding options and warrants, and MSKCC share sales.