Actinium Pharmaceuticals, Inc. — Q1 2016 Form 10-Q
Reporting period: Three months ended March 31, 2016. The interim consolidated financial statements are unaudited. Actinium is a clinical-stage biotechnology company developing radioimmunotherapy candidates; it had no approved products or commercial revenue.
Financial results and position
| Metric | Q1 2016 | Q1 2015 / prior date |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $3.77 million | $4.05 million |
| General and administrative expense | $2.22 million | $3.81 million |
| Total operating expenses | $6.00 million | $7.87 million |
| Net loss | $4.40 million | $3.07 million |
| Net loss per share, basic and diluted | $0.10 | $0.09 |
| Cash and cash equivalents, period end | $22.21 million | $25.64 million at Dec. 31, 2015 |
| Net cash used in operating activities | $4.76 million | $5.81 million |
| Total assets | $23.34 million | $26.59 million at Dec. 31, 2015 |
| Total liabilities | $3.29 million | $4.61 million at Dec. 31, 2015 |
Operating expenses declined year over year, mainly reflecting lower Iomab-B manufacturing costs and lower salaries, stock compensation, professional services and other G&A costs. R&D savings included about $0.9 million less Iomab-B manufacturing expense, partly offset by about $0.6 million more Actimab-A manufacturing expense. The net loss increased despite lower operating expenses because the warrant derivative fair-value gain was smaller: $1.60 million versus $4.80 million. This gain is valuation-related and can fluctuate with the stock price and other assumptions. No operating margin is meaningful given zero revenue.
Cash used in investing was $0.08 million. Financing provided $1.40 million, principally from approximately $1.5 million of net ATM stock proceeds, partly offset by note payments. Notes payable were $0.18 million at quarter end. Current assets were $23.18 million and current liabilities $3.29 million. The company reported no material off-balance-sheet arrangements.
Business developments, outlook and risks
- Iomab-B: The FDA had cleared the IND for a planned pivotal Phase 3 trial in relapsed or refractory AML patients age 55 and older. Management expected enrollment to begin in the first half of 2016. The planned randomized, controlled study was to enroll 150 patients; durable complete remission was the primary endpoint and one-year overall survival the secondary endpoint. Management estimated direct trial-completion costs of approximately $25–30 million in its plan-of-operation discussion.
- Actimab-A: The candidate remained in clinical development for AML. The filing reports prolonged bone-marrow suppression at the highest dose tested in its Phase 1 study, prompting dose reductions while the maximum tolerated dose was assessed.
- Funding outlook: Management believed available cash could fund operations and working-capital needs for at least the next 12 months. It also stated that substantial additional capital would be needed for continued development and commercialization; future stock or debt financing could be unavailable or dilutive. The company expected continuing losses and increased future R&D and G&A costs.
- Post-quarter financing and equity: After March 31, the company sold 2,024,504 shares for gross proceeds of $4.1 million under its sales agreement. Shares outstanding were 44,925,176 at March 31 and 46,950,180 as of May 9, 2016. Subsequent equity sales and outstanding options and warrants may dilute shareholders.
- Development and commercial risks: Clinical efficacy and safety, patient enrollment, regulatory approval, third-party manufacturing and research partners, and access to radioactive isotopes are uncertain. Ac-225 supply depended on an ORNL contract then running through 2016. The filing also says Iomab-B was not patent-protected and identifies potential patent-expiration and licensing-cost concerns for Actimab-A.
- Commitments and related parties: The company disclosed milestone and royalty obligations under licensing agreements, including potential payments to AbbVie and MSKCC. A new office-space license with Relmada, which shares two board members with Actinium, cost approximately $16,620 monthly; both boards authorized the transaction. No legal proceedings were reported.
Most important facts for investors to verify
- Whether the Iomab-B Phase 3 trial began on the expected timetable, its enrollment progress, costs, and eventual endpoints.
- Whether Actimab-A dose reductions and safety findings affect trial progress or clinical results.
- Cash burn, remaining runway, and financing needs relative to the planned clinical program; monitor dilution from ATM sales and equity awards.
- Availability and renewal of Ac-225 supply, and manufacturing readiness and costs for both leading candidates.
- Material assumptions behind the noncash derivative-liability valuation gain and its potential effect on reported earnings.
- Licensing, royalty, milestone, intellectual-property and commercialization terms, including Iomab-B’s stated lack of patent protection.