Actinium Pharmaceuticals, Inc. — Q2 2016 Form 10-Q
Business context and reporting period. Unaudited results cover the three and six months ended June 30, 2016. Actinium is a clinical-stage biotechnology company with no commercial product sales. Its lead programs are Iomab-B, for which a pivotal Phase 3 trial in relapsed or refractory AML patients aged 55 and older began in June 2016, and Actimab-A, in clinical development for AML.
Financial results and liquidity
| Metric | Q2 2016 | Q2 2015 | Six months 2016 | Six months 2015 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development | $4.15m | $3.84m | $7.91m | $7.89m |
| General and administrative | $2.75m | $3.55m | $4.97m | $7.36m |
| Total operating expenses | $6.92m | $7.40m | $12.92m | $15.27m |
| Net loss | $6.62m | $7.46m | $11.03m | $10.54m |
| Basic and diluted loss per share | $0.15 | $0.20 | $0.25 | $0.30 |
At June 30, cash and cash equivalents were $20.46m, down from $25.64m at year-end 2015. Six-month operating cash use was $10.98m; investing cash use was $0.09m; financing provided $5.88m, mainly from net ATM stock-sale proceeds of $6.06m. The company reported total current assets of $21.41m and current liabilities of $2.49m. Notes payable were $89,569; a further $934,586 of current liabilities comprised derivative liabilities. Stockholders’ equity was $19.08m, with an accumulated deficit of $123.26m. There was no revenue base from which to assess operating margins.
Changes versus prior comparable periods
- Q2 net loss narrowed by about $0.84m, mainly reflecting lower G&A expense and a favorable derivative fair-value change. R&D increased about $0.31m.
- For the first six months, operating expenses fell about $2.35m, largely due to lower G&A and stock compensation. Net loss nevertheless increased about $0.49m because the noncash gain on derivative liabilities was smaller: $1.90m versus $4.74m in 2015.
- Financing cash inflow fell substantially from $30.33m in the 2015 period to $5.88m in 2016, when funding came primarily from ATM sales rather than the prior-year offerings.
- Common shares outstanding increased from 44.07m at December 31, 2015 to 47.29m at June 30, 2016. The filing reports 47.72m shares outstanding as of July 28, 2016.
Outlook, commentary, risks and unusual items
- Management said available cash was expected to fund operations for at least the next 12 months. The company also cautioned that it expects continued losses and will need additional capital to advance development and potentially commercialize its candidates.
- The Iomab-B Phase 3 trial is a randomized, controlled, multicenter study planned for 150 patients. Durable complete remission is the primary endpoint; one-year overall survival is secondary. Management estimated direct trial costs of approximately $25m–$30m and anticipated completion in 2018; successful results are intended to support a BLA.
- Derivative-liability remeasurement produced a $1.90m six-month 2016 gain, a noncash item that materially affected reported net loss and may fluctuate with the stock price and valuation assumptions.
- Key risks include clinical-trial success, enrollment and safety; regulatory approval; the ability to raise capital (including potential shareholder dilution); dependence on contractors and collaborators; intellectual-property limitations, including no patent protection for Iomab-B as described in the filing; and the supply and renewal of Ac-225 from ORNL. The company disclosed no legal proceedings.
- Subsequent to quarter-end, the company sold 423,422 shares for gross proceeds of about $0.7m through its sales agreement. The filing also reports that MSKCC had sold 4,961,956 company shares under an investor-rights agreement, a potential share-supply consideration.
Important facts for investors to verify
- Cash runway assumptions against ongoing operating burn and the stated $25m–$30m estimated direct cost of the Iomab-B Phase 3 trial.
- Phase 3 enrollment, timing, endpoint results and any changes to the expected trial cost or completion schedule.
- Future financing needs, ATM usage, share-count changes and the potential dilutive effect of outstanding options and warrants.
- Derivative-liability valuation and the impact of future stock-price changes on reported earnings.
- ORNL Ac-225 supply renewal and availability, as well as manufacturing and clinical-trial contractor performance.