Actinium Pharmaceuticals, Inc. — Q2 2018 Form 10-Q
Reporting period: Three and six months ended June 30, 2018; unaudited. Actinium is a clinical-stage biopharmaceutical company developing targeted radio-conjugate therapies. It has no approved products and has never generated commercial revenue.
Financial performance and liquidity
| Metric | Q2 2018 | Q2 2017 | Six months 2018 | Six months 2017 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $3.33 million | $4.45 million | $7.79 million | $9.02 million |
| General and administrative expense | $1.57 million | $2.74 million | $3.45 million | $5.95 million |
| Total operating expenses | $4.91 million | $7.20 million | $11.27 million | $15.01 million |
| Net loss | $4.86 million | $7.05 million | $11.19 million | $15.12 million |
| Basic and diluted loss per share | $0.04 | $0.12 | $0.11 | $0.26 |
- Six-month operating cash outflow was $9.67 million, versus $12.51 million a year earlier. Investing cash outflow was $0.03 million.
- Financing provided $13.81 million, principally from the March 2018 equity-and-warrant offering. Net cash, cash equivalents and restricted cash increased $4.11 million.
- At June 30, cash and cash equivalents were $21.47 million; restricted cash was $0.43 million, for combined cash and restricted cash of $21.91 million.
- Total assets were $22.58 million; current liabilities and total liabilities were $5.27 million, consisting principally of accounts payable and accrued expenses. No borrowings or debt are reported on the balance sheet. Operating margins are not meaningful given zero revenue.
Changes versus prior period
- Q2 net loss narrowed by about $2.19 million year over year; first-half net loss narrowed by about $3.93 million. Lower R&D costs, including lower Actimab-A costs and Astellas collaboration payments recorded as R&D expense reductions, contributed. Lower G&A reflected reduced stock-option expense and, for the six-month comparison, prior-year severance and bonuses.
- March financing raised approximately $15.1 million gross and $13.8 million net. The company issued 30.24 million common shares and warrants; common shares outstanding rose from 80.07 million at December 31, 2017 to 110.46 million at June 30, 2018.
- Effective April 1, 2018, Actinium adopted ASU 2017-11 and reclassified certain down-round warrants from derivative liabilities to equity. This removed subsequent fair-value gains or losses on those warrants from earnings; the prior-year periods included warrant valuation effects.
Outlook, commentary and risks
- Management said the June 30 cash balance was sufficient to fund operations through the next 12 months. The filing also says current funds are not sufficient to complete development and commercialization; further financing may be needed and could dilute shareholders or require partnering or licensing rights.
- The Phase 3 SIERRA trial of Iomab-B for relapsed or refractory AML reached 25% patient enrollment in June 2018. The company intends to seek U.S. and EU marketing approval if the trial succeeds; FDA guidance indicated a single pivotal Phase 3 study could support a BLA, if successful.
- Actimab-A is in Phase 2 for older, newly diagnosed AML patients ineligible for intensive chemotherapy. Other lintuzumab-Ac-225 trials include investigator-initiated AML studies and a Phase 1 multiple-myeloma trial. The company is discussing an FDA pathway for a planned high-risk MDS conditioning program.
- The March 2018 Astellas collaboration funds preclinical work on selected targeting agents conjugated with Ac-225. No revenue or specific forward financial guidance was provided.
- Key risks include clinical-trial enrollment, efficacy and safety uncertainty; regulatory approval; dependence on third-party manufacturers and CROs; isotope supply, especially renewal of the DOE Ac-225 supply contract through year-end 2018; and ongoing financing needs. The filing notes that the lintuzumab antibody supply was undergoing release testing, with potential for trial delays if release were not timely.
- Commitments include approximately $1.5 million of remaining Goodwin manufacturing services. Certain license agreements also include regulatory milestone payments and royalties if products are approved and sold. No legal proceedings were reported.
- After quarter-end, the company engaged Marcum LLP following GBH CPAs’ resignation in connection with its practice combination with Marcum; the filing reports no accounting disagreements with GBH. Management assessed disclosure controls as effective and reported no material change in internal control over financial reporting.
Important facts for investors to verify
- Whether SIERRA enrollment and execution progress as planned, and what clinical milestones or data are expected next.
- Whether management’s stated 12-month cash runway remains supportable given actual cash burn, trial costs and financing needs.
- The terms and potential dilution from the 56.02 million outstanding warrants and 5.80 million outstanding options; the filing reports 61.82 million potentially dilutive shares in total.
- Whether Ac-225 supply is renewed and remains adequate, and whether lintuzumab manufacturing and release testing avoid disrupting trials.
- The implications of the auditor change and the August 2018 amendments to executive agreements and bylaws.