Actinium Pharmaceuticals, Inc. — Q3 2019 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2019. Filed November 12, 2019. Interim financial statements are unaudited. Actinium is a clinical-stage biopharmaceutical company developing antibody radiation-conjugates; it has no approved products and has generated no commercial revenue.
Financial results and liquidity
| Metric | Q3 2019 | Q3 2018 | Nine months 2019 | Nine months 2018 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense, net | $4.83 million | $4.23 million | $13.18 million | $12.02 million |
| General and administrative expense | $1.82 million | $1.97 million | $4.26 million | $5.44 million |
| Total operating expenses | $6.65 million | $6.20 million | $17.44 million | $17.46 million |
| Net loss | $6.60 million | $6.15 million | $17.30 million | $17.33 million |
| Loss per share, basic and diluted | $0.04 | $0.06 | $0.12 | $0.17 |
For the nine months, operating cash used was $16.45 million, versus $16.28 million in 2018; investing cash used was $0.06 million. Financing provided $17.16 million, mainly from equity and warrant proceeds. Cash, cash equivalents and restricted cash rose by $0.65 million to $14.75 million; unrestricted cash and cash equivalents were $14.31 million at September 30.
Current assets were $14.55 million and current liabilities $5.54 million, implying working capital of approximately $9.01 million. Total liabilities were $6.38 million, including $25,000 of note payable and lease liabilities. No operating margin is meaningful because the company had no revenue and incurred operating losses.
Changes versus comparable periods
- Q3 net loss increased about $0.45 million year over year as R&D expense rose $0.60 million, mainly from the CD45 program and compensation; lower G&A partially offset the increase.
- Nine-month net loss was broadly flat year over year. Higher R&D expense, principally CD45 and compensation, was offset by lower CD33 spending and a $1.18 million reduction in G&A, primarily professional fees.
- Financing included an April offering of 42.9 million shares and warrants for up to 42.9 million additional shares, generating $15.1 million net proceeds. Share count rose from 115.7 million at December 31, 2018 to 164.7 million at September 30, 2019.
- Adoption of lease accounting in January 2019 resulted in recognition of right-of-use assets and lease obligations. The company reported $0.96 million of operating lease assets and $0.24 million of finance lease assets at quarter-end.
Outlook, programs, and principal risks
Management stated that existing resources were expected to fund planned operations into the third quarter of 2020; additional capital would be needed for longer-term operations. The filing identifies substantial doubt about the company’s ability to continue as a going concern, citing recurring losses, negative operating cash flows, and dependence on future financing. Potential funding sources include equity sales, licensing, collaborations, or borrowings, none assured. Failure to raise capital could require delaying or ending clinical trials.
The principal clinical priority is the Phase 3 SIERRA trial of Iomab-B in 150 older patients with relapsed or refractory AML. The trial reached 50% enrollment in July 2019. The filing also discusses October 2019 interim safety and feasibility observations: among the reported patients receiving therapeutic-dose Iomab-B, all 31 received a bone marrow transplant and achieved engraftment. These interim observations are not final trial results and do not establish that the primary endpoint has been met. Management also reported that it was prioritizing SIERRA resources; it had deferred a planned MRD-positive AML trial.
Other programs include Actimab-MDS, for which the company was finalizing protocols with the FDA; Iomab-ACT, for which it was evaluating potential CAR-T collaborators; and CD33 programs in AML and multiple myeloma. The company’s AWE platform is being used in a research collaboration with Astellas. The filing’s key risks include clinical failure or delays, regulatory uncertainty, enrollment and manufacturing challenges, dependence on third-party isotope supply, competition, intellectual-property uncertainty, and further dilution from financing. The DOE Ac-225 supply contract was due for renewal at year-end 2019.
Most important facts for investors to verify
- Whether cash runway and financing needs changed after the filing, and whether additional funding was secured on dilutive terms.
- Subsequent SIERRA enrollment, trial conduct, safety findings, and final primary and secondary endpoint results; distinguish interim observations from definitive efficacy evidence.
- Whether SIERRA and other trials remain on schedule and whether the FDA agreed to the Actimab-MDS protocols.
- Renewal and adequacy of Ac-225 supply, as well as reliable manufacturing capacity for clinical and potential commercial needs.
- Potential dilution from the 86.3 million warrants and 11.9 million options outstanding at September 30, 2019, in addition to future capital raises.
- The filing contains an inconsistent 2018 nine-month net-loss figure in its MD&A; the financial statements report $17.334 million.