Actinium Pharmaceuticals, Inc. annual report, FY2018

Business context and reporting period

Actinium Pharmaceuticals, Inc. filed this Form 10-K for the fiscal year ended December 31, 2018; it is an annual report, not a standalone fourth-quarter report. The company is a clinical-stage biopharmaceutical developer with no approved products or commercial product sales. Its antibody radiation-conjugate programs focus on conditioning before bone marrow transplant (BMT) and lymphodepletion before CAR-T and other cell therapies, as well as direct cancer treatment.

Financial results and liquidity

There is no meaningful commercial gross margin because the company reported no revenue. The 2018 net loss narrowed by $2.9 million, primarily due to lower general and administrative and research and development expenses. Research and development costs benefited in part from Astellas collaboration payments recorded as reductions to R&D expense. Interest income was $0.2 million; a $0.3 million noncash gain on derivative liabilities recorded in 2017 did not recur in 2018 following adoption of new accounting guidance.

Cash used in investing activities was $0.1 million, and financing activities provided $17.0 million, principally from stock and warrant sales. Year-end liabilities included a $249,000 insurance-premium note payable and a $13,000 long-term capital lease obligation; accounts payable and accrued expenses were $5.8 million. Accumulated deficit was $186.9 million. The company reported no off-balance-sheet arrangements.

Material developments and outlook

• Iomab-B / SIERRA: The lead program is being evaluated in a 150-patient pivotal Phase 3 trial for patients over 55 with active, relapsed or refractory AML, comparing Iomab-B followed by BMT with physician-selected salvage chemotherapy. The primary endpoint is durable complete remission at six months; one-year overall survival is secondary. The trial was active at 18 U.S. and Canadian sites.
• Early SIERRA observations: The filing describes safety and feasibility observations from the first 38 enrolled patients. All 18 patients reported in the Iomab-B arm and all 10 eligible control-arm crossover patients received a BMT and engrafted; median time to BMT was 28 days in the Iomab-B arm versus 67 days in the control arm. No 100-day non-relapse mortality was reported among the 18 Iomab-B-arm patients. These are interim feasibility observations, not final pivotal efficacy results.
• Actimab-MDS: Management said it was finalizing a Phase 1 dose-confirming study, planned for 7–18 patients, followed by a randomized pivotal trial with reduced-intensity conditioning; initiation was expected in 2019. Earlier Actimab-A Phase 2 data in older, newly diagnosed AML patients showed reported overall response rates of 69% at one dose cohort and 22% at another, with myelosuppression identified as dose-limiting toxicity.
• Iomab-ACT: The company planned a human trial in 2019 of a lower-dose CD45-targeted construct for lymphodepletion before CAR-T and other adoptive cell therapies. The filing cites preclinical results, not human clinical efficacy data.
• Other CD33 programs: Phase 1 studies included or were planned for combinations with venetoclax and CLAG-M, and for multiple myeloma; an MRD-focused AML study was planned. The CLAG-M study reported no dose-limiting toxicities in its first cohort and had begun its second cohort by the filing date.
• Platform collaboration: The March 2018 Astellas research collaboration uses Actinium’s AWE platform to create Ac-225 conjugates with selected Astellas targeting agents. A second collaboration module began in January 2019.

Risks, contingencies and unusual items

The company has recurring losses and negative operating cash flows. Its independent auditor included a going-concern explanatory paragraph, and management stated that, as of the March 15, 2019 filing date, available resources were expected to fund planned operations only into the fourth quarter of 2019. Additional financing was required, with no assurance it would be available on acceptable terms. Failure to raise capital could force delayed or terminated trials, spending reductions, licensing or asset sales, or cessation of operations.

Financing and dilution are material considerations. During 2018, Actinium raised approximately $17.0 million net, including a March stock-and-warrant offering and sales under a Lincoln Park equity purchase agreement with up to $30.0 million of additional purchases available subject to conditions and limits. The company reported 55.8 million warrants outstanding at year-end, in addition to 7.2 million options. Subsequent to year-end, it reported $0.4 million net proceeds from ATM share sales and $1.5 million from exercise of approximately 2.5 million Series A warrants. In March 2019, it increased authorized common shares from 400 million to 600 million.

Other significant risks include clinical-trial failure or delay, patient enrollment, regulatory approval, commercialization and reimbursement uncertainty, manufacturing dependence, and supply and renewal risks for I-131 and Ac-225. The DOE Ac-225 supply contract was due for annual renewal and ran through the end of 2019. The filing also notes that key lintuzumab antibody patents have expired and that no issued patent claims cover the Iomab-B antibody or complete conjugate; protection relies on other intellectual property, know-how and pending filings. No material pending legal proceedings were identified. Management and the auditor reported effective internal control over financial reporting; the financial-statement audit opinion was unqualified apart from the going-concern explanatory paragraph.

Important facts for investors to verify

• Current cash runway, financing availability and subsequent share or warrant issuance; the stated runway was only through Q4 2019.
• SIERRA enrollment, final primary and secondary endpoint results, safety findings and whether interim observations translate into pivotal efficacy.
• Whether Actimab-MDS and Iomab-ACT trials began as planned, and whether regulatory discussions support the proposed paths.
• Progress, terms and potential funding or milestone economics of the Astellas collaboration; the filing does not provide a clear value for future collaboration proceeds.
• Availability, quality and cost of isotope and drug-product supply, including renewal of the DOE Ac-225 arrangement and commercial-scale manufacturing readiness.
• Potential dilution from the Lincoln Park facility, outstanding warrants and options, and the increased authorized share count.