Actinium Pharmaceuticals, Inc. — Q2 2017 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2017. The interim financial statements are unaudited. Actinium is a development-stage biopharmaceutical company with no commercial product revenue; its principal programs are Iomab-B, Actimab-A and Actimab-M.
Financial performance and liquidity
| Metric | Q2 2017 | Q2 2016 | Six months 2017 | Six months 2016 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Operating expenses | $7.20 million | $6.92 million | $15.01 million | $12.92 million |
| Net loss | $7.05 million | $6.62 million | $15.12 million | $11.03 million |
| Net loss per share, basic and diluted | $0.12 | $0.14 | $0.26 | $0.24 |
| Cash used in operating activities | Not separately stated for the quarter | $12.51 million | $10.98 million |
- At June 30, cash and cash equivalents were $11.46 million; current assets were $12.47 million and current liabilities were $4.11 million. An additional $390,825 was classified as restricted cash.
- Total liabilities were $4.11 million, comprising current liabilities; the balance sheet reports no debt outstanding.
- Six-month cash use in investing activities was $0.37 million. Financing provided $3.82 million, primarily from the at-the-market equity program. Cash declined $9.06 million from year-end 2016.
- Gross margin is not meaningful because the company reported no revenue. Accumulated deficit was $151.67 million.
Changes versus comparable periods
- Q2 net loss increased about 6% year over year. Six-month net loss increased about 37%, while operating expenses rose about 16%.
- Six-month research and development expense increased to $8.88 million from $7.91 million, reflecting higher professional fees, payroll and Iomab-B manufacturing costs, partly offset by lower Actimab-A manufacturing costs.
- Six-month general and administrative expense increased to $6.09 million from $4.97 million, mainly due to higher compensation, stock-based compensation, professional fees and severance.
- Other expense included a $106,403 loss from changes in derivative fair value in the first half of 2017, compared with a $1.90 million gain in the first half of 2016. This noncash, warrant-related valuation item materially affected the year-over-year net-loss comparison.
Outlook, developments and risks
- Management said June 30 cash was expected to fund operations into the first quarter of 2019. After quarter-end, the company completed an August 2 offering of 21.5 million shares and warrants for 18.275 million shares at $0.75 per share and related warrant, raising approximately $16.1 million gross before offering costs. The filing reported cash of approximately $24 million as of August 2.
- Iomab-B was in a 150-patient pivotal Phase 3 trial for relapsed or refractory AML patients aged 55 and older; management estimated direct trial completion costs of approximately $25 million, with completion anticipated in 2019. Actimab-A was in a 53-patient Phase 2 trial, and Actimab-M in a Phase 1 investigator-initiated trial.
- The company expects continued losses and increased R&D and G&A spending. It has no recurring revenue and expects to seek additional capital; future equity financing could dilute shareholders.
- Key risks include clinical-trial enrollment, efficacy and safety outcomes; regulatory approval; dependence on contract manufacturers and suppliers; timely release of HuM195 antibody; and limited Actinium-225 supply. The ORNL supply contract extended through the end of 2017 and required renewal.
- Clinical and licensing commitments include estimated Iomab-B trial costs, milestone and royalty obligations, and lease minimum payments of approximately $2.18 million. The company also recorded a $750,000 accrued AbbVie milestone payable.
- Unusual personnel and equity items included CEO and CTO departures in May 2017 and related severance payments, plus option and warrant modifications that generated additional compensation expense. Management reported effective disclosure controls and no material change in internal control over financial reporting. No legal proceedings were reported.
Important facts for investors to verify
- Whether the post-quarter offering’s net proceeds, warrant terms and resulting dilution materially extend the stated cash runway.
- Actual cash burn and clinical spending relative to management’s stated first-quarter 2019 runway and the estimated Iomab-B trial cost.
- Enrollment, progress and eventual results of the Iomab-B Phase 3 and Actimab-A Phase 2 trials, including safety signals and manufacturing readiness.
- Renewal and adequacy of Actinium-225 supply, and timely availability of HuM195 for clinical programs.
- Potential effects of outstanding options and warrants, derivative-liability remeasurement, and future financing on per-share value.