Actinium Pharmaceuticals, Inc. — Q3 2017 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2017. The interim financial statements are unaudited. Actinium is a clinical-stage biopharmaceutical company with no commercial sales; its principal programs are Iomab-B, Actimab-A and Actimab-M.
Financial performance and liquidity
| Metric | Q3 2017 | Q3 2016 | Nine months 2017 | Nine months 2016 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $5.0m | $5.7m | $13.8m | $13.6m |
| General and administrative expense | $1.7m | $1.4m | $7.8m | $6.4m |
| Total operating expenses | $6.7m | $7.1m | $21.7m | $20.0m |
| Net loss | $6.3m | $6.6m | $21.4m | $17.6m |
| Loss per share, basic and diluted | $0.09 | $0.14 | $0.34 | $0.38 |
| Operating cash used | Not separately stated | Not separately stated | $18.4m | $16.5m |
At September 30, 2017, cash and cash equivalents were $20.5m, with an additional $0.4m of restricted cash; current assets were $21.2m and current liabilities $3.5m. Total liabilities were $3.5m, consisting principally of payables, accrued expenses and $54,325 of derivative liabilities; the balance sheet reports no debt. Accumulated deficit was $158.0m. No meaningful operating margin is available because the company had no revenue.
Net cash from financing was $18.8m for the nine months, primarily from an August public offering and ATM stock sales. Investing activities used $0.4m. Cash increased by $22,661 during the period. The company reported more than $20m cash as of November 3, 2017, but did not provide a specific cash-runway estimate.
Material changes versus prior comparable periods
- For the quarter, operating expenses fell $0.4m, mainly because prior-year R&D included Actimab-A trial start-up and close-out costs. Quarterly net loss narrowed by $0.3m.
- For the nine months, operating expenses rose $1.7m and net loss widened $3.8m. Higher Iomab-B Phase 3 R&D and G&A costs outweighed lower Actimab-A costs.
- Nine-month other income fell to $0.3m from $2.4m, primarily reflecting a smaller noncash gain from remeasuring warrant derivative liabilities.
- Net operating cash use increased $1.8m, which management attributed mainly to one-time severance and increased professional-services and clinical-trial enrollment payments.
- Common shares outstanding increased to 80.0m from 55.8m at December 31, 2016. The August offering raised approximately $15.0m net and included warrants for 18.275m shares; the warrants have a $1.05 exercise price and five-year term.
Outlook, commentary and risks
- Development: Iomab-B was in a 150-patient pivotal Phase 3 SIERRA trial for relapsed or refractory AML patients age 55 and older. Its primary endpoint is durable complete remission; overall survival at one year is secondary. Management stated a successful trial could support a BLA, and the FDA had indicated that a single pivotal study could be acceptable. Actimab-A was in Phase 2 and Actimab-M in Phase 1.
- Spending and revenue outlook: Management expects R&D costs to fluctuate with clinical-trial enrollment and expects continued losses as it funds development. No numerical revenue, earnings or cash-flow guidance was provided; management said the company has never generated revenue and has no recurring source to cover operating costs.
- Funding: The filing warns that additional capital will be needed to complete development and pursue commercialization. Future equity or convertible financings could dilute shareholders; inadequate funding could delay, reduce or end development. Cash resources should be assessed against ongoing trial costs and contractual commitments.
- Clinical, regulatory and supply risks: Trial outcomes, enrollment, FDA approval and commercialization are uncertain. The filing notes prolonged bone-marrow suppression at the highest Actimab-A Phase 1 dose. The company relies on third parties for manufacturing and trials, and warns of HuM195 batch-release risk and limited Ac-225 supply; its ORNL supply agreement was due for renewal at year-end 2017.
- Intellectual property: The filing states Iomab-B is not patent-protected and that key HuM195 antibody patents had likely expired; the company was reviewing the related license and strategy. These could affect competitive protection and partnering prospects.
- Commitments and unusual items: Future minimum office lease obligations totaled $2.05m. The company disclosed milestone and royalty obligations under license agreements, including a $750,000 AbbVie milestone payable recorded in accrued expenses. Warrant remeasurement gains are noncash and can materially affect reported results. Management reported effective disclosure controls and no material change in internal control over financial reporting.
Investor verification priorities
- Check subsequent filings for SIERRA enrollment, trial progress, results and any change to the expected regulatory path.
- Reconcile cash, restricted cash, operating burn and financing activity in later periods; assess funding needs against clinical and contractual commitments.
- Review share-count and warrant dilution, including the August 2017 offering terms and outstanding options and warrants.
- Verify renewal and adequacy of Ac-225 supply, HuM195 batch release, and manufacturing and CRO execution.
- Examine developments in the HuM195 license review, Iomab-B intellectual-property position, and related milestone or royalty obligations.