Actinium Pharmaceuticals, Inc. — Q1 2020 Form 10-Q
Business context and period. This unaudited quarterly report covers the three months ended March 31, 2020; it was filed June 29, 2020, after a COVID-19-related delay. Actinium is a clinical-stage biopharmaceutical company developing antibody radiation-conjugates (ARCs); it had no approved products or commercial sales. Its lead program, Iomab-B, was in the Phase 3 SIERRA trial for conditioning before bone marrow transplant in older patients with relapsed or refractory AML.
Financial performance and position
| Metric | Q1 2020 | Q1 2019 / prior balance date |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense, net | $4.151 million | $4.336 million |
| General and administrative expense | $1.532 million | $1.363 million |
| Total operating expenses | $5.683 million | $5.699 million |
| Net loss | $5.670 million | $5.670 million |
| Basic and diluted loss per share | $0.03 | $0.05 |
| Net cash used in operating activities | $5.854 million | $5.489 million |
| Cash and cash equivalents at period end | $5.942 million | $9.254 million at Dec. 31, 2019 |
| Cash, cash equivalents and restricted cash | $6.381 million | $9.693 million at Dec. 31, 2019 |
| Total assets / total liabilities | $8.364 million / $5.344 million | $11.670 million / $6.026 million at Dec. 31, 2019 |
Operating expenses were nearly flat year over year: lower R&D, principally reflecting lower CD33 spending, was largely offset by higher G&A and lower interest income. Management attributed the $0.365 million increase in operating cash use primarily to vendor-payment timing. There was no reported product gross margin; margins are not meaningful given zero revenue.
At March 31, current liabilities were $4.710 million, including a $0.268 million note payable and $4.041 million of accounts payable and accrued expenses. Operating and finance lease liabilities totaled $0.955 million, of which $0.401 million was current. Q1 financing cash flow was $2.542 million, including $2.674 million net proceeds from common-stock sales. The company reported an accumulated deficit of $214.428 million.
Material developments and outlook
- Clinical programs: Management expected to complete SIERRA enrollment and have topline data it believed could support a BLA submission in 2021. It said an optional ad hoc analysis could produce primary-endpoint topline data in late 2020 and potentially permit early trial termination if positive. The filing also described 2021 proof-of-concept expectations for Iomab-ACT and planned CD33 combination studies; these are expectations, not assured outcomes.
- Reported SIERRA interim observations: The company cited safety and feasibility results for the first 75 enrolled patients. Among patients receiving a therapeutic Iomab-B dose, 31/31 on the study arm and 20/20 crossover patients received a transplant; the filing reported 100-day transplant-related mortality of 6% (2/31) for the study arm versus 29% (2/7) for control-arm patients who received transplant after salvage therapy. These observations are not final trial results or proof of the primary endpoint.
- Subsequent financings and dilution: The April 24 offering generated $29.1 million net proceeds; the June 19 offering generated $22.8 million net proceeds. Both included common shares and pre-funded warrants. The company stated that, as of the filing, existing resources were expected to fund planned operations for more than 12 months. This liquidity statement followed the offerings and should not be inferred from the March 31 cash balance alone. The offerings substantially increased the potential and actual share count.
- Listing compliance: NYSE American notified the company on April 29 that its share price had been low for a substantial period. It was required to demonstrate sustained price improvement or effect a reverse split by October 29, 2020 to address the deficiency. Stockholders had authorized a reverse split of up to 1-for-75, subject to board discretion. The filing also notes the exchange’s stated policy regarding suspension and delisting procedures if the share price falls below $0.06 intraday.
- COVID-19: As of the filing, the company reported no financial impact and no significant clinical-development or drug-production disruption to date, but acknowledged potential trial, manufacturing, regulatory, staffing and financing delays. Some trial sites had paused enrollment; management anticipated some would resume, while warning that the pandemic could affect timelines.
Risks, contingencies and unusual items
- The company had no commercial revenue, recurring losses and substantial dependence on future financing and successful clinical development, particularly Iomab-B and SIERRA. Future equity financing could dilute shareholders.
- Trial enrollment, results, safety, regulatory review, manufacturing capacity and access to I-131 and Actinium-225 are material uncertainties. The company relies on third-party clinical, manufacturing and supply providers.
- COVID-19 could disrupt trials, suppliers, manufacturing, regulatory interactions and capital-market access. It also contributed to the late filing of this report.
- The filing reported no legal proceedings and no material off-balance-sheet arrangements. It disclosed contractual and contingent obligations, including a potential $1 million FHCRC milestone upon first FDA approval of a BC8-antibody drug and 2% royalties on commercial net sales.
- Management concluded disclosure controls were effective as of March 31, 2020 and reported no material change in internal control over financial reporting during the quarter.
Most important facts for investors to verify
- SIERRA enrollment status, interim-analysis timing, final primary-endpoint results, safety and the regulatory acceptability of any eventual BLA submission.
- Cash use after March 31, including how April and June offering proceeds were spent, current cash runway, and potential further financing needs.
- Fully diluted share count and warrant exercises following the offerings; the filing reports 395,154,726 common shares outstanding as of June 29, 2020.
- NYSE American compliance status, the board’s decision on a reverse split, and any effect on trading or listing.
- Whether COVID-19, clinical-site enrollment, third-party manufacturing or isotope supply changes the company’s stated development timelines.