Actinium Pharmaceuticals(ATNM) - 2018 Q4 - Annual Report

PART I This section outlines the company's biopharmaceutical business, its ARC development pipeline, strategic objectives, market landscape, intellectual property, and associated risk factors Item 1. Business Actinium Pharmaceuticals Inc. develops Antibody Radiation-Conjugates (ARCs) for targeted conditioning in cell therapies and direct cancer targeting, with lead programs in pivotal trials Business Overview Actinium Pharmaceuticals Inc. is a clinical-stage biopharmaceutical company developing Antibody Radiation-Conjugates (ARCs) for targeted conditioning and cancer cell killing, utilizing its AWE technology platform - Actinium Pharmaceuticals Inc. is a clinical-stage biopharmaceutical company focused on developing Antibody Radiation-Conjugates (ARCs) for targeted conditioning before cell therapies (BMT, CAR-T) and for directly killing cancer cells[7] - ARCs combine monoclonal antibodies (mAb) with radioisotopes to deliver precise internal radiation, aiming for higher efficacy and lower toxicity than external radiation[7] - The company has two clinical-stage ARC programs targeting CD45 and CD33 antigens, with its AWE technology platform supporting the creation of new ARCs using isotopes like actinium-225 (Ac-225) and iodine-131 (I-131)[7] Targeted Conditioning Pipeline The company's pipeline includes Iomab-B in pivotal Phase 3 for BMT in AML, Actimab-MDS for BMT in MDS, and Iomab-ACT for CAR-T lymphodepletion - The company's pipeline includes Iomab-B (anti-CD45 mAb + I-131) in a pivotal Phase 3 trial for targeted conditioning prior to BMT in elderly relapsed/refractory AML patients[8] - Actimab-MDS (anti-CD33 mAb + Ac-225) is a second pivotal program for targeted conditioning before BMT in high-risk MDS patients, with a Phase 1 dose-finding study planned[10] - Iomab-ACT, a lower dose of Iomab-B, is being developed as a targeted lymphodepletion agent for CAR-T and other adoptive cell therapies, offering potential advantages over chemotherapy-based regimens[11] CD33 ARC Therapeutics and Combinations The CD33 targeting ARC (Actimab) is being developed for various hematologic indications, including AML, MDS, and Multiple Myeloma, both as monotherapy and in combination trials - The CD33 targeting ARC (lintuzumab-Ac-225, designated Actimab) is being developed for multiple hematologic indications, including AML, MDS, and Multiple Myeloma, both as a monotherapy and in combination with other therapeutic modalities[12] - Ongoing and planned combination trials include Actimab-A: Ven (with Venetoclax) and Actimab-A: CLAG-M (with salvage chemotherapy) for relapsed/refractory AML, and Actimab-A: Ven+HMA (with Venetoclax and a hypomethylating agent) for relapsed/refractory AML[13][14] - Therapeutic trials include a multi-center Phase 1 Actimab-M trial for penta-refractory multiple myeloma and a planned Phase 1 Actimab-A: MRD trial for post-remission AML patients with minimal residual disease[15] Antibody Warhead Enabling Technology Platform The proprietary AWE Technology Platform, supported by 27 patent families, enables direct labeling of biomolecular agents with radionuclides for ARC generation and development, including a collaboration with Astellas - The proprietary AWE Technology Platform is supported by 27 patent families (110 issued/pending applications) covering ARC generation, development, methods of use, and manufacturing, with useful lives extending to 2039[16][41] - The technology enables direct labeling of biomolecular targeting agents with radionuclide warheads (Ac-225, I-131) for cancer treatment, covering compositions, formulations, administration methods, and radionuclide production[16][17][41] - A research collaboration with Astellas Pharma, Inc. is utilizing the AWE platform to create ARCs with Ac-225 and Astellas' targeting agents, with the second module initiated in January 2019[17][45] Business Strategy The strategy focuses on developing targeted conditioning products for U.S. commercialization and international out-licensing, seeking collaborators for the CD33 program, and expanding the AWE platform through new ARCs and partnerships - The company plans to develop targeted conditioning products (Iomab-B, Actimab-MDS, Iomab-ACT) through registration studies and approval, potentially commercializing them in the U.S. and out-licensing internationally[18] - For its CD33 program trials (excluding Actimab-MDS), the strategy is to develop them to proof-of-concept and then seek collaborators, with an option for self-development/commercialization if targeted conditioning assets are monetized[18] - Actinium aims to expand its AWE Technology Platform, arming additional targeting agents for various cancers and rare diseases, developing next-generation ARCs, and exploring novel combination approaches, while continuing to monetize the platform via collaborations[18] Market Opportunity Significant market opportunities exist in targeted conditioning for BMT and CAR-T lymphodepletion, and the broader cancer treatment market for CD33 ARC candidates - Targeted conditioning prior to BMT is believed to improve patient access and outcomes, and provide pharmacoeconomic benefits by reducing toxicities and associated hospital stays, with over 23,000 BMTs performed in the U.S. in 2018[19] - Iomab-ACT aims to replace chemotherapy-based lymphodepletion agents for CAR-T and adoptive cell therapies, addressing a market with two approved CAR-T therapies and dozens in development[20] - The CD33 program drug candidates compete in the broader cancer treatment market, which reached over $83 billion in 2016 sales, offering a targeted approach with radioisotopes (Ac-225 and I-131) to spare healthy tissues[21] Clinical Trials Clinical trials focus on ARCs for targeted conditioning in BMT and CAR-T, including the Iomab-B pivotal Phase 3 SIERRA trial, Actimab-MDS, Iomab-ACT, and multiple CD33 ARC combination studies - Actinium is focused on applying ARC product candidates for targeted conditioning prior to BMT and CAR-T to improve access and outcomes for patients with blood cancers and disorders[22] - The Iomab-B pivotal Phase 3 SIERRA trial is enrolling 150 patients with active, relapsed or refractory AML over age 55 for targeted conditioning prior to BMT, with safety and feasibility data from the first 38 patients showing 100% engraftment in the study arm and no 100-day non-relapse mortality[27][28] - The Actimab-MDS pivotal program, using CD33 ARC (lintuzumab-Ac-225), is designed as a targeted conditioning agent for high-risk MDS patients prior to BMT, following a planned Phase 1 dose-confirming study[29][31] - The Iomab-ACT program, a lower dose of Iomab-B, is being developed for lymphodepletion prior to CAR-T and adoptive cell therapies, with preclinical data showing effective lymphocyte depletion and preservation of bone marrow stem cells[32] - The CD33 ARC (lintuzumab-Ac-225) is being studied in multiple combination trials for relapsed/refractory AML (with Venetoclax, CLAG-M, Venetoclax+HMA) and as a monotherapy in a Phase 1 trial for penta-refractory multiple myeloma, and a planned Phase 1 trial for post-remission AML patients with MRD[34][36][37][38][39][40] Intellectual Property Portfolio and Regulatory Protections The company's IP portfolio includes 28 patent families covering ARC technology and manufacturing, with Iomab-B and lintuzumab-CD33 ARC holding orphan drug designations for market exclusivity - Actinium's patent portfolio includes 28 patent families with 111 issued and pending applications (12 issued/18 pending in U.S., 81 international), covering ARC generation, development, methods of use, and manufacturing, with expirations between 2019 and 2039[52] - The company owns patents related to actinium-225 manufacturing in a cyclotron (expiring 2024-2030) and has licensed/owns patents for radioimmunoconjugate generation (expiring 2019-2030), with additional pending patents for ARC composition, administration, and methods of use[53] - Iomab-B and lintuzumab-CD33 ARC have received orphan drug designations in the U.S. and EU, potentially granting 7 and 10 years of market exclusivity, respectively, upon approval[54] Competition Overview Actinium faces competition in targeted conditioning from generics and preclinical ADCs, but is unique with a pivotal Phase 3 anti-CD45 ARC, and is the sole company with a CD33 targeting Ac-225 ARC for multiple myeloma - In targeted conditioning, Actinium faces competition from generic chemotherapeutic agents and radiation, as well as preclinical-stage Antibody Drug Conjugate (ADC) programs from Magenta Therapeutics and Allogene Therapeutics[56] - Actinium is the only company with a pivotal Phase 3 trial for a targeted conditioning agent and the only anti-CD45 ARC in clinical development[56] - For its CD33 ARC, competition includes Pfizer's Mylotarg™ (FDA approved ADC), Immunogen's IMGN779 (Phase 1 ADC), Amgen's AMG330 (Phase 1 bispecific BiTE), and Boehringer Ingelheim's BI836858 (naked antibody), but Actinium is the only company with a CD33 targeting drug and Ac-225 based ARC for multiple myeloma[57] Government Regulation The company's products are subject to extensive U.S. and international governmental regulation across all development and commercialization stages, with non-compliance leading to severe sanctions - The company's products are subject to extensive regulation by governmental authorities in the U.S. (FDA) and other countries, covering research, development, testing, manufacturing, labeling, promotion, and marketing[58][59] - Failure to comply with FDA requirements (e.g., BLA approval, GCPs, cGMPs) can lead to severe sanctions, including delays or refusal of approvals, warning letters, product recalls, and criminal prosecution[58][60] Employees As of March 15, 2019, Actinium Pharmaceuticals Inc. had 30 full-time employees, none of whom are covered by a collective bargaining agreement - As of March 15, 2019, Actinium Pharmaceuticals Inc. had 30 full-time employees, none of whom are covered by a collective bargaining agreement[62] - Actinium Pharmaceuticals Inc. is a clinical-stage biopharmaceutical company developing Antibody Radiation-Conjugates (ARCs) for targeted conditioning prior to cell therapies (BMT, CAR-T) and for direct cancer cell targeting[7][206][288] - The company's proprietary Antibody Warhead Enabling (AWE) Technology Platform underpins its ARC programs, with intellectual property covering ARC generation, development, methods of use, and manufacturing[7][16][41] - The business strategy includes developing targeted conditioning products (Iomab-B, Actimab-MDS, Iomab-ACT) through registration studies, with potential for U.S. commercialization and international out-licensing, while seeking collaborators for its CD33 program and AWE platform[18] Item 1A. Risk Factors The company faces substantial doubt about its going concern ability due to recurring losses, high dependence on Iomab-B's clinical success, regulatory challenges, supply chain reliance, intense competition, and intellectual property risks Risks Related to Our Business The company faces ongoing net losses and an accumulated deficit of $186.9 million, with insufficient funding posing a significant risk to continued operations and high dependence on Iomab-B's clinical success - The company has incurred net losses in every year since inception, with an accumulated deficit of $186.9 million as of December 31, 2018, and anticipates continued losses[68] - Insufficient funding for product development and commercialization is a major risk; the company projects running out of funds in 2019 without additional capital, which could lead to reduced spending, workforce reductions, or cessation of operations[70][71] - The company is highly dependent on the success of Iomab-B and the SIERRA trial; failure to demonstrate safety and efficacy or secure adequate reimbursement would materially impact the business[80] Risks Related to Regulation Regulatory risks include potential disagreements with authorities, leading to approval delays or failures, clinical trial disruptions, and challenges in securing critical radioisotope supplies from third parties - The FDA or comparable foreign regulatory authorities may disagree with regulatory plans, leading to failure or delays in obtaining product approval, which is an expensive, time-consuming, and uncertain process[83][84][85] - Clinical trials may face substantial delays or termination due to conditions imposed by regulatory authorities, difficulties in patient enrollment, inconclusive results, unforeseen complications, or serious adverse side effects[88][92] - The company may be unable to obtain a sufficient supply of critical radioisotopes (Iodine-131, Actinium-225) to support clinical development or commercial scale, as it relies on third-party suppliers and annual contract renewals[103][104][105] Risks Related to Third Parties Risks include reliance on third parties for clinical trials and manufacturing, potential biosimilar competition, failure of market acceptance, ongoing regulatory obligations, partner conflicts, intense competition, and adverse side effects - Reliance on third parties (CROs, medical institutions, contract laboratories) to conduct clinical trials reduces control and poses risks if they fail to meet contractual duties, deadlines, or regulatory requirements (GCPs, cGMPs)[113][114][116] - The company's biologic product candidates may face biosimilar competition sooner than anticipated due to the Biologics Price Competition and Innovation Act of 2009 (BPCIA)[117] - Failure of product candidates to achieve market acceptance among physicians, patients, and the medical community, due to perceived effectiveness, cost, or lack of influential support, could limit sales[118][119] - Ongoing regulatory obligations post-approval, including surveillance, risk evaluation, and compliance with cGMPs, could lead to restrictions, withdrawals, fines, or revocation of approvals if not met[121] - The company relies on third-party manufacturers for preclinical and clinical drug supplies; any failure in manufacturing capacity, quality control, or regulatory compliance could delay development or commercialization[128][129][133][134] - Conflicts with partners regarding data interpretation, milestones, or intellectual property could delay product development or commercialization[135][136] - The company faces intense competition from large pharmaceutical companies and research institutions with greater financial resources and experience in R&D, regulatory approvals, and marketing[137] - Undesirable side effects from product candidates could halt clinical development, prevent regulatory approval, limit commercial potential, or result in significant negative consequences like product recalls or liability claims[138][139] Risks Related to Our Intellectual Property Intellectual property risks include patent uncertainty, expiration of key antibody patents, potential infringement, high enforcement costs, and the limitations of confidentiality agreements in protecting trade secrets - The company's patent position is highly uncertain; patents may not be granted, may not provide competitive advantages, or could be challenged and invalidated by third parties[142][143][144] - The intellectual property related to the humanized antibody lintuzumab (used in CD33 program) and the BC8 antibody (used in Iomab-B) has expired or is not covered by issued patents, potentially allowing competitors to use similar sequences[99] - Infringement by others, the high cost of enforcing patent rights, and potential litigation could significantly harm the business and divert management resources[145] - Reliance on confidentiality agreements to protect trade secrets may not effectively prevent disclosure to competitors, and others may independently develop similar information[146][151][152] - Recurring losses and negative cash flows raise substantial doubt about the company's ability to continue as a going concern, with an accumulated deficit of $186.9 million as of December 31, 2018[64][65][68] - The company is highly dependent on the success of Iomab-B and the SIERRA trial; failure to complete clinical development or obtain necessary data for regulatory approval would materially impact the business[80] - Significant risks include potential delays or termination of clinical trials, inability to establish sales and marketing capabilities, challenges in obtaining sufficient supply of isotopes (I-131, Ac-225), and intense competition from other biotechnology and pharmaceutical companies[82][88][103][104][137] - Intellectual property risks include the expiration of patents for key antibodies (lintuzumab, BC8), uncertainty in patent enforceability, and potential infringement claims from third parties[99][140][144] Item 1B. Unresolved Staff Comments The company reported that there were no unresolved staff comments from the SEC - There are no unresolved staff comments[193] Item 2. Properties Actinium Pharmaceuticals Inc. does not own any real property but leases office space in New York, NY, under a seven-year, three-month term expiring in September 2022. The company also has a letter of credit and certified deposit as collateral for the lease - The company does not own any real property[194] - Actinium leases 5,790 square feet of office space at 275 Madison Avenue, New York, NY, with a lease term expiring on September 6, 2022[194] Annual Lease Rates | Period | Annual Rate | | :----------------- | :---------- | | Until June 8, 2019 | $312,660 | | Remaining Life | $341,610 | Item 3. Legal Proceedings Actinium Pharmaceuticals Inc. is not currently aware of any legal proceedings or claims that would individually or in aggregate have a material adverse effect on its business, financial condition, or operating results - The company is not currently aware of any legal proceedings or claims that would have a material adverse effect on its business, financial condition, or operating results[195] Item 4. Mine Safety Disclosures This item is not applicable to Actinium Pharmaceuticals Inc. - This item is not applicable[196] PART II This section details the company's common stock market, selected financial data, management's discussion and analysis of financial condition, market risk disclosures, and comprehensive financial statements with auditor reports Item 5. Market for Registrant's Common Equity, Related Stockholders Matters, and Issuer Purchases of Equity Securities The company's common stock trades on NYSE AMERICAN under 'ATNM', with 119.1 million shares outstanding as of March 15, 2019, and details on equity compensation plans - Actinium's common stock is listed on the NYSE AMERICAN under the symbol "ATNM"[199] Common Stock Information (as of March 15, 2019) | Metric | Value | | :---------------------- | :------------ | | Shares Outstanding | 119,136,036 | | Holders of Record | ~97 | | Closing Price (March 14)| $0.57 per share | Equity Compensation Plans (as of December 31, 2018) | Plan Category | Securities to be Issued (Outstanding Options, Warrants, Rights) | Weighted-Average Exercise Price | Securities Remaining Available for Future Issuance | | :------------------------------------------ | :-------------------------------------------------------------- | :------------------------------ | :------------------------------------------------- | | Equity compensation plans approved by security holders | 7,236,101 | $1.74 | 15,912,235 | | Equity compensation plans not approved by security holders | - | - | - | | Total | 7,236,101 | $1.74 | 15,912,235 | Item 6. Selected Financial Data Actinium Pharmaceuticals Inc. has consistently reported no revenues and recurring net losses from operations over the past five fiscal years (2014-2018). The company's cash and cash equivalents have fluctuated, showing a decrease from $25.6 million in 2015 to $13.7 million in 2018, while total liabilities have remained relatively stable Statements of Operations Data (2014-2018) | Metric | 2018 | 2017 | 2016 | 2015 | 2014 | | :-------------------------- | :------------- | :------------- | :------------- | :------------- | :------------- | | Revenues | $ - | $ - | $ - | $ - | $ - | | Loss from operations | $(23,827,322) | $(26,910,788) | $(26,847,481) | $(24,829,764) | $(22,480,544) | | Net loss | $(23,653,963) | $(26,601,235) | $(24,321,724) | $(21,025,314) | $(24,687,509) | | Net loss per common share | $(0.22) | $(0.40) | $(0.50) | $(0.55) | $(0.90) | | Weighted-average common shares outstanding | 106,041,809 | 66,746,389 | 48,463,268 | 38,158,480 | 27,363,748 | Balance Sheet Data (as of December 31, 2014-2018) | Metric | 2018 | 2017 | 2016 | 2015 | 2014 | | :-------------------------- | :------------- | :------------- | :------------- | :------------- | :------------- | | Cash and cash equivalents | $13,673,308 | $17,399,636 | $20,519,294 | $25,643,273 | $6,706,802 | | Total assets | $14,889,394 | $18,337,107 | $22,528,886 | $26,587,581 | $7,569,086 | | Total liabilities | $6,076,597 | $4,666,004 | $4,520,557 | $4,613,533 | $9,491,616 | | Stockholders' equity (deficit) | $8,812,797 | $13,671,103 | $18,008,329 | $21,974,048 | $(1,922,530) | Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses the company's financial condition, highlighting recurring losses, negative cash flows, and going concern doubt, with liquidity projected into Q4 2019, requiring additional capital, and details critical accounting policies and recent accounting standards Results of Operations – Year Ended December 31, 2018 Compared to the Year Ended December 31, 2017 The company's 2018 financial results show a $2.9 million reduction in net loss to $23.7 million, primarily driven by decreased general and administrative and research and development expenses compared to 2017 Statements of Operations Data (2018 vs. 2017) | Metric | 2018 | 2017 | Increase (Decrease) | | :----------------------------------------- | :------------- | :------------- | :------------------ | | Revenues | $ - | $ - | $ - | | Research and development, net of reimbursements | $17,094,778 | $17,719,855 | $(625,077) | | General and administrative | $6,732,544 | $9,190,933 | $(2,453,389) | | Total operating expenses | $23,827,322 | $26,910,788 | $(3,083,466) | | Interest income | $173,359 | $5,430 | $167,929 | | Gain on change in fair value of derivative liabilities | $ - | $304,123 | $(304,123) | | Net loss | $(23,653,963) | $(26,601,235) | $(2,947,272) | - Research and development expenses decreased by $0.7 million, primarily due to payments received from Astellas (reducing R&D expenses) and lower Actimab-A and non-cash stock-based compensation expenses[212] - General and administrative expenses declined by $2.5 million, mainly due to lower non-cash stock-based compensation and one-time charges paid to former employees in 2017[213] - Net loss decreased by $2.9 million to $23.7 million in 2018, driven by the reduction in general and administrative and research and development expenses[217] Results of Operations – Year Ended December 31, 2017 Compared to the Year Ended December 31, 2016 In 2017, the net loss increased by $2.3 million to $26.6 million compared to 2016, mainly due to one-time charges for former employees and a significant decrease in non-cash other income Statements of Operations Data (2017 vs. 2016) | Metric | 2017 | 2016 | Increase (Decrease) | | :----------------------------------------- | :------------- | :------------- | :------------------ | | Revenues | $ - | $ - | $ - | | Research and development, net of reimbursements | $17,719,855 | $17,828,287 | $(108,432) | | General and administrative | $9,190,933 | $9,019,194 | $171,739 | | Total operating expenses | $26,910,788 | $26,847,481 | $63,307 | | Interest income (expense) | $5,430 | $(5,007) | $10,437 | | Gain on change in fair value of derivative liabilities | $304,123 | $2,530,764 | $(2,226,641) | | Net loss | $(26,601,235) | $(24,321,724) | $(2,279,511) | - Research and development expenses slightly decreased by $0.1 million, mainly due to higher start-up and closing costs for Actimab-A trials in 2016, partially offset by increased Iomab-B expenses in 2017[220] - General and administrative expenses increased by $0.2 million, primarily due to one-time charges for former employees and higher professional fees[221] - Net loss increased by $2.3 million to $26.6 million in 2017, mainly due to one-time charges for former employees and a significant decrease in non-cash other income from derivative warrant liabilities[223] Liquidity and Capital Resources Net cash used in operating activities decreased by $1.0 million in 2018, with $17.0 million raised from financing activities, but existing resources are projected to fund operations only into Q4 2019, necessitating additional capital Cash Flow Summary (2016-2018) | Cash Flow Activity | 2018 | 2017 | 2016 | | :----------------------------- | :-------------- | :-------------- | :-------------- | | Net Cash Used in Operating Activities | $(20,571,056) | $(21,553,346) | $(20,789,237) | | Net Cash Used in Investing Activities | $(96,092) | $(24,739) | $(109,819) | | Net Cash Provided by Financing Activities | $16,981,086 | $18,814,634 | $15,775,077 | | Net Change in Cash, Cash Equivalents and Restricted Cash | $(3,686,062) | $(2,763,451) | $(5,123,979) | - Net cash used in operating activities decreased by $1.0 million in 2018 compared to 2017, reflecting lower R&D expenses, payments from Astellas, and reduced compensation[225] - Financing activities in 2018 included $17.0 million from the sale of common stock and warrants, including an agreement with Lincoln Park Capital Fund, LLC for up to $32.5 million in equity sales[227][231][232] - The company's existing resources are projected to fund operations only into Q4 2019, necessitating additional capital from equity sales, warrant exercises, licensing, or collaborations to continue as a going concern[237] Off-Balance Sheet Arrangements The company does not have any off-balance sheet arrangements - The company does not have any off-balance sheet arrangements[238] Critical Accounting Policies Critical accounting policies involve significant management estimates and judgments for fair value measurements, research and development costs, share-based payments, and income taxes - Critical accounting policies involve significant management estimates and judgments, including fair value measurements (classified into Level 1, 2, or 3 inputs), research and development costs (expensed as incurred, reimbursements as reduction), share-based payments (fair value estimated using Black-Scholes model), and income taxes (liability method, deferred taxes, valuation allowance)[239][240][241][242][243][244][245][246] Accounting Standards Recently Adopted The company adopted ASU 2016-02 (restricted cash) and ASU 2014-09 (revenue recognition) in 2018, and early adopted ASU 2017-11 (down-round features), reclassifying derivative liabilities to equity - The company adopted ASU 2016-02 (restricted cash presentation) on January 1, 2018, retrospectively adding restricted cash to cash and cash equivalents in statements of cash flows[247] - ASU 2014-09 (revenue recognition) was adopted on January 1, 2018, but did not have a significant impact on financial statements[249] - ASU 2017-11 (financial instruments with down-round features) was early adopted on April 1, 2018, simplifying accounting by disregarding down-round features for equity classification, resulting in reclassification of derivative liabilities to equity[216][250] Recent Accounting Standards The company is evaluating ASU 2016-02 (Leases) and other recent accounting standards, with some expected to impact balance sheets but not operations, and will implement new SEC disclosure requirements in Q1 2019 - The company is evaluating ASU 2016-02 (Leases), effective after December 15, 2018, expecting an impact on consolidated balance sheets for operating lease recognition but not on statements of operations[252] - ASU 2018-07 (share-based payments to nonemployees), ASU 2018-13 (Fair Value Measurement - Disclosure Framework), and ASU 2018-18 (Collaborative Arrangements) are being evaluated, with no material impact expected on financial statements from ASU 2018-07 or ASU 2018-13[252][253][254] - The SEC's final rule under Release No. 33-10532 (Disclosure Update and Simplification) will require an analysis of changes in stockholders' equity for interim financial statements, with the first presentation anticipated in Q1 2019[254] Subsequent Events Subsequent events include $0.4 million net proceeds from common stock sales and $1.5 million from warrant exercises in early 2019, alongside amendments to the 2013 Stock Plan and authorized common stock - In January 2019, the company sold 924,500 common shares through its at-the-market program, realizing $0.4 million in net proceeds[255] - Since December 31, 2018, holders of March 2018 Series A warrants exercised 2.5 million shares, generating $1.5 million in proceeds[255] - On March 6, 2019, the company amended its 2013 Stock Plan to increase authorized shares to 22,750,000 and filed to increase authorized common stock from 400,000,000 to 600,000,000 shares[256][257] - Actinium Pharmaceuticals Inc. is a clinical-stage biopharmaceutical company focused on developing therapies for targeted conditioning prior to cell therapies and for targeting cancer cells, utilizing Antibody Radiation-Conjugates (ARCs) and its AWE technology platform[206] - The company has never generated revenue, incurred net losses and negative operating cash flows since inception, with an accumulated deficit of $186.9 million as of December 31, 2018, raising substantial doubt about its ability to continue as a going concern[207][289] - Existing resources are expected to fund operations only into the fourth quarter of 2019, requiring additional capital from equity sales, warrant exercises, licensing fees, or collaborations to sustain longer-term operations[207][237][289] Item 7A. Quantitative and Qualitative Disclosures About Market Risk Actinium Pharmaceuticals Inc. is not currently exposed to significant market risk from changes in interest rates or foreign currency exchange rates. Its cash equivalents are primarily short-term money market funds, and a 10% change in interest rates would not materially affect its financial position. Inflation's impact on labor and clinical trial costs has not been material - The company is not currently exposed to significant market risk related to changes in interest rates or foreign currency exchange rates[257][258] - Cash equivalents primarily consist of short-term money market funds, and an immediate 10% change in interest rates would not materially affect the fair market value of its financial position or results of operations[257] - Inflation has not had a material effect on the company's business, financial condition, or results of operations during 2016-2018[258] Item 8. Financial Statements and Supplementary Data This section presents audited consolidated financial statements for 2016-2018, including management and auditor reports on internal controls, with an explanatory paragraph on going concern doubt due to recurring losses and negative cash flows Report of Management on Internal Control Over Financial Reporting Management concluded that the company's internal control over financial reporting was effective as of December 31, 2018, based on COSO criteria - Management assessed the effectiveness of the company's internal control over financial reporting as of December 31, 2018, based on COSO criteria, and concluded it was effective[261] Report of Independent Registered Public Accounting Firm (Internal Control) Marcum LLP issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2018 - Marcum LLP, the independent auditor, issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2018[263] Report of Independent Registered Public Accounting Firm (Financial Statements - 2018) Marcum LLP issued an unqualified opinion on the 2018 consolidated financial statements, with an explanatory paragraph on substantial doubt about the company's going concern ability - Marcum LLP issued an unqualified opinion on the consolidated financial statements for the year ended December 31, 2018, but included an explanatory paragraph regarding the substantial doubt about the company's ability to continue as a going concern[269][271] Report of Independent Registered Public Accounting Firm (Financial Statements - 2017 & 2016) GBH CPAs, PC issued an unqualified opinion on the consolidated financial statements for the years ended December 31, 2017 and 2016 - GBH CPAs, PC issued an unqualified opinion on the consolidated financial statements for the years ended December 31, 2017 and 2016[275][276] Consolidated Balance Sheets This section presents the consolidated balance sheets for Actinium Pharmaceuticals Inc. as of December 31, 2018 and 2017 Consolidated Balance Sheets (as of December 31, 2018 and 2017) | Metric | 2018 | 2017 | | :----------------------------------------- | :------------- | :------------- | | Cash and cash equivalents | $13,673,308 | $17,399,636 | | Restricted cash – current | $40,075 | $ - | | Prepaid expenses and other current assets | $616,222 | $439,322 | | Total Current Assets | $14,329,605 | $17,838,958 | | Property and equipment, net | $118,799 | $57,350 | | Security deposit | $49,859 | $49,859 | | Restricted cash | $391,131 | $390,940 | | Total Assets | $14,889,394 | $18,337,107 | | Accounts payable and accrued expenses | $5,814,004 | $4,650,088 | | Note payable | $249,239 | $ - | | Derivative liabilities | $ - | $15,916 | | Total Current Liabilities | $6,063,243 | $4,666,004 | | Long-term capital lease obligation | $13,354 | $ - | | Total Liabilities | $6,076,597 | $4,666,004 | | Common stock | $115,703 | $80,072 | | Additional paid-in capital | $195,554,332 | $176,744,068 | | Accumulated deficit | $(186,857,238) | $(163,153,037) | | Total Stockholders' Equity | $8,812,797 | $13,671,103 | | Total Liabilities and Stockholders' Equity | $14,889,394 | $18,337,107 | Consolidated Statements of Operations This section presents the consolidated statements of operations for Actinium Pharmaceuticals Inc. for the years ended December 31, 2018, 2017, and 2016 Consolidated Statements of Operations (Years Ended December 31, 2018, 2017, 2016) | Metric | 2018 | 2017 | 2016 | | :----------------------------------------- | :------------- | :------------- | :------------- | | Revenue | $ - | $ - | $ - | | Research and development, net of reimbursements | $17,094,778 | $17,719,855 | $17,828,287 | | General and administrative | $6,732,544 | $9,190,933 | $9,019,194 | | Total operating expenses | $23,827,322 | $26,910,788 | $26,847,481 | | Loss from operations | $(23,827,322) | $(26,910,788) | $(26,847,481) | | Interest income (expense) | $173,359 | $5,430 | $(5,007) | | Gain on change in fair value of derivative liabilities | $ - | $304,123 | $2,530,764 | | Total other income (expense) | $173,359 | $309,553 | $2,525,757 | | Net loss | $(23,653,963) | $(26,601,235) | $(24,321,724) | | Net loss per common share | $(0.22) | $(0.40) | $(0.50) | | Weighted average common shares outstanding | 106,041,809 | 66,746,389 | 48,463,268 | Consolidated Statement of Changes in Stockholders' Equity This section presents the consolidated statement of changes in stockholders' equity for Actinium Pharmaceuticals Inc. for the years ended December 31, 2018, 2017, and 2016 Consolidated Statement of Changes in Stockholders' Equity (Years Ended December 31, 2018, 2017, 2016) | Metric | Common Shares | Common Stock Amount | Paid-In Capital | Accumulated Deficit | Stockholders' Equity | | :----------------------------------------- | :------------ | :------------------ | :-------------- | :------------------ | :------------------- | | Balance, January 1, 2016 | 44,066,541 | $44,067 | $134,160,059 | $(112,230,078) | $21,974,048 | | Stock-based compensation | 81,700 | $82 | $4,297,696 | - | $4,297,778 | | Sale of common stock and warrants, net of offering costs | 11,504,427 | $11,504 | $16,011,163 | - | $16,022,667 | | Issuance of common stock from exercise of options | 23,212 | $23 | $18,082 | - | $18,105 | | Issuance of common stock from exercise of warrants | 125,862 | $126 | $(126) | - | $ - | | Transfer of warrant derivatives from liability to equity classification | - | - | $17,455 | - | $17,455 | | Net loss | - | - | - | $(24,321,724) | $(24,321,724) | | Balance, December 31, 2016 | 55,801,742 | $55,802 | $154,504,329 | $(136,551,802) | $18,008,329 | | Stock-based compensation | 93,385 | $93 | $3,474,282 | - | $3,474,375 | | Sale of common stock and warrants, net of offering costs | 24,172,973 | $24,173 | $18,765,461 | - | $18,789,634 | | Issuance of common stock from exercise of warrants | 4,234 | $4 | $(4) | - | $ - | | Net loss | - | - | - | $(26,601,235) | $(26,601,235) | | Balance, December 31, 2017 | 80,072,334 | $80,072 | $176,744,068 | $(163,153,037) | $13,671,103 | | Modified retroactive adjustment for derivative liability | - | - | $66,154 | $(50,238) | $15,916 | | Stock-based compensation | 156,393 | $157 | $1,798,498 | - | $1,798,655 | | Sale of common stock and warrants, net of offering costs | 34,614,448 | $34,614 | $16,941,623 | - | $16,976,237 | | Issuance of commitment shares to Lincoln Park | 852,537 | $853 | $(853) | - | $ - | | Issuance of common stock from exercise of warrants | 7,332 | $7 | $4,842 | - | $4,849 | | Net loss | - | - | - | $(23,653,963) | $(23,653,963) | | Balance, December 31, 2018 | 115,703,044 | $115,703 | $195,554,332 | $(186,857,238) | $8,812,797 | Consolidated Statements of Cash Flows This section presents the consolidated statements of cash flows for Actinium Pharmaceuticals Inc. for the years ended December 31, 2018, 2017, and 2016 Consolidated Statements of Cash Flows (Years Ended December 31, 2018, 2017, 2016) | Cash Flow Activity | 2018 | 2017 | 2016 | | :----------------------------- | :-------------- | :-------------- | :-------------- | | Net loss | $(23,653,963) | $(26,601,235) | $(24,321,724) | | Stock-based compensation expense | $1,798,655 | $3,493,731 | $4,297,778 | | Depreciation expense | $50,721 | $55,938 | $77,523 | | Gain on change in fair value of derivative liabilities | $ - | $(304,123) | $(2,530,764) | | Prepaid expenses and other current assets | $100,032 | $1,397,129 | $(1,032,988) | | Accounts payable and accrued expenses | $1,133,499 | $405,214 | $2,720,938 | | Net Cash Used In Operating Activities | $(20,571,056) | $(21,553,346) | $(20,789,237) | | Purchase of property and equipment | $(96,092) | $(24,739) | $(59,960) | | Net Cash Used In Investing Activities | $(96,092) | $(24,739) | $(109,819) | | Proceeds from sales of shares of common stock and warrants, net of offering costs | $16,976,237 | $18,814,634 | $16,022,667 | | Proceeds from the exercise of stock options | $ - | $ - | $18,105 | | Proceeds from the exercise of warrants | $4,849 | $ - | $ - | | Net Cash Provided By Financing Activities | $16,981,086 | $18,814,634 | $15,775,077 | | Net change in cash, cash equivalents and restricted cash | $(3,686,062) | $(2,763,451) | $(5,123,979) | | Cash, cash equivalents and restricted cash at end of year | $14,104,514 | $17,790,576 | $20,554,027 | Note 1 - Description of Business and Summary of Significant Accounting Policies This note describes the company's clinical-stage biopharmaceutical business, its history of net losses and going concern doubt, and outlines significant accounting policies for estimates, cash, property, fair value, income taxes, revenue, R&D, and share-based payments - Actinium Pharmaceuticals Inc. is a clinical-stage biopharmaceutical company developing targeted conditioning therapies for cell therapies (BMT, CAR-T) and cancer cell targeting using Antibody Radiation-Conjugates (ARCs)[288] - The company has never generated revenue, incurred net losses and negative operating cash flows since inception, with an accumulated deficit of $186.9 million as of December 31, 2018, raising substantial doubt about its ability to continue as a going concern[289] - Key accounting policies include the use of estimates, cash and cash equivalents (highly liquid accounts with original maturities of three months or less), property and equipment (depreciated straight-line over 3-7 years), fair value of financial instruments (Level 1, 2, 3 hierarchy), income taxes (liability method, deferred taxes, valuation allowance), revenue recognition (adopted ASU 2014-09 on Jan 1, 2018, no significant impact), research and development costs (expensed as incurred), and share-based payments (Black-Scholes model, expensed over vesting period)[291][292][293][295][296][297][298][299][300][301][302][303][304] Note 2 - Derivative Liabilities This note details the historical accounting of warrants as derivative liabilities, their reclassification to equity upon early adoption of ASU 2017-11 in April 2018, and the resulting financial impact - Historically, certain warrants with anti-dilution provisions were accounted for as derivative instruments and re-measured at fair value, resulting in a gain of $0.3 million in 2017 and $2.5 million in 2016[319] - Effective April 1, 2018, the company early adopted ASU 2017-11, which revised guidance for instruments with down-round provisions, leading to the reclassification of outstanding warrants as free-standing equity-linked instruments to equity, eliminating derivative liability accounting[320] Impact of ASU 2017-11 Adoption (as of January 1, 2018) | Account | Amount | | :--------------------------- | :----------- | | Derivative liabilities | $(15,916) | | Additional paid-in capital | $66,154 | | Accumulated deficit | $(50,238) | | Total stockholders' equity | $15,916 | Note 3 - Prepaid Expenses and Other Current Assets This note provides a breakdown of prepaid expenses and other current assets, including a $249,239 note payable issued in December 2018 for insurance premiums Prepaid Expenses and Other Current Assets (as of December 31, 2018 and 2017) | Category | 2018 | 2017 | | :-------------------------------- | :-------- | :-------- | | Prepaid insurance | $339,336 | $72,371 | | Prepaid clinical trial expenses | $171,128 | $226,997 | | Other prepaid expenses | $105,758 | $139,954 | | Total prepaid expenses and other current assets | $616,222 | $439,322 | - In December 2018, the company issued a note payable of $249,239 for its insurance premiums, with payments scheduled for 2019[325] Note 4 - Property and Equipment This note details property and equipment, net, including a $16,078 capital lease for office equipment in December 2018, and provides a breakdown of depreciation expenses Property and Equipment, Net (as of December 31, 2018 and 2017) | Category | 2018 | 2017 | | :--------------------------- | :-------- | :-------- | | Lab equipment | $176,500 | $116,070 | | Office equipment & furniture | $208,680 | $156,940 | | Less: accumulated depreciation | $(266,381) | $(215,660) | | Property and equipment, net | $118,799 | $57,350 | - In December 2018, the company entered into a five-year capital lease agreement for office equipment and services, with a capitalized value of $16,078[326] Depreciation Expense (Years Ended December 31, 2018, 2017, 2016) | Category | 2018 | 2017 | 2016 | | :----------------------- | :------ | :------ | :------ | | Research & development | $20,170 | $20,352 | $41,632 | | General administrative | $30,551 | $35,586 | $35,891 | | Total Depreciation expense | $50,721 | $55,938 | $77,523 | Note 6 - Commitments and Contingencies This note outlines license and research agreements, including milestone payments and royalties, manufacturing and CRO commitments, and future minimum operating lease obligations - The company has license and research agreements, including with Oak Ridge National Laboratory (ORNL) for radioactive material purchases ($0.3 million in 2018, $0.2 million committed for 2019) and Fred Hutchinson Cancer Research Center (FHCRC) for Iomab-B (BC8 antibody), with a $1 million milestone payment upon FDA approval and 2% royalties on net sales[328][329] - Manufacturing agreements include Goodwin Biotechnology Inc. for cGMP production of Iomab-B monoclonal antibody ($1.0 million remaining cost as of Dec 31, 2018) and CRO agreements with Medpace, Inc. for Iomab-B study ($3.3 million remaining cost) and George Clinical Services for Actimab-A study ($0.5 million remaining cost)[331][332][333] Future Minimum Operating Lease Obligations | Year | Amount | | :--- | :---------- | | 2019 | $419,896 | | 2020 | $431,958 | | 2021 | $431,958 | | 2022 | $287,972 | | Total| $1,571,784 | Note 7 - Equity This note details equity transactions, including a $32.5 million purchase agreement with Lincoln Park Capital, $15.1 million gross proceeds from stock and warrant sales, and summaries of stock option and warrant activity - In October 2018, the company entered a purchase agreement with Lincoln Park Capital Fund, LLC, allowing it to sell up to $32.5 million in common stock, with an initial purchase of $2.5 million and an additional $0.7 million by year-end 2018[338][339][342] - In March 2018, the company sold 30.2 million units (common stock and Series A/B warrants) for gross proceeds of $15.1 million, or $13.8 million net[343] - The 2013 Stock Plan and 2013 Equity Incentive Plan authorize 22,750,000 and 1,000,000 shares for grant, respectively, with amendments increasing authorized shares over time[349][350] Stock Option Activity Summary (Years Ended December 31, 2018, 2017, 2016) | Metric | Number of Options | Weighted Average Exercise Price | | :----------------------------------------- | :---------------- | :------------------------------ | | Outstanding, January 1, 2016 | 3,971,583 | $4.34 | | Granted (2016) | 2,225,000 | $1.92 | | Cancelled (2016) | (266,485) | $2.51 | | Exercised (2016) | (23,212) | $0.78 | | Outstanding, December 31, 2016 | 5,906,886 | $3.52 | | Granted (2017) | 2,597,500 | $1.32 | | Cancelled (2017) | (3,329,794) | $2.85 | | Outstanding, December 31, 2017 | 5,174,592 | $2.83 | | Granted (2018) | 3,577,159 | $0.69 | | Cancelled (2018) | (1,515,650) | $2.96 | | Outstanding, December 31, 2018 | 7,236,101 | $1.74 | | Exercisable, December 31, 2018 | 3,021,818 | $2.88 | Warrant Activity Summary (Years Ended December 31, 2018, 2017, 2016) | Metric | Number of Units | Weighted Average Exercise Price | | :----------------------------------------- | :---------------- | :------------------------------ | | Outstanding, January 1, 2016 | 9,018,470 | $3.73 | | Granted (2016) | 130,000 | $0.96 | | Exercised (2016) | (183,718) | $0.90 | | Outstanding, December 31, 2016 | 8,964,752 | $3.72 | | Granted (2017) | 18,496,575 | $1.05 | | Exercised (2017) | (9,364) | $0.78 | | Cancelled (2017) | (1,789,623) | $2.22 | | Outstanding, December 31, 2017 | 25,662,340 | $1.89 | | Granted (2018) | 30,360,466 | $0.67 | | Exercised (2018) | (7,332) | $0.66 | | Cancelled (2018) | (194,598) | $9.00 | | Outstanding, December 31, 2018 | 55,820,876 | $1.20 | | Exercisable, December 31, 2018 | 55,613,377 | $1.19 | Note 8 - Income Taxes This note discusses the impact of the 2017 Tax Cuts and Jobs Act, the company's $46.4 million valuation allowance against deferred tax assets, and its significant federal and state net operating losses and tax credits - The Tax Cuts and Jobs Act (2017) reduced the U.S. federal corporate tax rate from 35% to 21%, leading to a provisional charge of $17.9 million to deferred tax assets in 2017, fully offset by a valuation allowance[370] Deferred Tax Assets (as of December 31, 2018 and 2017) | Deferred Tax Assets | 2018 | 2017 | | :----------------------------------- | :------------- | :------------- | | Net operating losses carry forward | $34,531,577 | $30,826,534 | | Share-based compensation | $2,950,963 | $3,731,413 | | Research and development/orphan drug credits | $8,896,703 | $6,324,998 | | Others | $15,285 | $11,369 | | Less: valuation allowance | $(46,394,528) | $(40,894,314) | | Deferred tax assets, net | $ - | $ - | - The company has recorded a full valuation allowance against its deferred tax assets ($46.4 million in 2018) due to uncertainty of realization[372] - As of December 31, 2018, the company had $144.5 million in federal NOLs (expiring) and $66.8 million in state NOLs (expiring 2035), plus $1.4 million in federal R&D tax credits (expiring 2033) and $7.5 million in orphan drug credits (expiring 2037)[373][374] Note 9 - Subsequent Event This note details subsequent events including $0.4 million net proceeds from common stock sales and $1.5 million from warrant exercises in early 2019, along with amendments to the 2013 Stock Plan and authorized common stock - In January 2019, the company sold 924,500 common shares through its at-the-market program, realizing $0.4 million in net proceeds[255] - Since December 31, 2018, holders of March 2018 Series A warrants exercised approximately 2.5 million shares, resulting in proceeds of $1.5 million[377] - On March 6, 2019, the company amended its 2013 Stock Plan to increase authorized shares to 22,750,000 and filed to increase authorized common stock from 400,000,000 to 600,000,000 shares[378][379] - Management and independent auditors (Marcum LLP) concluded that Actinium's internal control over financial reporting was effective as of December 31, 2018[261][263][270][385] - The independent auditor's report includes an explan