Perspective Therapeutics(CATX) - 2021 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Consolidated Unaudited Financial Statements The unaudited consolidated financial statements for December 31, 2020, show increased assets and equity, a narrowed net loss, and significant cash inflow from financing activities Consolidated Balance Sheets (Unaudited) As of December 31, 2020, total assets and stockholders' equity significantly increased, primarily driven by a rise in cash and cash equivalents Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | Dec 31, 2020 | June 30, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $9,585 | $2,392 | | Total current assets | $12,289 | $5,507 | | Total assets | $15,513 | $8,699 | | Liabilities & Equity | | | | Total current liabilities | $1,335 | $1,575 | | Total liabilities | $2,740 | $2,976 | | Total stockholders' equity | $12,773 | $5,723 | | Total liabilities and stockholders' equity | $15,513 | $8,699 | Consolidated Statements of Operations (Unaudited) Net sales increased and net loss narrowed for both the three and six months ended December 31, 2020, with improved loss per share Statement of Operations Summary (in thousands, except per-share amounts) | Metric | Three Months Ended Dec 31, 2020 | Three Months Ended Dec 31, 2019 | Six Months Ended Dec 31, 2020 | Six Months Ended Dec 31, 2019 | | :--- | :--- | :--- | :--- | :--- | | Sales, net | $2,359 | $2,206 | $4,743 | $4,521 | | Gross profit | $1,167 | $1,111 | $2,413 | $2,347 | | Operating loss | ($873) | ($903) | ($1,587) | ($1,739) | | Net loss | ($868) | ($897) | ($1,581) | ($1,713) | | Basic and diluted loss per share | ($0.01) | ($0.01) | ($0.02) | ($0.03) | Consolidated Statements of Cash Flows (Unaudited) Cash flow from operations improved, while significant financing activities, primarily from stock sales, led to a substantial net increase in cash Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended Dec 31, 2020 | Six Months Ended Dec 31, 2019 | | :--- | :--- | :--- | | Net cash used by operating activities | ($1,098) | ($1,931) | | Net cash used by investing activities | ($173) | ($204) | | Net cash provided (used) by financing activities | $8,465 | ($11) | | Net increase (decrease) in cash | $7,194 | ($2,146) | | Cash, cash equivalents, and restricted cash end of period | $9,767 | $3,361 | Notes to the Consolidated Unaudited Financial Statements Notes detail accounting policies, share-based compensation, and significant financing events, including major stock sales and warrant exercises - The company signed a new supply contract with The Open Joint Stock Company for Cesium-131, covering the period from August 2020 to December 2021[45] - In October 2020, the company sold 18,269,230 shares of common stock at $0.52 per share, raising gross proceeds of $9.5 million. Warrants to purchase an additional 9,134,615 shares were also issued[54] - Subsequent to the quarter end, in January 2021, the company received approximately $7.9 million from the exercise of warrants and options[69][132] - On February 8, 2021, the company sold common stock for aggregate gross proceeds of approximately $45 million, plus an additional $6.75 million from the exercise of an overallotment option[70] - One group of customers, serviced by the same physician group (which includes the company's Medical Director), accounted for 24.88% of total revenue for the period[68] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a 5% net sales increase driven by non-prostate applications, improved liquidity from recent stock offerings, and strategic initiatives for future growth Results of Operations Net sales increased 5% and operating loss improved 9% for the six months ended December 31, 2020, driven by growth in 'Other sales' Six Months Ended December 31, 2020 vs 2019 (in thousands) | Line Item | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | Sales, net | $4,743 | $4,521 | 5% | | Gross profit | $2,413 | $2,347 | 3% | | Total operating expenses | $4,000 | $4,086 | (2%) | | Operating loss | ($1,587) | ($1,739) | (9%) | Sales Breakdown - Six Months Ended Dec 31 (in thousands) | Sales Category | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | Prostate brachytherapy | $3,784 | $4,037 | (6%) | | Other sales | $959 | $484 | 98% | - The decrease in prostate sales was attributed to procedure delays and cancellations due to COVID-19 stay-at-home orders and hospitals' focus on the pandemic[91] - The significant growth in 'Other sales' was primarily driven by increased treatments for brain cancer, including GammaTile™[93] Impact of COVID-19 COVID-19 negatively impacted prostate brachytherapy sales due to procedure delays, though the company maintained its isotope supply chain - COVID-19 led to the cancellation or postponement of elective procedures, including prostate brachytherapy, causing prostate revenues to remain below pre-pandemic levels[115] - The company took steps to maintain its isotope supply from Russia despite disruptions to international flights[114] Liquidity and Capital Resources Significant financing activities in late 2020 and early 2021 substantially strengthened liquidity, increasing working capital and providing sufficient funds for the next fiscal year Key Liquidity Metrics | Metric | As of Dec 31, 2020 | As of June 30, 2020 | | :--- | :--- | :--- | | Working capital | $10,954 thousand | $3,932 thousand | | Current ratio | 9.21 | 3.50 | - Net cash from financing activities was $8.47 million for the six months ended Dec 31, 2020, primarily from an underwritten offering of common stock[118][123] - A February 2021 stock sale generated gross proceeds of approximately $45 million, plus an additional $6.75 million from an overallotment option[133] - As a result of recent capital raises, the company does not anticipate needing to finance its operations through additional raises for the next fiscal year[133] Quantitative and Qualitative Disclosures About Market Risk This section is not applicable as per the report's disclosure requirements - Not Applicable[140] Controls and Procedures As of December 31, 2020, disclosure controls and procedures were deemed effective with no material changes in internal control over financial reporting - Management, including the principal executive and financial officers, concluded that as of December 31, 2020, the company's disclosure controls and procedures were effective[140] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[141] PART II OTHER INFORMATION Legal Proceedings The company reports no legal proceedings requiring disclosure - Nothing to disclose[143] Risk Factors Key risks include heavy customer reliance, ongoing COVID-19 supply chain and procedure impacts, and uncertainties regarding CMS reimbursement models - The company relies heavily on three customers, with one group accounting for approximately 25% of revenues for the six months ended December 31, 2020[144] - The COVID-19 outbreak could materially affect the company by disrupting the Cesium-131 supply chain from Russia and causing further postponements or cancellations of implant surgeries[145][146] - Uncertainties regarding reimbursement for the company's products pose a significant risk. The CMS Radiation Oncology Alternative Payment Model (RO APM), delayed to January 1, 2022, creates uncertainty as its bundled payment structure could either drive adoption of brachytherapy or lead physicians to choose less costly alternatives like iodine seeds[151][155] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities or use of proceeds - None[162] Exhibits This section lists exhibits filed with the report, including the Underwriting Agreement, corporate governance documents, and various certifications - Key exhibits filed include the Underwriting Agreement with Oppenheimer & Co. Inc. dated October 20, 2020, and an amendment to the Manufacturing and Supply Agreement with GT Medical Technologies, Inc[166]