Perspective Therapeutics(CATX) - 2021 Q4 - Annual Report

PART I Business The company develops and sells Cesium-131 brachytherapy seeds, primarily for prostate cancer, while expanding into other treatments like brain cancer - Isoray's core business is the development, manufacture, and sale of Cesium-131 brachytherapy seeds for treating malignant tumors; prostate cancer treatment represents approximately 75% of the company's business[16][21][26] - The company collaborates with GT Medical Technologies, Inc ("GT Med Tech") to supply Cesium-131 seeds for GammaTile™ Therapy, a treatment for brain cancer that received FDA clearance in July 2018 and launched a full market release in January 2020[40][48][95] - Isoray's strategy for fiscal year 2022 includes investing in sales and marketing for its core prostate business, commercializing the Blu Build™ loader for intra-operative customization, supporting GT Med Tech's GammaTile™ launch, and expanding the use of Cesium-131 for other cancers[113][116][119] - The company is solely reliant on a Russian supplier, JSC Isotope, for its Cesium-131 isotope, with a supply contract extending through March 31, 2023; the company has no domestic suppliers[148][153][155] Top Customers as a Percentage of Total Sales (FY 2021) | Facility/Customer | Location | % of Revenue | | :--- | :--- | :--- | | El Camino, Los Gatos, and other facilities | Northern CA | 25.3% | | GT Medical Technologies | Arizona | 11.3% | | Total Top Two | | 36.6% | Risk Factors The company faces significant risks from its single-product focus, sole Russian supplier dependency, customer concentration, and regulatory uncertainties - The COVID-19 pandemic and its variants pose a material risk to the company's financial condition, potentially impacting its Russian supply chain, product sales due to postponed surgeries, and ability to obtain licensure at new locations[234][236] - The company's revenue depends entirely on its single product, the Cesium-131 brachytherapy seed, making it vulnerable to shifts in market acceptance, pricing pressures, and regulatory changes[239] - Isoray is heavily reliant on a single Russian supplier (JSC Isotope) and its two nuclear reactors for Cesium-131, with no domestic supply capabilities; this concentration poses significant risks of supply interruption due to potential shutdowns, political instability, or sanctions[240][241][242] - Approximately 42% of the company's revenue is dependent on three customers, with one customer accounting for 25%; the loss of any of these customers would have a material adverse effect on revenues[264] - The company faces uncertainty regarding reimbursement from third-party payers like Medicare; proposed changes such as the Radiation Oncology Alternative Payment Model (RO APM) could impact payment structures, although a recent proposal suggests excluding brachytherapy, which would be favorable[250][251][253] Unresolved Staff Comments The company reports no unresolved comments from SEC staff - Not applicable[334] Properties The company leases its main facility in Richland, WA, and has paused plans for constructing a new facility on an adjacent owned property - The company leases its executive office and production facility space of approximately 15,300 square feet in Richland, WA; the lease was modified in July 2019 to extend the term to April 30, 2026[335] - Isoray purchased a 4.2-acre property in 2017 for a future production, lab, and administrative facility; while the design is complete, construction is on hold as the company focuses resources on revenue growth[336] Legal Proceedings The company reports no material pending legal proceedings - Nothing to disclose[338] Mine Safety Disclosures This section is not applicable to the company's operations - Not applicable[340] PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on the NYSE American; no cash dividends have been paid, and equity plans authorize future share issuance - The company's common stock trades on the NYSE American under the symbol "ISR"; as of September 23, 2021, there were 141,915,266 shares outstanding[341] - The company has never paid cash dividends and does not plan to in the foreseeable future, anticipating that any earnings will be retained to finance operations[343] - The 2020 Equity Incentive Plan allows for the grant of up to 6,000,000 shares, and the 2017 plan allows for up to 4,000,000 shares; as of June 30, 2021, 4,593,125 securities remained available for future issuance under equity compensation plans approved by security holders[346][347][351] Quarterly Stock Price (Fiscal 2021) | Quarter | High ($) | Low ($) | | :--- | :--- | :--- | | Q1 | 0.78 | 0.54 | | Q2 | 0.58 | 0.36 | | Q3 | 2.47 | 0.53 | | Q4 | 1.15 | 0.75 | Selected Financial Data Disclosure is not required as the company qualifies as a smaller reporting company - Disclosure is not required as the company is a smaller reporting company[355] Management's Discussion and Analysis of Financial Condition and Results of Operations Fiscal 2021 sales grew 4% driven by non-prostate treatments, while gross margin slightly declined and liquidity significantly improved via equity offerings - The company's cash position increased significantly, ending FY 2021 with $63.8 million in cash and cash equivalents, up from $2.4 million in FY 2020; this was primarily due to raising $56.4 million from two underwritten offerings and $7.8 million from warrant exercises[392][401][513] - Management projects that current cash and cash equivalents are sufficient to meet operating needs for the next twelve months; the company anticipates reaching cash flow break-even in three to four years, assuming annual revenue growth of twenty-five percent[402] Results of Operations (in thousands) | Metric | FY 2021 | FY 2020 | % Change | | :--- | :--- | :--- | :--- | | Sales, net | $10,053 | $9,680 | 4% | | Gross profit | $5,121 | $5,124 | 0% | | Gross Margin | 51% | 53% | -2 p.p. | | Operating loss | ($3,446) | ($3,476) | 1% | | Net loss | ($3,387) | ($3,446) | -2% | Sales by Treatment Type (in thousands) | Treatment | FY 2021 | FY 2020 | % Change | | :--- | :--- | :--- | :--- | | Prostate Brachytherapy | $7,824 | $8,356 | (6%) | | Other sales | $2,229 | $1,324 | 68% | | Total Sales, net | $10,053 | $9,680 | 4% | Quantitative and Qualitative Disclosures About Market Risk Disclosure is not required as the company qualifies as a smaller reporting company - Disclosure is not required as the company is a smaller reporting company[419] Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements and the independent auditor's unqualified opinion for the past three fiscal years Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2021 | June 30, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $63,828 | $2,392 | | Total current assets | $67,302 | $5,507 | | Total assets | $70,416 | $8,699 | | Liabilities & Equity | | | | Total current liabilities | $1,801 | $1,575 | | Total liabilities | $3,010 | $2,976 | | Total stockholders' equity | $67,406 | $5,723 | Consolidated Statement of Operations Highlights (in thousands) | Metric | FY 2021 | FY 2020 | FY 2019 | | :--- | :--- | :--- | :--- | | Sales, net | $10,053 | $9,680 | $7,314 | | Gross profit | $5,121 | $5,124 | $3,047 | | Operating loss | ($3,446) | ($3,476) | ($5,254) | | Net loss | ($3,387) | ($3,446) | ($5,144) | | Net loss per share | ($0.03) | ($0.05) | ($0.08) | Consolidated Statement of Cash Flows Highlights (in thousands) | Metric | FY 2021 | FY 2020 | FY 2019 | | :--- | :--- | :--- | :--- | | Net cash used by operating activities | ($2,837) | ($3,641) | ($5,049) | | Net cash provided by (used in) investing activities | ($410) | ($287) | $401 | | Net cash provided by financing activities | $64,684 | $994 | $7,374 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no disagreements with its independent registered public accounting firm - There were no disagreements with the company's accountants[423] Controls and Procedures Management concluded that the company's disclosure controls, procedures, and internal control over financial reporting were effective as of June 30, 2021 - Management, including the CEO and co-principal financial officers, concluded that the company's disclosure controls and procedures were effective as of June 30, 2021[420] - Management concluded that the company's internal control over financial reporting was effective as of June 30, 2021, based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in its 2013 framework[421][422] - There were no changes in internal control over financial reporting during the fourth fiscal quarter that materially affected, or are reasonably likely to materially affect, these controls[425] Other Information This section is not applicable - Not applicable[426] PART III Directors, Executive Officers and Corporate Governance This section details the composition of the board and executive team, committee structures, and discloses late Form 4 filings by insiders - The Board of Directors as of June 30, 2021, consisted of Michael McCormick (Chairman), Lori Woods (CEO), Philip Vitale, MD, and Alan Hoffmann[427][429] - The company's executive officers include Lori Woods (CEO), Jonathan Hunt (CFO), Mark Austin (VP of Finance and Corporate Controller), William Cavanagh III (Chief R&D Officer), and Jennifer Streeter (COO)[436] - Several executive officers and directors filed late Form 4s during the fiscal year ended June 30, 2021, including Lori Woods, Michael McCormick, Alan Hoffmann, and Philip Vitale[444] - The Board has determined that Alan Hoffmann qualifies as an "audit committee financial expert," and that he, along with Michael McCormick and Dr Philip Vitale, are independent directors[451][491] Executive Compensation Executive compensation is performance-based, with significant base salary increases approved in May 2021 to align with market rates - In May 2021, the Compensation Committee significantly increased annual base salaries for key executives: Lori Woods to $439,810 (26.7% increase), William Cavanagh to $300,000 (25.0% increase), and Jennifer Streeter to $337,840 (34.7% increase)[464] - The fiscal 2021 bonus plan was based on quarterly and annual performance metrics for revenue growth, gross margin, and net loss margin; the company achieved 12.5% of the target metrics, resulting in bonuses being paid out[472][473] - Independent directors received $3,000 per month plus meeting fees in fiscal 2021; beginning in fiscal 2022, this was changed to a flat $5,000 per month with no per-meeting fees[469] Summary Compensation Table (FY 2021 vs. FY 2020) | Name and Position | Year | Salary ($) | Option Awards ($) | Non-Equity Incentive ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Lori Woods (CEO) | 2021 | 353,450 | - | 17,745 | 371,195 | | | 2020 | 315,612 | 98,700 | 77,325 | 491,637 | | William Cavanagh (CRDO) | 2021 | 244,149 | - | 9,190 | 253,339 | | | 2020 | 220,256 | 59,220 | 38,545 | 318,021 | | Jennifer Streeter (COO) | 2021 | 256,672 | - | 9,677 | 266,349 | | | 2020 | 214,565 | 59,220 | 38,500 | 312,285 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Directors and executive officers as a group beneficially owned approximately 2.39% of common stock as of September 23, 2021 - As of September 23, 2021, directors and executive officers as a group beneficially owned 2.39% of the company's 141,915,266 outstanding common shares[481][482] - CEO Lori Woods is the largest beneficial owner among the executive officers and directors, holding 0.76% of the class[482] - All outstanding Series B preferred stock (59,065 shares) was automatically converted into common stock as a result of the October 22, 2020 offering; as of June 30, 2021, no preferred stock was outstanding[486] Certain Relationships and Related Transactions, and Director Independence The company reports no related party transactions and confirms the independence of three board members - There were no related party transactions requiring disclosure under Regulation S-K Item 404 during the fiscal year[488][490] - The Board of Directors has determined that three of its members—Mr Hoffmann, Mr McCormick, and Dr Vitale—qualify as independent directors under NYSE American standards[491] Principal Accountant Fees and Services Total fees paid to the principal accountant, Assure CPA, LLC, were $104,000 for fiscal year 2021 - The Audit Committee has a pre-approval policy for all audit and permitted non-audit services provided by the independent registered public accountants; all services provided by Assure CPA, LLC were approved by the Audit Committee[495] Accountant Fees (in thousands) | Fee Type | FY 2021 ($) | FY 2020 ($) | | :--- | :--- | :--- | | Audit Fees | 67 | 74 | | Tax Fees | 11 | 12 | | All other Fees | 26 | 13 | | Total | 104 | 99 | PART IV Exhibits and Financial Statement Schedules This section provides an index to the financial statements and a list of all exhibits filed with the Form 10-K - This item contains the index to the Consolidated Financial Statements and the Exhibit Index, which lists all documents filed with the report[499][501] Form 10-K Summary The company has opted not to provide a Form 10-K summary - None[650]