Plus Therapeutics(PSTV) - 2022 Q3 - Quarterly Report

FORM 10-Q Filing Information This section details the filing specifics of the Quarterly Report (Form 10-Q) for PLUS THERAPEUTICS, INC., including key company identification and stock information - The document is a Quarterly Report (Form 10-Q) for the period ended September 30, 2022, filed by PLUS THERAPEUTICS, INC[1][2] Registrant Information | Registrant Name | PLUS THERAPEUTICS, INC. | | :--- | :--- | | State of Incorporation | DELAWARE | | Principal Executive Offices | 4200 MARATHON BLVD., SUITE 200, AUSTIN, TX 78756 | | Telephone Number | (737) 255-7194 | | Trading Symbol | PSTV | | Exchange | Nasdaq Capital Market | | Filer Status | Non-Accelerated Filer, Smaller reporting company | | Common Stock Outstanding (Oct 14, 2022) | 33,601,373 shares | Cautionary Statement Regarding Forward-Looking Statements This section warns that the report contains forward-looking statements based on management's expectations, which are subject to material risks and uncertainties - This report contains forward-looking statements, identified by terms like 'intend,' 'expect,' 'project,' 'believe,' 'anticipate,' and similar expressions, which are based on management's assumptions and perceptions of historical trends, current conditions, and future developments[8] - These statements cover anticipated expenditures (R&D, G&A), strategic collaborations, intellectual property, FDA approvals, market size, clinical study results, product candidate efficacy/safety, anticipated progress in trials, IP strategy, CPRIT Grant compliance, competition, revenue generation, regulatory approvals, future performance, liquidity, going concern status, Nasdaq listing, debt repayment, manufacturing transfer, and cash position enhancement[9] - Actual results may differ materially due to various factors, including the early stage of product candidates, R&D uncertainties, liquidity and capital resources, partnering efforts, regulatory requirements, market conditions, litigation, and competition, as detailed in the 'Risk Factors' sections of this report and the Annual Report on Form 10-K[9][10][11] Part I. Financial Information This part presents the company's unaudited condensed financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed financial statements for Plus Therapeutics, Inc., including the balance sheets, statements of operations, stockholders' equity, and cash flows, along with accompanying notes, providing a snapshot of the company's financial position and performance for the periods ended September 30, 2022 and 2021 Condensed Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity as of September 30, 2022, and December 31, 2021 Condensed Balance Sheet Highlights (in thousands) | Metric | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $20,266 | $18,400 | | Total current assets | $20,879 | $19,724 | | Total assets | $23,104 | $21,981 | | Total current liabilities | $7,420 | $5,870 | | Total liabilities | $11,700 | $11,145 | | Total stockholders' equity | $11,404 | $10,836 | Condensed Statements of Operations This section presents the company's revenues, expenses, and net loss for the three and nine months ended September 30, 2022, and 2021 Condensed Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Grant revenue | $73 | $— | $73 | $— | | Research and development | $2,945 | $1,491 | $7,560 | $3,724 | | General and administrative | $2,222 | $1,990 | $6,653 | $4,811 | | Total operating expenses | $5,167 | $3,499 | $14,213 | $8,553 | | Operating loss | $(5,094) | $(3,499) | $(14,140) | $(8,553) | | Net loss | $(5,219) | $(3,724) | $(14,617) | $(9,244) | | Net loss per share, basic and diluted | $(0.19) | $(0.28) | $(0.61) | $(0.84) | Condensed Statements of Stockholders' Equity This section details the changes in the company's stockholders' equity, including common stock and accumulated deficit, for the nine months ended September 30, 2022 Changes in Stockholders' Equity (in thousands) | Metric | Balance at Dec 31, 2021 | Balance at Sep 30, 2022 | | :--- | :--- | :--- | | Common stock shares | 15,510,025 | 32,570,002 | | Common stock amount | $16 | $32 | | Additional paid-in capital | $457,730 | $472,899 | | Accumulated deficit | $(446,910) | $(461,527) | | Total stockholders' equity | $10,836 | $11,404 | - During the nine months ended September 30, 2022, the company issued 17,059,977 shares of common stock, primarily through sales of common stock, net, which contributed to an increase in additional paid-in capital[19] - The accumulated deficit increased by $14,617 thousand during the nine months ended September 30, 2022, reflecting the net loss for the period[17][19] Condensed Statements of Cash Flows This section outlines the company's cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2022, and 2021 Condensed Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(10,738) | $(7,656) | | Net cash used in investing activities | $(748) | $(84) | | Net cash provided by financing activities | $13,352 | $20,674 | | Net increase in cash and cash equivalents | $1,866 | $12,934 | | Cash and cash equivalents at end of period | $20,266 | $21,280 | - The increase in cash used in operating activities for the nine months ended September 30, 2022, was primarily due to higher research and development expenditures[138][140][164] - Financing activities in 2022 were mainly driven by $14.6 million in proceeds from common stock sales, while 2021 also included $2.0 million from warrant exercises[21][166][167] Notes to Condensed Financial Statements This section provides additional information and explanations for the condensed financial statements, including accounting policies, significant estimates, and details on grants, debt, and legal proceedings - The unaudited condensed financial statements are prepared in accordance with GAAP for interim information and should be read with the 2021 Annual Report on Form 10-K. Grant revenue is recognized when related costs are incurred, applying ASC 606 by analogy, as government grants are outside the scope of ASC 606[23][24][55] - The company incurred net losses of $14.6 million and used $10.7 million in cash from operations for the nine months ended September 30, 2022, resulting in an accumulated deficit of $461.5 million. Current cash and cash equivalents are expected to fund operations for at least the next 12 months[32][33] - On September 19, 2022, the company entered into a Cancer Research Grant Contract (CPRIT Contract) for up to $17.6 million to fund 186RNL development for leptomeningeal metastases (LM), subject to matching funds, revenue sharing, and reporting requirements[29][52] - The company has a Term Loan with Oxford Finance, LLC, with $2.8 million principal outstanding as of September 30, 2022 (excluding a $3.2 million final payment fee), collateralized by substantially all assets, and was in compliance with all debt covenants[43][47] - The company has various financing agreements, including a 2022 Purchase Agreement with Lincoln Park for up to $50.0 million in common stock sales and a September 2022 Distribution Agreement with Canaccord Genuity LLC for up to $5.0 million in at-the-market common stock sales[78][89] - The company is a defendant in a legal proceeding brought by Lorem Vascular, Pte. Ltd. alleging false representations regarding a UK manufacturing facility, with Lorem claiming at least $6 million in damages. The company believes the claim is without merit[68] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and operational results, highlighting key business developments, clinical trial progress, recent financing activities, and a detailed breakdown of revenues and expenses for the three and nine months ended September 30, 2022 and 2021 Overview This section introduces Plus Therapeutics, Inc. as a pharmaceutical company developing targeted radiotherapeutics for rare cancers, outlining its core technology and lead product candidates - Plus Therapeutics, Inc. is a U.S. pharmaceutical company focused on developing innovative, targeted radiotherapeutics for rare and difficult-to-treat cancers in adults and children[101] - The company's technology involves encapsulating radionuclides (e.g., Rhenium isotopes) within nanoliposomes and microspheres to deliver high, targeted radiation doses to tumors, aiming to minimize exposure to healthy tissues and improve safety margins[101][103] - Lead candidates include Rhenium-186 NanoLiposome (186RNL) for CNS cancers (glioblastoma, leptomeningeal metastases, pediatric brain cancers) and Rhenium-188 NanoLiposome Biodegradable Alginate Microsphere (188RNL-BAM) for solid organ cancers[104] Pipeline This section details the company's lead investigational drug, 186RNL, and other pipeline candidates, including their clinical trial progress and development status - The lead investigational drug, 186RNL, is a patented radiotherapy for CNS and other cancers, with preclinical data published and an active $3.0 million NIH/NCI award supporting its Phase 2 clinical trial for recurrent glioblastoma (GBM)[106][107] - Current clinical trials include ReSPECT-GBM and ReSPECT-LM (leptomeningeal metastases), with an IND application for ReSPECT-PBC (pediatric brain cancer) anticipated in late 2022 or early 2023[109] - FDA has agreed with the company's proposed cGMP guidance for 186RNL manufacturing, which is expected to apply across all 186RNL clinical development programs[110][111] - Updated data from the ReSPECT-GBM trial showed no dose-limiting toxicities, a strong safety profile, and improved median overall survival (22.9 months) in patients receiving a therapeutic absorbed radiation dose (>100 Gray) compared to subtherapeutic doses (5.6 months)[119] - The ReSPECT-LM Phase 1 clinical trial's first cohort was well-tolerated with no significant adverse events, demonstrating 186RNL distribution in CSF and decreased CSF cell count. The trial's continued development through Phase 2 is funded by a $17.6 million CPRIT grant[122][123] - The company licensed Biodegradable Alginate Microsphere (BAM) technology in January 2022 to combine with Rhenium NanoLiposome technology, creating 188RNL-BAM for intra-arterial embolization and targeted radiation delivery for solid organ cancers, with preclinical development ongoing[129][130] Recent Developments This section highlights key corporate and clinical milestones, including new grant funding, strategic agreements, and licensing activities - On September 19, 2022, the company secured a Cancer Research Grant Contract (CPRIT Contract) for up to $17.6 million to fund the continued development of 186RNL for leptomeningeal metastases (LM) over three years, with matching fund and revenue sharing obligations[131] - A multi-year laboratory services agreement was announced with Biocept, Inc. on June 22, 2022, to utilize their CNSide cerebrospinal fluid (CSF) assay in the ReSPECT-LM Phase 1/2a dose-escalation trial[132] - On March 31, 2022, a Sales Order was executed with Medidata Solutions, Inc. for the development of a Synthetic Control Arm® (SCA) platform to integrate historical clinical data into the company's Phase 2 clinical trial of 186RNL in glioblastoma (GBM)[133] - An exclusive license agreement was entered into with UT Health Science Center at San Antonio on December 31, 2021, for global rights to develop and commercialize 188RNL-BAM, requiring commercial reasonable efforts and future milestone/earn-out payments[135] Results of Operations This section provides a detailed analysis of the company's financial performance, breaking down grant revenue, operating expenses, and financing items for the reported periods Grant Revenue This section details the grant revenue recognized by the company, primarily from the CPRIT Contract, for the reported periods - The company recognized $73,000 in grant revenue for both the three and nine months ended September 30, 2022, stemming from the CPRIT Contract for 186RNL development for LM[137] Research and development expenses This section analyzes the changes in research and development expenditures, highlighting key drivers such as drug development and clinical trial costs Research and Development Expenses (in thousands) | Period | 2022 | 2021 | Change (YoY) | | :--- | :--- | :--- | :--- | | Three Months Ended Sep 30 | $2,945 | $1,491 | +$1,454 (+97.5%) | | Nine Months Ended Sep 30 | $7,560 | $3,724 | +$3,836 (+103.0%) | - The increase in R&D expenses for the three months ended September 30, 2022, was primarily due to a $0.4 million increase in cGMP 186RNL drug development, an $0.8 million increase in other expenses (including SCA development), and a $0.3 million increase in personnel and travel-related expenses[139] - For the nine months ended September 30, 2022, the increase was mainly driven by a $1.8 million rise in cGMP 186RNL drug development and a $2.2 million increase in other expenses, including SCA development[140] - Aggregate R&D expenditures are expected to increase in absolute dollars for the remainder of 2022 due to ongoing development of 186RNL and 188RNL-BAM therapies[141] General and administrative expenses This section examines the trends in general and administrative expenses, focusing on professional fees and personnel-related costs General and Administrative Expenses (in thousands) | Period | 2022 | 2021 | Change (YoY) | | :--- | :--- | :--- | :--- | | Three Months Ended Sep 30 | $2,222 | $1,990 | +$232 (+11.7%) | | Nine Months Ended Sep 30 | $6,653 | $4,811 | +$1,842 (+38.3%) | - The increase in G&A expenses for the three months ended September 30, 2022, was primarily due to a $0.2 million increase in litigation, legal fees, and other professional expenses[142] - For the nine months ended September 30, 2022, the increase was mainly attributable to a $1.6 million rise in litigation, legal fees, intellectual property, and other professional expenses, along with a $0.2 million increase in personnel-related expenses[142] - G&A expenditures are expected to remain generally consistent in 2022 compared to 2021, though subject to unpredictable additional litigation costs[143] Stock-based compensation expense This section explains the fluctuations in stock-based compensation expenses, attributing them to changes in option grants and vesting schedules Stock-based Compensation Expenses (in thousands) | Period | 2022 | 2021 | Change (YoY) | | :--- | :--- | :--- | :--- | | Three Months Ended Sep 30 | $129 | $180 | -$51 (-28.3%) | | Nine Months Ended Sep 30 | $476 | $425 | +$51 (+12.0%) | - Fluctuations in stock-based compensation are attributed to changes in the grants of stock-based options, their vesting schedules, and the grant-date fair value of these awards[144] Financing items This section details the company's interest income, interest expense, and changes in fair value of liability instruments, and their impact on financial results Financing Items (in thousands) | Item | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Interest income | $48 | $5 | $74 | $13 | | Interest expense | $(173) | $(232) | $(552) | $(708) | | Change in fair value of liability instruments | $0 | $2 | $1 | $4 | | Total | $(125) | $(225) | $(477) | $(691) | - The decrease in interest expense for both the three and nine months ended September 30, 2022, was primarily due to principal repayments of $0.4 million and $1.2 million, respectively, compared to no principal payments in the same periods of 2021[146] - Interest expense is expected to decrease in 2022 compared to 2021 due to scheduled debt principal repayments that commenced on November 1, 2021[147] Liquidity and Capital Resources This section assesses the company's ability to meet its short-term and long-term obligations, reviewing cash position, working capital, and financing activities Key Liquidity Measures (in thousands) | Metric | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $20,266 | $18,400 | | Current assets | $20,879 | $19,724 | | Current liabilities | $7,420 | $5,870 | | Working capital | $13,459 | $13,854 | - The company's cash and cash equivalents of $20.3 million at September 30, 2022, are believed to be sufficient to fund operations for at least the next twelve months[148] - Net cash used in operating activities increased to $10.7 million for the nine months ended September 30, 2022, from $7.7 million in the prior year, primarily due to increased research and development expenditures[160][164] - Financing activities provided $13.352 million in cash for the nine months ended September 30, 2022, mainly from common stock sales, compared to $20.674 million in the prior year[160][166] - The company continues to seek additional capital through strategic transactions and financing alternatives, as current working capital and grant funds may be insufficient for ongoing research and product development activities at current levels[149][159] - Material cash obligations include matching funds for the CPRIT Contract, payments for the Medidata Sales Order, and approximately $6.0 million in remaining principal and interest payments under the Term Loan with Oxford through June 1, 2024[161][162][163] Critical Accounting Policies and Significant Estimates This section outlines the key accounting policies and management estimates that significantly impact the company's financial statements - The preparation of financial statements requires management to make estimates and assumptions, particularly concerning grant revenue recognition, asset impairment, and stock-based compensation expense[28][168] - Goodwill is reviewed for impairment annually during the fourth quarter, or more frequently if impairment indicators exist, given the company operates in a single reporting unit and has experienced stock price volatility[170] - Liability-classified warrants are fair valued using an option pricing model, with changes in fair value recorded as non-operating income or loss in the statements of operations[171] - There have been no material changes to the critical accounting policies and estimates discussed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2021[172] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section states that there are no applicable quantitative and qualitative disclosures about market risk for the company - Not applicable[173] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the effectiveness of the company's disclosure controls and procedures as of September 30, 2022, concluding they were effective at a reasonable assurance level. There were no material changes in internal control over financial reporting during the quarter - The company's disclosure controls and procedures were evaluated by management, including the CEO and CFO, and concluded to be effective at the reasonable assurance level as of September 30, 2022[174][175] - There have been no material changes in the company's internal control over financial reporting during the quarter ended September 30, 2022[176] Part II. Other Information This part includes disclosures on legal proceedings, risk factors, unregistered sales of equity securities, and a list of exhibits filed with the report Item 1. Legal Proceedings The company is a defendant in a lawsuit filed by Lorem Vascular, Pte. Ltd. on June 22, 2021, alleging false representations regarding the sale of a UK manufacturing facility. Lorem claims at least $6 million in damages, but the company believes the claim is without merit and is vigorously defending the case - The company is a defendant in a lawsuit initiated by Lorem Vascular, Pte. Ltd. on June 22, 2021, in the District Court for the District of Delaware[177] - The complaint alleges false representations were made concerning the UK manufacturing facility purchased by Lorem from the company and its certification to sell and distribute devices in the European Union and export to China[177] - Lorem claims entitlement to at least $6,000,000 in compensatory damages and operational costs. The company believes the claim is without merit and is vigorously defending the case[177] Item 1A. Risk Factors This section outlines additional and updated risk factors, primarily focusing on potential substantial dilution from future equity issuances (including sales to Lincoln Park and Canaccord) and the requirements and potential penalties associated with government funding, specifically the CPRIT Grant. It also highlights the risk of delisting from Nasdaq due to non-compliance with the minimum bid price requirement - Stockholders may experience substantial dilution from future issuances of common stock or other convertible securities, potentially at prices lower than existing stockholders paid, which could grant new investors superior rights[179][180] - The 2022 Purchase Agreement with Lincoln Park allows for the sale of up to $50.0 million of common stock, and the September 2022 Distribution Agreement with Canaccord permits sales of up to $5.0 million via 'at the market' offerings, both of which could cause the stock price to fall and make future equity financing more difficult[181][182][183][184] - Reliance on the CPRIT Grant imposes significant requirements, including maintaining headquarters in Texas and potential repayment obligations (up to 400% of grant proceeds in revenue sharing, or full repayment with interest under certain termination conditions or relocation outside Texas)[185][186][187] - The company received a Nasdaq notice on May 24, 2022, for non-compliance with the $1.00 minimum bid price requirement, with an initial compliance period until November 21, 2022. Failure to regain compliance could lead to delisting, severely harming stock liquidity and ability to raise capital[188][189][190] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company's Board of Directors approved a share repurchase program on August 15, 2022, authorizing repurchases of up to $2.0 million of common stock over 12 months, subject to market conditions and lender consent. As of the filing date, no shares have been repurchased under this program - On August 15, 2022, the Board of Directors approved a share repurchase program authorizing the company to repurchase up to $2.0 million of its outstanding common stock[191] - The timing and amount of repurchases will be determined based on market conditions and other factors, including the consent of Oxford, the company's lender[191] - The program allows for repurchases over 12 months, but the company is not obligated to acquire any shares, and the program may be discontinued or suspended at any time. No shares have been repurchased as of the Form 10-Q filing date[191] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, stock incentive plans, purchase and distribution agreements, grant contracts, and certifications - Exhibits include corporate governance documents (Certificate of Incorporation, Bylaws), the 2020 Stock Incentive Plan, and various agreements[194] - Key agreements filed are the Purchase Agreement and Registration Rights Agreement with Lincoln Park Capital Fund, LLC (August 2, 2022), the Distribution Agreement with Canaccord Genuity LLC (September 9, 2022), and the Cancer Research Grant Contract with CPRIT (effective August 31, 2022)[194] - Certifications from the Principal Executive Officer and Principal Financial and Accounting Officer, as required by the Sarbanes-Oxley Act of 2002, are also included[194][195] Signatures This section confirms the official signing and filing of the report by the company's principal executive and financial officers - The report was duly signed on behalf of PLUS THERAPEUTICS, INC. on October 20, 2022[198][200] - Signatories include Marc H. Hedrick, President & Chief Executive Officer (Principal Executive Officer), and Andrew Sims, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)[199][200]