UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ Annual Report Under Section 13 Or 15(d) Of The Securities
Exchange Act Of 1934
For the fiscal year ended December 31, 2021
or
☐ Transition Report Under Section 13 Or 15(d) Of The Securities
Exchange Act Of 1934
For the transition period from _____ to _____
COMMISSION FILE NUMBER: 000-52446
ACTINIUM PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
|
Delaware |
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74-2963609 |
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
275 Madison Avenue, 7th Fl.
New York, NY 10016
(Address of principal executive offices) (Zip Code)
(646) 677-3870
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the
Act:
|
Title
of each class |
|
Trading
symbol |
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Name
of exchange on which registered |
| Common
stock, par value $0.001 |
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ATNM |
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NYSE
American |
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.
Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or 15(d) of the Act.
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Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
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electronically every Interactive Data File required to be submitted
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chapter) during the preceding 12 months (or for such shorter period
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Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
| Large
accelerated filer |
☐ |
Accelerated
filer |
☐ |
| Non-accelerated
filer |
☒ |
Smaller
reporting company |
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| |
|
Emerging
growth company |
☐ |
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
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and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the
registered public accounting firm that prepared or issued its audit
report. ☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the act):
Yes ☐ No ☒
The aggregate market value of voting stock held by nonaffiliates of
the registrant as of June 30, 2021, the last business day of
the registrant’s most recently completed second fiscal quarter,
based on the closing price of the common stock on the NYSE American
on June 30, 2021 was $138,622,140.
As of March 25, 2022, 22,143,974 shares of common stock, $0.001 par
value per share, were outstanding.
Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (this “Report”) contains
forward-looking statements that involve risks and uncertainties,
principally in the sections entitled “Description of Business,”
“Risk Factors,” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations.” All statements
other than statements of historical fact contained in this Report,
including statements regarding future events, our future financial
performance, business strategy and plans and objectives of
management for future operations, are forward-looking statements.
We have attempted to identify forward-looking statements by
terminology including “anticipates,” “believes,” “can,” “continue,”
“could,” “estimates,” “expects,” “intends,” “may,” “plans,”
“potential,” “predicts,” “should,” or “will” or the negative of
these terms or other comparable terminology. Although we do not
make forward-looking statements unless we believe we have a
reasonable basis for doing so, we cannot guarantee their accuracy.
These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks
outlined under “Risk Factors” or elsewhere in this Report, which
may cause our or our industry’s actual results, levels of activity,
performance or achievements expressed or implied by these
forward-looking statements. Moreover, we operate in a very
competitive and rapidly changing environment. New risks emerge from
time to time and it is not possible for us to predict all risk
factors, nor can we address the impact of all factors on our
business or the extent to which any factor, or combination of
factors, may cause our actual results to differ materially from
those contained in any forward-looking statements. All
forward-looking statements included in this document are based on
information available to us on the date hereof, and we assume no
obligation to update any such forward-looking statements.
You should not place undue reliance on any forward-looking
statement, each of which applies only as of the date of this
Report. Before you invest in our securities, you should be aware
that the occurrence of the events described in the section entitled
“Risk Factors” and elsewhere in this Report could negatively affect
our business, operating results, financial condition and stock
price. Except as required by law, we undertake no obligation to
update or revise publicly any of the forward-looking statements
after the date of this Report to conform our statements to actual
results or changed expectations.
PART I
Item 1. BUSINESS.
Business Overview
Actinium Pharmaceuticals, Inc. is a clinical-stage,
biopharmaceutical company applying its proprietary platform
technology and deep understanding of radiobiology to the
development of novel targeted radiotherapies for patients with
unmet needs. Our targeted radiotherapies combine the cell-killing
ability of radiation via a radioisotope payload with a targeting
agent, such as a monoclonal antibody, to deliver radiation in a
precise manner inside the body to specific, targeted cells, to
potentially achieve greater efficacy with lower toxicity than with
external beam radiation. They also enable a broader usage of
radiation than external beam radiation as they can be used in the
treatment of both solid tumors and blood cancers, which generally
cannot be treated with external radiation given their diffuse
nature. Our clinical pipeline is focused on targeting the antigens
CD45 and CD33, both of which are expressed in multiple hematologic
cancers, which are known to be highly sensitive to radiation. Our
clinical programs are focused on two primary areas: (1) targeted
conditioning prior to a bone marrow transplant (“BMT”), adoptive
cell therapy (“ACT”) such as CAR-T or gene therapy with Iomab-B and
(2) targeted radiotherapy combinations with Actimab-A and other
therapeutic agents. Our product development strategy is actively
informed by clinical data with Iomab-B and Actimab-A in
approximately 600 patients, including our ongoing Pivotal Phase 3
SIERRA trial, which completed its targeted enrollment of 150
patients in the third quarter of 2021, with the last patient
receiving their BMT in the fourth quarter of 2021. Our clinical
pipeline has emanated from our Antibody Warhead Enabling (“AWE”)
technology platform, which is protected by over 170 issued and
pending patents, trade secrets and know-how that we are applying to
the development of targeted radiotherapies for blood and solid
tumor indications, independently and with collaborators. Ongoing
collaborations include a research partnership with Astellas Pharma,
Inc. (“Astellas”) focused on the development of theranostics, which
enable the diagnosis and treatment, for solid tumor indications, a
collaboration with EpicentRx, Inc, focused on a novel CD47
immunotherapy targeted radiotherapy combination, leveraging
EpicentRx’s RRx-01, that is being studied in a Phase 3 trial in
non-small cell lung cancer, with our clinical stage Actimab-A in
AML models, and a collaboration with AVEO Oncology, focused on
developing a HER3 targeting ARC or Antibody Radiation Conjugate for
solid tumors leveraging with their clinical stage antibody. We are
also utilizing our AWE technology platform to advance our research
objectives focused on developing next-generation targeted
radiotherapies with our expanded research and development
organization and research laboratories leveraging our drug
development experience.
Targeted Conditioning
To the best of our knowledge, we are advancing the only
multi-target, multi-indication, clinical-stage pipeline for
targeted conditioning. Our targeted conditioning agents are
intended to potentially enable improved access and outcomes to
cell-based therapies with curative potential, including BMT, ACT,
and gene therapy Conditioning in the context of BMT, ACT or gene
therapy is the act of depleting certain blood and immune-forming
cells, including bone marrow stem cells and, in some cases, cancer
cells prior to transplanting new cells into a patient. Currently,
conditioning is accomplished using a combination of cytotoxic
chemotherapeutic agents and external radiation. These non-targeted
conditioning regimens are highly toxic and may prevent a patient
from receiving a potentially curative therapy and hinder outcomes.
We believe our targeted conditioning agents have the potential to
increase patient access and outcomes by way of their ability to
selectively deplete targeted cells while sparing normal healthy
cells, resulting in potentially lower systemic and off-target
toxicities. We use our ARCs both at high isotope dose levels to
achieve myeloablation, which fully depletes bone marrow stem cells
and at lower isotope dose levels to achieve lymphodepletion, which
spares bone marrow stem cells from depletion. In addition, dosing
may be titrated downward from myeloablative doses to achieve
partial myeloablation, which may be appropriate for certain gene
therapy programs.
CD45 Targeted Conditioning Program
Iomab-B (I-131 apamistamab), our lead candidate and targeted
conditioning agent is comprised of the anti-CD45 monoclonal
antibody known as apamistamab (formerly BC8) and the radioisotope
Iodine-131 (“I-131”). CD45 is an antigen expressed on leukemia,
lymphoma and myeloma cancer cells, as well as nucleated immune
cells including bone marrow stem cells, but is not expressed
outside of the hematopoietic, or blood forming, system. This unique
expression on blood cancer and immune cells enables simultaneous
depletion of both cell types, making CD45 an optimal antigen for
targeted conditioning applications. CD45 is a cell surface antigen
with an average expression of 200,000 copies per cell, however, it
only internalizes at a rate of 10-15%. We believe our ARC approach
is the most effective method to target CD45 positive cells, as the
radioisotope payload linear energy transfer can readily ablate a
targeted cell without requiring payload internalization like an
antibody drug conjugate or without relying on biological effector
function processes like a naked antibody. Furthermore, since CD45
expression level varies from low to high antigen density as the
immune cells become more terminally differentiated, we can
selectively condition depending on the therapeutic application,
from full myeloablation to transient lymphodepletion, by adjusting
the dose or intensity of the I-131 isotope payload. Full
myeloablation can be achieved with high doses of I-131, as its
energy pathlength and crossfire effect can penetrate into bone
marrow niches to target and deplete blood and immune system forming
bone marrow stem cells. Myeloablation is applicable to autologous
or allogeneic BMT and to autologous gene-edited or modified
therapies that can reconstitute a patient’s blood and immune
systems. Alternatively, low doses of I-131 can be transiently
lymphodepleting and spare a patient’s bone marrow stem cells, which
we believe is ideal for ACT applications such as CAR-T. We intend
to develop our CD45 targeted conditioning program for BMT, ACT and
gene therapy applications for malignant and non-malignant diseases
and believe that multiple radioisotopes beyond I-131 may be
utilized including alpha and beta emitters.
Iomab-B uses high doses of I-131 to achieve myeloablative
conditioning prior to a BMT, is currently being studied in the
pivotal Phase 3 Study of Iomab-B in Elderly Relapsed or Refractory
AML (“SIERRA”), clinical trial for targeted conditioning prior to
an allogeneic BMT for patients with active, relapsed or refractory
(“r/r”) Acute Myeloid Leukemia, (“AML”), who are age 55 or older.
Enrollment of the planned 150 patients in the SIERRA trial was
completed in the third quarter of 2021 with the last patient
receiving their BMT in the fourth quarter of 2021. Patients with
active, r/r AML are not normally considered eligible for BMT and
the SIERRA trial is the only randomized Phase 3 trial to offer BMT
as a treatment option for this patient population. The SIERRA trial
compares outcomes of patients randomized to receive Iomab-B and a
BMT (the “study arm”) to those patients randomized to receive
physician’s choice of salvage therapy (the “control arm”). The
control arm is also defined as conventional care, as no standard of
care exists for this patient population and includes over 20 agents
that may be used as single agents or in combination including
venetoclax, a targeted Bcl-2 inhibitor, Midostaurin and Sorafenib,
targeted FLT3 inhibitors, hypomethylating agents and cytotoxic
chemotherapies. Patients who fail to achieve a Complete Remission
(“CR”) on the control arm are ineligible to proceed to a BMT, but
the trial design permits these patients to “cross over” to receive
the study arm treatment if they meet the eligibility criteria. The
primary endpoint of the SIERRA trial is durable Complete Remission
(“dCR”) of 180 days and the secondary endpoint is Overall Survival
(“OS”). When the crossover patients receive Iomab-B and BMT, they
have not achieved remission with their salvage therapy and are
considered to be failures for the primary endpoint of the study.
The SIERRA trial recruited patients at 24 sites in the United
States and Canada, which includes many of the leading BMT sites
based on volume. If approved, we expect our initial commercial
launch would target the leading 50-100 BMT and medical centers that
perform the vast majority of BMT’s in the United States. In the
European Union (“EU”), we received favorable feedback from the
European Medicines Agency (“EMA”) via their scientific advice
program that the trial design, primary endpoint and planned
statistical analysis from the SIERRA trial are acceptable as the
basis for a Marketing Authorization Application, or MAA.
Additionally, the EMA commented that it does not anticipate the
need for further standalone preclinical toxicology or safety
studies. Overall, transplant procedures in the EU are approximately
fifty percent higher than in the United States with a similar
market dynamic, with a majority of BMT volume being conducted in a
concentrated number of leading medical centers. Currently we intend
to secure a partner for Iomab-B in the EU.
Data from full patient enrollment in the SIERRA trial (151
patients), was presented at the American Society of Hematology
(“ASH”) Annual Meeting in December 2021. The data presented
includes rates of BMT access and engraftment, 100-day non-relapse
transplant-related mortality (100-day TRM) and adverse events,
which has been reported from interim analyses conducted at 25%, 50%
75% and 100% of patient enrollment pursuant to the study protocol.
The data presented at ASH highlighted that 100% of patients (59/59)
on the study arm that received a therapeutic dose of Iomab-B
received a BMT, with a median time to BMT of 30 days, and all
patients achieved neutrophil and platelet engraftment in a median
time of 18 days despite a high median blast count of 29%. On the
control arm, only 17% of patients (13/76) achieved remission after
salvage therapy, and then received a BMT with a median time to BMT
of 67 days and median blast count of 20%. Of the 83% of patients
failing to achieve a CR with conventional care (47/57), 30 patients
were eligible to cross over to receive Iomab-B followed by
transplant. These patients are considered as having failed the
primary endpoint of the study. All crossover patients who received
the therapeutic dose of Iomab-B (30/30) received a BMT, with a
median time to BMT of 24 days and they achieved engraftment in a
median time of 19 days despite high median blast count of 22% at
time of crossover. It was also reported that 100-day TRM of the
study or Iomab-B arm was 10% (6/59) of patients that received a BMT
compared to 15% of patients (2/13) who received a BMT after salvage
therapy on the control arm. The universal engraftment rate and low
100-day TRM rate of the Iomab-B arm resulted in 53 patients
potentially evaluable for the primary endpoint compared to 11
patients in the control arm, an approximate five times difference.
At each of the interim analyses throughout the SIERRA trial, this
approximate five times difference has been consistent in favor of
the Iomab-B arm as a result of higher rates of BMT engraftment and
lower rates of 100-day TRM.
Data from the SIERRA trial has also been accepted for presentation
at the upcoming Transplantation & Cellular Therapy (“TCT”)
Tandem Meetings of the American Society for Transplantation and
Cellular Therapy (“ASTCT”) and Center for International Bone &
Marrow Transplant Research (“CIBMTR”), which has been postponed
from February to April 2022. At TCT, we expect to present
additional data from the SIERRA trial to include patients who have
matured for BMT engraftment and 100-day TRM analysis, for which
data was not available at time of the submission cutoff for ASH in
December of 2021. Top-line data for the primary endpoint of durable
Complete Remission is expected to be presented in the third quarter
of 2022. We believe topline data from SIERRA will support the
submission of a Biologics License Application (“BLA”) with the U.S.
Food and Drug Administration (“FDA”), which we expect to file in
the first half of 2023.
Our Iomab-ACT program is intended for targeted conditioning prior
to ACT or gene therapy and uses the same I-131-apamistamab
construct as Iomab-B at varying doses. At lower doses of one-eighth
to one-sixth of the myeloablative dose, it is applicable for
lymphodepletion prior to CAR-T or certain gene therapy applications
where stem cell myeloablation is not necessary. At higher doses it
is applicable for gene therapy applications where stem cell
myeloablation is necessary.
We believe our Iomab-ACT program is highly differentiated when
compared to Fludarabine and Cyclophosphamide (“Flu/Cy”) or other
chemotherapy-based regimens that are used as the standard of
practice today for lymphodepletion prior to CAR-T. CD45 is an
antigen expressed on certain immune cell types that are relevant to
the mechanism of CAR-T therapies including lymphocytes, regulatory
T-cells and macrophages that have been associated with clinical
responses that may limit the safety, efficacy and durability of
response of these CAR-T therapies including cytokine release
syndrome (“CRS”) and neurotoxicity. Some of these limitations may
be attributable to the chemotherapy-based conditioning agents that
are being used prior to CAR-T therapies. Preclinical data
supporting the rational for our Iomab-ACT program was presented at
multiple medical conferences in 2019. Unlike chemotherapy,
Iomab-ACT is targeted in nature and, due to this CD45-directed
targeting, we expect we can improve CAR-T cell expansion,
potentially resulting in responses that are more durable, but also
resulting in reduced CAR-T related toxicities. Importantly, we
expect the Iomab-ACT program construct to enable lymphodepletion
through a single-dose, outpatient administration versus Flu/Cy or
other chemotherapy-based lymphodepletion regimens that can require
multiple infusion cycles over several days. Because of this
potentially superior profile, the Iomab-ACT construct could result
in improved access to CAR-T therapy and better outcomes.
We are studying Iomab-ACT in a clinical collaboration with Memorial
Sloan Kettering Cancer Center (“MSKCC”) for targeted conditioning
prior to administration of MSKCC’s 19-28z CD19 targeting CAR-T in
patients with relapsed or refractory B-cell acute lymphoblastic
leukemia (“ALL”) or diffuse large B-cell lymphoma (“DLBCL”). We
received grant funding from the National Institute of Health
(“NIH”) to fund this trial with MSKCC being a co-recipient on this
grant. This is a first of its kind study to use an ARC-based
conditioning regimen with CAR-T therapy. The hypothesized rationale
for this study is that Iomab-ACT will exert an anti-tumor effect on
the chemotherapy-refractory B-ALL cells that are sensitive to
radiation resulting in reduced disease burden and simultaneously
deplete CD45 expressing immune cells implicated in CAR-T related
toxicities, resulting in an optimal homeostatic environment for the
CAR-T cells. Results with MSKCC’s 19-28z CD-19 CAR-T in 53 patients
with r/r B-ALL published in the New England Journal of Medicine
reported complete remissions in 83% (44/53) of patients, which
compares favorably to standard chemotherapy regimens that have
complete remission rates of 18% - 45% in this patient population.
Median event-free survival (EFS) was 6.1 months and median overall
survival (OS) was 12.9 months at a median follow up period of 29
months (range 1 – 65 months). There was a 26% (14/53) rate of Grade
3 or greater CRS and a 42% rate of Grade 3 or 4 neurotoxicity
reported. The study will evaluate the feasibility of using an
ARC-based conditioning regimen with CAR-T therapy and will evaluate
safety measures including incidence of CRS and neurotoxicity and
efficacy measures including responses and survival outcomes. In
March 2021, we announced that patient enrollment was initiated, and
the first patient was administered Iomab-ACT followed by their
19-28z CAR-T therapy. We expect proof of concept data from this
study in the second half of 2022.
In addition, we are working in collaboration with the University of
California Davis to utilize Iomab-ACT conditioning with a novel
anti-HIV autologous gene therapy. We continue to identify
additional gene therapies for which Iomab-ACT can be used for
targeted conditioning with the goal of collaborating with multiple
academic or industry developers to establish Iomab-ACT as a
non-chemotherapy universal targeted conditioning solution.
CD33 Program: Combinations and Therapeutics
Our CD33 program is evaluating the clinical utility of Actimab-A,
comprised of the anti-CD33 mAb lintuzumab linked to the potent
alpha-emitting radioisotope Actinium-225 (“Ac-225”). CD33 is
expressed in the majority of patients with AML and myelodysplastic
syndrome (“MDS”) as well as approximately one-third of patients
with multiple myeloma. Ac-225 emits four alpha particles and can
kill a cell with one alpha-particle hit, making it one of the most
powerful cell-killing agents with no know resistance mechanism to
the double strand DNA breaks it can cause. We source Ac-225 from
the Department of Energy’s Oak Ridge National Laboratory.
Our CD33 development program is driven by data obtained from nearly
one hundred fifty treated patients, including results from a Phase
1/2 trial that studied Actimab-A as a single agent at multiple dose
levels in 58 patients with newly diagnosed AML, which was completed
in 2018, as well as trials studying Actimab-A in combination with
other agents.
We believe that radiation delivered internally via a targeting
moiety can be synergistic when used in combination with
chemotherapy, targeted agents and immunotherapy based on
mechanistic rationales supported by our own clinical data,
preclinical research and scientific and clinical evidence in the
literature. We have prioritized our efforts and resources in favor
of combination trials for our CD33 program development strategy
rather than single agent trials at this time as we believe
Actimab-A can be a backbone therapy in AML when combined with other
therapeutic modalities. Our CD33 development program encompasses
the following ongoing trials:
Actimab -A Combination
Trials:
Actimab-A + CLAG-M
The combination of Actimab-A with CLAG-M has been studied in a
Phase 1 combination trial that was conducted in collaboration with
the Medical College of Wisconsin (“MCW”) in patients age 18 and
above with r/r AML who are fit for intensive therapy. Patient
enrollment was completed in November 2021. CLAG-M (cladribine,
cytarabine, filgrastim and mitoxantrone) is a salvage chemotherapy
regimen that produced a 55% remission rate in patients with r/r AML
in a previous study conducted by MCW that compared outcomes of
patients receiving either CLAG-M, MEC or CLAG salvage therapy
regimens. Data from the Phase 1 combination trial of Actimab-A +
CLAG-M were presented at ASH in December 2021. After completion of
dose-escalation in the Phase 1 trial, the recommended Phase 2 dose
was determined to be 0.75 µCi/kg of Actimab-A. 3 patients were
enrolled in the 0.75 µCi/kg dose cohort, which had a 100% remission
rate comprised of 1 complete remission (“CR”) and 2 complete
remissions with incomplete platelet recovery (“CRp”), there were no
dose limiting toxicities (“DLTs”) or 30-day mortality reported.
Overall, a 67% (12/18) overall response rate (“ORR”) was reported
across all dose cohorts (0.25 – 1.0 µCi/kg) and remissions were
achieved in every dose cohort including the 0.25 and 0.50 µCi/kg
doses of Actimab-A, which have been shown to be subtherapeutic as a
single agent. In addition, there was a 72% minimal residual disease
(“MRD”) negativity rate, which compares favorably to the 39% MRD
negativity rate reported by MCW with CLAG-M alone. This study
enrolled patients who previously failed Venetoclax, a targeted
Bcl-2 inhibitor, and efficacy was similar in patients Venetoclax
naïve and those that previously failed Venetoclax, with a 60%
response rate in previous Venetoclax failures. We are working to
develop a regulatory and development pathway for the Actimab-A
CLAG-M combination and will be evaluating potential registration
enabling strategies. In addition, we believe this Actimab-A +
CLAG-M combination study has provided proof of principle that the
addition of Actimab-A to other AML therapies can lead to
well-tolerated regimens with improved responses, which supports our
Actimab-A backbone therapy in AML strategy.
Actimab-A + Venetoclax
We are also conducting a Phase 1/2 Actimab-A combination trial with
the Bcl-2 inhibitor Venetoclax in fit and unfit patients age 18 and
above with relapsed or refractory AML. This multi-center trial is
being led by UCLA Medical Center. This combination is supported by
mechanistic evidence in preclinical studies using Venetoclax
-resistant AML tumor cell lines. In these models, we have
demonstrated that Actimab-A can deplete Mcl-1 and Bcl-XL, two
proteins implicated in mediating resistance to Venetoclax, in
addition to causing potentially lethal double-stranded DNA breaks
in these CD33 expressing cells. Furthermore, in vivo studies in
animal models of Venetoclax-resistant AML demonstrated robust tumor
regression and improved survival in cohorts receiving the Actimab-A
Venetoclax combination compared to Venetoclax alone. The rationale
for this clinical study is that the addition of Actimab-A will; 1)
have a direct anti-tumor effect via double-stranded DNA breaks and
2) deplete Mcl-1 and Bcl-XL making the AML cells more susceptible
to Venetoclax. Updated data from the Phase 1 dose escalation
portion of this study was presented at ASH in December 2021 from
three dose cohorts of 0.50, 0.75 and 1.0 µCi/kg of Actimab-A in a
total of 12 patients. 50% of patients received Venetoclax therapy
prior to enrollment on the Actimab-A combination trial. And 67% of
patients had poor risk cytogenetics, of which, 3 had a TP53
mutation, which is associate with poorer response rates and
survival outcomes. Of the patients with a TP53 mutation, 67%
achieved a remission including a patient that achieved a CR and at
the time of data cutoff for ASH, the patient was in follow-up 230
days (~7.5 months). The combination of Actimab-A with Venetoclax
was reported to be well-tolerated with no 30-day mortality. The
data to date support advancing to the Phase 2 portion of the trial
and we expect to provide an update on the development strategy,
including consideration of patients with a TP53 mutation, after the
Phase 1 dose finding portion of the trial is complete and the
recommended Phase 2 dose is determined.
In addition to these ongoing trials, we actively seek and evaluate
additional modalities and agents that can be the basis for
Actimab-A therapeutic combinations such as the CD47 immunotherapy
magrolimab combinations we announced at the Society for
Immunotherapy of Cancer in November 2021 to leverage our clinical
experience, supply chain and AWE technology platform.
CD47 Based ARC Combinations in Solid Tumors and Blood
Cancers
CD47 is a macrophage checkpoint that is upregulated in multiple
cancers including blood cancers such as AML and MDS as well as
solid tumors. CD47 acts as a “don’t eat me” signal on cancer cells
to suppress phagocytosis and evade detection and destruction by the
immune system. It has become an immunotherapy target of significant
interest with multiple biopharmaceutical companies actively
developing CD47 targeting agents across a wide range of oncology
and hematology indications. CD47 targeting agents have shown
limited efficacy as single agent monotherapies in AML/MDS or solid
tumors, which has led to combinations such as with hypomethylating
agents in AML/MDS. We hypothesized that targeted radiotherapy via
ARCs could synergize with CD47 targeting agents via the direct
cytotoxic and immunogenic effect of ARCs without overlapping
toxicities. To explore this synergy and the potential to improve
patient outcomes and we have initiated a program in AML with our
Actimab-A ARC, consistent with our strategy to establish Actimab-A
a backbone AML therapy, and in solid tumors with a HER-2 targeting
ARC, which emanated from our AWE technology platform. To our
knowledge, these are the first and only ARC-based targeted
radiotherapy combinations with CD47 immunotherapy. Data from these
novel combinations were presented at the 36th Annual
Meeting of the Society for Immunotherapy for Cancer.
The most advanced CD47 development programs are being studied in
patients with AML and MDS. Leveraging our clinical experience with
Actimab-A in these indications we have begun studying Actimab-A
with the anti-CD47 antibody immunotherapy magrolimab, which is
owned by Gilead Sciences, Inc., in preclinical models of AML. In
preclinical models, it was shown that in multiple AML cell lines,
the combination of Actimab-A with magrolimab led to increased
phagocytosis of AML cells compared to magrolimab alone. Our studies
also demonstrated that AML cell lines exposed to Actimab-A had an
upregulation of calreticulin, which is a pro-phagocytic or “eat me”
signal, which we hypothesize makes Actimab-A potentially
synergistic with magrolimab and other anti-CD47 antibodies. The
Actimab-A and magrolimab combination showed a significant increase
in survival compared to Actimab-A alone in a disseminated AML
animal tumor model. We intend to continue to study preclinically
this combination with the goal of advancing to human clinical
trials.
In January 2022, we announced a research collaboration with
EpicentRx that will evaluate Actimab-A in combination with
EpicentRx’s RRx-001in AML. EpicentRx’s RRx-001, currently under
investigation in a Phase 3 trial for Small Cell Lung Cancer and in
other oncology and non-oncology indications, is a versatile next
generation small molecule immunotherapeutic that targets the
CD47-SIRPα axis and the NLRP3 inflammasome to alter the tumor
microenvironment and optimize immune response. This collaboration
will explore the mechanistic synergy of RRx-001’s CD47–SIRPα
downregulation with Actinium’s targeted radiotherapy calreticulin
upregulation to increase the immune detection and destruction of
cancer cells. Preclinical experiments have begun exploring this
combination in AML models. We intend to leverage our experience
with CD47 targeting agents such as magrolimab in this
collaboration. Based on Actimab-A and RRx-001 both being
clinical-stage assets, we believe there is a potentially faster
pathway to clinical trials with this novel combination,
particularly if the preclinical safety and efficacy profile are in
line with what was observed with Actimab-A and magrolimab.
Antibody Warhead Enabling Technology Platform
Our proprietary AWE technology platform is supported by
intellectual property, know-how and trade secrets that cover the
generation, development, methods of use and manufacture of targeted
radiotherapies and certain of their components. Our AWE technology
patent portfolio presently includes 39 patent families comprised of
173 issued patents and pending patent applications, of which 8 are
issued and 30 are pending in the United States, and 135 are issued
or pending internationally. The effective lives of the issued
patents in our portfolio, or patents that may issue from the
pending applications in our portfolio, ranges from expirations
between 2024 and 2042. Our technology enables the direct labeling,
or conjugation and labeling, of a biomolecular targeting agent to a
radionuclide warhead and its development and use as a therapeutic
regimen for the treatment of diseases such as cancer. Our AWE
intellectual property covers various methods of use in multiple
diseases, including indication, dose and scheduling, radionuclide
warhead, and therapeutic combinations. We have particular expertise
in utilizing the alpha emitting isotope Ac-225 including clinical
experience in treating approximately 150 patients with our
alpha-emitter-based therapies, “gold standard” linker technology
and 5 issued patents in the United States and 49 patents
internationally related to the manufacturing or Ac-225 in a
cyclotron, which we believe has the potential to produce higher
quantities of Ac-225 than currently utilized methods.
In 2021 we have enhanced our research and development capabilities
around AWE by securing and staffing research facilities. Our
research laboratories are focused on applying our AWE technology
platform to the development of radiation conjugates and to execute
on research collaborations. Our R&D efforts employ a
multidisciplinary approach leveraging our team’s knowledge and
experience in cancer cell biology, radiochemistry, radiation
sciences, immunology and oncology drug development. We intend to
focus on generating targeted radiotherapies using our existing
intellectual property, evaluating assets for in-licensing to
complement our existing clinical pipeline and securing
collaborations and partnerships with biopharmaceutical companies.
By adding research and development capabilities to our clinical
development and clinical supply chain capabilities, we seek to
enable the rapid translation of radiotherapies.
Our AWE technology platform is being utilized in our ongoing
research collaboration with Astellas to arm select targeting agents
owned by Astellas with the alpha-emitting radioisotope Ac-225 for
the development of theranostics for solid tumor indications, which
combine the ability of radioisotopes to be used for both diagnostic
and therapeutic purposes.
We also utilized AWE to create aHER2-targeting radiotherapy using
the antibody Trastuzumab with either Ac-225 or Lu-177 radioisotopes
to study in combination with magrolimab for solid tumors. Anti-CD47
monotherapies, such as magrolimab, have not shown meaningful
responses in clinical studies in solid tumors. We hypothesized that
radiation directed at HER2 expressing cells would upregulate cell
surface calreticulin, a pro-phagocytic “eat me” signal, that when
combined with an anti-CD47 blockade therapy would enhance antitumor
activity. Data from this combination was presented at the Annual
Meeting of the Society for Immunotherapy for Cancer in November
2021. In vitro studies showed that immunogenicity, determined by
binding to HER2 expressing cells, remained intact after
radiolabeling Trastuzumab with Ac-225 or Lu-177. In multiple cells
lines radiolabeled Trastuzumab increased cell surface calreticulin
and the combination with magrolimab increased phagocytosis. The
combination of the Ac-225 or Lu-117 Trastuzumab with magrolimab
slowed tumor growth in animal models of solid tumors compared to
either the radiolabeled Trastuzumab or magrolimab as single agents.
We are continuing to evaluate this combination in additional tumor
models, and we intend to continue to study this combination with
the goal of advancing to human clinical trials.
We are also collaborating with AVEO Oncology (“AVEO”) to develop a
targeted radiotherapy against ErbB3, also known as HER3, with the
Ac-225 isotope for solid tumor indications. HER3 is overexpressed
in several solid tumor indications with high unmet needs, including
colorectal, gastric, head and neck, breast, ovarian, melanoma,
prostate and bladder cancers with HER3 agents under development
demonstrating activity in preclinical and clinical studies. To our
knowledge, this is the first HER3 targeting radiotherapy in
development. AVEO is developing high affinity antibodies including
HER3 targeting AV-203, which has demonstrated preclinical activity
across a number of solid tumor indications and was studied in a
Phase 1 open-label trial in patients with advanced solid tumors
where it was found to be safe and generally well tolerated. In
March 2022, we announced that data from studies of Ac-225
radiolabeled HER3 antibody have been accepted for presentation at
the American Association for Cancer Research (“AACR”) Annual
Meeting. Preliminary results contained in the AACR abstract showed
potent tumor cell cytotoxicity, complete anti-tumor response in a
HER3 tumor xenograft models and significantly prolonged survival
compared to control groups (p<0.0001). Additional data from
these studies will be presented at AACR in April 2022. We believe
these preliminary results support our collaboration with AVEO and
given that AV-203 has clinical safety data, a potentially
accelerated regulatory pathway to clinical studies with an Ac-225
HER3 targeted radiotherapy.
Intellectual Property Portfolio and Regulatory
Protections
Intellectual Property
We have developed or in-licensed numerous patents and patent
applications and possess substantial know-how and trade secrets
related to the development and manufacture of our products. As of
March 2022, our patent portfolio includes 39 patent families
comprised of 174 issued patents and pending patent applications, of
which 8 are issued and 30 are pending in the United States, and 135
are issued or pending internationally. Several non-provisional
patent applications are expected to be filed in 2022 based on
provisional patent applications filed in 2021. More than 90% of our
patents are Actinium-owned and the remainder are in-licensed from
third parties. These patents cover key areas of our business,
including the use of actinium-225 and other alpha- or beta-emitting
isotopes attached to cancer targeting carriers like monoclonal
antibodies in the treatment of cancers and non-malignant medical
disorders, methods for manufacturing key components of our product
candidates including actinium-225, an alpha particle emitting
radioisotope and carrier antibodies, or Iodine-131, a beta particle
emitting radioisotope, and methods for manufacturing finished
product candidates for use in cancer treatment.
We own two issued patents in the United States and issued patents
in Europe and Japan that relate to the composition of our Iomab-B
product candidate. The basis patent terms of these patents expire
in 2036 and 2037. Four related patent applications are also
currently pending in the U.S. and internationally. In addition, we
own both U.S. and international pending patent applications that
relate to the use of Iomab-B or Iomab-ACT in the treatment of
cancers and non-malignant conditions. We also own five issued
patents in the United States and 49 patents outside the United
States that relate to the manufacturing of actinium-225, the
radionuclide used in our Actimab-A product candidate, in a
cyclotron. These patents will expire in the years 2024 through
2027. In addition, we also own U.S. and international patents and
pending patent applications that relate to the manufacturing of
Actimab-A and its use in the treatment of cancers.
Regulatory Protections
The indications for which we are developing our product candidates
for are orphan drug designations, which are disease indications
that affect fewer than 200,000 patients in the United States and
less than 5 in 10,000 patients in the EU. We have received orphan
drug designation for Iomab-B and Actimab-A for patients with AML in
both the United States and the EU. As a result, if our products are
to be approved, they may receive 7 years and 10 years of market
exclusivity in the United States and EU, respectively. In addition,
our product candidates are biologics combined with radioisotopes.
We believe that the nature of radioisotopes having half-lives
combined with the complexities of biologic drugs would make it
difficult for a manufacturer to demonstrate bioequivalence to our
product candidates. The Hatch-Waxman Act requires that a
manufacturer of generic drugs, for which a biologic drug is called
a biosimilar, demonstrate bioequivalence to the innovator. However,
we are not aware of any existing or pending regulations or
legislation that pertains to generic radiopharmaceutical products
such as our antibody radiation-conjugate product candidates
Competition
The biopharmaceutical industry in which we operate, specifically,
the field of oncology drug development is rapidly evolving and
highly competitive. Radiopharmaceuticals for the treatment of
cancer has received considerable interest from major and specialty
pharmaceutical companies, biotechnology companies, academic
research institutions and other public and private entities,
particularly in recent years.
For the targeted radiotherapies we are developing, we face
competition from biopharmaceuticals companies who are developing
alpha particle-based therapies utilizing Actinium-225, Radium-223
and Thorium-227. Companies developing targeted alpha therapies
include Bayer AG, who owns Xofigo, the only approved alpha therapy,
that is used in the treatment of metastatic prostate cancer,
Novartis AG, Telix Pharmaceuticals Limited, Point Biopharma, Inc.,
Fusion Pharmaceuticals, Inc., RayzeBio, Inc., Aktis Oncology, Curie
Therapeutics, RadioMedix, Inc. and Orano Med. Significant attention
and resources is being applied to Ac-225 based therapies given its
high linear energy and short path length. Fusion Pharmaceuticals is
studying FPI-1434, targeting IFG-1R with Ac-225 in a Phase 1 trial
in solid tumors and has recently initiated a Phase 1 study to test
FGFR3 targeting agent in development. Point Biopharma is studying
PNT2002, a PSMA targeting agent for metastatic prostate cancer in a
Phase 1 trial, PNT2004, a preclinical agent targeting solid tumors
expressing FAP, and PNT2001, a preclinical agent also targeting
PSMA in prostate cancer, which all utilize Ac-225. Novartis is also
developing a PSMA targeting agent utilizing Ac-225 for prostate
cancer. RayzeBio, Aktis Oncology and Curie Therapeutics are all
pursuing Ac-225 based therapies but have not yet disclosed cancer
targets or indications.
To our knowledge, our Actimab-A product candidate is the only
clinical stage Ac-225 based therapy in active development for
hematologic indications.
There are also several companies developing beta particle-based
therapies such as Bayer, Novartis, Lantheus Holdings, Inc. and Q
BioMed, Inc., who all own approved products. Beta particles used
for oncology therapeutics includes Iodine-131, Lutetium-177,
Strontium-89 and Yttrium-90. Companies developing beta
particle-based therapies includes Cellectar Biosciences, Inc.,
Clovis Oncology, Inc., Y-mAbs Therapeutics, Inc., Ipsen S.A., and
Novartis.
In the field of conditioning, pharmaceuticals currently used for
myeloablation prior to a bone marrow transplant, lymphodepletion
prior to CAR-T and other adoptive cell therapies and conditioning
for gene therapy are largely generic, non-targeted chemotherapeutic
agents like fludarabine or busulfan and/or total body
irradiation.
In targeted conditioning, we face competition from companies
developing agents targeting CD117 (Jasper Therapeutics and Magenta
Therapeutics), CD45 (Magenta Therapeutics) and CD66 (Telix
Pharmaceuticals). CD117 is expressed in normal CNS, GI,
reproductive, kidney and skin tissue, which could result in
on-target toxicity to these organs. CD117 is not expressed on
mature circulating immune cells and thus cannot be targeted for
lymphodepletion for adoptive cell therapy. Jasper Therapeutics,
Inc, is developing JSP191, an anti-CD117 unconjugated monoclonal
antibody that is being studied in a Phase 1b trial in combination
with fludarabine and total body irradiation in patients with MDS
and AML. Magenta has initiated a Phase 1/2 trial for its MGTA-117
CD117 ADC and will conduct this first in human dose finding study
in patients with r/r AML MDS with excess blasts and is exploring
MGTA-117 for gene therapy conditioning in preclinical studies.
Magenta is also developing its CD45 ADC, which is has not yet been
studied in humans and is being evaluated in IND enabling
studies.
Forty Seven, Inc.(acquired by Gilead) announced a conditioning
regimen comprised of its anti-CD47 monoclonal antibody Magrolimab
with its preclinical stage FSI-174 anti-CD117 monoclonal antibody
in a preclinical collaboration with bluebird bio, Inc. for
conditioning prior to gene therapy.
Molecular Templates announced a collaboration with Vertex focused
on targeted conditioning using its Engineered Toxin Bodies (ETBs)
with two targets that were not disclosed. In October 2021, Vertex
terminated the research collaboration with Molecular Templates.
Molecular Templates has a preclinical stage CD45 ETB in
development.
Telix Pharmaceuticals is developing TLX66, a CD66 targeting
antibody radio conjugated with Yttrium-90, for BMT conditioning in
patients with Systemic Amyloid Light-Chain Amyloidosis (SALA).
TLX66 is also being studied in a Phase 2 investigator sponsored
trial in the U.K in patients with childhood leukemia.
Allogene Therapeutics is developing an anti-CD52 monoclonal
antibody for use as a lymphodepletion agent in conjunction with
CAR-T therapies. CD52 is not expressed on stem cells and therefore
cannot be used for myeloablation for a bone marrow transplant.
To our knowledge, we are the only company with an anti-CD45 radio
conjugate in clinical development and the only company with a
targeted conditioning agent that has completed enrollment of a
pivotal Phase 3 trial.
Our Actimab-A product candidate faces competition from several
major pharmaceutical companies and biotechnology companies who are
also developing multiple types of therapies including chemotherapy,
targeted agents, ADCs, monoclonal antibodies, bispecific
antibodies, immunotherapies and cellular therapies for patients
with AML. The standard of care for patients with AML has long been
“7+3”, which is 7 days of treatment with cytarabine with an
anthracycline on the first 3 days for patients who can tolerate
intensive therapy and hypomethylating agents, azacitidine or
decitabine, for patients who are “unfit” and cannot tolerate
intensive therapy. Since 2017, 9 agents have been approved for
patients with AML. These approved agents include Vyxeos (liposomal
cytarabine and daunorubicin) owned by Jazz Pharmaceuticals,
venetoclax, a Bcl-2 inhibitor owned by Abbvie, FLT3 inhibitors
midostaurin (owned by Novartis) and gilteritinib (owned by
Astellas), Daurismo, a hedgehog pathway inhibitor owned by Pfizer,
IDH inhibitors Tibsovo (IDH1) and Idhifa (IDH2) owned by Servier,
Onureg (oral azacitidine) owned by Bristol Myers Squibb and
Mylotarg, a CD33 targeting ADC owned by Pfizer.
These agents are approved in various AML patient segments including
secondary or treatment related AML (Vyxeos), patients over the age
of 75 or patients unfit for intensive therapy (venetoclax and
Daurismo) and patients with a specific cytogenetic mutation such as
FLT3 or IDH1/2. Despite these 9 approved agents, outcomes for
patients with r/r AML remain dismal and it remains an area of high
medical need that could accommodate many new products with
favorable safety and efficiency profiles.
We are pursuing CD33 because it is expressed in virtually all
patients with AML. AML is known to be highly sensitive to
radiation, which lends itself to our targeted radiotherapy
approach. Also, AML has high cytogenetic and mutational
heterogeneity, which targeted radiotherapy is agnostic to.
Combination therapies are commonly used in hematologic indications,
but we believe we are the only clinical stage Ac-225 based product
candidate that is being explored in hematologic indications in
combination with other modalities, including with the salvage
chemotherapy regimen CLAG-M in fit patients with relapsed or
refractory AML as well as in combination with the Bcl-2 inhibitor
venetoclax in fit and unfit patients with relapsed or refractory
AML.
In addition to developing targeted radiotherapies, we also own
patents related to the manufacturing of Ac-225 in a cyclotron.
Medical grade Ac-225 is largely supplied by the U.S. Department of
Energy (“DOE”) derived from the natural decay of thorium-229 from
so-called “thorium-cows”. Additional routes of Ac-225 production
are being pursued by the DOE including the generation of new
thorium cows and production via a cyclotron to increase supply. The
DOE’s cyclotron production method for Ac-225 production leverages
Actinium’s proprietary technology and know-how and presents an
additional path towards production of high-quality Ac-225.
Previously, we utilized our cyclotron production IP to create
highly pure Ac-225. We are aware of at least six other government
and non-government entities globally that have or expect to have
ability to supply Ac-225 using various methods including ITM,
Niowave, Terrapower, NorthStar Medical Radioisotopes, IONETIX
Corporation, TRIUMF and Canadian Nuclear Laboratories that could be
competitors should we elect to manufacture Ac-225 in the future. We
believe our cyclotron method has the potential to produce robust
amounts of highly pure Ac-225, which could address potential future
Ac-225 supply constraints should multiple Ac-225 products gain
regulatory approval.
Government Regulation
Governmental authorities in the United States and other countries
extensively regulate, among other things, the research,
development, testing, manufacture, labeling, promotion,
advertising, distribution and marketing of radioimmunotherapy
pharmaceutical products such as those being developed by us. In the
United States, the FDA regulates such products under the Federal
Food, Drug and Cosmetic Act (“FDCA”) and implements regulations.
Failure to comply with applicable FDA requirements, both before and
after approval, may subject us to administrative and judicial
sanctions, such as a delay in approving or refusal by the FDA to
approve pending applications, warning letters, product recalls,
product seizures, total or partial suspension of production or
distribution, injunctions and/or criminal prosecution.
U.S. Food and Drug Administration Regulation
Our research, development and clinical programs, as well as our
manufacturing and marketing operations, are subject to extensive
regulation in the United States and other countries. Most notably,
products that may in the future be sold in the United States are
subject to regulation by the FDA. Certain of our product candidates
in the United States will require FDA approval of a BLA prior to
marketing. Foreign countries may require similar or more onerous
approvals to manufacture or market these products.
FDA Approval Process for Biologics License Applications
Prior to testing a biological product on humans, the product must
clear the preclinical testing stage. The goal of preclinical
testing is to perform laboratory evaluations of the product’s
chemistry and formulation as well as evaluate the product’s
potential for adverse events by performing in vitro and animal
studies. This information is packaged together and submitted to the
FDA as part of an investigational new drug (“IND”) application,
which must be approved by the FDA before administering the product
to human subjects in clinical trials.
From there, the product moves to the clinical stage, where it is
administered to healthy volunteers or patients. The data gathered
from the preclinical testing and clinical trials is used to support
the BLA submission. The FDA must approve the BLA prior to
commercial marketing of a biological product. The BLA must include
information about product development, laboratory and animal
studies, human trials, manufacturing information, the composition
of the product, and proposed labeling. The approval process
requires significant time and financial resources and does not
guarantee that FDA will accept the BLA filing or ultimately approve
the BLA.
The Prescription Drug User Fee Act, as amended (“PDUFA”), requires
each BLA to be accompanied by a substantial user fee. The amount of
the user fee changes on an annual basis. In addition to the BLA
user fee, PDUFA also imposes an annual program fee for biological
products. The FDA will waive or reduce the fee under limited
circumstances, such as for first applications filed by small
businesses.
Within 60 days following submission of the BLA, the FDA reviews the
BLA submission for completion to determine if it will accept it for
filing. The FDA may refuse to file the BLA if it deems the
submission incomplete or not properly reviewable at the time of
submission. For the BLA review process to proceed, the BLA must be
resubmitted with the necessary additional information. After the
BLA is accepted for filing, the FDA commences its substantive
review of the BLA. The FDA reviews the BLA to determine, among
other things, whether the proposed product is safe, potent, and/or
effective for its intended use, has an acceptable purity profile,
and whether the product’s manufacturing is consistent with current
Good Manufacturing Processes (“cGMPs”) to ensure that the product
meets the appropriate standards for identity, safety, strength,
quality, potency and purity.
The FDA may involve an advisory committee for novel biological
products that present complex questions of safety or efficacy. The
advisory committee typically consists of a panel that includes
clinicians and other subject matter experts that assist with the
reviewing and evaluating the product. While the advisory committee
provides a recommendation for whether the product should be
approved and under what conditions, the FDA is not bound to follow
the recommendations. However, the advisory committee’s
recommendations are usually given significant consideration.
The FDA may also consider requiring a risk evaluation and
mitigation strategy (“REMS”) if it determines that one is necessary
to ensure that the biological product is used safely. If the FDA
requires a REMS, the BLA sponsor must develop and submit a proposed
REMS for the BLA review process to move forward.
The manufacturer of the biological product is also subject to FDA
inspection prior to the approval of the BLA. The purpose of the
inspection is to determine whether the manufacturer adequately
complies with the applicable cGMP requirements to ensure that the
biological product is manufactured safely and within the required
specifications. Additionally, the FDA may choose to inspect one or
more clinical sites to assess compliance with IND trial
requirements and good clinical practices (“GCPs”). Compliance with
cGMP and GCP requirements involves significant expenditures of
time, money, and effort for BLA sponsors due to associated
training, recordkeeping, production, and quality control needs.
If the FDA decides not to approve the BLA in the form submitted, it
will issue what is called a complete response letter that outlines
the specific deficiencies it would like to see addressed. The
deficiencies identified can be minor (e.g., labeling changes) or
major (e.g., the need for additional clinical trials). The complete
response letter may also include recommended actions the applicant
may take to move closer towards securing an approval. At this
point, applicants may choose to resubmit the BLA to address FDA’s
concerns or withdraw the application.
In addition, under the Pediatric Research Equity Act, a BLA or
supplement to a BLA must contain data to assess the safety and
effectiveness of the product for the claimed indications in all
relevant pediatric subpopulations and to support dosing and
administration for each pediatric subpopulation for which the
product is safe and effective. The FDA may grant deferrals for
submission of data or full or partial waivers.
Post-Approval Requirements
If the BLA is approved, the FDA may include additional conditions
as part of its approval, such as limiting the approval by
designating specific diseases for which the product may be used.
Additionally, conditions may include requiring the labeling to
include specific contraindications, warnings, or precautions,
requiring post marketing clinical trials (sometimes referred to as
Phase 4 clinical trials), and implementation of surveillance
program to monitor the approved product once commercialized.
Products approved by the FDA under a BLA are subject to ongoing
regulatory requirements, including, among other things,
record-keeping requirements, adverse event reporting requirements,
responsibility for reporting updated safety and efficacy
information to FDA, sampling and distribution requirements,
complying with advertising and promotion requirements, and
complying with cGMPs.
Quality control and manufacturing procedures must continue to
comply with cGMP requirements even after the BLA is approved. The
cGMP regulations include, but are not limited to, requirements to
ensure quality control, maintain appropriate manufacturing records
and documentation, and the obligation to investigate and address
deviations from cGMPs, when identified. Manufacturers are also
required to register their establishments with the FDA and certain
state agencies. The establishments are also subject to unannounced
inspections by regulators.
The advertising and promotion of drug and biologic products are
also subject to specific laws and regulations. These authorities
provide standards for direct-to-consumer advertising, restrictions
on promoting products for uses or to patient populations that are
not described in the product’s approved uses, known as “off-label”
use, limitations on industry-sponsored scientific and educational
activities, and requirements for promotional activities involving
the internet.
Regulatory Enforcement
Failure to comply with applicable regulatory requirements can
result in enforcement action by the FDA, the Nuclear Regulatory
Commission or other regulatory authorities, which may result in
sanctions, including but not limited to, untitled letters, warning
letters, fines, injunctions, consent decrees and civil penalties;
customer notifications or repair, replacement, refunds, recall,
detention or seizure of our products; operating restrictions or
partial suspension or total shutdown of production; refusing or
delaying our requests for BLA premarket approval of new products or
modified products; withdrawing BLA approvals that have already been
granted; and refusal to grant export.
Additional Healthcare Laws
In addition to FDA regulations, several other types of state and
federal laws may restrict our business activities, including
certain healthcare laws. These laws include, without limitation,
anti-kickback laws, false claims laws, data privacy and security
laws, as well as transparency laws regarding payments or other
items of value provided to healthcare providers.
The federal Anti-Kickback Statute prohibits, among other things,
knowingly and willfully offering, paying, soliciting or receiving
remuneration to induce or in return for purchasing, leasing,
ordering or arranging for the purchase, lease or order of any
healthcare item, good, facility or service reimbursable under
Medicare, Medicaid or other federal healthcare programs. The term
“remuneration” has been broadly interpreted to include anything of
value. This statute has been interpreted to apply to arrangements
between pharmaceutical manufacturers on the one hand and
prescribers, purchasers and formulary managers on the other hand.
Although there are a number of statutory exceptions and regulatory
safe harbors protecting certain common activities from prosecution
or other regulatory sanctions, the exceptions and safe harbors are
drawn narrowly and arrangements must meet every element to qualify
for an exception or safe harbor. Failure to meet all of the
requirements of a particular applicable statutory exception or
regulatory safe harbor does not make the conduct per se
illegal under the federal Anti-Kickback Statute. Instead, the
arrangement will be evaluated on a case-by-case basis based on the
facts and circumstances involved. Courts have interpreted the
statute’s intent requirement to mean that if any one purpose of an
arrangement involving remuneration is to induce referrals of
federal healthcare program business, the federal Anti-Kickback
Statute has been violated. Additionally, the intent standard under
the federal Anti-Kickback Statute was amended by the Patient
Protection and Affordable Care Act of 2010, as amended by the
Health Care and Education Reconciliation Act of 2010, collectively
the “Affordable Care Act,” to a stricter standard such that a
person or entity no longer needs to have actual knowledge of the
statute or specific intent to violate it in order to have committed
a violation. In addition, the Affordable Care Act codified case law
that a violation of the federal Anti-Kickback Statute constitutes a
false or fraudulent claim for purposes of the federal False Claims
Act.
Federal false claims laws, including the federal False Claims Act,
and civil monetary penalties laws, prohibit any person or entity
from, among other things, knowingly presenting, or causing to be
presented, a false claim for payment to the federal government, or
knowingly making, or causing to be made, a false statement to have
a false claim paid. Whistleblower or qui tam provisions under the
False Claims Act permit whistleblowers to sue in the name of the
federal government for False Claims Act violations, and to share in
the recovery from any award. Pharmaceutical and other healthcare
companies have been prosecuted under these laws for, among other
things, allegedly inflating drug prices they report to pricing
services, which in turn were used by the government to set Medicare
and Medicaid reimbursement rates, and for allegedly providing free
product to customers with the expectation that the customers would
bill federal programs for the product. In addition, certain
marketing practices, including off-label promotion, may also
violate false claims laws.
The federal Health Insurance Portability and Accountability Act of
1996, or HIPAA, created additional federal civil and criminal
statutes that prohibit among other actions, knowingly and willfully
executing, or attempting to execute, a scheme to defraud any
healthcare benefit program, including private third-party payors,
knowingly and willfully embezzling or stealing from a healthcare
benefit program, willfully obstructing a criminal investigation of
a healthcare offense, and knowingly and willfully falsifying,
concealing or covering up a material fact or making any materially
false, fictitious or fraudulent statement in connection with the
delivery of or payment for healthcare benefits, items or services.
Like the federal Anti-Kickback Statute, the Affordable Care Act
amended the intent standard for certain healthcare fraud under
HIPAA such that a person or entity no longer needs to have actual
knowledge of the statute or specific intent to violate it in order
to have committed a violation.
In addition, if we engage in certain activities, we may be subject
to data privacy and security regulation under HIPAA, as amended by
the Health Information Technology for Economic and Clinical Health
Act, or HITECH. HIPAA imposes certain requirements on covered
entities, which include certain healthcare providers, health plans
and healthcare clearinghouses, and their business associates and
covered subcontractors that receive or obtain protected health
information in connection with providing a service on behalf of a
covered entity that involves the use or disclosure of individually
identifiable health information.
Additionally, the federal Physician Payments Sunshine Act, created
under the Affordable Care Act, and its implementing regulations,
require certain manufacturers of drugs, devices, biologicals and
medical supplies for which payment is available under Medicare,
Medicaid or the Children’s Health Insurance Program (with certain
exceptions) to report annually information related to certain
payments or other transfers of value provided to physicians and any
ownership and investment interests held by physicians or their
immediate family members. Beginning in 2022, applicable
manufacturers also will be required to report such information
regarding payments and other transfers of value to physician
assistants, nurse practitioners, clinical nurse specialists,
anesthesiologist assistants, certified registered nurse
anesthetists and certified nurse midwives during the previous
year.
The majority of states also have statutes or regulations similar to
the aforementioned federal healthcare laws, including fraud and
abuse laws, some of which are broader in scope and apply to items
and services reimbursed under Medicaid and other state programs,
or, in some states, apply regardless of the payor. Many states also
have some form of health information privacy or data security laws
that could apply. Further, some state laws require pharmaceutical
companies to comply with the pharmaceutical industry’s voluntary
compliance guidelines and the relevant compliance guidance
promulgated by the federal government in addition to requiring drug
manufacturers to report information related to payments or other
transfers of value provided to physicians and other healthcare
providers and entities, marketing expenditures, or drug pricing.
Certain state and local laws also require the registration of
pharmaceutical sales representatives.
If our operations are found to be in violation of any of the
healthcare regulatory laws described above or any other laws that
apply to us, we may be subject to potentially significant criminal,
civil and administrative penalties, damages, fines, disgorgement,
imprisonment, additional reporting obligations and oversight (if we
become subject to a corporate integrity agreement or other
agreement to resolve allegations of non-compliance with these
laws), exclusion from participation in government healthcare
programs, as well as contractual damages, reputational harm,
administrative burdens, diminished profits and future earnings, and
the curtailment or restructuring of our operations, any of which
could adversely affect our ability to operate our business and our
results of operations.
Employees
As of March 25, 2022, we have 32 full-time employees including 20
with M.D., Ph.D. or other advanced degrees.
We believe that our future success largely depends upon our
continued ability to attract and retain highly skilled employees.
We provide our employees with competitive salaries and bonuses,
opportunity for equity ownership, development programs that enable
continued learning and growth, and an employment package that
promotes wellness across all aspects of their lives, including
healthcare, retirement planning, and paid time off. None of these
employees are covered by a collective bargaining agreement, and we
believe our relationship with our employees is good. We also engage
consultants on an as-needed basis to supplement existing staff.
Recent Developments
Impact of COVID–19 Pandemic
The global health crisis caused by the novel coronavirus COVID-19
pandemic and its resurgences has and may continue to negatively
impact global economic activity, which, despite progress in
vaccination efforts, remains uncertain and cannot be predicted with
confidence. In addition, the Omicron variant of COVID-19, which
appears to be the most transmissible variant to date, has spread
globally. The full impact of the Omicron variant, or any subsequent
variant, cannot be predicted at this time, and could depend on
numerous factors, including vaccination rates among the population,
the effectiveness of COVID-19 vaccines against the Omicron variant
and the response by governmental bodies and regulators. Given the
ongoing and dynamic nature of the circumstances, it is difficult to
predict the impact of the COVID-19 pandemic on our business.
Many countries around the world have continued to impose
quarantines and restrictions on travel and mass gatherings to slow
the spread of the virus. Accordingly, our ability to continue to
operate our business may also be limited. Such events may result in
a period of business, supply and drug product manufacturing
disruption, and in reduced operations, any of which could
materially affect our business, financial condition and results of
operations. In response to COVID-19, we implemented remote working
and thus far have not experienced a significant disruption or delay
in our operations as it relates to the clinical development of our
drug candidates. Such government-imposed precautionary measures may
have been relaxed in certain countries or states, but there is no
assurance that more strict measures will be put in place again due
to a resurgence in COVID-19 cases, including those involving new
variants of the coronavirus, which may be more contagious and
deadly than prior strains. Therefore, the COVID-19 pandemic may
continue to affect our operation, may further divert the attention
and efforts of the medical community to coping with COVID-19 and
disrupt the marketplace in which we operate and may have a material
adverse effect on our operations.
A continuation or worsening of the levels of market disruption and
volatility seen in the recent past could have an adverse effect on
our ability to access capital, which could in the future negatively
affect our liquidity. In addition, a recession or market correction
resulting from the spread of COVID-19 could materially affect our
business and the value of our common stock.
We believe our earlier stage CD33 clinical trials will continue to
recruit and enroll patients given the acute nature of relapsed or
refractory AML. The continuation of the pandemic could adversely
affect our planned clinical trial operations, including our ability
to conduct the trials on the expected timelines and recruit and
retain patients and principal investigators and site staff who, as
healthcare providers, may have heightened exposure to COVID-19 if
their geography is impacted by the pandemic. Further, the
continuation and/or resurgence of the COVID-19 pandemic could
result in delays in our clinical trials due to prioritization of
hospital resources toward the pandemic, restrictions in travel,
potential unwillingness of patients to enroll in trials at this
time, or the inability of patients to comply with clinical trial
protocols if quarantines or travel restrictions impede patient
movement or interrupt healthcare services. In addition, we rely on
independent clinical investigators, contract research organizations
and other third-party service providers to assist us in managing,
monitoring and otherwise carrying out our preclinical studies and
clinical trials, and the pandemic may affect their ability to
devote sufficient time and resources to our programs or to travel
to sites to perform work for us, which may result in delays or
hinder our ability to collect data from our clinical trials.
Additionally, COVID-19 may result in delays in receiving approvals
from local and foreign regulatory authorities, delays in necessary
interactions with IRB’s or Institutional Review Boards, local and
foreign regulators, ethics committees and other important agencies
and contractors due to limitations in employee resources or forced
furlough of government employees.
To date, COVID-19 has not had a financial impact on our company. We
continue to monitor the impacts of COVID-19 on the global economy
and on our business operations. Although we expect that
vaccinations for COVID-19 will continue to improve conditions, the
ultimate impact from COVID-19 on our business operations and
financial results during 2022 will depend on, among other things,
the ultimate severity and scope of the pandemic, including the new
variants of the virus, the pace at which governmental and private
travel restrictions and public concerns about public gatherings
will ease, the rate at which historically large increases in
unemployment rates will decrease, if at all, and whether, and the
speed with which the economy recovers. We are not able to fully
quantify the impact that these factors will have on our financial
results during 2022 and beyond.
ITEM 1A. RISK FACTORS
In analyzing our company, you should consider carefully the
following risk factors, together with all of the other information
included in this Annual Report on Form 10-K. Factors that
could cause or contribute to differences in our actual results
include those discussed in the following subsection, as well as
those discussed above in “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and elsewhere
throughout this Annual Report on Form 10-K. Each of the
following risk factors, either alone or taken together, could
adversely affect our business, operating results and financial
condition, as well as adversely affect the value of an investment
in our company. The risks and uncertainties described below are not
the only ones we face. Additional risks not currently known to us
or other factors not perceived by us to present significant risks
to our business at this time also may impair our business
operations.
Summary of Risk Factors
We are providing the following summary of the risk factors
contained in this Annual Report on Form 10-K to enhance the
readability and accessibility of our risk factor disclosures. We
encourage you to carefully review the full risk factors contained
in this Annual Report on Form 10-K in their entirety for additional
information regarding the material factors that make an investment
in our securities speculative or risky. These risks and
uncertainties include, but are not limited to, the following:
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We
are a clinical-stage company and have generated no revenue from
commercial sales to date; |
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We
have incurred net losses in every year since our inception and
anticipate that we will continue to incur net losses in the
future; |
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If we
fail to obtain additional financing, we will be unable to continue
or complete our product development and you will likely lose your
entire investment; |
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We
are highly dependent on the success of Iomab-B and the SIERRA trial
and we may not be able to complete the necessary clinical
development or our development efforts may not result in the data
necessary to receive regulatory approval; |
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Our
business could be adversely affected by the effects of health
epidemics, including the global COVID-19 pandemic; |
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We
have not demonstrated that any of our products are safe and
effective for any indication and will continue to expend
substantial time and resources on clinical development before any
of our current or future product candidates will be eligible for
FDA approval, if ever; |
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Our
clinical trials may fail to demonstrate adequately the efficacy and
safety of our product candidates, which would prevent or delay
regulatory approval and commercialization; |
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Preliminary,
Interim, and “top-line” data from our clinical trials that we
announce or publish from time to time may change as more patient
data become available and are subject to audit and verification
procedures that could result in material changes in the final
data.; |
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Healthcare legislative reform measures intended to increase
pressure to reduce prices of pharmaceutical products paid for by
Medicare or, otherwise, affect the federal regulation of the U.S.
healthcare system could have a material adverse effect our
business, future revenue, if any, and results of operations;
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We
rely on third parties to conduct our clinical trials. If these
third parties do not successfully carry out their contractual
duties or meet expected deadlines or comply with regulatory
requirements, we may not be able to obtain regulatory approval for
or commercialize our product candidates; |
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We
currently depend on a single third-party manufacturer to produce
our pre-clinical and clinical trial drug supplies. Any disruption
in the operations of our current third-party manufacturer, or other
third-party manufacturers we may engage in the future, could
adversely affect our business and results of
operations; |
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Our
product candidates may cause undesirable side effects or have other
properties that could halt their clinical development, prevent
their regulatory approval, limit their commercial potential, or
result in significant negative consequences; |
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Our
patent position is highly uncertain and involves complex legal and
factual questions. |
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The
use of hazardous materials, including radioactive and biological
materials, in our research and development efforts imposes certain
compliance costs on us and may subject us to liability for claims
arising from the use or misuse of these materials; |
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We are highly dependent on our key personnel, and the demand
for talent in the biotechnology industry is highly
competitive; if we are not successful in attracting and retaining
highly qualified personnel, we may not be able to successfully
implement or execute our business strategy;
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Certain
provisions of our Certificate of Incorporation and Bylaws and
Delaware law make it more difficult for a third party to acquire us
and make a takeover more difficult to complete, even if such a
transaction were in our stockholders’ interest; and |
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Our
ability to utilize our net operating loss carryforwards and certain
other tax attributes may be limited. |
Risks Related to Our Business
We are a clinical-stage company and have generated no revenue
from commercial sales to date.
We are a clinical-stage biopharmaceutical company with a limited
operating history. We have no products approved for commercial sale
and have not generated any revenue from product sales to date. We
will encounter risks and difficulties frequently experienced by
early-stage companies in rapidly evolving fields. If we do not
address these risks successfully, our business will suffer.
We have incurred net losses in every year since our inception
and anticipate that we will continue to incur net losses in the
future.
We are not profitable and have incurred losses in each period since
our inception. As of December 31, 2021 and December 31, 2020, we
had an accumulated deficit of $255.7 million and $231.0 million,
respectively. We reported a net loss of $24.8 million and $22.2
million for the years ended December 31, 2021 and 2020,
respectively. We expect to continue to operate at a net loss as we
continue our research and development efforts, continue to conduct
clinical trials and develop manufacturing, sales, marketing and
distribution capabilities. There can be no assurance that the
products under development by us will be approved for sale in the
United States or elsewhere. Furthermore, there can be no assurance
that if such products are approved, they will be successfully
commercialized, which would have an adverse effect on our business
prospects, financial condition and results of operation.
If we fail to obtain additional financing, we will be unable
to continue or complete our product development and you will likely
lose your entire investment.
In August 2020, we entered into the Capital on Demand™ Sales
Agreement with JonesTrading, pursuant to which we may sell, from
time to time, through or to JonesTrading, up to an aggregate of
$200 million of our common stock. Shares of common stock are
offered pursuant to our shelf registration statement filed with the
SEC on August 7, 2020. For the year ended December 31, 2021, we
sold 4.6 million shares of common stock, resulting in net proceeds
of $35.3 million. As of the date of filing this report, we expect
that our existing resources will be more than sufficient to fund
our planned operations for more than 12 months following the date
of this report.
Our business or operations may change in a manner that would
consume available funds more rapidly than anticipated and
substantial additional funding may be required to maintain
operations, fund expansion, develop new or enhanced products,
acquire complementary products, business or technologies or
otherwise respond to competitive pressures and opportunities, such
as a change in the regulatory environment or a change in preferred
cancer treatment modalities. However, we may not be able to secure
funding when we need it or on favorable terms or indeed on any
terms. In addition, from time to time, we may not be able to secure
enough capital in a timely enough manner which may cause the
generation of a going-concern opinion from our auditors which can
and may impair our stock market valuation and also our ability to
finance on favorable terms or indeed on any terms.
To raise additional capital, we may in the future offer additional
shares of our common stock or other securities convertible into or
exchangeable for our common stock. We cannot assure you that we
will be able to sell shares or other securities in any other
offering at a price per share that is equal to or greater than the
price per share paid by investors, and investors purchasing shares
or other securities in the future could have rights superior to
existing stockholders.
If we cannot raise adequate funds to satisfy our capital
requirements, we will have to delay, scale back or eliminate our
research and development activities, clinical studies or future
operations. We may also be required to obtain funds through
arrangements with collaborators, which arrangements may require us
to relinquish rights to certain technologies or products that we
otherwise would not consider relinquishing, including rights to
future product candidates or certain major geographic markets. We
may further have to license our technology to others. This could
result in sharing revenues which we might otherwise have retained
for ourselves. Any of these actions may harm our business,
financial condition and results of operations.
The amount of funding we will need depends on many factors,
including the progress, timing and scope of our product development
programs; the progress, timing and scope of our preclinical studies
and clinical trials; the time and cost necessary to obtain
regulatory approvals; the time and cost necessary to further
develop manufacturing processes and arrange for contract
manufacturing; our ability to enter into and maintain
collaborative, licensing and other commercial relationships; and
our partners’ commitment of time and resources to the development
and commercialization of our products.
We have limited access to the capital markets and even if we
can raise additional funding, we may be required to do so on terms
that are dilutive to you.
We have limited access to the capital markets to raise funds. The
capital markets have been unpredictable in the recent past for
radioisotope and other oncology companies and unprofitable
companies such as ours. In addition, it is generally difficult for
development-stage companies to raise capital under current market
conditions. The amount of capital that a company such as ours is
able to raise often depends on variables that are beyond our
control. As a result, we may not be able to secure financing on
terms attractive to us, or at all. If we are able to consummate a
financing arrangement, the amount raised may not be sufficient to
meet our future needs. If adequate funds are not available on
acceptable terms, or at all, our business, including our technology
licenses, results of operations, financial condition and our
continued viability will be materially adversely affected.
We are highly dependent on the success of Iomab-B and the
SIERRA trial and we may not be able to complete the necessary
clinical development or our development efforts may not result in
the data necessary to receive regulatory approval.
We have completed patient enrollment in the pivotal Phase 3 SIERRA
trial (Study of Iomab-B in Elderly Relapsed or Refractory AML), a
150-patient multi-center randomized trial that will compare
outcomes of patients who receive Iomab-B and a BMT to those
patients receiving physician’s choice of salvage chemotherapy,
defined as conventional care, as no standard of care exists for
this patient population. The SIERRA trial may be unsuccessful and
fail to demonstrate a safety and efficacy profile that is necessary
to receive favorable regulatory approval. Even if Iomab-B receives
favorable regulatory approval, we may not be successful in securing
adequate reimbursement or establishing successful commercial
operations. Any or all of these factors could have a material
adverse impact on our business and ability to continue
operations.
We may be unable to establish sales, marketing and commercial
supply capabilities.
We do not currently have, nor have we ever had, commercial sales
and marketing capabilities. If any of our product candidates become
approved, we would have to build and establish these capabilities
in order to commercialize our approved product candidates. The
process of establishing commercial capabilities will be expensive
and time consuming. Even if we are successful in building sales and
marketing capabilities, we may not be successful in commercializing
any of our product candidates. Any delays in commercialization or
failure to successfully commercialize any product candidate may
have material adverse impacts on our business and ability to
continue operations.
Our business could be adversely affected by the effects of
health epidemics, including the global COVID-19
pandemic.
The global health crisis caused by the novel coronavirus COVID-19
pandemic and its resurgences has and may continue to negatively
impact global economic activity, which, despite progress in
vaccination efforts, remains uncertain and cannot be predicted with
confidence. In addition, the Omicron variant of COVID-19, which
appears to be the most transmissible variant to date, has spread
globally. The full impact of the Omicron variant, or any subsequent
variant, cannot be predicted at this time, and could depend on
numerous factors, including vaccination rates among the population,
the effectiveness of COVID-19 vaccines against the Omicron variant
and the response by governmental bodies and regulators. Given the
ongoing and dynamic nature of the circumstances, it is difficult to
predict the impact of the COVID-19 pandemic on our business.
Many countries around the world have continued to impose
quarantines and restrictions on travel and mass gatherings to slow
the spread of the virus. Accordingly, our ability to continue to
operate our business may also be limited. Such events may result in
a period of business, supply and drug product manufacturing
disruption, and in reduced operations, any of which could
materially affect our business, financial condition and results of
operations. In response to COVID-19, we implemented remote working
and thus far have not experienced a significant disruption or delay
in our operations as it relates to the clinical development of our
drug candidates. Such government-imposed precautionary measures may
have been relaxed in certain countries or states, but there is no
assurance that more strict measures will be put in place again due
to a resurgence in COVID-19 cases, including those involving new
variants of the coronavirus, which may be more contagious and
deadly than prior strains. Therefore, the COVID-19 pandemic may
continue to affect our operation, may further divert the attention
and efforts of the medical community to coping with COVID-19 and
disrupt the marketplace in which we operate and may have a material
adverse effect on our operations.
A continuation or worsening of the levels of market disruption and
volatility seen in the recent past could have an adverse effect on
our ability to access capital, which could in the future negatively
affect our liquidity. In addition, a recession or market correction
resulting from the spread of COVID-19 could materially affect our
business and the value of our common stock.
We believe our earlier stage CD33 clinical trials will continue to
recruit and enroll patients given the acute nature of relapsed or
refractory AML. The continuation of the pandemic could adversely
affect our planned clinical trial operations, including our ability
to conduct the trials on the expected timelines and recruit and
retain patients and principal investigators and site staff who, as
healthcare providers, may have heightened exposure to COVID-19 if
their geography is impacted by the pandemic. Further, the
continuation and/or resurgence of the COVID-19 pandemic could
result in delays in our clinical trials due to prioritization of
hospital resources toward the pandemic, restrictions in travel,
potential unwillingness of patients to enroll in trials at this
time, or the inability of patients to comply with clinical trial
protocols if quarantines or travel restrictions impede patient
movement or interrupt healthcare services. In addition, we rely on
independent clinical investigators, contract research organizations
and other third-party service providers to assist us in managing,
monitoring and otherwise carrying out our preclinical studies and
clinical trials, and the pandemic may affect their ability to
devote sufficient time and resources to our programs or to travel
to sites to perform work for us, which may result in delays or
hinder our ability to collect data from our clinical trials.
Additionally, COVID-19 may result in delays in receiving approvals
from domestic and foreign regulatory authorities, delays in
necessary interactions with Institutional Review Boards (“IRBs”),
domestic and foreign regulators, ethics committees and other
important agencies and contractors due to limitations in employee
resources or forced furlough of government employees.
We continue to monitor the impacts of COVID-19 on the global
economy and on our business operations. However, the ultimate
impact from COVID-19 on our business operations and financial
results during 2022 will depend on, among other things, the
ultimate severity and scope of the pandemic, including the new
variants of the virus, the pace at which governmental and private
travel restrictions and public concerns about public gatherings
will ease, the rate at which historically large increases in
unemployment rates will decrease, if at all, and whether, and the
speed with which the economy recovers. We are not able to fully
quantify the impact that these factors will have on our financial
results during 2022 and beyond.
Our business is subject to cybersecurity risks.
Our operations are increasingly dependent on information
technologies and services. Threats to information technology
systems associated with cybersecurity risks and cyber incidents or
attacks continue to grow, and include, among other things, storms
and natural disasters, terrorist attacks, utility outages, theft,
viruses, phishing, malware, design defects, human error, and
complications encountered as existing systems are maintained,
repaired, replaced, or upgraded. Risks associated with these
threats include, among other things:
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theft
or misappropriation of funds; |
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loss,
corruption, or misappropriation of intellectual property, or other
proprietary, confidential or personally identifiable information
(including supplier, clinical data or employee data); |
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disruption
or impairment of our and our business operations and safety
procedures; |
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damage
to our reputation with our potential partners, patients and the
market; |
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exposure
to litigation; |
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increased
costs to prevent, respond to or mitigate cybersecurity
events. |
Although we utilize various procedures and controls to mitigate our
exposure to such risk, cybersecurity attacks and other cyber events
are evolving and unpredictable. Moreover, we have no control over
the information technology systems of third parties conducting our
clinical trials, our suppliers, and others with which our systems
may connect and communicate. As a result, the occurrence of a cyber
incident could go unnoticed for a period time.
We have cybersecurity insurance coverage in the event we become
subject to various cybersecurity attacks, however, we cannot ensure
that it will be sufficient to cover any particular losses we may
experience as a result of such cyberattacks. Any cyber incident
could have a material adverse effect on our business, financial
condition and results of operations.
Risks Related to Regulation
The FDA or comparable foreign regulatory authorities may
disagree with our regulatory plans and we may fail to obtain
regulatory approval of our product candidates.
Our products are subject to rigorous regulation by the FDA and
numerous other federal, state and foreign governmental authorities.
The process of seeking regulatory approval to market an antibody
radiation-conjugate product is expensive and time-consuming, and,
notwithstanding the effort and expense incurred, approval is never
guaranteed. If we are not successful in obtaining timely approval
of our products from the FDA, we may never be able to generate
significant revenue and may be forced to cease operations. In
particular, the FDA permits commercial distribution of a new
antibody radiation-conjugate product only after a BLA for the
product has received FDA approval. The BLA process is costly,
lengthy and inherently uncertain. Any BLA filed by us will have to
be supported by extensive data, including, but not limited to,
technical, preclinical, clinical trial, chemistry, manufacturing
and controls (“CMC”) and labeling data, to demonstrate to the FDA’s
satisfaction the safety and efficacy of the product for its
intended use. The lengthy approval process as well as the
unpredictability of future clinical trial results may result in our
failing to obtain regulatory approval to market our product
candidates, which would significantly harm our business, results of
operations and prospects. In addition, even if we were to obtain
approval, regulatory authorities may approve any of our product
candidates for fewer or more limited indications than we request,
may not approve the price we intend to charge for our products, may
grant approval contingent on the performance of costly
post-marketing clinical trials, or may approve a product candidate
with a label that does not include the labeling claims necessary or
desirable for the successful commercialization of that product
candidate. Any of the foregoing scenarios could materially harm the
commercial prospects for our product candidates.
The approval process in the United States and in other countries
could result in unexpected and significant costs for us and consume
management’s time and other resources. The FDA and other foreign
regulatory agencies could ask us to supplement our submissions,
collect non-clinical data, conduct additional clinical trials or
engage in other time-consuming actions, or it could simply deny our
applications. In addition, even if we obtain approval to market our
products in the United States or in other countries, the approval
could be revoked, or other restrictions imposed if post-market data
demonstrates safety issues or lack of effectiveness. We cannot
predict with certainty how, or when, the FDA or other regulatory
authorities will act. If we are unable to obtain the necessary
regulatory approvals, our financial condition and cash flow may be
materially adversely affected, and our ability to grow domestically
and internationally may be limited. Additionally, even if we obtain
approval, regulatory authorities may approve any of our product
candidates for fewer or more limited indications that we request.
The Company’s products may not be approved for the specific
indications that are most necessary or desirable for successful
commercialization or profitability.
We have not demonstrated that any of our products are safe
and effective for any indication and will continue to expend
substantial time and resources on clinical development before any
of our current or future product candidates will be eligible for
FDA approval, if ever.
We expect that a substantial portion of our efforts and
expenditures over the next few years will be devoted to development
of our existing and contemplated biological product candidates.
Accordingly, our business currently depends heavily on the
successful development, FDA approval, and commercialization of such
candidates, which may never receive FDA approval or be successfully
commercialized even if FDA approval is received. The research,
testing, manufacturing, labeling, approval, sale, marketing, and
distribution of our biological product candidates are, and will
remain, subject to extensive regulation by the FDA and other
regulatory authorities in the United States and other countries, as
applicable. We are currently not permitted to market any of our
current or future product candidates in the United States until we
receive FDA approval (of each) via the BLA process. To date, we
have two product candidates in clinical development and have
not-yet submitted a BLA for any of our candidates and, for many
such candidates, do not expect to be in a position to do so for the
foreseeable future, as there are numerous developmental steps that
must be completed before we can prepare and submit a BLA.
In the United States, the FDA regulates pharmaceutical and
biological product candidates under the FDCA and the Public Health
Service Act (“PHSA”), as well as their respective implementing
regulations. Such products and product candidates are also subject
to other federal, state, and local statutes and regulations. The
process of obtaining regulatory approvals and the subsequent
compliance with appropriate federal, state, local, and foreign
statutes and regulations requires the expenditure of substantial
time and financial resources. The process required by the FDA
before a drug or biological product may be marketed in the United
States generally involves the following:
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completion
of preclinical laboratory tests and animal studies in accordance
with FDA’s good laboratory practices (“GLPs”) and applicable
requirements for the humane use of laboratory animals or other
applicable regulations; |
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submission
to the FDA of an Investigational New Drug (“IND”), which must
become effective before human clinical trials in the United States
may begin; |
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performance
of adequate and well-controlled human clinical trials in accordance
with FDA’s IND regulations, GCPs, and any additional requirements
for the protection of human research subjects and their health
information, to establish the safety and efficacy of the proposed
biological product for its intended use; |
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submission
to the FDA of a BLA for marketing approval that meets applicable
requirements to ensure the continued safety, purity, and potency of
the product that is the subject of the BLA based on results of
preclinical testing and clinical trials; |
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satisfactory
completion of an FDA inspection of the manufacturing facility or
facilities where the biological product is produced, to assess
compliance with cGMPs and assure that the facilities, methods and
controls are adequate to preserve the biological product’s
identity, strength, quality and purity; |
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potential
FDA audit of the nonclinical study and clinical trial sites that
generated the data in support of the BLA; and |
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FDA
review and approval, or denial, of the BLA. |
Before testing any biological product candidate in humans, the
product candidate enters the preclinical testing stage. Preclinical
tests include laboratory evaluations of product chemistry, toxicity
and formulation, as well as animal studies to assess the potential
safety and activity of the product candidate. The conduct of the
preclinical tests must comply with federal regulations and
requirements including GLPs. The clinical trial sponsor must submit
the results of the preclinical tests, together with manufacturing
information, analytical data, any available clinical data or
literature and a proposed clinical protocol, to the FDA as part of
the IND. Some preclinical testing may continue even after the IND
is submitted. The IND automatically becomes effective 30 days after
receipt by the FDA, unless the FDA raises concerns or questions
regarding the proposed clinical trials and places the trial on a
clinical hold within that 30-day time period. In such a case, the
IND sponsor and the FDA must resolve any outstanding concerns
before the clinical trial can begin. The FDA may also impose
clinical holds on a biological product candidate at any time before
or during clinical trials due to safety concerns or non-compliance.
If the FDA imposes a clinical hold, trials may not recommence
without FDA authorization and then only under terms authorized by
the FDA. Accordingly, we cannot be sure that submission of an IND
will result in the FDA allowing clinical trials to begin or that,
for those that have already commenced under an active IND, that
issues will not arise that suspend or terminate such trials.
Clinical trials involve the administration of the biological
product candidate to healthy volunteers or patients under the
supervision of qualified investigators, generally physicians not
employed by or under the trial sponsor’s control. Clinical trials
are conducted under protocols detailing, among other things, the
objectives of the clinical trial, dosing procedures, subject
selection and exclusion criteria, and the parameters to be used to
monitor subject safety, including stopping rules that assure a
clinical trial will be stopped if certain adverse events should
occur. Each protocol and any amendments to the protocol must be
submitted to the FDA as part of the IND. Clinical trials must be
conducted and monitored in accordance with the FDA’s regulations
composing the GCP requirements, including the requirement that all
research subjects provide informed consent. Further, each clinical
trial must be reviewed and approved by an independent institutional
review board, or IRB, at or servicing each institution at which the
clinical trial will be conducted. An IRB is charged with protecting
the welfare and rights of trial participants and considers such
items as whether the risks to individuals participating in the
clinical trials are minimized and are reasonable in relation to
anticipated benefits. The IRB also approves the form and content of
the informed consent that must be signed by each clinical trial
subject or his or her legal representative and must monitor the
clinical trial until completed. Human clinical trials are typically
conducted in three sequential phases that may overlap or be
combined:
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Phase
1. The biological product is initially introduced into healthy
human subjects and tested for safety. In the case of some products
for severe or life-threatening diseases, especially when the
product may be too inherently toxic to ethically administer to
healthy volunteers, the initial human testing is often conducted in
subjects. |
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Phase
2. The biological product is evaluated in a limited patient
population to identify possible adverse effects and safety risks,
to preliminarily evaluate the efficacy of the product for specific
targeted diseases and to determine dosage tolerance, optimal dosage
and dosing schedule. |
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Phase
3. Clinical trials are undertaken to further evaluate dosage,
clinical efficacy, potency, and safety in an expanded patient
population at geographically dispersed clinical trial sites. These
clinical trials are intended to establish the overall risk to
benefit ratio of the product and provide an adequate basis for
product labeling. |
Post-approval clinical trials, sometimes referred to as Phase 4
clinical trials, may be conducted after initial marketing approval.
These clinical trials are used to gain additional experience from
the treatment of patients in the intended therapeutic indication,
particularly for long-term safety follow-up.
After the completion of clinical trials of a biological product,
FDA approval of a BLA must be obtained before commercial marketing
of the biological product. The BLA must include results of product
development, laboratory and animal studies, human trials,
information on the manufacture and composition of the product,
proposed labeling and other relevant information. The FDA may grant
deferrals for submission of data, or full or partial waivers. The
testing and approval processes require substantial time and effort
and there can be no assurance that the FDA will accept the BLA for
filing and, even if filed, that any approval will be granted on a
timely basis, if at all. Before approving a BLA, the FDA will
inspect the facilities at which the product is manufactured. The
FDA will not approve the product unless it determines that the
manufacturing processes and facilities are in compliance with cGMP
requirements and adequate to assure consistent production of the
product within required specifications. Additionally, before
approving a BLA, the FDA will typically inspect one or more
clinical sites to assure that the clinical trials were conducted in
compliance with IND trial requirements and GCP requirements. To
assure cGMP and GCP compliance, an applicant must incur significant
expenditure of time, money and effort in the areas of training,
record keeping, production, and quality control.
Notwithstanding the submission of relevant data and information,
the FDA may ultimately decide that the BLA does not satisfy its
regulatory criteria for approval and deny approval. Data obtained
from clinical trials are not always conclusive and the FDA may
interpret data differently than we interpret the same data. Our
product candidates are in the earliest stages of clinical
development and, therefore, a long way from BLA submission. We
cannot predict with any certainty if or when we might submit a BLA
for regulatory approval for our product candidates or whether any
such BLA will be approved by the FDA. Human clinical trials are
very expensive and difficult to design and implement, in part
because they are subject to rigorous regulatory requirements. For
example, the FDA may not agree with our proposed endpoints for any
clinical trial we propose, which may delay the commencement of our
clinical trials. The clinical trial process is also lengthy and
requires substantial time and effort.
In December 2015, the FDA cleared our IND filing for Iomab-B and we
have completed patient enrollment of a randomized, controlled,
pivotal Phase 3 clinical trial under such IND to study Iomab-B in
patients 55 years of age or older with relapsed or refractory AML.
Assuming the Phase 3 trial meets its endpoints and there are no
unexpected issues or delays, it is expected to form the basis for a
BLA for Iomab-B for use in preparing and conditioning AML patients
for a BMT. Additionally, there are physician IND trials at the
FHCRC that have been conducted or are currently ongoing at FHCRC
with Iomab-B (for other target indications) and the apamistamab
antibody (formerly known as BC8) we licensed. And, we have multiple
Phase 1 and Phase 2 clinical trials ongoing and others that we have
planned but not-yet commenced, for our other drug candidates under
our own sponsorship and multiple investigator-initiated trials
ongoing. Except for Iomab-B (for patients with AML), we expect that
the clinical trials we need to conduct to be in a position to
submit BLAs for our product candidates currently in-development
will take, at least, several years to complete. Moreover, failure
can occur at any stage of the trials, and we could encounter
problems that cause us to abandon or repeat clinical trials. Also,
the results of early preclinical and clinical testing may not be
predictive of the results of subsequent clinical trials. A number
of companies in the biopharmaceutical industry have suffered
significant setbacks in advanced clinical trials due to lack of
efficacy or adverse safety profiles, notwithstanding promising
results in earlier studies. And, preclinical and clinical data are
often susceptible to multiple interpretations and analyses. Many
companies that have believed their product candidates performed
satisfactorily in preclinical studies and clinical trials have,
nonetheless, failed to obtain marketing approval of their products.
Success in preclinical testing and early clinical trials does not
ensure that later clinical trials, which involve many more
subjects, and the results of later clinical trials may not
replicate the results of prior clinical trials and preclinical
testing. Any failure or substantial delay in our product
development plans may have a material adverse effect on our
business.
We may encounter substantial delays in our clinical trials or
may not be able to conduct our trials on the timelines we
expect.
We cannot predict whether we will encounter problems with any of
our ongoing or planned clinical trials that will cause us or
regulatory authorities to delay, suspend, or discontinue clinical
trials or to delay the analysis of data from ongoing clinical
trials. Any of the following could delay or disrupt the clinical
development of our product candidates and potentially cause our
product candidates to fail to receive regulatory approval:
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conditions
imposed on us by the FDA or comparable foreign authorities
regarding the scope or design of our clinical trials; |
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delays
in receiving, or the inability to obtain, required approvals from
IRBs or other reviewing entities at clinical sites selected for
participation in our clinical trials; |
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delays
in enrolling patients into clinical trials; |
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a
lower than anticipated retention rate of patients in clinical
trials; |
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the
need to repeat or discontinue clinical trials as a result of
inconclusive or negative results or unforeseen complications in
testing or because the results of later trials may not confirm
positive results from earlier preclinical studies or clinical
trials; |
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inadequate
supply, delays in distribution, deficient quality of, or inability
to purchase or manufacture drug product, comparator drugs or other
materials necessary to conduct our clinical trials; |
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unfavorable
FDA or other foreign regulatory inspection and review of a clinical
trial site or records of any clinical or preclinical
investigation; |
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serious
and unexpected drug-related side effects experienced by
participants in our clinical trials, which may occur even if they
were not observed in earlier trials or only observed in a limited
number of participants; |
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a
finding that the trial participants are being exposed to
unacceptable health risks; |
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the
placement by the FDA or a foreign regulatory authority of a
clinical hold on a trial; or |
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delays
in obtaining regulatory agency authorization for the conduct of our
clinical trials. |
We may suspend, or the FDA or other applicable regulatory
authorities may require us to suspend, clinical trials of a product
candidate at any time if we or they believe the patients
participating in such clinical trials, or in independent
third-party clinical trials for drugs based on similar
technologies, are being exposed to unacceptable health risks
including but not limited to unacceptable or suboptimal factors
related to toxicity, clinical efficacy, imbalances in safety and
efficacy profiles or for other reasons.
Further, individuals involved with our clinical trials may serve as
consultants to us from time to time and receive stock options or
cash compensation in connection with such services. If these
relationships and any related compensation to the clinical
investigator carrying out the study result in perceived or actual
conflicts of interest, or the FDA concludes that the financial
relationship may have affected interpretation of the study, the
integrity of the data generated at the applicable clinical trial
site may be questioned and the utility of the clinical trial itself
may be jeopardized. The delay, suspension or discontinuation of any
of our clinical trials, or a delay in the analysis of clinical data
for our product candidates, for any of the foregoing reasons, could
adversely affect our efforts to obtain regulatory approval for and
to commercialize our product candidates, increase our operating
expenses and have a material adverse effect on our financial
results.
Clinical trials may also be delayed or terminated as a result of
ambiguous or negative interim results. In addition, a clinical
trial may be suspended or terminated by us, the FDA, the IRBs at
the sites where the IRBs are overseeing a trial, or a data safety
monitoring board, or DSMB (Data Safety Monitoring Board)/DMC (Data
Monitoring Committee), overseeing the clinical trial at issue, or
other regulatory authorities due to a number of factors,
including:
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failure
to conduct the clinical trial in accordance with regulatory
requirements or our clinical protocols; |
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inspection
of the clinical trial operations or trial sites by the FDA or other
regulatory authorities resulting in the imposition of a clinical
hold; |
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varying
interpretation of data by the FDA or similar foreign regulatory
authorities; |
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failure
to achieve primary or secondary endpoints or other failure to
demonstrate efficacy; |
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unforeseen
safety issues; or |
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lack
of adequate funding to continue the clinical trial. |
Modifications to our product candidates may require federal
approvals.
The BLA application is the vehicle through which the company may
formally propose that the FDA approve a new pharmaceutical for sale
and marketing in the United States. Once a particular product
candidate receives FDA approval, expanded uses or uses in new
indications of our products may require additional human clinical
trials and new regulatory approvals, including additional IND and
BLA submissions and premarket approvals before we can begin
clinical development, and/or prior to marketing and sales. If the
FDA requires new approvals for a particular use or indication, we
may be required to conduct additional clinical studies, which would
require additional expenditures and harm our operating results. If
the products are already being used for these new indications, we
may also be subject to significant enforcement actions.
Conducting clinical trials and obtaining approvals is a
time-consuming process, and delays in obtaining required future
approvals could adversely affect our ability to introduce new or
enhanced products in a timely manner, which in turn would have an
adverse effect on our business prospects, financial condition and
results of operation.
The FDA or comparable foreign regulatory authorities may
disagree with our regulatory plans, and we may fail to obtain
regulatory approval of our product candidates.
In June 2012, we acquired rights to apamistamab, a clinical stage
anti-CD45 monoclonal antibody with safety and efficacy data in more
than 300 patients in need of a BMT. Iomab-B is our product
candidate that links I-131 to apamistamab that is being studied in
the pivotal Phase 3 SIERRA trial. Product candidates utilizing
apamistamab would require BLA approval before they can be marketed
in the United States. We are also evaluating Iomab-ACT, which uses
a lower dose I-131 for lymphodepletion prior to CAR-T or adoptive
cell therapy. We are currently evaluating clinical trials that
would use our construct for lymphodepletion. Our lintuzumab-Ac-225
product candidate is also being studied in several Phase 1 trials
under our sponsorship and investigator-initiated trials in patients
with r/r AML. Product candidates utilizing the lintuzumab antibody
would require BLA approval before they can be marketed in the
United States. We are in the early stages of evaluating other
product candidates consisting of conjugates of Ac-225 with human or
humanized antibodies for pre-clinical and clinical development in
other types of cancer. The FDA may not approve these products for
the indications that are necessary or desirable for successful
commercialization. The FDA may fail to approve any BLA we submit
for new product candidates or for new intended uses or indications
for approved products or future product candidates. Failure to
obtain FDA approval for our products in the proposed indications
would have a material adverse effect on our business prospects,
financial condition and results of operations.
Clinical trials necessary to support approval of our product
candidates are time-consuming and expensive.
Initiating and completing clinical trials necessary to support FDA
approval of a BLA for Iomab-B, CD33 program candidates, and other
product candidates, is a time-consuming and expensive process, and
the outcome is inherently uncertain. Moreover, the results of early
clinical trials are not necessarily predictive of future results,
and any product candidate we advance into clinical trials may not
have favorable results in later clinical trials. We worked with the
FDA to develop the SIERRA clinical trial to test the safety and
efficacy of Iomab-B in patients with relapsed or refractory AML who
are age 55 and above prior to a BMT. This trial is designed to
support a BLA filing for marketing approval by the FDA, pending
results from the trial. In addition to clinical data, a BLA filing
encompasses preclinical, CMC, labeling and other information. Even
if the clinical data from the SIERRA trial is positive, there can
be no assurances that the BLA filing we produce will meet all of
the FDA’s requirements or that they will not request additional
information or studies, which may delay the FDA’s review or we may
not be able to produce. We have also worked with the FDA to develop
a regulatory pathway for lintuzumab-Ac-225 in patients with
high-risk MDS that consists of a dose-confirming Phase 1 trial that
can be followed by a randomized, controlled pivotal trial that
could support a BLA filing. To date, we have not initiated this
clinical trial and we may never elect or be able to do so. There
can be no assurance that the data generated during the trial will
meet our chosen safety and effectiveness endpoints or otherwise
produce results that will eventually support the filing or approval
of a BLA. Even if the data from this trial are favorable, the data
may not be predictive of the results of any future clinical
trials.
Preliminary, Interim, and “top-line” data from our clinical
trials that we announce or publish from time to time may change as
more patient data become available and are subject to audit and
verification procedures that could result in material changes in
the final data.
From time to time, we may publicly disclose preliminary,
interim, and top-line data from our clinical trials, which is based
on a preliminary analysis of then-available data, and the results
and related findings and conclusions are subject to change as more
patient data become available or following a more comprehensive
review of the data related to the particular study or trial. For
example, at the ASH annual meeting in December 2021, we presented
safety and feasibility data available at the time of data
submission from 100% patient enrollment from the SIERRA trial. We
also make assumptions, estimations, calculations and conclusions as
part of our analyses of data, and we may not have received or had
the opportunity to fully and carefully evaluate all data. Our
clinical trials may be open label studies and certain of our
clinical development and or operations staff may review interim or
preliminary safety or efficacy data during routine data collection,
cleaning and analysis from time to time. Interim or preliminary
results that we report may differ from future results of the same
studies, or different conclusions or considerations may qualify
such results once additional data have been received and fully
evaluated. Preliminary, interim or top-line data also remain
subject to audit and verification procedures that may result in the
final data being materially different from the top-line, interim or
preliminary data we previously published. As a result, top-line,
interim and preliminary data should be viewed with caution until
the final data are available.
From time to time, we may also disclose interim data from our
preclinical studies and clinical trials. Interim data from clinical
trials that we may complete are subject to the risk that one or
more of the clinical outcomes may materially change as patient
enrollment continues and more patient data become available.
Adverse differences between interim data and final data could
significantly harm our business prospects. Further, disclosure of
interim data by us or by our competitors could result in volatility
in the price of our common stock.
Further, others, including regulatory agencies, may not accept or
agree with our assumptions, estimates, calculations, conclusions or
analyses or may interpret or weigh the importance of data
differently, which could impact the value of the particular
program, the approvability or commercialization of the particular
product candidate or product and our company in general. In
addition, the information we choose to publicly disclose regarding
a particular study or clinical trial is based on what is typically
extensive information, and you or others may not agree with what we
determine is material or otherwise appropriate information to
include in our disclosure.
If the interim, top-line or preliminary data that we report differ
from final results, or if others, including regulatory authorities,
disagree with the conclusions reached, our ability to obtain
approval for, and commercialize, our product candidates may be
harmed, which could harm our business, operating results, prospects
or financial condition.
Our clinical trials may fail to demonstrate adequately the
efficacy and safety of our product candidates, which would prevent
or delay regulatory approval and commercialization.
Even if our clinical trials are completed as planned, we cannot be
certain that their results will support our product candidate
claims or that the FDA or foreign authorities will agree with our
conclusions regarding them. Success in pre-clinical studies and
early clinical trials does not ensure that later clinical trials
will be successful, and we cannot be sure that the later trials
will replicate the results of prior trials and pre-clinical
studies. The clinical trial process may fail to demonstrate that
our product candidates are safe and effective for the proposed
indicated uses. If FDA concludes that the clinical trials for
Iomab-B, Actimab-A, or any other product candidate for which we
might seek approval, have failed to demonstrate safety and
effectiveness, we would not receive FDA approval to market that
product candidate in the United States for the indications sought.
In addition, such an outcome could cause us to abandon the product
candidate and might delay development of others. Any delay or
termination of our clinical trials will delay or preclude the
filing of any submissions with the FDA and, ultimately, our ability
to commercialize our product candidates and generate revenues. It
is also possible that patients enrolled in clinical trials will
experience adverse side effects that are not currently part of a
product candidate’s profile.
The intellectual property related to antibodies we have
licensed has expired or likely expired.
The key patents related to the humanized antibody, lintuzumab,
which we use in our CD33 program product candidates have expired.
It is generally possible that others may be eventually able to use
an antibody with the same sequence, and we will then need to rely
on additional patent protection covering alpha particle drug
products comprising Ac-225. Our final drug construct consists of
the lintuzumab antibody labeled with the isotope Ac-225. We have
licensed issued patents that relate to the linker technology we use
to conjugate the isotope to the antibody. Further, we own issued
and pending patents related to methods for drug conjugation and
isotope labeling and for methods of isotope production. In
addition, we possess trade secrets and know how related to the
manufacturing and use of isotopes. Any competing product based on
the lintuzumab antibody is likely to require several years of
development before achieving our product candidate’s current status
and may be subject to significant regulatory hurdles but such
development by others is nevertheless a possibility that could
negatively impact our business in the future. We own 2 issued U.S.
patents, 1 issued European patent (validated as a national patent
in several countries) and 1 issued Japanese patent that relate to
the composition of our Iomab-B product candidate. Several patent
applications relating to Iomab-B are also pending in the U.S. and
internationally. We have and may continue to file patents related
to Iomab-B that can provide barriers to entry but there is no
certainty that these patents will be granted or such granting
thereof will adequately prevent others from seeking to replicate
and use the apamistamab antibody or the construct. We have pending
patents related to radioimmunoconjugate composition, formulation
administration, and methods of use in solid or liquid cancers. This
matter includes composition, administration, and methods of
treatment for our products Actimab-A and Iomab-B. Any competing
product based on the antibody used in Iomab-B is likely to require
several years of development before achieving our product
candidate’s current status and may be subject to significant
regulatory hurdles but such development by others is nevertheless a
possibility that could negatively impact our business in the
future.
Our CD33 program clinical trials are testing the same drug
construct.
Our CD33 program is comprised of several clinical trials including
investigator-initiated trials in AML that are studying the same
drug construct consisting of lintuzumab-Ac-225. Negative results
from any of these trials could negatively impact our ability to
enroll or complete our other trials studying lintzumab-Ac-225.
Additionally, negative outcomes including safety concerns, may
result in the FDA discontinuing other trials utilizing
lintuzumab-Ac-225.
We may be unable to obtain a sufficient supply of isotopes to
support clinical development or at commercial
scale.
Iodine-131 is a key component of our Iomab-B drug candidate. We
currently source medical grade I-131 from three suppliers including
two leading global manufacturers. Currently, there is sufficient
supply of I-131 to advance our ongoing SIERRA clinical trial,
support additional trials we may undertake utilizing I-131 and for
commercialization of Iomab-B. We continually evaluate I-131
manufacturers and suppliers and intend to have multiple qualified
suppliers prior to the commercial launch of Iomab-B. While we
consider I-131 to be commoditized and obtainable through several
suppliers, there can be no guarantee that we will be able to secure
I-131 or obtain I-131 on terms that are acceptable to us.
Actinium-225 is a key component of our CD33 ARC program, AWE
platform and other drug candidates that we might consider for
development with the Ac-225 payload. There are adequate quantities
of Ac-225 available today to meet our current needs via our present
supplier, the Department of Energy (“DOE”). The current Ac-225
currently supplied to Actinium’s clinical trials from the DOE is
derived from the natural decay of thorium-229 from so-called
‘thorium-cows’ and is able to produce sufficient quantities that
are several multiples of the amount of Ac-225 we require to supply
our clinical programs through to early commercialization phase. The
DOE is also producing Ac-225 from a recently developed alternative
route for Ac-225 production via a linear accelerator that is
currently being evaluated by Actinium. Initial preclinical and
modelling results have indicated that the linear accelerator
sourced Ac-225 does not impact labelling efficiency and expected
distribution. In accordance with representations made by the DOE,
the capacity of Ac-225 from this route is expected to be sufficient
to supply all of Actinium’s pipeline and commercial Ac-225 needs
and support new program expansion by not just Actinium but also
other companies that are developing Ac-225 based products.
Additional routes of Ac-225 production are being pursued by the DOE
including the generation of new thorium cows and production via a
cyclotron. The cyclotron production method for Ac-225 production
leverages Actinium’s proprietary technology and know-how and
presents an additional path towards production of high-quality
Ac-225 that would be able to satisfy commercial needs. In addition,
we are aware of at least six other government and non-government
entities globally including the U.S., Canada, Russia, Belgium,
France and Japan that have, or expect to have ability to supply
Ac-225 or equipment for its production within the timeframes
relevant to the potential first commercial approval of our Ac-225
ARC.
Our contract for supply of this isotope from the DOE must be
renewed yearly, we recently renewed our contract to extend through
the end of 2022. While we expect this contract will continue to be
renewed at the end of its term as it has since 2009, there can be
no assurance that the DOE will renew the contract or that change
its policies that allow for the sale of isotope to us. Failure to
acquire sufficient quantities of medical grade Ac-225 would make it
impossible to effectively complete clinical trials and to
commercialize any Ac-225 based drug candidates that we may develop
and would materially harm our business.
Our ability to conduct clinical trials to advance our ARC drug
candidates is dependent on our ability to obtain the radioisotopes
I-131, Ac-225 and other isotopes we may choose to utilize in the
future. Currently, we are dependent on third party manufacturers
and suppliers for our isotopes. These suppliers may not perform
their contracted services or may breach or terminate their
agreements with us. Our suppliers are subject to regulations and
standards that are overseen by regulatory and government agencies
and we have no control over our suppliers’ compliance to these
standards. Failure to comply with regulations and standards may
result in their inability to supply isotope could result in delays
in our clinical trials, which could have a negative impact on our
business. We have developed intellectual property, know-how and
trade secrets related to the manufacturing process of Ac-225. While
we have manufactured medical grade Ac-225 of a purity compared to
the cyclotron sourced material in the past, this activity was
terminated due to operating cost reasons and we currently do not
have experience in manufacturing medical grade Ac-225 and may not
obtain the resources necessary to establish our own manufacturing
capabilities in future. Our inability to build out and establish
our own manufacturing facilities would require us to continue to
rely on third party suppliers as we currently do. However, based on
our current third-party suppliers and potential future suppliers of
Ac-225 we expect to have adequate isotope supply to support our
current ongoing clinical trials, current AWE program activities and
commercialization should our drug candidates receive approval.
If we encounter difficulties enrolling patients in our
clinical trials, our clinical development activities could be
delayed or otherwise adversely affected.
The timely completion of clinical trials in accordance with their
protocols depends on our ability to enroll a sufficient number of
patients who remain in the trial until its conclusion. We may
experience difficulties in patient enrollment in our clinical
trials for a variety of reasons, including:
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size and nature of the patient population; |
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the
patient eligibility criteria defined in the protocol; |
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the
size of the study population required for analysis of the trial’s
primary endpoints;
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the
proximity of patients to trial sites; |
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the
design of the trial; |
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our
ability to recruit clinical trial investigators with the
appropriate competencies and expertise; |
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competing
clinical trials for similar or alternate therapeutic
treatments; |
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clinician’s
and patients’ perceptions as to the potential advantages and side
effects of the product candidate being studied in relation to other
available therapies; |
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our
ability to obtain and maintain patient consents; and |
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the
risk that patients enrolled in clinical trials will not complete a
clinical trial. |
In addition, refractory patients, which several of our trials are
enrolling, participating in clinical trials are seriously and often
terminally ill and therefore may not complete the clinical trial
due to reasons including comorbid conditions or occurrence of
adverse medical events related or unrelated to the investigational
products, or death. Even if we are able to enroll a sufficient
number of patients in our clinical trials, delays in patient
enrollment will result in increased costs or affect the timing of
our planned trials, which could adversely affect our ability to
advance the development of our product candidates.
FDA may take actions that would prolong, delay, suspend, or
terminate clinical trials of our product candidates, which may
delay or prevent us from commercializing our product candidates on
a timely basis.
There can be no assurance that the data generated in our clinical
trials will be acceptable to FDA or that if future modifications
during the trial are necessary, that any such modifications will be
acceptable to FDA. Certain modifications to a clinical trial
protocol made during the course of the clinical trial have to be
submitted to the FDA. This could result in the delay or halt of a
clinical trial while the modification is evaluated. In addition,
depending on the quantity and nature of the changes made, FDA could
take the position that some or all of the data generated by the
clinical trial is not usable because the same protocol was not used
throughout the trial. This might require the enrollment of
additional subjects, which could result in the extension of the
clinical trial and the FDA delaying approval of a product
candidate. If the FDA believes that its prior approval is required
for a particular modification, it can delay or halt a clinical
trial while it evaluates additional information regarding the
change.
Any delay or termination of our current or future clinical trials
as a result of the risks summarized above, including delays in
obtaining or maintaining required approvals from IRBs, delays in
patient enrollment, the failure of patients to continue to
participate in a clinical trial, and delays or termination of
clinical trials as a result of protocol modifications or adverse
events during the trials, may cause an increase in costs and delays
in the filing of any submissions with the FDA, delay the approval
and commercialization of our product candidates or result in the
failure of the clinical trial, which could adversely affect our
business, operating results and prospects. Lengthy delays in the
completion of our Iomab-B clinical trials would adversely affect
our business and prospects and could cause us to cease
operations.
We have obtained orphan drug designation from FDA for two of
our current product candidates and intend to pursue such
designation for other candidates and indications in the future, but
we may be unable to obtain such designations or to maintain the
benefits associated with any orphan drug designations we have
received or may receive in the future.
We have received orphan drug designation for Iomab-B and
lintuzumab-CD33 ARC for treatment of AML in both the United States
and the EU. Under the Orphan Drug Act, the FDA may grant orphan
designation to a drug or biologic intended to treat a rare disease
or condition, which is a disease or condition that affects fewer
than 200,000 individuals in the United States, or if it affects
more than 200,000 individuals in the United States, there is no
reasonable expectation that the cost of developing and making
available a drug or biologic for this type of disease or condition
will be recovered from sales in the United States for that drug or
biologic. Similarly, the EMA grants orphan drug designation to
promote the development of products that are intended for the
diagnosis, prevention, or treatment of a life-threatening or
chronically debilitating condition affecting not more than five in
10,000 persons in the EU.
Orphan drug designation neither shortens the development time or
regulatory review time of a drug or biologic nor gives the drug or
biologic any advantage in the regulatory review or approval
process. In the United States, orphan drug designation entitles a
party to financial incentives, such as opportunities for grant
funding towards clinical trial costs, tax advantages, and
application fee waivers. In addition, if a product candidate
receives the first FDA approval for the indication for which it has
orphan designation, such product is entitled, upon approval, to
seven years of orphan-drug exclusivity, during which the FDA may
not approve any other application to market the same drug for the
same indication, unless a subsequently approved product is
clinically superior to orphan drug or where the manufacturer is
unable to assure sufficient product quantity in the applicable
patient population. In the EU, orphan drug designation entitles a
party to financial incentives such as reduction of fees or fee
waivers and ten years of market exclusivity following drug or
biological product approval. This period may be reduced to six
years if the orphan drug designation criteria are no longer met,
including where it is shown that the product is sufficiently
profitable not to justify maintenance of market exclusivity.
Even if we obtain (or have obtained) orphan drug designation for
certain product candidates, we may not be the first to obtain
marketing approval for such candidates for the applicable
indications due to the uncertainties inherent in the development of
novel biologic products. And, an orphan drug candidate may not
receive orphan-drug exclusivity upon approval if such candidate is
approved for a use that is broader than the indication for which it
received orphan designation. In addition, exclusive marketing
rights in the United States may be lost if the FDA later determines
that the request for designation was materially defective or if the
manufacturer is unable to assure sufficient quantities of the
product to meet the needs of patients with the rare disease or
condition.
Finally, even if we successfully obtain orphan-drug exclusivity for
an orphan drug candidate upon approval, such exclusivity may not
effectively protect the product from competition because (i)
different drugs with different active moieties can be approved for
the same condition; and (ii) the FDA or EMA can also subsequently
approve a subsequent product with the same active moiety and for
the same indication as the orphan drug if the later-approved drug
if deemed clinically superior to the orphan drug.
Even if we receive regulatory approval of our product
candidates, we will be subject to ongoing regulatory obligations
and continued regulatory review.
Any regulatory approvals that we receive for our product candidates
will require surveillance to monitor the safety and efficacy of the
product candidate. The FDA may also require a REMS in order to
approve our product candidates, which could entail requirements for
a medication guide, physician communication plans or additional
elements to ensure safe use, such as restricted distribution
methods, patient registries and other risk minimization tools. In
addition, if the FDA or a comparable foreign regulatory authority
approves our product candidates, the manufacturing processes,
labeling, packaging, distribution, adverse event reporting,
storage, advertising, promotion, import, export and recordkeeping
for our product candidates will be subject to extensive and ongoing
regulatory requirements. These requirements include submissions of
safety and other post-marketing information and reports,
registration, as well as continued compliance with cGMPs and GCPs
for any clinical trials that we conduct post-approval. In addition,
the FDA could require us to conduct another study to obtain
additional safety or biomarker information. Later discovery of
previously unknown problems with our product candidates, including
adverse events of unanticipated severity or frequency, or with our
third-party suppliers or manufacturing processes, or failure to
comply with regulatory requirements, may result in, among other
things:
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restrictions
on the marketing or manufacturing of our product candidates,
withdrawal of the product from the market, or voluntary or
mandatory product recalls; |
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fines,
warning letters or holds on clinical trials; |
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refusal
by the FDA to approve pending applications or supplements to
approved applications filed by us or suspension or revocation of
license approvals; |
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product
seizure or detention, or refusal to permit the import or export of
our product candidates; and |
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injunctions
or the imposition of civil or criminal penalties. |
The FDA’s and other regulatory authorities’ policies may change,
and additional government regulations may be enacted that could
prevent, limit or delay regulatory approval of our product
candidates. We cannot predict the likelihood, nature or extent of
government regulation that may arise from future legislation or
administrative action, either in the United States or abroad. If we
are slow or unable to adapt to changes in existing requirements or
the adoption of new requirements or policies, or if we are not able
to maintain regulatory compliance, we may lose any marketing
approval that we may have obtained, and we may not achieve or
sustain profitability.
Coverage and reimbursement may be limited or unavailable in
certain market segments for our product candidates which could
limit our sales of our product candidates, if approved.
The commercial success of our product candidates in both domestic
and international markets will be substantially dependent on
whether third-party coverage and reimbursement is available for
patients that use our products. However, the availability of
insurance coverage and reimbursement for newly approved cancer
therapies is uncertain, and therefore, third-party coverage may be
particularly difficult to obtain even if our products are approved
by the FDA as safe and efficacious. Patients using existing
approved therapies are generally reimbursed all or part of the
product cost by Medicare or other third-party payors. Medicare,
Medicaid, health maintenance organizations and other third-party
payors are increasingly attempting to contain healthcare costs by
limiting both coverage and the level of reimbursement of new drugs,
and, as a result, they may not cover or provide adequate payment
for these products. Submission of applications for reimbursement
approval generally does not occur prior to the filing of a BLA for
that product and may not be granted until many months after BLA
approval. In order to obtain coverage and reimbursement for these
products, we or our commercialization partners may have to agree to
a net sales price lower than the net sales price we might charge in
other sales channels. The continuing efforts of government and
third-party payors to contain or reduce the costs of healthcare may
limit our revenue. Initial dependence on the commercial success of
our products may make our revenues particularly susceptible to any
cost containment or reduction efforts.
Healthcare legislative reform measures intended to increase
pressure to reduce prices of pharmaceutical products paid for by
Medicare or, otherwise, affect the federal regulation of the U.S.
healthcare system could have a material adverse effect our
business, future revenue, if any, and results of
operations.
In the United States, there have been a number of legislative and
regulatory initiatives focused on containing the cost of
healthcare. The Affordable Care Act, for example, substantially
changed the way healthcare is financed by both governmental and
private insurers. The Affordable Care Act contains a number of
provisions that could impact our business and operations,
primarily, once we obtain FDA approval to commercialize one of our
product candidates in the United States, if ever, and may also
affect our operations in ways we cannot currently predict.
Affordable Care Act provisions that may affect our business
include, among others, those governing enrollment in federal
healthcare programs, reimbursement changes, rules regarding
prescription drug benefits under health insurance exchanges,
expansion of the 340B program, expansion of state Medicaid
programs, fees and increased discount and rebate obligations,
transparency and reporting requirements, and fraud and abuse
enforcement. Such changes may impact existing government healthcare
programs, industry competition, formulary composition, and may
result in the development of new programs, including Medicare
payment for performance initiatives, health technology assessments,
and improvements to the physician quality reporting system and
feedback program.
There have been significant ongoing judicial, administrative,
executive, and legislative initiatives to modify, limit, replace,
or repeal the Affordable Care Act. For example, former President
Trump issued several Executive Orders and other directives designed
to delay the implementation of certain provisions of the Affordable
Care Act or otherwise circumvent some of the requirements for
health insurance mandated by the Affordable Care Act. Concurrently,
Congress considered legislation that would repeal or replace all or
part of the Affordable Care Act. While Congress has not passed
comprehensive repeal legislation, several bills affecting the
implementation the Affordable Care Act have been passed. For
example, the Tax Cuts and Jobs Act of 2017 eliminated the
Affordable Care Act provision requiring individuals to purchase and
maintain health coverage, or the “individual mandate,” by reducing
the associated penalty to zero, beginning in 2019. In December
2018, a district court in Texas held that the individual mandate is
unconstitutional and that the rest of the Affordable Care Act is,
therefore, invalid. On appeal, the Fifth Circuit Court of Appeals
affirmed the holding on the individual mandate but remanded the
case back to the lower court to reassess whether and how such
holding affects the validity of the rest of the Affordable Care
Act. The Fifth Circuit’s decision on the individual mandate was
appealed to the U.S. Supreme Court. On June 17, 2021, the Supreme
Court held that the plaintiffs (comprised of the state of Texas, as
well as numerous other states and certain individuals) did not have
standing to challenge the constitutionality of the Affordable Care
Act’s individual mandate and, accordingly, vacated the Fifth
Circuit’s decision and instructed the district court to dismiss the
case. As a result, the Affordable Care Act will remain in-effect in
its current form for the foreseeable future; however, we cannot
predict what additional challenges may arise in the future, the
outcome thereof, or the impact any such actions may have on our
business.
The adoption or implementation of new or amended legislation at the
federal or state level could affect our ability to obtain
regulatory approval for any of our vaccine candidates and the
commercial viability of our future approved products, if any. We
cannot predict the ultimate nature, timing, or effect of any
changes to the Affordable Care Act or other federal and state
reform efforts, and there is no assurance that such efforts will
not adversely affect our future business and financial results.
In addition to the Affordable Care Act, there have been several
recent Congressional inquiries and proposed and enacted federal and
state legislation designed to, among other things, bring more
transparency to drug pricing, review the relationship between
pricing and manufacturer patient programs, and reform government
program reimbursement methodologies for drug products.
Pharmaceutical product prices have been the focus of increased
scrutiny by the government, including certain state attorneys
general, members of Congress and the United States Department of
Justice. State or federal healthcare reform measures or other
social or political pressure to lower the cost of pharmaceutical
products could have a material adverse impact on our business,
results of operations and financial condition.
The Biden administration also introduced various measures in 2021
focusing on healthcare and drug pricing, in particular. For
example, on January 28, 2021, President Biden issued an executive
order that initiated a special enrollment period for purposes of
obtaining health insurance coverage through the Affordable Care Act
marketplace, which began on February 15, 2021, and remained open
through August 15, 2021. The executive order also instructed
certain governmental agencies to review and reconsider their
existing policies and rules that limit access to healthcare,
including among others, reexamining Medicaid demonstration projects
and waiver programs that include work requirements and policies
that create unnecessary barriers to obtaining access to health
insurance coverage through Medicaid or the Affordable Care Act. On
the legislative front, the American Rescue Plan Act of 2021 was
signed into law on March 11, 2021, which, in relevant part,
eliminates the statutory Medicaid drug rebate cap, currently set at
100% of a drug’s average manufacturer price, for single source
drugs and innovator multiple source drugs, beginning January 1,
2024. And, in July 2021, the Biden administration released an
executive order entitled, “Promoting Competition in the American
Economy,” with multiple provisions aimed at prescription drugs. In
response, on September 9, 2021, HHS released a “Comprehensive Plan
for Addressing High Drug Prices” that outlines principles for drug
pricing reform and sets out a variety of potential legislative
policies that Congress could pursue as well as potential
administrative actions HHS can take to advance these principles.
And, in November 2021, President Biden announced the “Prescription
Drug Pricing Plan” as part of the Build Back Better Act (H.R. 5376)
passed by the House of Representatives on November 19, 2021, which
aims to lower prescription drug pricing by, among other things,
allowing Medicare to negotiate prices for certain high-cost
prescription drugs covered under Medicare Part D and Part B after
the drugs have been on the market for a certain number of years and
imposing tax penalties on drug manufacturers that refuse to
negotiate pricing with Medicare or increase drug prices “faster
than inflation.” If enacted, this bill could have a substantial
impact on our business, particularly once we have commercially
available products on the U.S. market, if ever. In the coming
years, additional legislative and regulatory changes could be made
to governmental health programs that could significantly impact
pharmaceutical companies and the potential success of our vaccine
candidates.
Our relationships with customers, health care professionals
and third-party payors may be subject to applicable healthcare
laws, which could expose us to penalties, including administrative,
civil or criminal penalties, damages, fines, imprisonment,
exclusion from participation in federal healthcare programs such as
Medicare and Medicaid, reputational harm, the curtailment or
restructuring of our operations and diminished future profits and
earnings.
Healthcare professionals and third-party payors will play a primary
role in the recommendation and prescription of any product
candidates for which we obtain marketing approval. Our current and
future arrangements with customers, healthcare professionals and
third-party payors may expose us to broadly applicable fraud and
abuse and other healthcare laws and regulations that may constrain
the business or financial arrangements and relationships through
which we conduct research, market, sell and distribute any products
for which we obtain marketing approval. Federal and state
healthcare laws and regulations that may affect our operations,
directly or indirectly, include the following, among others:
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the
federal Anti-Kickback Statute, which prohibits persons and entities
from, among other things, knowingly and willfully soliciting,
offering, receiving or providing remuneration, directly or
indirectly, in cash or in kind, to induce or reward either the
referral of an individual for, or the purchase, lease, order or
recommendation of, any good, facility, item or service, for which
payment may be made under federal and state healthcare programs
such as Medicare and Medicaid; |
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the
federal false claims laws, including civil whistleblower or qui tam
actions under the federal False Claims Act, which impose criminal
and civil penalties against individuals or entities for, among
other things, knowingly presenting, or causing to be presented, to
the federal government, claims for payment that are false or
fraudulent or making a false statement to avoid, decrease or
conceal an obligation to pay money to the federal
government; |
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the
federal Health Insurance Portability and Accountability Act of
1996, or HIPAA, as amended by the Health Information Technology for
Economic and Clinical Health Act of 2009, or HITECH, which imposes
criminal and civil liability for, among other things, executing a
scheme to defraud any healthcare benefit program or making false
statements relating to healthcare matters and also imposes
obligations, including mandatory contractual terms, on covered
entities, including certain healthcare providers, health plans, and
healthcare clearinghouses, and their respective business associates
that create, receive, maintain or transmit individually
identifiable health information for or on behalf of the covered
entity as well as their covered subcontractors, with respect to
safeguarding the privacy, security and transmission of individually
identifiable health information; |
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the
federal Civil Monetary Penalties Law, which prohibits, among other
things, the offering or transfer of remuneration to a Medicare or
state healthcare program beneficiary if the person knows or should
know it is likely to influence the beneficiary’s selection of a
particular provider, practitioner, or supplier of services
reimbursable by Medicare or a state healthcare program, unless an
exception applies;
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the
federal Physician Payments Sunshine Act, created under the
Affordable Care Act, and its implementing regulations, which
requires certain manufacturers of drugs, devices, biologicals and
medical supplies for which payment is available under Medicare,
Medicaid or the Children’s Health Insurance Program (with certain
exceptions) to report annually information related to certain
payments or other transfers of value provided to physicians and any
ownership and investment interests held by physicians or their
immediate family members. Beginning in 2022, applicable
manufacturers also will be required to report such information
regarding payments and other transfers of value to physician
assistants, nurse practitioners, clinical nurse specialists,
anesthesiologist assistants, certified registered nurse
anesthetists and certified nurse midwives during the previous year;
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analogous
state laws and regulations, including (among others) state
anti-kickback and false claims laws, which may apply to our
business practices, including, but not limited to, research,
distribution, sales and marketing arrangements and claims involving
healthcare items or services reimbursed by any third-party payor,
including private insurers; state laws that require pharmaceutical
companies to comply with the pharmaceutical industry’s voluntary
compliance guidelines and the relevant compliance guidance
promulgated by the United States federal government, or otherwise
restrict payments that may be made to healthcare providers and
other potential referral sources; state laws and regulations that
require drug manufacturers to file reports relating to pricing and
marketing information and that require tracking gifts and other
remuneration and items of value provided to healthcare
professionals and entities; state and local laws that require the
registration of pharmaceutical sales representatives; and state
laws governing the privacy and security of health information in
certain circumstances, many of which differ from each other in
significant ways and often are not preempted by federal law, thus
complicating compliance efforts. |
Efforts to comply with applicable healthcare laws and regulations
will involve substantial costs. Interpretations of standards of
compliance under these laws and regulations are rapidly changing
and subject to varying interpretations and it is possible that
governmental authorities will conclude that our business practices
may not comply with current or future statutes, regulations or case
law involving applicable fraud and abuse or other healthcare laws
and regulations. If our operations are found to be in violation of
any of these laws or any other laws that may apply to us, we may be
subject to significant civil, criminal and administrative
penalties, damages, fines, exclusion from government funded
healthcare programs, such as Medicare and Medicaid, reputational
harm, imprisonment, additional reporting obligations and oversight
(if we become subject to a corporate integrity agreement or other
agreement to resolve allegations of non-compliance with these
laws), and the curtailment or restructuring of our operations, any
of which could diminish our future profits or earnings. If any of
the physicians or other providers or entities with whom we expect
to do business are found to be not in compliance with applicable
laws, they may be subject to criminal, civil or administrative
sanctions, including exclusions from government funded healthcare
programs.
Third-party payors may not adequately reimburse customers for
any of our products that we may commercialize or promote, and may
impose coverage restrictions or limitations such as prior
authorizations and step edits that affect their use.
Our ability to commercialize any product candidates successfully
also will depend in part on the extent to which coverage and
adequate reimbursement for these products and related treatments
will be available from government health programs, private health
insurers, integrated delivery networks and other third-party
payors. Third-party payors decide which medications they will pay
for and establish reimbursement levels. A significant trend in the
United States healthcare industry and elsewhere is cost
containment. Government authorities and third-party payors have
attempted to control costs by limiting coverage and the amount of
payment for particular medications. Increasingly, third-party
payors are requiring that drug companies provide predetermined
discounts from list prices and are challenging the prices charged
for medical products. Coverage and reimbursement may not be
available for any product that we commercialize and, if
reimbursement is available, the level of reimbursement may not be
sufficient for commercial success. Coverage and reimbursement may
impact the demand for, or the price of, any product candidate for
which we obtain marketing approval. If coverage and reimbursement
is not available or is available only to limited levels, we may not
be able to successfully commercialize any product candidate for
which we obtain marketing approval.
Obtaining reimbursement approval for any product candidate for
which we obtain marketing approval from any government or other
third-party payor is a time-consuming and costly process. There may
be significant delays in obtaining coverage and adequate
reimbursement for newly approved products. Moreover, eligibility
for coverage and reimbursement does not imply that any product will
be paid for in all cases or at a rate that covers our costs,
including research, development, manufacture, sale and
distribution. Even when a payor determines that a product that we
may commercialize or promote is eligible for reimbursement under
its criteria, the payor may impose coverage limitations that
preclude payment for some uses that are approved by the FDA, or may
impose restrictions, such as prior authorization requirements, or
may simply deny coverage altogether. Interim reimbursement levels
for new drugs, if applicable, may also not be sufficient to cover
our costs and may not be made permanent. Coverage and reimbursement
rates may vary according to the use of the drug and the medical
circumstances under which it is used may be based on reimbursement
levels already set for lower cost products or procedures or may be
incorporated into existing payments for other services. Net prices
for drugs may be reduced by mandatory discounts or rebates required
by government healthcare programs or private payors and by any
future relaxation of laws that presently restrict imports of drugs
from countries where they may be sold at lower prices than in the
United States. Furthermore, the Centers for Medicare and Medicaid
Services frequently change product descriptors, coverage policies,
product and service codes, payment methodologies and reimbursement
values. Commercial third-party payors often rely upon Medicare
coverage policies and payment limitations in setting their own
reimbursement policies. Our inability to promptly obtain and
maintain coverage and profitable payment rates from both
government-funded programs and private payors for any approved
products that we develop could have a material adverse effect on
our operating results, our ability to raise capital needed to
commercialize our approved products and our overall financial
condition.
Risks Related to Third Parties
We rely on third parties to conduct our clinical trials. If
these third parties do not successfully carry out their contractual
duties or meet expected deadlines or comply with regulatory
requirements, we may not be able to obtain regulatory approval for
or commercialize our product candidates.
We do not have the ability to independently conduct our clinical
trials for our product candidates and we must rely on third
parties, such as contract research organizations, medical
institutions, clinical investigators and contract laboratories to
conduct such trials. Our reliance on these third parties for
clinical development activities results in reduced control over
these activities. Moreover, the FDA requires us to comply with
regulations and standards, commonly referred to as GCPs (good
clinical practices), for conducting, recording and reporting the
results of clinical trials to assure that data and reported results
are credible and accurate and that the trial participants are
adequately protected. Our reliance on third parties does not
relieve us of these responsibilities and requirements. If we or any
of our third-party contractors fail to comply with applicable GCPs,
the clinical data generated in our clinical trials may be deemed
unreliable and the FDA or comparable foreign regulatory authorities
may require us to perform additional clinical trials before
approving our marketing applications. We cannot assure you that
upon inspection by a given regulatory authority, such regulatory
authority will determine that any of our clinical trials complies
with GCP regulations. In addition, our clinical trials must be
conducted with product produced under current good manufacturing
practice, or cGMP, regulations. Our failure to comply with these
regulations may require us to repeat clinical trials, which would
delay the regulatory approval process.
If our consultants, contract research organizations and other
similar entities with which we are working do not successfully
carry out their contractual duties, meet expected deadlines, or
comply with applicable regulations, we may be required to replace
them. Although we believe that there are a number of other
third-party contractors we could engage to continue these
activities, we may not be able to enter into arrangements with
alternative third-party contractors or to do so on commercially
reasonable terms, which may result in a delay of our planned
clinical trials and delayed development of our product
candidates.
In addition, our third-party contractors are not our employees, and
except for remedies available to us under our agreements with such
third-party contractors, we cannot control whether or not they
devote sufficient time and resources to our programs. If these
third parties do not successfully carry out their contractual
duties or regulatory obligations or meet expected deadlines, or if
the quality or accuracy of the data they obtain is compromised due
to the failure to adhere to our clinical protocols or regulatory
requirements or for other reasons, our pre-clinical development
activities or clinical trials may be extended, delayed, suspended
or terminated, and we may not be able to obtain regulatory approval
for, or successfully commercialize, our product candidates on a
timely basis, if at all, and our business, operating results and
prospects would be adversely affected.
The antibodies we use in our antibody radiation-conjugate
product candidates may be subject to generic
competition.
We are not aware of any existing or pending regulations or
legislation that pertains to generic radiopharmaceutical products
such as our antibody radiation-conjugate product candidates. Our
product candidates are regulated by the FDA as biologic products
and we intend to seek approval for these products pursuant to the
BLA pathway. The Biologics Price Competition and Innovation Act of
2009, or BPCIA, created an abbreviated pathway for the approval of
biosimilar and interchangeable biologic products. The abbreviated
regulatory pathway establishes legal authority for the FDA to
review and approve biosimilar biologics, including the possible
designation of a biosimilar as “interchangeable” based on its
similarity to an existing brand product. Under the BPCIA, an
application for a biosimilar product cannot be approved by the FDA
until 12 years after the original branded product was approved
under a BLA. The law is complex and is still being interpreted and
implemented by the FDA. As a result, its ultimate impact,
implementation, and meaning are subject to uncertainty. Even if a
biosimilar gets approved for one of the antibodies that we use, the
final constructs of our drug candidates consist of an antibody,
radioisotope and in some cases a linker. Therefore, we do not
believe that the final drug product of our candidates can be
subject to competition from a biosimilar as outlined in BPCIA.
Our product candidates may never achieve market
acceptance.
Iomab-B, CD33 ARC program candidates and future product candidates
that we may develop may never gain market acceptance among
physicians, patients and the medical community. The degree of
market acceptance of any of our products will depend on a number of
factors, including the actual and perceived effectiveness and
reliability of the product; the results of any long-term clinical
trials relating to use of the product; the availability, relative
cost and perceived advantages and disadvantages of alternative
technologies; the degree to which treatments using the product are
approved for reimbursement by public and private insurers; the
strength of our marketing and distribution infrastructure; and the
level of education and awareness among physicians and hospitals
concerning the product.
We believe that oncologists and other physicians will not widely
adopt a product candidate unless they determine, based on
experience, clinical data, and published peer-reviewed journal
articles, that the use of that product candidate provides an
effective alternative to other means of treating specific cancers.
Patient studies or clinical experience may indicate that treatment
with our product candidates does not provide patients with
sufficient benefits in extension of life or quality of life. We
believe that recommendations and support for the use of each
product candidate from influential physicians will be essential for
widespread market acceptance. Our product candidates are still in
the development stage and it is premature to attempt to gain
support from physicians at this time. We can provide no assurance
that such support will ever be obtained. If our product candidates
do not receive such support from these physicians and from
long-term data, physicians may not use or continue to use, and
hospitals may not purchase or continue to purchase, them.
Failure of Iomab-B, CD33 ARC program candidates or any of our other
product candidates to significantly penetrate current or new
markets would negatively impact our business financial condition
and results of operations.
We may be subject to claims that our third-party service
providers, consultants or current or former employees have
wrongfully used or disclosed confidential information of third
parties.
We have received confidential and proprietary information from
third parties. In addition, we employ individuals who were
previously employed at other biotechnology or pharmaceutical
companies. We may be subject to claims that we or our employees,
consultants or independent contractors have inadvertently or
otherwise used or disclosed confidential information of these third
parties or our employees’ former employers. Litigation may be
necessary to defend against these claims. Even if we are successful
in defending against these claims, litigation could result in
substantial cost and be a distraction to our management and
employees.
We currently depend on single third-party manufacturers to
produce our pre-clinical and clinical trial drug supplies. Any
disruption in the operations of our current third-party
manufacturers, or other third-party manufacturers we may engage in
the future, could adversely affect our business and results of
operations.
We do not currently operate manufacturing facilities for
pre-clinical or clinical production of any of our product
candidates. We rely on third-party manufacturers to supply, store,
and distribute pre-clinical and clinical supply of the components
of our drug product candidates including monoclonal antibodies,
linkers and radioisotopes, as well as the final construct which
comprises our drug product candidates. We expect to continue to
depend on third-party manufacturers for the foreseeable future. Any
performance failure on the part of our existing or future
manufacturers could delay clinical development, cause us to suspend
or terminate development or delay or prohibit regulatory approval
of our product candidates or commercialization of any approved
products. Further avenues of disruption to our clinical or eventual
commercial supply may also occur due to the sale, acquisition,
business reprioritization, bankruptcy or other unforeseen
circumstances that might occur at any of our suppliers or contract
manufacturing partners including an inability to come to terms on
renewal of existing contracts or new contracts.
We currently rely on single manufacturers to manufacture our
pre-clinical and clinical trial drug supplies. With a view to
maintaining business continuity we are evaluating alternatives and
second and even third sources of supply or manufacturing for our
core suppliers and manufacturing partners, however there can be no
assurances that we will be able to identify such suppliers or
partners and assuming we did, that we would be able to enter into
contracts that are on favorable terms or on terms that will enable
sufficient supply to ensure business continuity and support our
growth plans.
Our product candidates require precise, high-quality manufacturing.
Failure by our current contract manufacturer or other third-party
manufacturers we may engage in the future to achieve and maintain
high manufacturing standards could result in patient injury or
death, product recalls or withdrawals, delays or failures in
testing or delivery, cost overruns, or other problems that could
seriously hurt our business. Contract manufacturers may encounter
difficulties involving production yields, quality control, and
quality assurance. These manufacturers are subject to ongoing
periodic and unannounced inspections by the FDA and corresponding
state and foreign agencies to ensure strict compliance with cGMPs
and other applicable government regulations and corresponding
foreign standards; we do not have control over third-party
manufacturers’ compliance with these regulations and standards.
We may elect to build or purchase a manufacturing facility or
facilities in the future to operate for the purposes of
manufacturing our own products. We have never built, owned or
operated a manufacturing facility. There can be no assurances that
we will be able to successfully accomplish this and in doing so we
may experience delays, cost overruns, or other problems that could
seriously hurt our business. Even if we successfully build or
purchase a manufacturing facility, we may not realize the expected
benefits of these efforts.
We depend on vendors with specialized operations, equipment and
know-how to manufacture the respective components of our drug
candidates. We have entered into manufacturing and supply
agreements with these third-parties, and in some instances, we have
agreed that such vendor be the exclusive manufacturer and supplier.
If any of the third-parties we depend on encounter difficulties in
their operations, fail to comply with required regulations or
breach their contractual obligations it may be difficult, or we may
be unable to identify suitable alternative third-party
manufacturers. While we identify and evaluate third-party
manufacturers from time to time, even if we do identify suitable
alternative third-parties, we may fail to reach agreement on
contractual terms, it may be prohibitively expensive and there can
be no assurance that we can successfully complete technology
transfer and development work necessary or complete the necessary
work in a timely manner. Any of which could prevent us from
commencing manufacturing with third-parties which could cause
delays or suspension of our clinical trials and pre-clinical work
that may have a negative impact on our business.
Furthermore, these third-party contractors, whether foreign or
domestic, may experience regulatory compliance difficulty,
mechanical shut downs, employee strikes, or any other unforeseeable
acts that may delay or limit production. Our inability to
adequately establish, supervise and conduct (either ourselves or
through third parties) all aspects of the formulation and
manufacturing processes, and the inability of third-party
manufacturers to consistently supply quality product when required
would have a material adverse effect on our ability to develop or
commercialize our products. We have faced delays and risks
associated with reliance on key third party manufacturers in the
past and may be faced with such delays and risks in the future. Any
future manufacturing interruptions or related supply issues could
have an adverse effect on our company, including delays in clinical
trials.
If we are successful in obtaining marketing approval from the
FDA and/or other regulatory agencies for any of our product
candidates, we anticipate continued reliance on third-party
manufacturers.
To date, our product candidates have been manufactured in small
quantities for preclinical and clinical testing by third-party
manufacturers. If the FDA or other regulatory agencies approve any
of our product candidates for commercial sale, we expect that we
would continue to rely, at least initially, on third-party
specialized manufacturers to produce commercial quantities of
approved products. These manufacturers may not be able to
successfully increase the manufacturing capacity for any approved
product in a timely or economic manner, or at all. Significant
scale-up of manufacturing may require additional validation
studies, which the FDA must review and approve. Scale-up for
commercial product may require financial commitment or investment
by us, which we may not have sufficient capital for or may elect
not to undertake. If third party manufacturers are unable to
successfully increase the manufacturing capacity for a product
candidate, or we are unable to establish our own manufacturing
capabilities, the commercial launch of any approved products may be
delayed or there may be a shortage in supply, which in turn could
have a material adverse effect on our business.
In addition, the facilities used by our contract manufacturers to
manufacture our product candidates must be approved by the FDA
pursuant to inspections that will be conducted after we submit a
BLA to the FDA. We do not control the manufacturing process of, and
are completely dependent on, our contract manufacturing partners
for compliance with cGMPs. If our contract manufacturers cannot
successfully manufacture material that conforms to our
specifications and the strict regulatory requirements of the FDA or
other regulatory authorities, they will not be able to secure
and/or maintain regulatory approval for their manufacturing
facilities. If the FDA or a comparable foreign regulatory authority
does not approve these facilities for the manufacture of our
product candidates or if it withdraws any such approval in the
future, we may need to find alternative manufacturing facilities,
which would significantly impact our ability to develop, obtain
regulatory approval for or market our product candidates, if
approved.
We may have conflicts with our partners that could delay or
prevent the development or commercialization of our product
candidates.
We may have conflicts with our partners, such as conflicts
concerning the interpretation of preclinical or clinical data, the
achievement of milestones, the interpretation of contractual
obligations, payments for services, development obligations or the
ownership of intellectual property developed during our
collaboration. If any conflicts arise with any of our partners,
such partner may act in a manner that is averse to our best
interests. Any such disagreement could result in one or more of the
following, each of which could delay or prevent the development or
commercialization of our product candidates, and in turn prevent us
from generating revenues: unwillingness on the part of a partner to
pay us milestone payments or royalties we believe are due under a
collaboration; uncertainty regarding ownership of intellectual
property rights arising from our collaborative activities, which
could prevent us from entering into additional collaborations;
unwillingness by the partner to cooperate in the development or
manufacture of the product, including providing us with product
data or materials; unwillingness on the part of a partner to keep
us informed regarding the progress of its development and
commercialization activities or to permit public disclosure of the
results of those activities; initiating litigation or alternative
dispute resolution options by either party to resolve the dispute;
or attempts by either party to terminate the agreement.
We face significant competition from other biotechnology and
pharmaceutical companies.
Our product candidates face, and will continue to face, intense
competition from large pharmaceutical and biotechnology companies,
as well as academic and research institutions. We compete in an
industry that is characterized by (i) rapid technological change,
(ii) evolving industry standards, (iii) emerging competition and
(iv) new product introductions. Our competitors have existing
products and technologies that will compete with our product
candidates and technologies and may develop and commercialize
additional products and technologies that will compete with our
product candidates and technologies. Because several competing
companies and institutions have greater financial resources than
us, they may be able to (i) provide broader services and product
lines, (ii) make greater investments in research and development,
or R&D, and (iii) carry on broader R&D initiatives. Our
competitors also have greater development capabilities than we do
and have substantially greater experience in undertaking
preclinical and clinical testing of product candidates, obtaining
regulatory approvals, and manufacturing and marketing
pharmaceutical products. They also have greater name recognition
and better access to customers than us.
Our product candidates may cause undesirable side effects or
have other properties that could halt their clinical development,
prevent their regulatory approval, limit their commercial
potential, or result in significant negative
consequences.
Undesirable side effects caused by our product candidates could
cause us or regulatory authorities to interrupt, delay or halt
clinical trials and could result in a more restrictive label or the
delay or denial of regulatory approval by the FDA or other
comparable foreign authorities. The drug-related side effects could
affect patient recruitment or the ability of enrolled patients to
complete the trial or result in potential product liability claims.
Any of these occurrences may harm our business, financial condition
and prospects significantly. Even if any of our product candidates
receives marketing approval, as greater numbers of patients use a
product following its approval, an increase in the incidence of
side effects or the incidence of other post-approval problems that
were not seen or anticipated during pre-approval clinical trials
could result in a number of potentially significant negative
consequences, including:
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regulatory
authorities may withdraw their approval of the product; |
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regulatory
authorities may require the addition of labeling statements, such
as warnings or contraindications; |
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we
may be required to change the way the product is administered,
conduct additional clinical trials or change the labeling of the
product; |
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we
may elect, or we may be required, to recall or withdraw product
from the market; |
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we
could be sued and held liable for harm caused to patients;
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our
reputation may suffer. |
Any of these events could substantially increase the costs and
expenses of developing, commercializing and marketing any such
product candidates or could harm or prevent sales of any approved
products.
Risks Related to Our Intellectual Property
We depend upon securing and protecting critical intellectual
property.
We are dependent on obtaining and maintaining patents, trade
secrets, copyright and trademark protection of our technologies in
the United States and other jurisdictions, as well as successfully
enforcing this intellectual property and defending this
intellectual property against third-party challenges. The degree of
future protection of our proprietary rights is uncertain for
product candidates that are currently in the early stages of
development because we cannot predict which of these product
candidates will ultimately reach the commercial market or whether
the commercial versions of these product candidates will
incorporate proprietary technologies.
Our patent position is highly uncertain and involves complex
legal and factual questions.
Accordingly, we cannot predict the breadth of claims that may be
allowed or enforced under our patents or in third-party patents.
For example, we or our licensors might not have been the first to
make the inventions covered by each of our pending patent
applications and issued patents; we or our licensors might not have
been the first to file patent applications for these inventions;
others may independently develop similar or alternative
technologies or duplicate any of our technologies; it is possible
that none of our pending patent applications or the pending patent
applications of our licensors will result in issued patents; our
issued patents and issued patents of our licensors may not provide
a basis for commercially viable technologies, or may not provide us
with any competitive advantages, or may be challenged and
invalidated by third parties; and, we may not develop additional
proprietary technologies that are patentable.
As a result, our owned and licensed patents may not be valid, and
we may not be able to obtain and enforce patents and to maintain
trade secret protection for the full commercial extent of our
technology. The extent to which we are unable to do so could
materially harm our business.
We or our licensors have applied for and will continue to apply for
patents for certain products. Such applications may not result in
the issuance of any patents, and any patents now held or that may
be issued may not provide us with adequate protection from
competition. Furthermore, it is possible that patents issued or
licensed to us may be challenged successfully. In that event, if we
have a preferred competitive position because of such patents, such
preferred position would be lost. If we are unable to secure or to
continue to maintain a preferred position, we could become subject
to competition from the sale of generic products. Failure to
receive, inability to protect, or expiration of our patents for
medical use, manufacture, conjugation and labeling of Ac-225, the
antibodies that we license from third parties, or subsequent
related filings, would adversely affect our business and
operations.
Patents issued or licensed to us may be infringed by the products
or processes of others. The cost of enforcing our patent rights
against infringers, if such enforcement is required, could be
significant, and we do not currently have the financial resources
to fund such litigation. Further, such litigation can go on for
years and the time demands could interfere with our normal
operations. There has been substantial litigation and other
proceedings regarding patent and other intellectual property rights
in the pharmaceutical industry. We may become a party to patent
litigation and other proceedings. The cost to us of any patent
litigation, even if resolved in our favor, could be substantial.
Some of our competitors may be able to sustain the costs of such
litigation more effectively than we can because of their
substantially greater financial resources. Litigation may also
absorb significant management time.
Unpatented trade secrets, improvements, confidential know-how and
continuing technological innovation are important to our scientific
and commercial success. Although we attempt to and will continue to
attempt to protect our proprietary information through reliance on
trade secret laws and the use of confidentiality agreements with
our partners, collaborators, employees and consultants and other
appropriate means, these measures may not effectively prevent
disclosure of our proprietary information, and, in any event,
others may develop independently, or obtain access to, the same or
similar information.
Certain of our patent rights are licensed to us by third parties.
If we fail to comply with the terms of these license agreements,
our rights to those patents may be terminated, and we will be
unable to conduct our business.
If we are found to be infringing on patents or trade secrets
owned by others, we may be forced to cease or alter our product
development efforts, obtain a license to continue the development
or sale of our products, and/or pay damages.
Our manufacturing processes and potential products may violate
proprietary rights of patents that have been or may be granted to
competitors, universities or others, or the trade secrets of those
persons and entities. As the pharmaceutical industry expands and
more patents are issued, the risk increases that our processes and
potential products may give rise to claims that they infringe the
patents or trade secrets of others. These other persons could bring
legal actions against us claiming damages and seeking to enjoin
clinical testing, manufacturing and marketing of the affected
product or process. If any of these actions are successful, in
addition to any potential liability for damages, we could be
required to obtain a license in order to continue to conduct
clinical tests, manufacture or market the affected product or use
the affected process. Required licenses may not be available on
acceptable terms, if at all, and the results of litigation are
uncertain. If we become involved in litigation or other
proceedings, it could consume a substantial portion of our
financial resources and the efforts of our personnel.
In addition to infringement or other intellectual property claims
against us, we may become a party to other patent litigation or
proceedings before regulatory agencies, including post-grant
review, inter parties review, interference or re-examination
proceedings filed with the U.S. Patent and Trademark Office (or
similar proceedings before corresponding tribunals in other
jurisdictions) that challenge our patent rights or the patent
rights of our licensors. The costs and efforts of defending our
patents or enforcing our proprietary rights in post-issuance
administrative proceedings can be substantial and the outcome can
be uncertain. An adverse determination in these proceedings could
weaken or invalidate the patent claims that cover our technology,
which adverse determination could harm our business significantly
and dissuade companies from collaborating with us or permit third
parties to directly compete with the same technology.
Our ability to protect and enforce our patents does not
guarantee that we will secure the right to commercialize our
patents.
A patent is a limited monopoly right conferred upon an inventor,
and his successors in title, in return for the making and
disclosing of a new and non-obvious invention. This monopoly is of
limited duration but, while in force, allows the patent holder to
prevent others from making and/or using its invention. While a
patent gives the holder this right to exclude others, it is not a
license to commercialize the invention where other permissions may
be required for commercialization to occur. For example, a drug
cannot be marketed without the appropriate authorization from the
FDA, regardless of the existence of a patent covering the product.
Further, the invention, even if patented itself, cannot be
commercialized if it infringes the valid patent rights of another
party.
We rely on confidentiality agreements to protect our trade
secrets. If these agreements are breached by our employees or other
parties, our trade secrets may become known to our
competitors.
We rely on trade secrets that we seek to protect through
confidentiality agreements with our employees and other parties. If
these agreements are breached, our competitors may obtain and use
our trade secrets to gain a competitive advantage over us. We may
not have any remedies against our competitors and any remedies that
may be available to us may not be adequate to protect our business
or compensate us for the damaging disclosure. In addition, we may
have to expend resources to protect our interests from possible
infringement by others.
Risks Related to Our Operations
The use of hazardous materials, including radioactive and
biological materials, in our research and development efforts
imposes certain compliance costs on us and may subject us to
liability for claims arising from the use or misuse of these
materials.
Our research, development and manufacturing activities involve the
controlled use of hazardous materials, including chemicals,
radioactive and biological materials, such as radioactive isotopes.
We are subject to federal, state, local and foreign environmental
laws and regulations governing, among other matters, the handling,
storage, use and disposal of these materials and some waste
products. We cannot completely eliminate the risk of contamination
or injury from these materials and we could be held liable for any
damages that result, which could exceed our financial resources. We
currently maintain insurance coverage for injuries resulting from
the hazardous materials we use; however, future claims may exceed
the amount of our coverage. Also, we do not have insurance coverage
for pollution cleanup and removal. Currently the costs of complying
with such federal, state, local and foreign environmental
regulations are not significant, and consist primarily of waste
disposal expenses. However, they could become expensive, and
current or future environmental laws or regulations may impair our
research, development, production and commercialization
efforts.
We may undertake international operations, which will subject
us to risks inherent with operations outside of the United
States.
Although we do not have any international operations at this time,
we intend to seek market clearances in foreign markets that we
believe will generate significant opportunities. However, even with
the cooperation of a commercialization partner, conducting drug
development in foreign countries involves inherent risks,
including, but not limited to difficulties in staffing, funding and
managing foreign operations; unexpected changes in regulatory
requirements; export restrictions; tariffs and other trade
barriers; difficulties in protecting, acquiring, enforcing and
litigating intellectual property rights; fluctuations in currency
exchange rates; and potentially adverse tax consequences.
If we were to experience any of the difficulties listed above, or
any other difficulties, any international development activities
and our overall financial condition may suffer and cause us to
reduce or discontinue our international development and
registration efforts.
We are highly dependent on our key personnel, and if we are
not successful in attracting and retaining highly qualified
personnel, we may not be able to successfully implement our
business strategy.
Our future operations and successes depend in large part upon the
continued service of key members of our senior management team whom
we are highly dependent upon to manage our business. If any member
of our current senior management terminates his employment with us
and we are unable to find a suitable replacement quickly, the
departure could have a material adverse effect on our business. An
overall tightening and increasingly competitive labor market has
been observed in the U.S. employment market generally, especially
in response to the COVID-19 pandemic. Specific to the biotechnology
industry in which we operate, there is significant demand and
competition for highly specialized talent that we require. We have
experienced high turnover rates, with approximately one third of
our employee base turning over or being replaced during 2021. A
sustained labor shortage or increased turnover rates within our
employee base, caused by the COVID-19 pandemic, as a result of
general macroeconomic factors, or due to dynamics within our
industry, could lead to increased costs, such as increased wage
rates to attract and retain employees, and could negatively affect
our ability to efficiently conduct our clinical development,
R&D, business development and potential regulatory and
commercial activities. If we are unable to hire and retain
employees capable of performing at a high-level, or if mitigation
measures we may take to respond to a decrease in labor
availability, have unintended negative effects, our business could
be adversely affected. An overall labor shortage, lack of skilled
labor, increased turnover or labor inflation, caused by the
COVID-19 pandemic, general macroeconomic factors or as a result of
biotechnology industry dynamics could have a material adverse
impact on our operations, results of operations, liquidity or cash
flows.
Our future success also depends on our ability to identify,
attract, hire or engage, retain and motivate other well-qualified
managerial, technical, clinical and regulatory personnel. This
activity is likely to create additional demands on the time and
attention of our senior management personnel as they identify,
hire, and train external and internal candidates to fill the
sizable number of positions required to execute our business plans,
including submitting a BLA and building a commercial organization.
The market for talent in our industry is very competitive. Many of
the other biopharmaceutical companies we compete against for
qualified personnel have greater financial and other resources,
more favorable risk profiles and a longer operating history in the
biopharmaceutical industry than we do. They also may provide more
diverse opportunities and better chances for career advancement.
Some of these opportunities may be more appealing to high-quality
candidates than what we have to offer.
It is particularly difficult to recruit and hire new employees
during the COVID-19 pandemic as conducting interviews remotely
makes it more difficult to ensure we are recruiting and hiring
high-quality employees, and the uncertainty created by the COVID-19
pandemic makes it less likely potential candidates will be willing
to leave a stable job to explore a new opportunity. There can be no
assurance that such professionals will be available in the market,
or that we will be able to retain existing professionals or meet or
continue to meet their compensation requirements. Furthermore, the
cost base in relation to such compensation, which may include
equity compensation, may increase significantly, which could have a
material adverse effect on us. Failure to establish and maintain an
effective management team and workforce could adversely affect our
ability to operate, grow and manage our business.
Managing our growth as we expand operations may strain our
resources.
We expect to need to grow rapidly in order to support additional,
larger, and potentially international, pivotal clinical trials of
our product candidates as well as potential commercial operations,
which will place a significant strain on our financial, managerial
and operational resources. In order to achieve and manage growth
effectively, we must continue to improve and expand our operational
and financial management capabilities. Moreover, we will need to
increase staffing and to train, motivate and manage our employees.
All of these activities will increase our expenses and may require
us to raise additional capital sooner than expected. Failure to
manage growth effectively could materially harm our business,
financial condition or results of operations.
We may expand our business through the acquisition of rights
to new product candidates that could disrupt our business, harm our
financial condition and may also dilute current stockholders’
ownership interests in our company.
Our business strategy includes expanding our products and
capabilities, and we may seek acquisitions of product candidates,
antibodies or technologies to do so. Acquisitions involve numerous
risks, including substantial cash expenditures; potentially
dilutive issuance of equity securities; incurrence of debt and
contingent liabilities, some of which may be difficult or
impossible to identify at the time of acquisition; difficulties in
assimilating acquired technologies or the operations of the
acquired companies; diverting our management’s attention away from
other business concerns; risks of entering markets in which we have
limited or no direct experience; and the potential loss of our key
employees or key employees of the acquired companies.
We can make no assurances that any acquisition will result in
short-term or long-term benefits to us. We may incorrectly judge
the value or worth of an acquired product, company or business. In
addition, our future success would depend in part on our ability to
manage the rapid growth associated with some of these acquisitions.
We cannot assure that we will be able to make the combination of
our business with that of acquired products, businesses or
companies work or be successful. Furthermore, the development or
expansion of our business or any acquired products, business or
companies may require a substantial capital investment by us. We
may not have these necessary funds, or they might not be available
to us on acceptable terms or at all. We may also seek to raise
funds by selling shares of our preferred or common stock, which
could dilute each current stockholder’s ownership interest in the
Company.
Risks Related to Ownership of Our Common Stock
The sale of securities by us in any equity or debt financing
could result in dilution to our existing stockholders and have a
material adverse effect on our earnings.
We have financed our operations primarily through sales of stock
and warrants. It is likely that during the next twelve months we
will seek to raise additional capital through the sales of stock
and warrants in order to expand our level of operations to continue
our research and development efforts.
Any sale of common stock by us in a future offering could result in
dilution to our existing stockholders as a direct result of our
issuance of additional shares of our capital stock. In addition,
our business strategy may include expansion through internal growth
or by establishing strategic relationships with targeted customers
and vendors. In order to do so, or to finance the cost of our other
activities, we may issue additional equity securities that could
dilute our stockholders’ stock ownership. We may also assume
additional debt and incur impairment losses related to goodwill and
other tangible assets if we acquire another company and this could
negatively impact our earnings and results of operations.
Our common stock is subject to price volatility which could
lead to losses by stockholders and potential costly security
litigation.
The trading volume of our common stock has been and may continue to
be extremely limited and sporadic. We expect the market price of
our common stock to fluctuate substantially due to a variety of
factors, including market perception of our ability to achieve our
planned growth, quarterly operating results of other companies in
the same industry, trading volume in our common stock, changes in
general conditions in the economy and the financial markets or
other developments affecting our competitors or us. This volatility
has had a significant effect on the market price of securities
issued by many companies for reasons unrelated to their operating
performance and could have the same effect on our common stock.
The trading price of our common stock may be highly volatile and
could fluctuate in response to factors such as:
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or anticipated variations in our operating results; |
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announcements
of developments by us or our competitors; |
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timing of IND and/or BLA approval, the completion and/or results of
our clinical trials; |
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regulatory
actions regarding our products; |
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announcements
by us or our competitors of significant acquisitions, strategic
partnerships, joint ventures or capital commitments; |
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adoption
of new accounting standards affecting our industry; |
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additions
or departures of key personnel; |
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of new products by us or our competitors; |
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sales
of our common stock or other securities in the open market;
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other
events or factors, many of which are beyond our
control. |
The stock market is subject to significant price and volume
fluctuations. Moreover, the COVID-19 pandemic has resulted in
significant financial market volatility and uncertainty in recent
months. In the past, following periods of volatility in the market
price of a company’s securities, securities class action litigation
has often been initiated against such a company. Litigation
initiated against us, whether or not successful, could result in
substantial costs and diversion of our management’s attention and
our resources, which could harm our business and financial
condition.
We do not intend to pay dividends on our common stock, so any
returns will be determined by the value of our common
stock.
We have never declared or paid any cash dividends on our common
stock. For the foreseeable future, it is expected that earnings, if
any, generated from our operations will be used to finance the
growth of our business, and that no dividends will be paid to
holders of our common stock. As a result, the success of an
investment in our common stock will depend upon any future
appreciation in its value. There is no guarantee that our common
stock will appreciate in value.
Certain provisions of our Certificate of Incorporation and
Bylaws and Delaware law make it more difficult for a third party to
acquire us and make a takeover more difficult to complete, even if
such a transaction were in our stockholders’ interest.
Provisions of our certificate of incorporation and bylaws may delay
or discourage transactions involving an actual or potential change
in our control or change in our management, including transactions
in which stockholders might otherwise receive a premium for their
shares, or transactions that our stockholders might otherwise deem
to be in their best interests. Therefore, these provisions could
adversely affect the price of our stock. Among other things, the
certificate of incorporation and bylaws:
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provide
that the authorized number of directors may be changed by
resolution of the board of directors; |
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provide
that all vacancies, including newly-created directorships, may,
except as otherwise required by law, be filled by the affirmative
vote of a majority of directors then in office, even if less than a
quorum; |
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divide
the board of directors into three classes; |
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provide
that stockholders seeking to present proposals before a meeting of
stockholders or to nominate candidates for election as directors at
a meeting of stockholders must provide notice in writing in a
timely manner, and meet specific requirements as to the form and
content of a stockholder’s notice; |
In addition, we are governed by Section 203 of the Delaware General
Corporation Law. In general, Section 203 prohibits a public
Delaware corporation from engaging in a “business combination” with
an “interested stockholder” for a period of three years after the
date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a
prescribed manner. A “business combination” includes mergers, asset
sales or other transactions resulting in a financial benefit to the
stockholder. An “interested stockholder” is a person who, together
with affiliates and associates, owns, or within three years, did
own, 15% or more of the corporation’s outstanding voting stock.
These provisions may have the effect of delaying, deferring or
preventing a change in our control.
Compliance with the reporting requirements of federal
securities laws can be expensive.
We are subject to the information and reporting requirements of the
Exchange Act and other federal securities laws, and the compliance
obligations of the Sarbanes-Oxley Act. The costs of preparing and
filing annual and quarterly reports and other information with the
Securities and Exchange Commission and furnishing audited reports
to stockholders are substantial. In addition, we will incur
substantial expenses in connection with the preparation of
registration statements and related documents with respect any
offerings of our common stock.
Our ability to utilize our net operating loss carryforwards
and certain other tax attributes may be limited.
Our ability to utilize our federal net operating loss and tax
credit carryforwards may be limited under Sections 382 and 383 of
the Internal Revenue Code of 1986, as amended, or the
Code. The limitations apply if we experience an “ownership
change”, generally defined as a greater than 50 percentage point
change in the ownership of our equity by certain stockholders over
a rolling three-year period. Similar provisions of state tax
law may also apply. We have not assessed whether such an ownership
change has previously occurred. If we have experienced an
ownership change at any time since our formation, we may already be
subject to limitations on our ability to utilize our existing net
operating losses and other tax attributes to offset taxable income.
In addition, future changes in our stock ownership, which may be
outside of our control, may trigger an ownership change and,
consequently, the limitations under Sections 382 and 383 of the
Code. As a result, if or when we earn net taxable income, our
ability to use our pre-change net operating loss carryforwards and
other tax attributes to offset such taxable income may be subject
to limitations, which could adversely affect our future cash
flows.
Failure to establish and maintain adequate finance
infrastructure and accounting systems and controls could impair our
ability to comply with the financial reporting and internal
controls requirements for publicly traded companies.
As a public company, we operate in an increasingly demanding
regulatory environment, including with respect to more complex
accounting rules. Company responsibilities required by the
Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act,
include establishing and maintaining corporate oversight and
adequate internal control over financial reporting and disclosure
controls and procedures. Effective internal controls are necessary
for us to produce reliable financial reports and are important to
help prevent financial fraud.
Our compliance with Section 404 of the Sarbanes-Oxley Act requires
that we incur substantial accounting expense and expend significant
management efforts. We complied with Section 404 at December 31,
2021 and 2020 and while our testing did not reveal any material
weaknesses in our internal controls, any material weaknesses in our
internal controls in the future would be required us to remediate
in a timely manner so as to be able to comply with the requirements
of Section 404 each year. If we are not able to comply with the
requirements of Section 404 in a timely manner each year, we could
be subject to sanctions or investigations by the SEC, NYSE American
or other regulatory authorities which would require additional
financial and management resources and could adversely affect the
market price of our common stock. Furthermore, if we cannot provide
reliable financial reports or prevent fraud, our business and
results of operations could be harmed, and investors could lose
confidence in our reported financial information.
If securities or industry analysts do not publish research or
publish inaccurate or unfavorable research about our business, the
price of our common stock and trading volume could
decline.
The trading market for our common stock will depend in part on the
research and reports that securities or industry analysts publish
about us or our business. Multiple securities and industry analysts
currently cover us. If one or more of the analysts downgrade our
common stock or publish inaccurate or unfavorable research about
our business, the price of our common stock would likely decline.
If one or more of these analysts cease coverage of us or fail to
publish reports on us regularly, demand for our common stock could
decrease, which could cause the price of our common stock and
trading volume to decline.
Our amended and restated bylaws, as
amended, designate the U.S. federal district courts
as the exclusive forum for the resolution of any
complaint asserting a cause of action arising under the Securities
Act of 1933, as amended.
Our amended and restated bylaws, as amended, provide
that, unless we consent in writing to the selection of an
alternative forum, the federal district courts of the United States
of America will be the exclusive forum for resolving any complaint
asserting a cause of action arising under the Securities Act of
1933, as amended. In addition, our amended and restated bylaws, as
amended, state that any person purchasing or otherwise acquiring
any interest in our security shall be deemed to have notice of and
to have consented to such provision. Such choice of forum provision
may limit a stockholder’s ability to bring a claim in a judicial
forum that it finds favorable for disputes with us or our
directors, officers or other employees, which may discourage such
lawsuits, if successful, might benefit our stockholders.
Stockholders who do bring a claim in the federal district courts of
the United States of America could face additional litigation costs
in pursuing any such claim.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2. PROPERTIES.
We do not own any real property. We lease offices at 275 Madison
Avenue, New York, NY. The lease has a term of seven years and three
months, with an expiration date of September 6, 2022, with a
current annual rate $342 thousand. We are also responsible for
certain other costs, such as insurance, taxes, utilities and
maintenance. We issued a letter of credit of $391 thousand in
connection with the lease and maintained a $391 thousand certified
deposit as collateral for the letter of credit. We lease lab
space and offices at Albert Einstein College of Medicine, 1300
Morris Park Avenue, Bronx, NY. The lease has a term of twelve
months, expiring August 31, 2022, with a current annual rate of
$132 thousand.
ITEM 3. LEGAL PROCEEDINGS.
From time to time, we may become involved in various lawsuits and
legal proceedings, which arise in the ordinary course of business.
Litigation is subject to inherent uncertainties, and an adverse
result in these or other matters may arise from time to time that
may harm business. We are currently not aware of any such legal
proceedings or claims that will have, individually or in the
aggregate, a material adverse effect on our business, financial
condition or operating results.
ITEM 4. MINE SAFETY DISCLOSURES.
Not Applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDERS MATTERS, AND ISSUER PURCHASE OF EQUITY
SECURITIES.
Market Information
Our common stock is listed for quotation on the NYSE American under
the symbol “ATNM”.
Holders
As of March 25, 2022, there were 22,143,974 shares of common stock
issued and outstanding, which were held by approximately 99 holders
of record. There are no shares of preferred stock outstanding.
Dividends
We have never declared or paid any cash dividends on our common
stock. For the foreseeable future, it is expected that earnings, if
any, generated from our operations will be used to finance the
growth of our business, and that no dividends will be paid to
holders of our common stock. The decision to pay dividends is at
the discretion of our board of directors and depends upon our
financial condition, results of operations, capital requirements,
and other factors that our board of directors deems relevant.
Securities Authorized for Issuance under Equity Compensation
Plans
We currently have three equity compensation plans defined as
follows:
The Company’s 2019 Amended and Restated Stock Plan has an
expiration date of October 18, 2029 and the number of shares of our
common stock authorized under the plan for grant to employees,
directors and consultants is 5,833,333 shares.
The Company’s 2013 Amended and Restated Stock Plan has an
expiration date of September 9, 2023 and after a number of
amendments approved by stockholders, the number of shares of our
common stock authorized under the plan for grant to employees,
directors and consultants is 758,333 shares.
The Company’s 2013 Equity Incentive Plan has an expiration date of
September 9, 2023 and the number of shares of our common stock
authorized under the plan for grant to employees, directors and
consultants under the plan is 33,333 shares.
The following table indicates shares of common stock authorized for
issuance under our equity compensation plans as of December 31,
2021:
|
Plan category |
|
Number of
securities to
be issued
upon exercise
of outstanding
options |
|
|
Weighted-
average
exercise
price of
outstanding
options |
|
|
Number of
securities
remaining
available
for future
issuance |
|
| Equity compensation plans
approved by security holders |
|
|
1,361,825 |
|
|
$ |
12.45 |
|
|
|
5,243,242 |
|
| Equity
compensation plans not approved by security holders |
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Total |
|
|
1,365,825 |
|
|
$ |
12.45 |
|
|
|
5,243,242 |
|
ITEM
6. RESERVED.
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
The
information and financial data discussed below is derived from the
audited consolidated financial statements of Actinium
Pharmaceuticals, Inc. for its fiscal years ended December 31, 2021
and 2020. The consolidated financial statements of
Actinium Pharmaceuticals, Inc. were prepared and presented in
accordance with generally accepted accounting principles in the
United States. The information and financial data discussed below
is only a summary and should be read in conjunction with the
historical financial statements and related notes of Actinium
Pharmaceuticals, Inc. contained elsewhere in this Report. The
financial statements contained elsewhere in this Report fully
represent Actinium Pharmaceuticals, Inc.’s financial condition and
operations; however, they are not indicative of the Company’s
future performance. See “Cautionary Note Regarding Forward-Looking
Statements” above for a discussion of forward-looking statements
and the significance of such statements in the context of this
Report.
Actinium Pharmaceuticals, Inc. is a clinical-stage,
biopharmaceutical company applying its proprietary platform
technology and deep understanding of radiobiology to the
development of novel targeted radiotherapies for patients with
unmet needs. Our targeted radiotherapies combine the cell-killing
ability of radiation via a radioisotope payload with a targeting
agent, such as a monoclonal antibody, to deliver radiation in a
precise manner inside the body to specific, targeted cells, to
potentially achieve greater efficacy with lower toxicity than with
external beam radiation. They also enable a broader usage of
radiation than external beam radiation as they can be used in the
treatment of both solid tumors and blood cancers, which generally
cannot be treated with external radiation given their diffuse
nature. Our clinical pipeline is focused on targeting the antigens
CD45 and CD33, both of which are expressed in multiple hematologic
cancers, which are known to be highly sensitive to radiation. Our
clinical programs are focused on two primary areas: (1) targeted
conditioning prior to a bone marrow transplant (“BMT”), adoptive
cell therapy (“ACT”) such as CAR-T or gene therapy with Iomab-B and
(2) targeted radiotherapy combinations with Actimab-A and other
therapeutic agents. Our product development strategy is actively
informed by clinical data with Iomab-B and Actimab-Ain
approximately 600 patients, including our ongoing Pivotal Phase 3
SIERRA trial, which completed enrollment of 150 patients in the
third quarter of 2021 with the last patient receiving their BMT in
the fourth quarter of 2021. Our clinical pipeline has emanated from
our Antibody Warhead Enabling (“AWE”) technology platform, which is
protected by over 170 issued and pending patents, trade secrets and
know-how that we are applying to the development of targeted
radiotherapies for blood and solid tumor indications independently
and with collaborators. . Ongoing collaborations include a research
partnership with Astellas Pharma, Inc. (“Astellas”) focused on the
development of theranostics for solid tumor indications, a
collaboration with EpicentRx, Inc, focused on a novel CD47
immunotherapy targeted radiotherapy combination leveraging
EpicentRx’s RRx-01, that is being studied in a Phase 3 trial in
non-small cell lung cancer, with our clinical stage Actimab-A in
AML models, and a collaboration with AVEO Oncology, focused on
developing a HER3 targeting ARC for solid tumors leveraging their
clinical stage antibodies. We are also utilizing our AWE technology
platform to advance our research objectives focused on developing
next-generation targeted radiotherapies with our expanded research
and development organization and research laboratories leveraging
our drug development experience.
Recent
Developments
Impact
of COVID–19 Pandemic
The
global health crisis caused by the novel coronavirus COVID-19
pandemic and its resurgences has and may continue to negatively
impact global economic activity, which, despite progress in
vaccination efforts, remains uncertain and cannot be predicted with
confidence. In addition, the Omicron variant of COVID-19, which
appears to be the most transmissible variant to date, has spread
globally. The full impact of the Omicron variant, or any subsequent
variant, cannot be predicted at this time, and could depend on
numerous factors, including vaccination rates among the population,
the effectiveness of COVID-19 vaccines against the Omicron variant
and the response by governmental bodies and regulators. Given the
ongoing and dynamic nature of the circumstances, it is difficult to
predict the impact of the COVID-19 pandemic on our
business.
Many
countries around the world have continued to impose quarantines and
restrictions on travel and mass gatherings to slow the spread of
the virus. Accordingly, our ability to continue to operate our
business may also be limited. Such events may result in a period of
business, supply and drug product manufacturing disruption, and in
reduced operations, any of which could materially affect our
business, financial condition and results of operations. In
response to COVID-19, we implemented remote working and thus far
have not experienced a significant disruption or delay in our
operations as it relates to the clinical development of our drug
candidates. Such government-imposed precautionary measures may have
been relaxed in certain countries or states, but there is no
assurance that more strict measures will be put in place again due
to a resurgence in COVID-19 cases, including those involving new
variants of the coronavirus, which may be more contagious and
deadly than prior strains. Therefore, the COVID-19 pandemic may
continue to affect our operation, may further divert the attention
and efforts of the medical community to coping with COVID-19 and
disrupt the marketplace in which we operate and may have a material
adverse effect on our operations.
A
continuation or worsening of the levels of market disruption and
volatility seen in the recent past could have an adverse effect on
our ability to access capital, which could in the future negatively
affect our liquidity. In addition, a recession or market correction
resulting from the spread of COVID-19 could materially affect our
business and the value of our common stock.
We
believe our earlier stage CD33 clinical trials will continue to
recruit and enroll patients given the acute nature of relapsed or
refractory AML. The continuation of the pandemic could adversely
affect our planned clinical trial operations, including our ability
to conduct the trials on the expected timelines and recruit and
retain patients and principal investigators and site staff who, as
healthcare providers, may have heightened exposure to COVID-19 if
their geography is impacted by the pandemic. Further, the
continuation and/or resurgence of the COVID-19 pandemic could
result in delays in our clinical trials due to prioritization of
hospital resources toward the pandemic, restrictions in travel,
potential unwillingness of patients to enroll in trials at this
time, or the inability of patients to comply with clinical trial
protocols if quarantines or travel restrictions impede patient
movement or interrupt healthcare services. In addition, we rely on
independent clinical investigators, contract research organizations
and other third-party service providers to assist us in managing,
monitoring and otherwise carrying out our preclinical studies and
clinical trials, and the pandemic may affect their ability to
devote sufficient time and resources to our programs or to travel
to sites to perform work for us, which may result in delays or
hinder our ability to collect data from our clinical
trials.
Additionally,
COVID-19 may result in delays in receiving approvals from local and
foreign regulatory authorities, delays in necessary interactions
with IRB’s or Institutional Review Boards, local and foreign
regulators, ethics committees and other important agencies and
contractors due to limitations in employee resources or forced
furlough of government employees.
To
date, COVID-19 has not had a financial impact on our company. We
continue to monitor the impacts of COVID-19 on the global economy
and on our business operations. Although we expect that
vaccinations for COVID-19 will continue to improve conditions, the
ultimate impact from COVID-19 on our business operations and
financial results during 2022 will depend on, among other things,
the ultimate severity and scope of the pandemic, including the new
variants of the virus, the pace at which governmental and private
travel restrictions and public concerns about public gatherings
will ease, the rate at which historically large increases in
unemployment rates will decrease, if at all, and whether, and the
speed with which the economy recovers. We are not able to fully
quantify the impact that these factors will have on our financial
results during 2022 and beyond.
Results
of Operations – Year Ended December 31, 2021 Compared to the Year
Ended December 31, 2020
The
following table sets forth, for the periods indicated, data derived
from our statements of operations:
| |
|
For the years ended
December 31, |
|
|
Increase |
|
| (in thousands) |
|
2021 |
|
|
2020 |
|
|
(Decrease) |
|
| |
|
|
|
|
|
|
|
|
|
| Revenue: |
|
|
|
|
|
|
|
|
|
| Revenue |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
Other revenue |
|
|
1,144 |
|
|
|
- |
|
|
|
1,144 |
|
|
Total revenue |
|
|
1,144 |
|
|
|
- |
|
|
|
1,144 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
| Research and
development, net of reimbursements |
|
|
18,031 |
|
|
|
16,085 |
|
|
|
1,946 |
|
|
General and administrative |
|
|
8,077 |
|
|
|
6,308 |
|
|
|
1,769 |
|
|
Total operating expenses |
|
|
26,108 |
|
|
|
22,393 |
|
|
|
3,715 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income – net |
|
|
190 |
|
|
|
178 |
|
|
|
12 |
|
|
Total other income |
|
|
190 |
|
|
|
178 |
|
|
|
12 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
|
$ |
(24,774 |
) |
|
$ |
(22,215 |
) |
|
$ |
(2,559 |
) |
Revenues
We
recorded no commercial revenues for the years ended December 31,
2021 and 2020, respectively.
Other
revenue
We
determined that certain collaborations with a third-party are
within the scope of Topic ASC 606, Revenue Recognition from
Contracts with Customers, or ASC 606. The collaboration
agreement is made up of multiple modules related to various
research activities. While the third party has the option to
terminate the agreement at the conclusion of any module, we
identified a single performance obligation to provide research
services within each module for which we receive monetary
consideration. We recognized revenue during the year ended December
31, 2021 of $0.9 million from these collaborations.
The National Institutes of Health awarded us a Small Business
Technology Transfer cost reimbursable grant to support a clinical
collaboration with Memorial Sloan Kettering Cancer Center, or MSK,
to study Iomab-ACT, our CD45-targeting Antibody Radio-Conjugate,
for targeted conditioning to achieve lymphodepletion prior to
administration of a CD19-targeted CAR T-cell therapy developed at
MSK. We recognized revenue of $0.2 million from this grant during
the year ended December 31, 2021.
We
recorded no other revenue for the year ended December 31,
2020.
Research
and Development Expense
Research
and development expenses increased by $1.9 million to $18.0 million
for the year ended December 31, 2021 compared to $16.1 million for
the year ended December 31, 2020. The increase was primarily due to
expenses related to our research activities at our laboratory space
and government grant program and higher compensation expense
resulting from the hiring of additional employees.
General
and Administrative Expenses
General and administrative expenses increased by $1.8 million to
$8.1 million for the year ended December 31, 2021 compared to $6.3
million for the year ended December 31, 2020, primarily
attributable to higher professional fees and consulting fees
including recruitment costs, business taxes and fees, and insurance
premiums for director and officer liability.
Other
Income
Other
income of $0.2 million for both time periods was attributable to
interest income - net as a higher average balance of cash and cash
equivalents offset a lower average interest rate.
Net
Loss
Net loss increased by $2.6 million to $24.8 million for the year
ended December 31, 2021 compared to $22.2 million for the year
ended December 31, 2020, primarily due to higher general and
administrative expenses and research and development expenses,
partially offset by other revenue.
Liquidity
and Capital Resources
We
have financed our operations primarily through sales of our common
stock, pre-funded warrants and warrants.
The
following tables sets forth selected cash flow information for the
periods indicated:
| |
|
For the years ended
December 31, |
|
| (in thousands) |
|
2021 |
|
|
2020 |
|
| |
|
|
|
|
|
|
| Cash used in operating
activities |
|
$ |
(20,866 |
) |
|
$ |
(21,617 |
) |
| Cash used in investing activities |
|
|
(133 |
) |
|
|
(253 |
) |
| Cash provided
by financing activities |
|
|
35,221 |
|
|
|
76,176 |
|
| |
|
|
|
|
|
|
|
|
| Net change
in cash, cash equivalents and restricted cash |
|
$ |
14,222 |
|
|
$ |
54,306 |
|
Net cash used in operating activities for the year ended December
31, 2021 of $20.9 million decreased by $0.7 million from $21.6
million for the year ended December 31, 2020, primarily due to the
increased net loss of $2.6 million being more than offset by
increased liabilities and increased accounts payable due to the
timing of payments to vendors.
Net
cash used in investing activities of $133 thousand and $253
thousand for the years ended December 31, 2021 and December 31,
2020, respectively, primarily due to the purchase of equipment for
our laboratory space.
Net
cash provided by financing activities for the year ended December
31, 2021 was $35.2 million, primarily from the sale of shares of
our common stock. In August 2020 we entered into the Capital on
Demand™ Sales Agreement with JonesTrading Institutional Services
LLC, or JonesTrading, pursuant to which we may sell, from time to
time, through or to JonesTrading, up to an aggregate of $200
million of our common stock. Shares of common stock are offered
pursuant to our shelf registration statement on Form S-3 filed with
the United States Securities and Exchange Commission, or SEC, on
August 7, 2020. As of December 31, 2020, we had sold 2.1 million
shares of common stock, resulting in gross proceeds of $22.6
million and net proceeds of $21.7 million. For the year ended
December 31, 2021, we sold 4.6 million shares of common stock,
resulting in gross proceeds of $36.5 million and net proceeds of
$35.3 million.
Net
cash provided by financing activities for the year ended December
31, 2020 was mainly generated by the sale of shares of common
stock, pre-funded warrants and warrants. Net cash provided by
financing activities was $76.2 million for the year ended December
31, 2020, reflecting $76.6 million in proceeds from the sales of
common stock and pre-funded warrants in April and June 2020 and
sales of common stock throughout 2020.
On
April 24, 2020, we issued and sold 4.3 million shares of common
stock and pre-funded warrants to purchase 2.8 million shares of
common stock. The price to the public for each share of common
stock sold in the offering was $4.50, and the price to the public
for each pre-funded warrant sold in the offering was $4.497. The
pre-funded warrants were exercisable at an exercise price of $0.003
per share and were exercisable immediately upon issuance. Gross
proceeds from this offering were $31.6 million, before deducting
underwriting discounts and commissions and other offering expenses
payable by us. Net proceeds from the offering were approximately
$29.1 million.
On
June 19, 2020, we issued and sold 1.9 million shares of common
stock and pre-funded warrants to purchase 0.7 million shares of
common stock. The price to the public in this offering for each
share of common stock was $9.75 and for each pre-funded warrant was
$9.747. Each pre-funded warrant had an exercise price of $0.003 per
share and were exercisable immediately upon issuance. Gross
proceeds from this offering to us were $25.0 million, before
deducting underwriting discounts and commissions and other offering
expenses payable us. Net proceeds from this offering were
approximately $23.0 million.
During
the year ended December 31, 2020, holders of all 2.8 million
pre-funded April 2020 warrants and 0.7 million pre-funded June 2020
warrants exercised their pre-funded warrants at $0.003 per share
and received 2.8 million shares of common stock and 0.7 million
shares of common stock, respectively.
We will require additional funds to conduct clinical and
non-clinical trials, achieve regulatory approvals, and, subject to
such approvals, commercially launch our product candidates, and
will need to secure additional financing in the future to support
our operations. As of the date of filing this report, we expect
that our existing resources will be more than sufficient to fund
our planned operations for more than 12 months following the date
of this report. We base this belief on assumptions that are subject
to change, and we may be required to use our available cash and
cash equivalent resources sooner than we currently expect. Our
actual future capital requirements will depend on many factors,
including the progress and results of our ongoing clinical trials,
the duration and cost of discovery and preclinical development,
laboratory testing and clinical trials for our pipeline candidates,
the timing and outcome of regulatory review of our product
candidates, the costs involved in preparing, filing, prosecuting,
maintaining, defending, and enforcing patent claims and other
intellectual property rights, the number and development
requirements of other pipeline candidates that we pursue, and the
costs of commercialization activities, including product marketing,
sales, and distribution.
We expect to continue to operate at a net loss as we continue our
research and development efforts, continue to conduct clinical
trials and develop manufacturing, sales, marketing and distribution
capabilities. There can be no assurance that the products under
development by us will be approved for sale in the United States or
elsewhere. Our ability to obtain additional capital may depend on
prevailing economic conditions and financial, business, and other
factors beyond our control. The ongoing COVID-19 pandemic has
caused an unstable economic environment globally. Disruptions in
the global financial markets may adversely impact the availability
and cost of credit, as well as our ability to raise money in the
capital markets. Current economic conditions have been, and
continue to be, volatile. Continued instability in these market
conditions may limit our ability to access the capital necessary to
fund and grow our business.
Off-Balance
Sheet Arrangements
We do
not have any off-balance sheet arrangements.
Critical
Accounting Policies
Our
management’s discussion and analysis of financial condition and
results of operations is based on our consolidated financial
statements, which have been prepared in accordance with accounting
principles generally accepted in the United States, or GAAP. The
preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets,
liabilities and expenses and the disclosure of contingent assets
and liabilities in our consolidated financial statements during the
reporting periods. These items are monitored and analyzed by us for
changes in facts and circumstances, and material changes in these
estimates could occur in the future. We base our estimates on
historical experience, known trends and events, and on various
other factors that we believe are reasonable under the
circumstances, the results of which form the basis for making
judgments about the carrying value of assets and liabilities that
are not readily apparent from other sources. Changes in estimates
are reflected in reported results for the period in which they
become known. Actual results may differ materially from these
estimates under different assumptions or conditions
Fair
Value of Financial Instruments
Fair
value is defined as the price that would be received to sell an
asset, or paid to transfer a liability, in an orderly transaction
between market participants. A fair value hierarchy has been
established for valuation inputs that gives the highest priority to
quoted prices in active markets for identical assets or liabilities
and the lowest priority to unobservable inputs.
Revenue
Recognition
We
recognize revenue in accordance with ASC 606. Under ASC 606, we
recognize revenue when our customer obtains control of promised
goods or services, in an amount that reflects the consideration
that we expect to receive in exchange for those goods or services.
To determine revenue recognition for arrangements within the scope
of ASC 606, we perform the following five steps: (i) identify the
contract(s) with a customer; (ii) identify the performance
obligations in the contract; (iii) determine the transaction price,
including variable consideration, if any; (iv) allocate the
transaction price to the performance obligations in the contract;
and (v) recognize revenue as we satisfy a performance obligation.
We only apply the five-step model to contracts when it is probable
that we will collect the consideration to which we are entitled in
exchange for the goods or services we transfer to the
customer.
At
contract inception, once the contract is determined to be within
the scope of ASC 606, we assess whether the promised goods or
services promised within each contract are distinct and, therefore,
represent a separate performance obligation. Goods and
services that are determined not to be distinct are combined with
other promised goods and services until a distinct bundle is
identified. In determining whether goods or services are distinct,
we evaluate certain criteria, including whether (i) the
customer can benefit from the good or service either on its own or
together with other resources that are readily available to the
customer (capable of being distinct) and (ii) the good or
service is separately identifiable from other goods or services in
the contract (distinct in the context of the contract).
ASC
606 requires us to allocate the arrangement consideration on a
relative standalone selling price basis for each performance
obligation after determining the transaction price of the contract
and identifying the performance obligations to which that amount
should be allocated. The relative standalone selling price is
defined in the new revenue standard as the price at which an entity
would sell a promised good or service separately to a customer. We
then recognize as revenue the amount of the transaction price that
is allocated to the respective performance obligation as each
performance obligation is satisfied, either at a point in time or
over time, and if over time, recognition is based on the use of an
output or input method.
Collaborative
Arrangements
We follow the accounting guidance for collaboration agreements,
which requires that certain transactions between us and
collaborators be recorded in our consolidated statements of
operations on either a gross basis or net basis, depending on the
characteristics of the collaborative relationship, and requires
enhanced disclosure of collaborative relationships. We evaluate our
collaboration agreements for proper classification in our
consolidated statements of operations based on the nature of the
underlying activity. When we conclude that we have a customer
relationship with one of our collaborators, we follow the guidance
of ASC 606.
Research
and Development Costs
Research
and development costs are expensed as incurred. These costs include
the costs of manufacturing drug components and final drug product,
the costs of clinical trials, costs of employees and associated
overhead, and depreciation and amortization costs related to
facilities and equipment. Research and development reimbursements
are recorded by us as a reduction of research and development
costs.
Share-Based
Payments
We
estimate the fair value of each stock option award at the grant
date by using the Black-Scholes option pricing model. The fair
value determined represents the cost for the award and is
recognized over the vesting period during which an employee is
required to provide service in exchange for the award. We account
for forfeitures of stock options as they occur.
Income
Taxes
We
use the asset and liability method to calculate deferred taxes.
Deferred taxes are recognized based on the differences between the
financial reporting and income tax bases of assets and liabilities
using the enacted tax rates and laws that will be in effect when
the differences are expected to reverse. We review deferred tax
assets for a valuation allowance based upon whether it is more
likely than not that the deferred tax asset will be fully realized.
A valuation allowance, if necessary, is provided against deferred
tax assets, based upon our assessment as to their
realization.
We
recognize tax when the positions meet a “more-likely-than-not”
recognition threshold. There were no tax positions for which it is
considered reasonably possible that the total amounts of
unrecognized tax benefits will significantly increase or decrease
within the next year. We recognize interest related to unrecognized
tax benefits in interest expense and penalties in operating
expenses.
Accounting
Standards Recently Adopted
In
August 2020, FASB issued ASU 2020-06, Debt—Debt with Conversion
and Other Options (Subtopic 470-20) and Derivatives and
Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):
Accounting for Convertible Instruments and Contracts in an Entity’s
Own Equity, which, among other things, provides guidance on how
to account for contracts on an entity’s own equity. This ASU
simplifies the accounting for certain financial instruments with
characteristics of liabilities and equity. Specifically, the ASU
eliminated the need for us to assess whether a contract on our own
equity (1) permits settlement in unregistered shares, (2) whether
counterparty rights rank higher than shareholder’s rights, and (3)
whether collateral is required. In addition, the ASU requires
incremental disclosure related to contracts on our own equity and
clarifies the treatment of certain financial instruments accounted
for under this ASU on earnings per share. This ASU may be applied
on a full retrospective of modified retrospective basis. This ASU
is effective January 1, 2022 and interim periods presented,
although early adoption of this ASU was permitted effective January
1, 2021. We early adopted this standard effective January 1, 2021
and the standard did not have a significant impact on our financial
statements.
Accounting
Standards Recently Issued
In
May 2021, FASB issued ASU 2021-04, Earnings Per Share (topic
260), Debt — Modifications and Extinguishments (Subtopic 470-50),
Compensation – Stock Compensation (Topic 718) and Derivatives and
Hedging – Contracts in an Entity’s Own Equity (Subtopic 815-40) –
Issuer’s Accounting for Certain Modifications or Exchanges of
Freestanding Equity-Classified Written Call Options, which
provides guidance of a modification or an exchange of a
freestanding equity-classified written call option that remains
equity classified after modification or exchange as (1) an
adjustment to equity and, if so, the related earnings per share
(EPS) effects, if any, or (2) an expense and, if so, the manner and
pattern of recognition. The amendments in this ASU are effective
January 1, 2022, including interim periods. Early adoption is
permitted. We will apply the amendments prospectively to
modifications or exchanges occurring on or after January 1, 2022.
We will evaluate the impact of ASU 2017-09 on any future changes to
the terms and conditions of its warrants.
In
October 2021, FASB issued ASU 2021-08, Business Combinations
(Topic 805), Account for Contract Assets and Contract Liabilities
from Contracts with Customers, which provides guidance on
accounting for contract assets and contract liabilities acquired in
a business combination in accordance ASC 606. To achieve this, an
acquirer may assess how the acquiree applied ASC 606 to determine
what to record for the acquired revenue contracts. Generally, this
should result in an acquirer recognizing and measuring the acquired
contract assets and contract liabilities consistent with how they
were recognized and measured in the acquiree’s financial
statements. The amendments of ASU 2021-08 are effective January 1,
2023, including interim periods. Early adoption is permitted,
including adoption in an interim period. The Company will evaluate
the impact of ASU 2021-08 on any future business combinations the
Company may enter in the future.
In
November 2021, the FASB issued ASU 2021-10, Government
Assistance (Topic 832), Disclosures by Business Entities about
Government Assistance, which provides guidance on disclosure
requirements to entities other than not-for-profit entities about
transaction with a government that are accounted for by applying a
grant or contribution accounting model by analogy. ASU 2021-10
requires an entity to make annual disclosures related to (1) the
nature of the transactions and the related accounting policy used
to account for the government transactions, (2) quantification and
disclosure of amounts related to the government transactions
included in balance sheet and income statement financial statement
line items, and (3) significant terms and conditions of the
government transactions, including commitments and contingencies.
The amendments of ASU 2021-10 are effective January 1, 2022,
including interim periods. The adoption of ASU 2021-10 is not
expected to have a significant impact on the Company’s financial
statements.
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
We
are not currently exposed to significant market risk related to
changes in interest rates. As of December 31, 2021, our cash
equivalents consisted primarily of short-term money market funds.
Our primary exposure to market risk is interest rate sensitivity,
which is affected by changes in the general level of U.S. interest
rates. Due to the short-term nature of the cash equivalents in our
portfolio and the low risk profile of our cash equivalents, an
immediate 10% change in interest rates would not have a material
effect on the fair market value of our financial position or
results of operations.
We
are not currently exposed to significant market risk related to
changes in foreign currency exchange rates. Our operations may be
subject to fluctuations in foreign currency exchange rates in the
future.
Inflation
generally affects us by increasing our cost of labor and clinical
trial costs. We do not believe that inflation had a material effect
on our business, financial condition, or results of operations
during the years ended December 31, 2021 and 2020.
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA.
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of
Actinium
Pharmaceuticals, Inc.
Opinion
on the Financial Statements
We have audited the accompanying consolidated balance sheets of
Actinium Pharmaceuticals, Inc. (the “Company”) as of December 31,
2021 and 2020, the related consolidated statements of operations,
changes in stockholders’ equity and cash flows for each of the two
years in the period ended December 31, 2021 and the related notes
(collectively referred to as the “financial statements”). In our
opinion, the financial statements present fairly, in all material
respects, the financial position of the Company as of December 31,
2021 and 2020, and the results of its operations and its cash flows
for each of the two years in the period ended December 31, 2021 in
conformity with accounting principles generally accepted in the
United States of America.
Basis
for Opinion
These
financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting
Oversight Board (United States) (“PCAOB”) and are required to be
independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting.
As part of our audits, we are required to obtain an understanding
of internal control over financial reporting but not for the
purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting. Accordingly,
we express no such opinion.
Our
audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis
for our opinion.
Critical
Audit Matters
Critical
audit matters are matters arising from the current period audit of
the financial statements that were communicated or required to be
communicated to the audit committee and that: (1) relate to
accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective,
or complex judgments. We determined that there are no critical
audit matters.
/s/
Marcum llp
Marcum
llp
We
have served as the Company’s auditor since 2012.
Houston,
Texas
March 25, 2022
Actinium
Pharmaceuticals, Inc.
Consolidated Balance Sheets
| (amounts in
thousands, except share and per share data) |
|
December 31,
2021 |
|
|
December 31,
2020 |
|
| |
|
|
|
|
|
|
| Assets |
|
|
|
|
|
|
| Current Assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
77,829 |
|
|
$ |
63,560 |
|
|
Restricted cash – current |
|
|
392 |
|
|
|
48 |
|
|
Security deposit |
|
|
50
|
|
|
|
-
|
|
|
Prepaid expenses and other current assets |
|
|
1,478 |
|
|
|
1,317 |
|
|
Total Current Assets |
|
|
79,749 |
|
|
|
64,925 |
|
| |
|
|
|
|
|
|
|
|
|
Property and equipment, net of accumulated depreciation of $335 and
$291 |
|
|
340 |
|
|
|
312 |
|
|
Operating lease right-of-use assets |
|
|
241 |
|
|
|
579 |
|
|
Finance leases right-of-use assets |
|
|
58 |
|
|
|
140 |
|
|
Security deposit |
|
|
- |
|
|
|
50 |
|
|
Restricted cash |
|
|
-
|
|
|
|
391 |
|
|
Total Assets |
|
$ |
80,388 |
|
|
$ |
66,397 |
|
| |
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
5,535
|
|
|
$ |
4,340 |
|
| Other
liability |
|
|
998 |
|
|
|
- |
|
|
Operating leases current liability |
|
|
245 |
|
|
|
342 |
|
|
Finance leases current liability |
|
|
62 |
|
|
|
85 |
|
|
Total Current Liabilities |
|
|
6,840 |
|
|
|
4,767 |
|
| |
|
|
|
|
|
|
|
|
|
Long-term operating lease obligations |
|
|
-
|
|
|
|
245 |
|
|
Long-term finance lease obligations |
|
|
3 |
|
|
|
66 |
|
|
Total Liabilities |
|
|
6,843 |
|
|
|
5,078 |
|
| |
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Stockholders’ Equity: |
|
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value; 50,000,000 shares authorized, 0
shares issued and outstanding |
|
|
-
|
|
|
|
-
|
|
| Common
stock, $0.001 par value; 1,000,000,000 and 600,000,000 shares
authorized; 22,143,974 and 17,532,893 shares issued and
outstanding |
|
|
22 |
|
|
|
18 |
|
|
Additional paid-in capital |
|
|
329,271 |
|
|
|
292,275 |
|
|
Accumulated deficit |
|
|
(255,748 |
) |
|
|
(230,974 |
) |
|
Total Stockholders’ Equity |
|
|
73,545 |
|
|
|
61,319 |
|
| |
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Equity |
|
$ |
80,388 |
|
|
$ |
66,397 |
|
See
accompanying notes to the consolidated financial
statements.
Actinium
Pharmaceuticals, Inc.
Consolidated Statements of Operations
| |
|
For the Year ended
December 31, |
|
| (amounts in
thousands, except share and per share data) |
|
2021 |
|
|
2020 |
|
| |
|
|
|
|
|
|
| Revenue |
|
|
|
|
|
|
| Revenue |
|
$ |
-
|
|
|
$ |
-
|
|
|
Other Revenue |
|
|
1,144 |
|
|
|
-
|
|
|
Total revenue |
|
|
1,144 |
|
|
|
-
|
|
| |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Research and development, net of reimbursements |
|
|
18,031 |
|
|
|
16,085 |
|
|
General and administrative |
|
|
8,077 |
|
|
|
6,308 |
|
|
Total operating expenses |
|
|
26,108 |
|
|
|
22,393 |
|
| |
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(24,964 |
) |
|
|
(22,393 |
) |
| |
|
|
|
|
|
|
|
|
|
Other income: |
|
|
|
|
|
|
|
|
|
Interest income - net |
|
|
190 |
|
|
|
178 |
|
|
Total other income |
|
|
190 |
|
|
|
178 |
|
| |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(24,774 |
) |
|
$ |
(22,215 |
) |
| |
|
|
|
|
|
|
|
|
|
Deemed dividend for warrant down-round protection provision |
|
|
-
|
|
|
|
(1 |
) |
|
Net loss applicable to common stockholders |
|
$ |
(24,774 |
) |
|
$ |
(22,216 |
) |
|
Net loss per common share - basic and diluted |
|
$ |
(1.20 |
) |
|
$ |
(1.83 |
) |
| |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic and diluted |
|
|
20,568,373 |
|
|
|
12,134,259 |
|
See
accompanying notes to the consolidated financial
statements.
Actinium
Pharmaceuticals, Inc.
Consolidated Statements of Changes in Stockholders’ Equity
For the Years Ended December 31, 2021 and 2020
(amounts in thousands, except share amounts)
| |
|
Common Stock |
|
|
Additional Paid-In |
|
|
Accumulated |
|
|
Stockholders’ |
|
| |
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Equity |
|
|
Balance, January 1, 2020 |
|
|
5,490,038 |
|
|
$ |
5 |
|
|
$ |
214,397 |
|
|
$ |
(208,758 |
) |
|
$ |
5,644 |
|
|
Stock-based compensation |
|
|
6,262 |
|
|
|
-
|
|
|
|
1,254 |
|
|
|
-
|
|
|
|
1,254 |
|
|
Sale of common stock and warrants, net of offering costs |
|
|
8,575,051 |
|
|
|
9 |
|
|
|
76,580 |
|
|
|
-
|
|
|
|
76,589 |
|
|
Issuance of common stock from exercise of pre-funded warrants |
|
|
3,458,929 |
|
|
|
4 |
|
|
|
6 |
|
|
|
-
|
|
|
|
10 |
|
|
Issuance of common stock from exercise of warrants |
|
|
2,613 |
|
|
|
-
|
|
|
|
37 |
|
|
|
|
|
|
|
37 |
|
|
Deemed dividend for warrant down-round protection provision |
|
|
- |
|
|
|
- |
|
|
|
1 |
|
|
|
(1 |
) |
|
|
- |
|
|
Net loss |
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
(22,215 |
) |
|
|
(22,215 |
) |
|
Balance, December 31, 2020 |
|
|
17,532,893 |
|
|
$ |
18 |
|
|
$ |
292,275 |
|
|
$ |
(230,974 |
) |
|
$ |
61,319 |
|
|
Stock-based compensation |
|
|
21,306 |
|
|
|
- |
|
|
|
1,694 |
|
|
|
- |
|
|
|
1,694 |
|
|
Sale of common stock, net of offering costs |
|
|
4,588,875 |
|
|
|
4 |
|
|
|
35,296 |
|
|
|
- |
|
|
|
35,300 |
|
|
Issuance of common stock from exercise of stock options |
|
|
900 |
|
|
|
- |
|
|
|
6 |
|
|
|
|
|
|
|
6 |
|
|
Net loss |
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
(24,774 |
) |
|
|
(24,774 |
) |
|
Balance, December 31, 2021 |
|
|
22,143,974 |
|
|
$ |
22 |
|
|
$ |
329,271 |
|
|
$ |
(255,748 |
) |
|
$ |
73,545 |
|
See
accompanying notes to the consolidated financial
statements.
Actinium
Pharmaceuticals, Inc.
Consolidated Statements of Cash Flows
| |
|
For the Year ended
December 31, |
|
| (amounts in
thousands) |
|
2021 |
|
|
2020 |
|
| Cash Flows from Operating
Activities: |
|
|
|
|
|
|
|
Net loss |
|
$ |
(24,774 |
) |
|
$ |
(22,215 |
) |
|
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
1,694 |
|
|
|
1,254 |
|
|
Depreciation and amortization expense |
|
|
524 |
|
|
|
447 |
|
| Changes
in operating assets and liabilities: |
|
|
|
|
|
|
|
|
| Decrease
in: |
|
|
|
|
|
|
|
|
| Prepaid
expenses and other current assets |
|
|
(161 |
) |
|
|
(531 |
) |
| Increase
(decrease) in: |
|
|
|
|
|
|
|
|
| Accounts
payable and accrued expenses |
|
|
1,195
|
|
|
|
(257 |
) |
| Other
liability |
|
|
998 |
|
|
|
- |
|
|
Operating lease liabilities |
|
|
(342 |
) |
|
|
(315 |
) |
|
Net Cash Used In Operating Activities |
|
|
(20,866 |
) |
|
|
(21,617 |
) |
| |
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities: |
|
|
|
|
|
|
|
|
|
Purchase of property and equipment |
|
|
(133 |
) |
|
|
(253 |
) |
|
Net Cash Used In Investing Activities |
|
|
(133 |
) |
|
|
(253 |
) |
| |
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
|
|
Payments on note payable |
|
|
-
|
|
|
|
(381 |
) |
|
Payments on finance leases |
|
|
(85 |
) |
|
|
(79 |
) |
|
Proceeds from sales of shares of common stock and warrants, net of
offering costs |
|
|
35,300 |
|
|
|
76,589 |
|
|
Proceeds from the exercise of stock options |
|
|
6 |
|
|
|
-
|
|
|
Proceeds from the exercise of warrants |
|
|
-
|
|
|
|
47 |
|
|
Net Cash Provided By Financing Activities |
|
|
35,221 |
|
|
|
76,176 |
|
| |
|
|
|
|
|
|
|
|
|
Net change in cash, cash equivalents and restricted cash |
|
|
14,222 |
|
|
|
54,306 |
|
|
Cash, cash equivalents and restricted cash at beginning of
year |
|
|
63,999 |
|
|
|
9,693 |
|
|
Cash, cash equivalents and restricted cash at end of year |
|
$ |
78,221 |
|
|
$ |
63,999 |
|
| |
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
-
|
|
|
$ |
8 |
|
|
Cash paid for taxes |
|
$ |
-
|
|
|
$ |
-
|
|
| |
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash investing and financing
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deemed dividend for warrant down-round protection provision |
|
$ |
-
|
|
|
$ |
1 |
|
See
accompanying notes to the consolidated financial
statements.
Actinium
Pharmaceuticals, Inc.
Notes to Consolidated
Financial Statements
Note
1 - Description of Business and Summary of Significant Accounting
Policies
Nature of Business - Actinium Pharmaceuticals, Inc. (the
“Company”, “Actinium”, or “We”) is a clinical-stage,
biopharmaceutical company focused on developing and potentially
commercializing targeted radiotherapies for patients with unmet
needs. The Company applies its proprietary technology platform
consisting of over 170 patients, know-how and clinical experience
in approximately 600 patients to develop novel therapies for blood
cancer and solid tumor indications. Its clinical and preclinical
development programs utilize multiple isotopes including
Actinium-225, Iodine-131 and Lutetium-177 directed at multiple
validated cancer targets including CD45, CD33, CD38, CD47, HER2 and
HER3 for targeted conditioning prior to cell and gene therapies
including bone marrow transplant and cancer therapeutics as single
agents or in combination with other therapeutic modalities.
Principles
of Consolidation - The consolidated financial statements
include the Company’s accounts and those of the Company’s wholly
owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
Use
of Estimates in Financial Statement Presentation - The
preparation of these consolidated financial statements in
conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities at the date of the consolidated financial statements
and the reported amounts of expenses during the reporting period.
Actual results could differ from those estimates.
Impact
of COVID–19 Pandemic on Financial Statements - The global
health crisis caused by the novel coronavirus (“COVID-19”) pandemic
and its resurgences has and may continue to negatively impact
global economic activity, which, despite progress in vaccination
efforts, remains uncertain and cannot be predicted with confidence.
In addition, the Omicron variant of COVID-19, which appears to be
the most transmissible variant to date, has spread globally. The
full impact of the Omicron variant, or any subsequent variants,
cannot be predicted at this time, and could depend on numerous
factors, including vaccination rates among the population, the
effectiveness of COVID-19 vaccines against the Omicron variant and
subsequent variants and the response by governmental bodies and
regulators.
Many
countries around the world have continued to impose quarantines and
restrictions on travel and mass gatherings to slow the spread of
the virus. Accordingly, the Company’s ability to continue to
operate its business may also be limited. Such events may result in
a period of business, supply and drug product manufacturing
disruption, and in reduced operations, any of which could
materially affect the Company’s business, financial condition and
results of operations. In response to COVID-19, the Company
implemented remote working and thus far, has not experienced a
significant disruption or delay in its operations as it relates to
the clinical development or drug production of our drug
candidates. A continuation or worsening of the levels of
market disruption and volatility seen in the recent past could have
an adverse effect on the Company’s ability to access capital, which
could in the future negatively affect the Company’s liquidity. In
addition, a recession or market correction resulting from the
spread of COVID-19 could materially affect the Company’s business
and the value of the Company’s common stock.
Additionally,
COVID-19 may result in delays in receiving approvals from local and
foreign regulatory authorities, delays in necessary interactions
with IRB’s or Institutional Review Boards, local and foreign
regulators, ethics committees and other important agencies and
contractors due to limitations in employee resources or forced
furlough of government employees.
To
date, COVID-19 has not had a financial impact on the Company. The
Company continues to monitor the impacts of COVID-19 on the global
economy and on its business operations. However, at this time, it
is difficult to predict how long the potential operational impacts
of COVID-19 will last or to what degree further disruption might
impact the Company’s operations and financial results.
Cash
and Cash Equivalents and Restricted Cash- The Company considers
all highly liquid accounts with original maturities of three months
or less to be cash equivalents. Balances held by the Company are
typically in excess of Federal Deposit Insurance Corporation
insured limits.
Following
is a summary of cash, cash equivalents and restricted cash at
December 31, 2021 and December 31, 2020:
| (in
thousands) |
|
December 31,
2021 |
|
|
December 31,
2020 |
|
| Cash and cash
equivalents |
|
$ |
77,829 |
|
|
$ |
63,560 |
|
| Restricted cash – current |
|
|
392 |
|
|
|
48 |
|
| Restricted
cash – long-term |
|
|
-
|
|
|
|
391 |
|
| Cash, cash
equivalents and restricted cash |
|
$ |
78,221 |
|
|
$ |
63,999 |
|
Current restricted cash of $392 thousand at December 31, 2021
relates to a certificate of deposit held as collateral for a letter
of credit issued in connection with the Company’s lease for
corporate office space. This restricted cash was classified as
long-term restricted cash at December 31, 2020. Current restricted
cash of $48 thousand at December 31, 2020 related to a credit card
account.
Property
and Equipment - Machinery and equipment are recorded at cost
and depreciated on a straight-line basis over estimated useful
lives of three to five years. Furniture and fixtures are recorded
at cost and depreciated on a straight-line basis over estimated
useful lives of seven years. When assets are retired, the cost and
related accumulated depreciation are removed from the accounts, and
any related gain or loss is reflected in operations. Repairs and
maintenance expenditures are charged to operations. Capitalized
lease assets are recorded at the lesser of the present value of
minimum lease payments or fair value and amortized over the
estimated useful life of the related property or term of the
lease.
Leases
– The Company has operating and finance leases for corporate office
space, office equipment and furniture located at the corporate
office space. Leases with an initial term of 12 months or less are
not recorded on the balance sheet; lease expense for these leases
is recognized on a straight-line basis over the lease
term.
Fair
Value of Financial Instruments - Fair value is defined as the
price that would be received to sell an asset, or paid to transfer
a liability, in an orderly transaction between market participants.
A fair value hierarchy has been established for valuation inputs
that gives the highest priority to quoted prices in active markets
for identical assets or liabilities and the lowest priority to
unobservable inputs.
Revenue
Recognition - The Company recognizes revenue in accordance with
Accounting Standards Codification (ASC) Topic 606, Revenue From
Contracts With Customers (“ASC 606”). Under ASC 606, an entity
recognizes revenue when its customer obtains control of promised
goods or services, in an amount that reflects the consideration
that the entity expects to receive in exchange for those goods or
services. To determine revenue recognition for arrangements within
the scope of ASC 606, the entity performs the following five steps:
(i) identify the contract(s) with a customer; (ii) identify the
performance obligations in the contract; (iii) determine the
transaction price, including variable consideration, if any; (iv)
allocate the transaction price to the performance obligations in
the contract; and (v) recognize revenue as the entity satisfies a
performance obligation. The Company only applies the five-step
model to contracts when it is probable that the entity will collect
the consideration to which it is entitled in exchange for the goods
or services it transfers to the customer.
At
contract inception, once the contract is determined to be within
the scope of ASC 606, the Company assesses whether the promised
goods or services promised within each contract are distinct and,
therefore, represent a separate performance obligation. Goods
and services that are determined not to be distinct are combined
with other promised goods and services until a distinct bundle is
identified. In determining whether goods or services are distinct,
the Company evaluates certain criteria, including whether
(i) the customer can benefit from the good or service either
on its own or together with other resources that are readily
available to the customer (capable of being distinct) and
(ii) the good or service is separately identifiable from other
goods or services in the contract (distinct in the context of the
contract).
The
Company then determines the transaction price, which is the amount
of consideration it expects to be entitled from a customer in
exchange for the promised goods or services for each performance
obligation and recognizes the associated revenue as each
performance obligation is satisfied. The Company’s estimate of the
transaction price for each contract includes all variable
consideration to which it expects to be entitled. Variable
consideration includes payments in the form of collaboration
milestone payments. If an arrangement includes collaboration
milestone payments, the Company evaluates whether the milestones
are considered probable of being reached and estimates the amount
to be included in the transaction price using the most likely
amount method. If it is probable that a significant revenue
reversal would not occur, the associated milestone value is
included in the transaction price.
ASC
606 requires the Company to allocate the arrangement consideration
on a relative standalone selling price basis for each performance
obligation after determining the transaction price of the contract
and identifying the performance obligations to which that amount
should be allocated. The relative standalone selling price is
defined in the revenue standard as the price at which an entity
would sell a promised good or service separately to a customer. The
Company then recognizes as revenue the amount of the transaction
price that is allocated to the respective performance obligation as
each performance obligation is satisfied, either at a point in time
or over time, and if over time, recognition is based on the use of
an output or input method.
Collaborative Arrangements - The Company follows the accounting
guidance for collaboration agreements with third parties, which
requires that certain transactions between the Company and
collaborators be recorded in its consolidated statements of
operations on either a gross basis or net basis, depending on the
characteristics of the collaborative relationship, and requires
enhanced disclosure of collaborative relationships. The Company
evaluates its collaboration agreements for proper classification in
its consolidated statements of operations based on the nature of
the underlying activity. When the Company has concluded that it has
a customer relationship with one of its collaborators, the Company
follows the guidance of ASC 606.
Grant
Revenue – The Company has a grant from a
government-sponsored entity for research and development related
activities that provide for payments for reimbursed costs, which
includes overhead and general and administrative costs as well as
an administrative fee. The Company recognizes revenue from grants
as it performs services under this arrangement. Associated expenses
are recognized when incurred as research and development expense.
Revenue and related expenses are presented gross in the
consolidated statements of operations.
Research
and Development Costs - Research and development costs are
expensed as incurred. These costs include the costs of
manufacturing drug product, the costs of clinical trials, costs of
employees and associated overhead, and depreciation and
amortization costs related to facilities and equipment. Research
and development reimbursements are recorded by the Company as a
reduction of research and development costs.
Share-Based
Payments - The Company estimates the fair value of each stock
option award at the grant date by using the Black-Scholes option
pricing model. The fair value determined represents the cost for
the award and is recognized over the vesting period during which an
employee is required to provide service in exchange for the award.
The Company accounts for forfeitures of stock options as they
occur.
Income
Taxes - The Company accounts for income taxes in accordance
with FASB ASC 740 Income Taxes, which requires the asset and
liability method to calculate deferred taxes. Deferred taxes are
recognized based on the differences between the financial reporting
and income tax bases of assets and liabilities using the enacted
tax rates and laws that will be in effect when the differences are
expected to reverse. The Company reviews deferred tax assets for a
valuation allowance based upon whether it is more likely than not
that the deferred tax asset will be fully realized.
FASB
ASC 740 prescribes guidance for the financial statement
recognition, measurement and disclosure of uncertain tax positions.
Tax positions must meet a “more-likely-than-not” recognition
threshold to be recognized. There were no tax positions for which
it is considered reasonably possible that the total amounts of
unrecognized tax benefits will significantly increase or decrease
within the next year. The Company recognizes interest related to
unrecognized tax benefits in interest expense and penalties in
operating expenses
Net
Loss Per Common Share - Basic loss per common share is computed
by dividing the net loss available to common stockholders by the
weighted average number of common shares outstanding during the
reporting period. For periods of net loss, diluted loss per share
is calculated similarly to basic loss per share because the impact
of all potential dilutive common shares is anti-dilutive. The
Company issued pre-funded warrants in April 2020 and June 2020 that
were considered outstanding shares for the purposes of calculating
net loss per common share throughout 2020. As of December 31, 2020,
all of the pre-funded warrants had been exercised.
For
the years ended December 31, 2021 and 2020, the Company’s
potentially dilutive shares, which include outstanding common stock
options and warrants have not been included in the computation of
diluted net loss per share as the result would have been
anti-dilutive.
| (in
thousands) |
|
December 31,
2021 |
|
|
December 31,
2020 |
|
| Options |
|
|
1,362 |
|
|
|
815 |
|
|
Warrants |
|
|
2,112 |
|
|
|
2,113 |
|
| Total |
|
|
3,474 |
|
|
|
2,928 |
|
Subsequent
Events - The Company’s management reviewed all material events
through the date the consolidated financial statements were issued
for subsequent event disclosure consideration.
Accounting
Standards Recently Adopted - In August 2020, FASB issued ASU
2020-06, Debt—Debt with Conversion and Other Options (Subtopic
470-20) and Derivatives and Hedging—Contracts in Entity’s Own
Equity (Subtopic 815-40): Accounting for Convertible Instruments
and Contracts in an Entity’s Own Equity, which, among other
things, provides guidance on how to account for contracts on an
entity’s own equity. This ASU simplifies the accounting for certain
financial instruments with characteristics of liabilities and
equity. Specifically, the ASU eliminated the need for the Company
to assess whether a contract on the entity’s own equity (1) permits
settlement in unregistered shares, (2) whether counterparty rights
rank higher than shareholder’s rights, and (3) whether collateral
is required. In addition, the ASU requires incremental disclosure
related to contracts on the entity’s own equity and clarifies the
treatment of certain financial instruments accounted for under this
ASU on earnings per share. This ASU may be applied on a full
retrospective of modified retrospective basis. This ASU is
effective January 1, 2022 and interim periods presented, although
early adoption of this ASU was permitted effective January 1, 2021.
The Company early adopted this standard effective January 1, 2021
and the standard did not have a significant impact on the Company’s
financial statements.
Accounting
Standards Recently Issued– In May 2021, FASB issued ASU
2021-04, Earnings Per Share (topic 260), Debt — Modifications
and Extinguishments (Subtopic 470-50), Compensation – Stock
Compensation (Topic 718) and Derivatives and Hedging – Contracts in
an Entity’s Own Equity (Subtopic 815-40) – Issuer’s Accounting for
Certain Modifications or Exchanges of Freestanding
Equity-Classified Written Call Options, which provides guidance
of a modification or an exchange of a freestanding
equity-classified written call option that remains equity
classified after modification or exchange as (1) an adjustment to
equity and, if so, the related earnings per share (EPS) effects, if
any, or (2) an expense and, if so, the manner and pattern of
recognition. The amendments in this ASU are effective January 1,
2022, including interim periods. Early adoption is permitted. The
Company will apply the amendments prospectively to modifications or
exchanges occurring on or after January 1, 2022. The Company will
evaluate the impact of ASU 2017-09 on any future changes to the
terms and conditions of its warrants.
In
October 2021, FASB issued ASU 2021-08, Business Combinations
(Topic 805), Account for Contract Assets and Contract Liabilities
from Contracts with Customers, which provides guidance on
accounting for contract assets and contract liabilities acquired in
a business combination in accordance with ASC 606. To achieve this,
an acquirer may assess how the acquiree applied ASC 606 to
determine what to record for the acquired revenue contracts.
Generally, this should result in an acquirer recognizing and
measuring the acquired contract assets and contract liabilities
consistent with how they were recognized and measured in the
acquiree’s financial statements. The amendments of ASU 2021-08 are
effective January 1, 2023, including interim periods. Early
adoption is permitted, including adoption in an interim period. The
Company will evaluate the impact of ASU 2021-08 on any future
business combinations the Company may enter in the
future.
In
November 2021, the FASB issued ASU 2021-10, Government
Assistance (Topic 832), Disclosures by Business Entities about
Government Assistance, which provides guidance on disclosure
requirements to entities other than not-for-profit entities about
transaction with a government that are accounted for by applying a
grant or contribution accounting model by analogy. ASU 2021-10
requires an entity to make annual disclosures related to (1) the
nature of the transactions and the related accounting policy used
to account for the government transactions, (2) quantification and
disclosure of amounts related to the government transactions
included in balance sheet and income statement financial statement
line items, and (3) significant terms and conditions of the
government transactions, including commitments and contingencies.
The amendments of ASU 2021-10 are effective January 1, 2022,
including interim periods. The adoption of ASU 2021-10 is not
expected to have a significant impact on the Company’s financial
statements.
Note
2 - Prepaid Expenses and Other Current Assets
Prepaid
expenses and other current assets consisted of the following at
December 31, 2021 and 2020:
| |
|
December 31, |
|
|
December 31, |
|
| |
|
2021 |
|
|
2020 |
|
|
Prepaid insurance |
|
$ |
874 |
|
|
$ |
792 |
|
| Prepaid clinical trial
expenses |
|
|
543 |
|
|
|
457 |
|
| Other prepaid
expenses and other current assets |
|
|
61 |
|
|
|
68 |
|
| Total
prepaid expenses and other current assets |
|
$ |
1,478 |
|
|
$ |
1,317 |
|
Note
3 - Property and Equipment
Property
and equipment consisted of the following at December 31, 2021 and
2020:
| |
|
|
|
|
December 31, |
|
|
December 31, |
|
| (in
thousands) |
|
Lives |
|
|
2021 |
|
|
2020 |
|
| Lab equipment |
|
|
5
years |
|
|
$ |
476 |
|
|
$ |
378 |
|
| Office equipment and
furniture |
|
|
3 - 7
years |
|
|
|
199 |
|
|
|
225 |
|
| Less:
accumulated depreciation |
|
|
|
|
|
|
(335 |
) |
|
|
(291 |
) |
| Property and
equipment, net |
|
|
|
|
|
$ |
340 |
|
|
$ |
312 |
|
Depreciation
expense consisted of the following for the years ended December 31,
2021 and 2020, respectively:
| |
|
December 31, |
|
|
December 31, |
|
| (in
thousands) |
|
2021 |
|
|
2020 |
|
| Research and
development |
|
$ |
88 |
|
|
$ |
36 |
|
| General
administrative |
|
|
17 |
|
|
|
18 |
|
| Total
Depreciation expense |
|
$ |
105 |
|
|
$ |
54 |
|
Note
4 - Leases
The
Company determines if an arrangement is a lease at inception. This
determination generally depends on whether the arrangement conveys
to the Company the right to control the use of a fixed asset for a
period of time in exchange for consideration. Control of an
underlying asset is conveyed to the Company if the Company obtains
the rights to direct the use of and to obtain substantially all of
the economic benefits from using the underlying asset. The Company
has lease agreements which include lease and non-lease components,
which the Company has elected to account for as a single lease
component for all classes of underlying assets. Lease expense for
variable lease components are recognized when the obligation is
probable. The Company made an accounting policy election to exclude
from balance sheet reporting those leases with initial terms of 12
months or less.
Right-of-use
assets and liabilities are recognized at commencement date based on
the present value of lease payments over the lease term. ASC 842
requires a lessee to discount its unpaid lease payments using the
interest rate implicit in the lease or, if that rate cannot be
readily determined, its incremental borrowing rate. As an implicit
interest rate was not readily determinable in the Company’s leases,
the incremental borrowing rate was used based on the information
available at commencement date in determining the present value of
lease payments.
The
lease term for all of the Company’s leases includes the
non-cancellable period of the lease plus any additional periods
covered by either a Company option to extend (or not to terminate)
the lease that the Company is reasonably certain to exercise, or an
option to extend (or not to terminate) the lease controlled by the
lessor. Options for lease renewals have been excluded from the
lease term (and lease liability) for the majority of the Company’s
leases as the reasonably certain threshold is not met.
At
December 31, 2021, the Company has an operating lease for corporate
office space and two finance leases for office equipment and
furniture located in the corporate office space. In addition, the
Company has auxiliary corporate office space that it rents on a
month-to-month basis; this rental is accounted for as an operating
lease with the same term as the Company’s main office in the same
building.
The
components of lease expense are as follows:
| (in
thousands) |
|
Year ended
December 31,
2021 |
|
|
Year ended
December 31,
2020 |
|
|
Operating lease expense |
|
$ |
372 |
|
|
$ |
372 |
|
| |
|
|
|
|
|
|
|
|
| Finance lease cost |
|
|
|
|
|
|
|
|
| Amortization of
right-to-use assets |
|
$ |
81 |
|
|
$ |
81 |
|
|
Interest on lease liabilities |
|
$ |
9 |
|
|
$ |
16 |
|
| Total finance
lease cost |
|
|
90 |
|
|
$ |
97 |
|
Supplemental
cash flow information related to leases are as follows:
| |
|
Year ended |
|
| (in
thousands) |
|
December 31,
2021 |
|
|
December 31,
2020 |
|
| Cash flow
information: |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| Cash paid for amounts included in the
measurement of lease liabilities: |
|
|
|
|
|
|
| Operating cash flow use
from operating leases |
|
$ |
377 |
|
|
$ |
375 |
|
| Operating cash flow use from finance
leases |
|
$ |
9 |
|
|
$ |
16 |
|
| Financing cash flow use from finance
leases |
|
$ |
85 |
|
|
$ |
78 |
|
| |
|
|
|
|
|
|
|
|
| Non-cash
activity: |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Right-of-use assets obtained in
exchange for lease obligations: |
|
|
|
|
|
|
|
|
| Operating leases |
|
$ |
-
|
|
|
$ |
83 |
|
| Finance Leases |
|
$ |
-
|
|
|
$ |
-
|
|
Weighted
average remaining lease terms are as follows at December 31,
2021:
| Weighted average remaining lease term: |
|
|
|
|
| Operating leases |
|
|
0.6
years |
|
| Finance Leases |
|
|
0.8
years |
|
As the interest rate implicit in the leases was not readily
determinable at the time that the leases were evaluated, the
Company used its incremental borrowing rate based on the
information available in determining the present value of lease
payments. The Company’s incremental borrowing rate was based on the
term of the lease, the economic environment of the lease and
reflect the rate the Company would have had to pay to borrow on a
secured basis. Below is information on the weighted average
discount rates used at the time that the leases were evaluated:
| Weighted average discount rates: |
|
|
|
| Operating leases |
|
|
8 |
% |
| Finance Leases |
|
|
8 |
% |
Maturities
of lease liabilities are as follows:
|
Year ending December 31, |
|
Operating
Leases |
|
|
Finance
Leases |
|
| 2022 |
|
|
252 |
|
|
|
64 |
|
| 2023 |
|
|
-
|
|
|
|
4 |
|
| Total lease
payments |
|
$ |
252 |
|
|
$ |
68 |
|
| Less imputed
interest |
|
|
(7 |
) |
|
|
(3 |
) |
| Present value of
lease liabilities |
|
$ |
245 |
|
|
$ |
65 |
|
Note 5 - Other revenue
The Company has a grant from a government-sponsored entity for
research and development related activities that provide for
payments for reimbursed costs, which includes overhead and general
and administrative costs as well as an administrative fee. The
Company recognizes revenue from grants as it performs services
under this arrangement. Associated expenses are recognized when
incurred as research and development expense. Revenue of $0.2
million was recognized during year ended December 31, 2021.
The Company determined that certain collaborations with a
third-party are within the scope of ASC 606. The collaboration
agreement is made up of multiple modules related to various
research activities. The Company identified a single performance
obligation to provide research services within each module for
which the Company receives monetary consideration. The third-party
can choose to proceed with each module or can terminate the
agreement at any time. The Company recognizes revenue for each
module on a straight-line basis over the expected module period.
Revenue for succeeding modules is not recognized until all
contingencies are resolved, inclusive of the third-party’s ability
to terminate the module. The consideration is recognized to revenue
over each module and revenue recognized during the year ended
December 31, 2021 was $0.9 million. Other liability consists of
$1.0 million of deferred other revenue that is expected to be
recognized during 2022.
Note
6 - Commitments and Contingencies
On
June 15, 2012, the Company entered into a license and sponsored
research agreement with Fred Hutchinson Cancer Research Center
(“FHCRC”) to build upon previous and ongoing clinical trials with
apamistamab (licensed antibody). FHCRC has completed both a Phase 1
and Phase 2 clinical trial with apamistamab. The Company has been
granted exclusive rights to the antibody and related master cell
bank developed by FHCRC. A milestone payment of $1 million will be
due to FHCRC upon FDA approval of the first drug utilizing the
licensed antibody. Upon commercial sale of the drug, royalty
payments of 2% of net sales will be due to FHCRC.
Note
7 - Equity
On
April 24, 2020, the Company issued and sold 4.3 million shares of
common stock and 2.8 million pre-funded warrants to purchase shares
of common stock. The price to the public in this offering for each
share of common stock was $4.50 and for each pre-funded warrant was
$4.497. Each pre-funded warrant had an exercise price of $0.003 per
share and was exercisable immediately upon issuance. Gross proceeds
from this offering were $31.6 million, before deducting
underwriting discounts and commissions and other offering expenses
payable by the Company. Net proceeds from this offering were $29.1
million.
During
the year ended December 31, 2020, holders of all of the 2.8 million
pre-funded April 2020 warrants exercised their warrants at $0.003
per share and received 2.8 million shares of common
stock.
On
June 19, 2020, the Company issued and sold 1.9 million shares of
common stock and 0.7 million pre-funded warrants to purchase shares
of common stock. The price to the public in this offering for each
share of common stock was $9.75 and for each pre-funded warrant was
$9.747. Each pre-funded warrant had an exercise price of $0.003 per
share and was exercisable immediately upon issuance. Gross proceeds
from this offering were $25.0 million, before deducting
underwriting discounts and commissions and other offering expenses
payable by the Company. Net proceeds from this offering were $23.0
million.
During
the year ended December 31, 2020, holders of all of the 0.7 million
pre-funded June 2020 warrants exercised their warrants at $0.003
per share and received 0.7 million shares of common
stock.
In
August 2020, the Company entered into the Capital on Demand™ Sales
Agreement with JonesTrading Institutional Services LLC
(“JonesTrading”), pursuant to which the Company may sell, from time
to time, through or to JonesTrading, up to an aggregate of $200
million of its common stock. Shares of common stock are offered
pursuant to the Company’s shelf registration statement on Form S-3
filed with the SEC on August 7, 2020. As of December 31, 2020, the
Company had sold 2.1 million shares of common stock, resulting in
gross proceeds of $22.6 million and net proceeds of $21.7 million.
For the year ended December 31, 2021, the Company sold 4.6 million
shares of common stock, resulting in gross proceeds of $36.5
million and net proceeds of $35.3 million.
2019
Amended and Restated Stock Plan
In
December 2019, the Company’s 2019 Stock Plan was established. The
expiration date of the plan is October 18, 2029 and the total
number of shares of the Company’s common stock available for grant
to employees, directors and consultants of the Company was 333,333
shares. At the Company’s Annual Meeting of Stockholders held on
November 18, 2020, its stockholders authorized an increase in the
number of shares authorized under the plan, resulting in the number
of shares authorized in the plan to be 3,083,333 shares. At the
Company’s Annual Meeting of Stockholders held on November 9, 2021,
its stockholders authorized an increase in the number of shares
authorized under the plan, resulting in the number of shares
authorized in the plan to be 5,833,333 shares.
2013
Amended and Restated Stock Plan
In
September 2013, the Company’s 2013 Stock Plan was established. The
expiration date of the plan is September 9, 2023 and at the time of
approval, the total number of shares of the Company’s common stock
available for grant to employees, directors and consultants of the
Company under the plan was 91,666 shares. After a number of
amendments approved by stockholders, the number of shares
authorized under the plan is 758,333 shares.
2013
Equity Incentive Plan
In
September 2013, the Company’s 2013 Equity Incentive Plan was
established. The expiration date of the plan is September 9, 2023
and the total number of shares of the Company’s common stock
available for grant to employees, directors and consultants of the
Company under the plan was 15,000 shares. In December 2013, the
shareholders of the Company approved the plan and increased the
number of shares authorized under the plan to 33,333
shares.
Stock
Options
Following
is a summary of stock option activity for the years ended December
31, 2021 and 2020:
| (in thousands,
except for per-share amount) |
|
Number of
Options |
|
|
Weighted
Average
Exercise
Price |
|
|
Weighted
Average
Remaining
Contractual
Term
(in years) |
|
|
Aggregate
Intrinsic
Value at December 31, 2021 |
|
| Outstanding, January 1, 2020 |
|
|
380 |
|
|
|
35.10 |
|
|
|
7.88 |
|
|
|
155 |
|
| Granted |
|
|
458 |
|
|
|
9.99 |
|
|
|
|
|
|
|
|
|
| Cancelled |
|
|
(23 |
) |
|
|
16.84 |
|
|
|
|
|
|
|
|
|
| Outstanding, December 31, 2020 |
|
|
815 |
|
|
|
21.53 |
|
|
|
8.51 |
|
|
|
120 |
|
| Granted |
|
|
881 |
|
|
|
6.43 |
|
|
|
|
|
|
|
|
|
| Exercised |
|
|
(1 |
) |
|
|
6.69 |
|
|
|
|
|
|
|
|
|
| Cancelled |
|
|
(333 |
) |
|
|
18.78 |
|
|
|
|
|
|
|
|
|
| Outstanding, December 31, 2021 |
|
|
1,362 |
|
|
|
12.45 |
|
|
|
8.69 |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Exercisable, December 31, 2021 |
|
|
354 |
|
|
|
27.04 |
|
|
|
6.92 |
|
|
|
- |
|
During
2021, the Company granted its employees and members of the Board of
Directors options to purchase 881 thousand shares of common stock
with an exercise price ranging from $6.02 to $9.25 per share, a
term of 10 years, and a vesting period from 4 to 4.2
years. The options have an aggregated fair value of $3.9
million that was calculated using the Black-Scholes option-pricing
model. Variables used in the Black-Scholes option-pricing model
include: (1) discount rate range from 0.65% to 1.28% (2) expected
life of 6 years, (3) expected volatility range from 79.8% to 85.1%,
and (4) zero expected dividends.
During
2020, the Company granted its employees and members of the Board of
Directors options to purchase 458 thousand shares of common stock
with an exercise price ranging from $6.63 to $12.41 per share, a
term of 10 years, and a vesting period from 4 to 4.2
years. The options have an aggregated fair value of $3.2
million that was calculated using the Black-Scholes option-pricing
model. Variables used in the Black-Scholes option-pricing model
include: (1) discount rate range from 0.34% to 0.56% (2) expected
life of 6 years, (3) expected volatility range from 83.6% to 85.5%,
and (4) zero expected dividends.
During
the years ended December 31, 2021 and 2020, options to purchase 333
thousand and 23 thousand common shares were cancelled,
respectively, upon the termination of employment. During 2021, 1
thousand options were exercised for shares of common stock. There
were no exercises of options during 2020.
The
fair values of all options issued and outstanding are being
amortized over their respective vesting periods. The unrecognized
compensation expense at December 31, 2021 was $4.9 million related
to unvested options, which is expected to be expensed over a
weighted average of 3.3 years. During 2021 and 2020, the Company
recorded total option expense of $1.5 million and $1.2 million,
respectively.
Pre-funded
Warrants
As
part of the April 2020 offering and the June 2020 offering, the
Company issued pre-funded warrants. Each pre-funded warrant had an
exercise price of $0.003 per share and was exercisable immediately
upon issuance. The pre-funded warrants did not have an expiration
date. During 2020 all the pre-funded warrants were exercised for
shares of common stock.
Warrants
Following
is a summary of warrant activities for the years ended December 31,
2021 and 2020:
| (in
thousands, except for per-share amounts) |
|
Number of
Warrants |
|
|
Weighted
Average
Exercise
Price |
|
|
Weighted
Average
Remaining
Contractual
Term
(in years) |
|
|
Aggregate
Intrinsic
Value |
|
| Outstanding, January 1, 2020 |
|
|
2,871 |
|
|
|
20.71 |
|
|
|
2.95 |
|
|
|
301 |
|
| Granted |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
| Exercised |
|
|
(2 |
) |
|
|
15.00 |
|
|
|
|
|
|
|
|
|
| Cancelled |
|
|
(756 |
) |
|
|
20.99 |
|
|
|
|
|
|
|
|
|
| Outstanding, December 31, 2020 |
|
|
2,113 |
|
|
|
20.55 |
|
|
|
2.76 |
|
|
|
362 |
|
| Granted |
|
|
1 |
|
|
|
8.30 |
|
|
|
|
|
|
|
|
|
| Exercised |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
| Cancelled |
|
|
(2 |
) |
|
|
50.17 |
|
|
|
|
|
|
|
|
|
| Outstanding, December 31, 2021 |
|
|
2,112 |
|
|
|
20.52 |
|
|
|
1.76 |
|
|
|
276 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Exercisable, December 31, 2021 |
|
|
2,108 |
|
|
|
20.12 |
|
|
|
1.76 |
|
|
|
276 |
|
The
Company has an outstanding warrant to purchase 1,907 shares of
common stock, issued on March 14, 2017 to Sandesh Seth, the
Company’s Chairman and Chief Executive Officer. The warrant
included down-round protection up until it was amended on August
11, 2020. For warrants with down-round protection, a deemed
dividend is recorded for the change in fair value of the warrants
when the down-round provision is triggered. As a result of the
April 2020 offering and June 2020 offering, the exercise price of
the warrant was reset from $26.40 per share to $15.62 per share.
The down-round protection provision in the above warrants created a
deemed dividend to common stockholders of $1 thousand in the year
ended December 31, 2020 which is reflected in the accompanying
consolidated statement of operations and consolidated statement of
changes in stockholders’ equity. On August 11, 2020, the Company
and Mr. Seth agreed to amend the warrant to remove the
anti-dilution provision that had been in the warrant. Accordingly,
pursuant to the amendment, as of August 11, 2020, the exercise
price of the warrant will no longer be subject to a proportional
adjustment if and when the Company issues any shares of its common
stock for a consideration less than the exercise price of the
warrant. All other terms of the warrant remained the
same.
During
the years ended December 31, 2021 and 2020, the Company recorded
stock-based compensation expense related to warrants of $16
thousand and $13 thousand, respectively.
Note
8 - Income Taxes
Deferred
income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Significant components of the Company’s deferred tax
assets and liabilities at December 31, 2021 and 2020 are as
follows:
| (in thousands) |
|
2021 |
|
|
2020 |
|
| Deferred tax assets: |
|
|
|
|
|
|
| Net operating losses carry forward |
|
$ |
36,405 |
|
|
$ |
33,955 |
|
| Share-based compensation |
|
|
1,213 |
|
|
|
1,689 |
|
| Research and development/orphan drug
credits |
|
|
14,536 |
|
|
|
12,638 |
|
| Intangibles |
|
|
10,426 |
|
|
|
7,873 |
|
| Others |
|
|
19 |
|
|
|
19 |
|
| Less: valuation allowance |
|
|
(62,599 |
) |
|
|
(56,174 |
) |
| Deferred tax assets, net |
|
$ |
-
|
|
|
$ |
-
|
|
The Company has recorded a valuation allowance of $62.6 million and
$56.2 million against its deferred tax assets at December 31, 2021
and 2020 respectively, because management determined that it is not
more-likely-than not that those assets will be realized.
For federal income tax purposes, the Company has $163.0 million of
unused net operating losses (“NOLs”) at December 31, 2021 available
for carry forward to future years. NOLs of $120.8 million generated
prior to 2018 will begin to expire if unused in 2022. NOLs
generated in 2018 and later years of $42.2 million have an
indefinite life, but will be limited to 80% of their value if used
in a tax year ending after January 1, 2022.
For state income tax purposes, the Company has $87.9 million of
unused NOLs at December 31, 2021 available for carry forward to
future years. These NOLs will begin to expire in 2034 if
unused.
The
Company has federal research and development tax credits of $2.9
million at December 31, 2021 which will begin to expire in 2034 if
unused and orphan drug credits of $11.6 million which will begin to
expire in 2028 if unused.
Federal
and state tax laws impose limitations on the utilization of net
operating losses and credit carryforwards in the event of an
ownership change for tax purposes, as defined in Section 382 of the
Internal Revenue Code. Accordingly, the Company’s ability to
utilize these carryforwards may be limited as a result of an
ownership change which may have already happened or may happen in
the future. Such an ownership change could result in a limitation
in the use of the net operating losses in future years and possibly
a reduction of the net operating losses available.
The
difference between the income tax provision and the amount that
would result if the U.S. Federal statutory rates were applied to
pre-tax losses for the year ended December 31, 2021 and 2020 are as
follows:
| (in thousands) |
|
December 31,
2021 |
|
|
December 31,
2020 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Federal
statutory income taxes |
|
$ |
(5,202 |
) |
|
|
(21.0 |
)% |
|
$ |
(4,665 |
) |
|
|
(21.0 |
)% |
| State income taxes |
|
|
(373 |
) |
|
|
(1.5 |
)% |
|
|
56 |
|
|
|
0.3 |
% |
| Deferred true-up |
|
|
562 |
|
|
|
2.3 |
% |
|
|
(64 |
) |
|
|
(0.3 |
)% |
| Research and development/orphan
drug tax credit |
|
|
(1,898 |
) |
|
|
(7.7 |
)% |
|
|
(1,766 |
) |
|
|
(8.0 |
)% |
| Other |
|
|
486 |
|
|
|
2.0 |
% |
|
|
202 |
|
|
|
0.9 |
% |
| Change in valuation allowance |
|
|
6,425 |
|
|
|
25.9 |
% |
|
|
6,237 |
|
|
|
28.1 |
% |
| Provision for income tax |
|
$ |
-
|
|
|
|
-
|
|
|
$ |
-
|
|
|
|
-
|
|
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Disclosure controls and procedures. The Company,
under the supervision and with the participation of its management,
including the Company’s principal executive officer and principal
financial and accounting officer, evaluated the effectiveness of
the Company’s “disclosure controls and procedures,” as such term is
defined in Rule 13a-15(e) and 15d-15(e) under the Securities Act of
1934, as amended (the “Exchange Act”), as of the end of the period
covered by this Annual Report on Form 10-K. Based on that
evaluation, the Company’s principal executive officer and principal
financial and accounting officer have concluded that the Company’s
disclosure controls and procedures are effective as of December 31,
2021 to ensure that information required to be disclosed by the
Company in reports that it files or submits under the Exchange Act
is recorded, processed, summarized and reported within the time
periods specified in Securities and Exchange Commission rules and
forms, and includes controls and procedures designed to ensure that
information required to be disclosed by the Company in such reports
is accumulated and communicated to the Company’s management,
including the Company’s principal executive officer and principal
financial and accounting officer, as appropriate, to allow timely
decisions regarding required disclosure.
Management’s Annual Report on Internal Control Over Financial
Reporting. The Company’s management is responsible for
establishing and maintaining adequate internal control over
financial reporting. The Company’s internal control over financial
reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles.
The Company’s internal control over financial reporting includes
policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect
transactions and dispositions of assets; (2) provide
reasonable assurances that transactions are recorded as necessary
to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and
expenditures are being made only in accordance with authorizations
of management and the directors of the Company; and
(3) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or disposition of
the Company’s assets that could have a material effect on our
financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal
control over financial reporting as of December 31, 2021. In making
this assessment, management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in Internal Control-Integrated Framework (2013). Based on
its assessment and those criteria, management concluded that as of
December 31, 2021, the Company’s internal control over financial
reporting was effective.
This Annual Report on Form 10-K does not include an attestation
report from our registered public accounting firm regarding
internal control over financial reporting. Our internal control
over financial reporting was not subject to such attestation as we
are a non-accelerated filer.
Changes in internal controls over financial
reporting. There were no changes in the Company’s internal
controls over financial reporting that occurred during the fourth
quarter of the fiscal year covered by this Annual Report on Form
10-K that have materially affected, or are reasonably likely to
materially affect, the Company’s internal control over financial
reporting.
ITEM 9B. OTHER INFORMATION.
Item 5.03 Amendments to Articles of Incorporation or
Bylaws; Change in Fiscal Year.
None.
ITEM 9C. Disclosure
Regarding Foreign Jurisdictions that Prevent
Inspections.
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE.
Directors and Executive Officers
The names, positions and ages of our directors and executive
officers as of March 25, 2022, are as follows:
|
Name |
|
Age |
|
Position |
| Sandesh
Seth |
|
57 |
|
Chairman
and Chief Executive Officer |
| |
|
|
|
|
| Steve
O’Loughlin |
|
37 |
|
Chief
Financial Officer (Principal Financial and Accounting
Officer) |
| |
|
|
|
|
| Jeffrey
W. Chell M.D. |
|
67 |
|
Director |
| |
|
|
|
|
| David
Nicholson, Ph.D. |
|
66 |
|
Lead
Independent Director |
| |
|
|
|
|
| Richard
I. Steinhart |
|
64 |
|
Director |
| |
|
|
|
|
| Ajit
S. Shetty, Ph.D. |
|
75 |
|
Director |
Subject to the classified board provisions of our Charter, all
directors hold office until the next annual meeting of stockholders
and the election and qualification of their successors. Officers
are elected annually by the Board of Directors and serve at the
discretion of the Board of Directors.
There are no other arrangements or understanding between any
of our directors and any other persons pursuant to which they were
selected as a director.
Background of Executive Officers and Directors
The principal occupations for the past five years (and, in some
instances, for prior years) of each of our directors and executive
officers are as follows:
Sandesh Seth, Chairman and Chief Executive Officer
Mr. Sandesh Seth has been our Chief Executive Officer since June
2017. Mr. Seth has been a Director since March 2012, our Chairman
of the Board since October 2013, and served as Executive Chairman
from August 2014 to June 2017.
Mr. Seth has 25+ years of experience in investment banking
(Laidlaw& Co (UK) Ltd., Cowen & Co.), equity research (Bear
Stearns, Commonwealth Associates) and in the pharma industry
(Pfizer, Warner-Lambert, SmithKline in strategic planning, business
development and R&D project management). Mr. Seth was chairman
of Relmada Therapeutics Inc., a specialty pharma company focused on
CNS therapeutics, which he helped co-found. Mr. Seth has an MBA in
Finance from New York University; an M.S. in the Pharmaceutical
Sciences from the University of Oklahoma Health Center and a B.Sc.
in Chemistry from Bombay University. He has published several
scientific articles and was awarded the University Regents Award
for Research Excellence at the University of Oklahoma. Mr. Seth was
designated as Regulatory Affairs Certified by the Regulatory
Affairs Professionals Society which signifies proficiency with U.S.
FDA regulations. He has several patents related to use of
radiopharmaceuticals as conditioning agents for adoptive cell
therapies and as therapeutic combinations.
That Mr. Seth has served in various business executive-level
positions over the course of his career, has significant investment
banking experience, has developed significant management,
operational and leadership skills and is well accustomed to
interfacing with investors, analysts, auditors, C-level executives,
and outside advisors, led us to conclude that Mr. Seth should serve
as a director.
Steve O’Loughlin, Chief Financial Officer
Steve O’Loughlin has been our Chief Financial Officer since August
2020. Mr. O’Loughlin served as our Principal Financial Officer from
May 2017 to August 2020. Mr. O’Loughlin joined Actinium in October
2015 as Vice President, Finance and Corporate Development, with
almost a decade of life sciences industry experience gained from
previous positions in investment banking and publicly traded life
sciences companies. Prior to Actinium, from June 2015 to October
2015, Mr. O’Loughlin worked at J. Streicher LLC as an investment
banker, from August 2012 to June 2015 Mr. O’Loughlin held the
position of vice president, corporate finance and development and
was a corporate officer at Protea Biosciences, Inc., a publicly
traded life sciences tools company. Previously, From June 2010 to
June 2012, Mr. O’Loughlin held corporate development positions with
Caliber I.D., a publicly traded diagnostics company. Mr. O’Loughlin
previously worked in investment banking at Jesup & Lamont where
he focused on the biotechnology and life sciences industries. Mr.
O’Loughlin has a B.S. in Business Administration with a
concentration in finance from Ramapo College of New Jersey.
Jeffrey W. Chell, M.D., Director
Dr. Chell has been a Director of the Company since April 2018. Dr.
Chell is also a member of our Audit Committee and Compensation
Committee. He has been the chief executive officer emeritus of the
National Marrow Donor Program (“NMDP”) since 2017 having served as
its chief executive officer since 2000. Dr. Chell has led the NMDP
through transformational growth as its Be The Match Registry
tripled to more than 12 million donors, the number of transplants
facilitated has grown fivefold to over 6,400 annually, and revenue
more than tripled to nearly $400 million per year. He is also the
co-founder and has served as executive director of the Center For
International Blood & Marrow Transplant Research since 2004, a
leading research program in the field contributing over 70 research
publications per year in peer-reviewed journals. Dr. Chell also
currently serves as chair of CLR Insurance, a captive insurance
company domiciled in the Cayman Islands. From 2014 to 2016, Dr.
Chell served as co-chair of Bone Marrow Donors Worldwide during its
IT transformation project, improving revenues and reducing
costs.
Prior to joining the NMDP, he served as president, Allina Medical
Clinics, a 450 physician multi-specialty medical group from 1994 to
1999. Prior to that he practiced Internal Medicine in Minneapolis
and in the U.S. Air Force Medical Corps.
Dr. Chell received his M.D. from the University of Minnesota and
his training in Internal Medicine at the University of Wisconsin,
Madison. Dr. Chell is a diplomate of the American Board of Internal
Medicine, a member of the American Society of Hematology and a
member of the American Society of Blood and Marrow
Transplantation.
He has received multiple honors including the 2018 Public Service
award of the American Society For Blood and Marrow Transplantation,
2017 Most Admired CEO by the Minneapolis/St. Paul Business Journal,
2010 Healthcare Executive of the Year by the Minneapolis/St, Paul
Business Journal, and the 2017 Bone Marrow Foundation Service
Award.
That Dr. Chell brings many years of experience with patient donor
programs, knowledge of challenges related to bone marrow
transplants, leadership of organizations and experience working in
medical groups to our Board, led us to conclude that Dr. Chell
should serve as a director.
David Nicholson, Ph.D., Director
David Nicholson has been a Director of the Company since 2008. Dr.
Nicholson is also a member of our Compensation Committee and
Corporate Governance Committee. Since March 2015, Dr. Nicholson
served as Executive Vice President and Chief R&D Officer of
Allergan, which was acquired by Abbvie in May 2020. In August 2014,
Dr. Nicholson joined Allergan (previously known as Actavis plc and
Forest Laboratories, Inc.) as senior vice president, Actavis Global
Brands R&D. From March 2012 to August 2014, Dr. Nicholson was
on the executive committee of Bayer CropScience as head of research
& development responsible for the integration of the company’s
R&D activities into one global organization. Dr. Nicholson
graduated in pharmacology, earning his B.Sc. from the University of
Manchester (1975) and his Ph.D. from the University of Wales
(1980). Between 1978 and 1988, Dr. Nicholson worked in the
pharmaceutical industry for the British company Beecham-Wülfing in
Gronau, Germany. The main emphasis of his activities as group
leader in a multidisciplinary project group was the development of
cardiovascular drugs.
From 1988-2007, Dr. Nicholson held various positions of increasing
seniority in the UK, the Netherlands and the U.S. with Organon, a
business unit of Akzo Nobel. Ultimately, he became executive vice
president, research & development, and member of the Organon
Executive Management Committee. He implemented change programs,
leading to maximizing effectiveness in research & development,
ensuring customer focus and the establishment of a competitive
pipeline of innovative drugs. In 2007, Dr. Nicholson transferred to
Schering-Plough, Kenilworth, New Jersey as senior vice president,
responsible for Global Project Management and Drug Safety. From
2009 to December 2011, he was vice president licensing and
knowledge management at Merck in Rahway, New Jersey, reporting to
the president of Merck R&D. As an integration team member, Dr.
Nicholson played a role in the strategic mergers of Organon
BioSciences, the human and animal health business of Dutch chemical
giant Akzo-Nobel, and Schering-Plough in 2007 as well as of
Schering-Plough and Merck in 2009.
That Dr. Nicholson brings over 25 years of pharmaceutical
experience to our Board, having served in various pharmaceutical
research and development executive-level positions over the course
of his career, and that Dr. Nicholson has developed significant
management and leadership skills relating to the pharmaceutical
industry. and is well accustomed to interfacing with investors,
analysts, auditors, outside advisors and governmental officials,
led us to conclude that Dr. Nicholson should serve as a
director.
Ajit S. Shetty, Ph.D., Director
Dr. Shetty has been a Director of the Company since March 2017. Dr.
Shetty is also a member of our Audit Committee, Compensation
Committee, and Chairman of our Corporate Governance Committee. Dr.
Shetty joined Janssen Pharmaceutical, Inc. (“Janssen”) in 1976
ultimately rising to the position of president in 1986 where he led
the establishment of Janssen’s business in the U.S. From 1999 to
2008 he was managing director of Janssen, during this time the
Janssen Group of companies’ global sales grew from $1 billion to $8
billion, and from 2004 until 2012 he was chairman of the board of
directors. In Dr. Shetty’s most recent role at Johnson &
Johnson he was head of Enterprise Supply Chain, where he reported
to the chief executive officer and was responsible for the
transformation and optimization of Johnson & Johnson’s supply
chain. Dr. Shetty earned a Ph.D. in Metallurgy and B.A. Natural
Sciences from Trinity College, Cambridge University and a Master of
Business Administration from Carnegie Mellon University. Dr. Shetty
has served as a member of Agile Therapeutics, Inc.’s board of
directors since February 2016. In 2007, Dr. Shetty was bestowed the
title of Baron by King Albert II of Belgium for his exceptional
merits. He is a member of the Board of Trustees of Carnegie Mellon
University, serves on the Board of Governors for GS1 (Global
Standards) in Belgium and formerly served on the Corporate Advisory
Board of the John Hopkins Carey Business School. In 2016, Dr.
Shetty was named as chairperson of the Vlaams Instituut voor
Biotechnologie (VIB), a Belgium based life sciences research
institute focused on translating scientific results into
pharmaceutical, agricultural and industrial applications. In
addition, he was elected Manager of the Year in 2004 in Flanders
and received a Life-Time Achievement Award in India in 2010. We
believe Dr. Shetty’s qualifications to sit on our Board include his
extensive pharmaceutical experience leading commercial and supply
chain operations and his significant education background.
That Dr. Shetty has 37 years of leadership and executive experience
in the pharmaceutical industry, that he has significant supply
chain knowledge and that he has experience conducting business in
the U.S. and Europe, led us to conclude that Dr. Shetty should
serve as a director.
Richard I. Steinhart, Director
Mr. Steinhart has served as our Director and Chairman of the Audit
Committee since November 2013. Mr. Steinhart is also a member of
our Corporate Governance Committee. Since October 2017 Mr.
Steinhart has been the senior vice president and chief financial
officer of BioXcel Therapeutics, Inc. Since March 2014, Mr.
Steinhart has been a member of the board of directors of Atossa
Genetics, Inc. where he is chairman of the audit committee and a
member of the compensation committee. From October 2015 to April
2017, Mr. Steinhart was vice president and chief financial officer
at Remedy Pharmaceuticals, a privately-held, clinical stage
pharmaceutical company. From January 2014 through September 2015
Mr. Steinhart worked as a financial and strategic consultant to the
biotechnology and medical device industries. From April 2006
through December 2013, Mr. Steinhart was employed by MELA Sciences,
Inc., as its vice president, finance and chief financial officer,
treasurer and secretary. In April 2012, Mr. Steinhart received a
promotion to senior vice president, finance and chief financial
officer. From May 1992 until joining MELA Sciences, Mr. Steinhart
was a managing director of Forest Street Capital/SAE Ventures, a
boutique investment banking, venture capital, and management
consulting firm focused on healthcare and technology companies.
Prior to Forest Street Capital/SAE Ventures, he was vice president
and chief financial officer of Emisphere Technologies, Inc. Mr.
Steinhart’s other experience includes seven years at CW Group,
Inc., a venture capital firm focused on medical technology and
biopharmaceutical companies, where he was a general partner and
chief financial officer. Mr. Steinhart began his career at Price
Waterhouse, now known as PricewaterhouseCoopers. He holds BBA and
MBA degrees from Pace University and is a Certified Public
Accountant (inactive).
That Mr. Steinhart brings more than 30 years of financial
experience to our Board, having served in various executive-level
financial positions over the course of his career, and that Mr.
Steinhart is a certified public accountant, led us to conclude that
Mr. Steinhart should serve as a director and chair the Audit
Committee.
Corporate Governance
Our Board of Directors oversees our business affairs and monitors
the performance of management. In accordance with our corporate
governance principles, our Board of Directors does not involve
itself in day-to-day operations. The Directors keep themselves
informed through discussions with the Chairman and Chief Executive
Officer and other key executives and by reading the reports and
other materials that we send them and by participating in Board of
Directors and committee meetings.
Term of Office
Our directors are divided into three classes, designated Class I,
Class II and Class III. Class I shall consists of two directors,
Class II shall consist of one director, and Class III consists of
one director. The term of office for each Class I director expires
at 2023 Annual Meeting of Stockholders; the term of office for each
Class II director expires at the 2024 annual meeting of
stockholders; and the term of office for each Class III director
expires at the 2022 annual meeting of stockholders.
The term of each director is set forth below or until their
successors are duly elected:
|
Director |
|
Class |
|
Term
(from 2021 Annual Meeting) |
| |
|
|
|
|
| David
Nicholson |
|
Class
I |
|
2
years |
| Richard
Steinhart |
|
Class
I |
|
2
years |
| Sandesh
Seth |
|
Class
II |
|
3
years |
| Jeffrey
W. Chell |
|
Class
II |
|
3
years |
| Ajit
Shetty |
|
Class
III |
|
1
year |
Notwithstanding the foregoing, each director shall serve until his
successor is duly elected and qualified, or until his retirement,
death, resignation or removal.
Director Independence
We use the definition of “independence” of the NYSE American stock
exchange to make this determination. We are listed on the NYSE
American under the symbol “ATNM”. NYSE MKT corporate governance
rule Sec. 803(A)(2) provides that an “independent director” means a
person other than an executive officer or employee of the company.
No director qualifies as independent unless the issuer’s board of
directors affirmatively determines that the director does not have
a relationship that would interfere with the exercise of
independent judgment in carrying out the responsibilities of a
director. Under the NYSE American director independence rules,
Jeffrey W. Chell, David Nicholson, Ajit S. Shetty, and Richard I.
Steinhart are independent directors of the Company.
Chief Executive Officer Compensation
On August 12, 2020, we and Mr. Seth entered into an employment
agreement whereby Mr. Seth will serve as Chairman and Chief
Executive Officer until February 24, 2024, unless terminated
earlier as set forth in the employment agreement.
Under the terms of the employment agreement, Mr. Seth is entitled
to (i) a base salary, which will be determined by the Board and
adjusted to be competitively aligned to a range between the 25th
and 75th percentile of the relevant market data of chief executive
officer positions of similarly situated publicly companies, (ii) a
performance bonus with a target of 50% of his annual base salary as
well as other multipliers as determined by the Board and (iii)
options to purchase shares of common stock of the Company as the
Board may grant. For 2020, Mr. Seth’s annual base salary was set at
$578,191, and for 2021, his annual base salary was set at
$615,000.
When and if granted, options will have an exercise price equal to
the closing price of the Company’s common stock on the date of the
approval, and 2% of the grant will vest each month from the grant
date until fully vested, in accordance with the 2013 Stock Plan and
2019 Plan. The options will expire 10 years from the grant date,
subject to Mr. Seth’s continuing service with the Company. Mr. Seth
also receives the standard benefits available to other similarly
situated employees.
If Mr. Seth’s employment as Chief Executive Officer or Chairman is
terminated due to death or disability, Mr. Seth will be entitled to
earned, but unpaid, salary, benefits and the Pro-Rated Bonus (as
defined herein) for the year of termination. Upon termination of
his employment for Cause (as defined in the employment agreement),
or his resignation without Good Reason (as defined in the
employment agreement), Mr. Seth will receive any accrued and unpaid
base salary, the Pro-Rated Bonus and benefits through the date of
termination.
If we terminate Mr. Seth’s employment without Cause, or if Mr. Seth
resigns for Good Reason, Mr. Seth will be entitled to (i) a single
lump sum payment equal to the 24 months of his compensation, (ii)
continued health benefits for 24 months, (iii) immediate vesting of
all outstanding equity awards granted to Mr. Seth, and (iv) a
single lump sum payment equal to his annual bonus subject to the
achievement of the applicable goals, pro-rated based on the number
of days in the Company’s fiscal year through the date of
termination (the “Pro-Rated Bonus”).
In addition, if we terminate Mr. Seth’s employment without Cause or
if Mr. Seth resigns for Good Reason, or if we fail to renew his
position as Chief Executive Officer and Chairman on February 21,
2024, in any case, within the 12-month period beginning on the date
of a Change in Control (as defined in the 2013 Stock Plan and 2019
Plan), Mr. Seth will be entitled to (i) a single lump sum payment
equal to 30 months of his compensation, (ii) continued health
benefits for 30 months, (iii) immediate vesting of all outstanding
equity awards granted to Mr. Seth, and (iv) a single lump sum
payment equal to the Pro-Rated Bonus.
Chief Financial Officer/Principal Financial Officer
Compensation
On August 12, 2020, we entered into an employment agreement with
Mr. O’Loughlin, pursuant to which he serves as Chief Financial
Officer of the Company. Under the terms of the employment
agreement, Mr. O’Loughlin is entitled to (i) a base salary, which
shall be determined by the Board, (ii) a performance bonus, which
may be up to 30% of the annual base salary based upon the
achievement of certain objectives such as the Board shall determine
and (iii) options to purchase shares of common stock of the Company
as the Board may grant. For 2020, Mr. O’Loughlin’s annual base
salary was set at $330,000, and for 2021, his annual base salary
was set at $370,000.
When and if granted, options will have an exercise price equal to
the closing price of the Company’s common stock on the date of the
approval, and 2% of the grant will vest each month from the grant
date until fully vested, in accordance with the 2013 Stock Plan and
2019 Plan. The options will expire 10 years from the grant date,
subject to Mr. O’Loughlin’s continuing service with the Company.
Mr. Loughlin will also receive the standard benefits available to
other similarly situated employees.
In addition, if we terminate Mr. O’Loughlin’s employment without
Cause (as defined in the employment agreement) or if Mr. O’Loughlin
resigns for Good Reason (as defined in the employment agreement),
in either case, within the 12-month period beginning on the date of
a Change in Control, Mr. O’Loughlin will be entitled to (i) a
single lump sum payment equal to his annual base salary, (ii)
continued health benefits for 12 months, and (iii) immediate
vesting of all outstanding equity awards granted to Mr.
O’Loughlin.
Board of Directors Meetings and Attendance
During 2021, our Board of Directors held fourteen meetings and did
not act by unanimous written consent. Each director attended all of
the meetings of our Board and of any committees of which he was a
member during the year ended December 31, 2021.
Committees of the Board of Directors
Our Board of Directors has formed three standing committees: Audit,
Compensation and Nominating and Corporate Governance. Actions taken
by our committees are reported to the full board. Each of our
committees has a charter and each charter is posted on our
website.
|
Audit
Committee |
|
Compensation Committee |
|
Nominating
and Corporate
Governance Committee |
| Richard
I. Steinhart* |
|
David
Nicholson* |
|
Ajit
S. Shetty* |
| Jeffrey
W. Chell |
|
Jeffrey
W. Chell |
|
David
Nicholson |
| Ajit
S. Shetty |
|
Ajit
S. Shetty |
|
Richard
I. Steinhart |
| * |
Indicates
committee chair |
Audit Committee
Our Audit Committee, which currently consists of three directors,
provides assistance to our Board in fulfilling its legal and
fiduciary obligations with respect to matters involving the
accounting, financial reporting, internal control and compliance
functions of the Company. The Board has determined that
Mr. Steinhart is an “audit committee financial expert” as
defined in Item 407(d)(5)(ii) of Regulation S-K. Our Audit
Committee employs an independent registered public accounting firm
to audit the financial statements of the Company and perform other
assigned duties. Further, our Audit Committee provides general
oversight with respect to the accounting principles employed in
financial reporting and the adequacy of our internal controls. In
discharging its responsibilities, our Audit Committee may rely on
the reports, findings and representations of the Company’s
auditors, legal counsel, and responsible officers. Our Board has
determined that all members of the Audit Committee are financially
literate within the meaning of SEC rules and under the current
listing standards of the NYSE American. The Audit Committee met
four times during 2021. Each member of the Audit Committee was
present at all of the Audit Committee meetings held during
2021.
Compensation Committee
Our Compensation Committee, which currently consists of three
directors, establishes executive compensation policies consistent
with the Company’s objectives and stockholder interests. The
Compensation Committee met one time during 2021. Each member of the
Compensation Committee was present at the meeting held in 2021. Our
Compensation Committee also reviews the performance of our
executive officers and establishes, adjusts and awards
compensation, including incentive-based compensation, as more fully
discussed below. In addition, our Compensation Committee generally
is responsible for:
|
● |
establishing
and periodically reviewing our compensation philosophy and the
adequacy of compensation plans and programs for our directors,
executive officers and other employees; |
|
● |
overseeing
our compensation plans, including the establishment of performance
goals under the Company’s incentive compensation arrangements and
the review of performance against those goals in determining
incentive award payouts; |
|
● |
overseeing
our executive employment contracts, special retirement benefits,
severance, change in control arrangements and/or similar
plans; |
|
● |
acting
as administrator of any company stock option plans; and |
|
● |
overseeing
outside compensation consultants when engaged. |
Our Compensation Committee periodically reviews the compensation
paid to our non-employee directors and the principles upon which
their compensation is determined. The Compensation Committee also
periodically reports to the Board on how our non-employee director
compensation practices compare with those of other similarly
situated public corporations and, if the Compensation Committee
deems it appropriate, recommends changes to our director
compensation practices to our Board for approval.
Outside consulting firms retained by our compensation committee and
management also will, if requested, provide assistance to the
Compensation Committee in making its compensation-related
decisions. We paid consultant fees to StreeterWyatt of $22,000
during the year ended December 31, 2021.
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee, which currently
consists of three directors is charged with the responsibility of
reviewing our corporate governance policies and proposing potential
director nominees to the Board for consideration. The Nominating
and Corporate Governance Committee was formed on November 4, 2021
and met one time during 2021.
Our Nominating and Corporate Governance Committee’s primary
responsibilities and obligations include, among other things:
|
● |
overseeing the administration of
our Code of Business Ethics and Conduct and related policies; |
|
● |
leading the search for and
recommending individuals qualified to become members of the Board,
and selecting director nominees to be presented for election by the
shareholders at each annual meeting; |
|
● |
ensuring, in cooperation with the
Compensation Committee, that no agreements or arrangements are made
with directors or relatives of directors for providing professional
or consulting services to us or our affiliate or individual officer
or one of their affiliated, without appropriate review and
evaluation for conflicts of interest; |
|
● |
assessing the
independence of directors annually and report to the
Board; |
|
● |
recommending to the
Board for its approval, the leadership structure of the Board,
including whether the Board should have an executive or
non-executive Chairman, whether the roles of Chairman and Chief
Executive Officer should be combined, and whether a Lead Director
of the Board should be appointed; provided that such structure
shall be subject to the bylaws of the Company then in
effect; |
|
● |
ensuring that Board members do not
serve on more than six other for-profit public company boards that
have a class of securities registered under the Exchange Act in
addition to the Board; |
|
● |
reviewing the Board’s committee
structure and to recommend to the Board for its approval directors
to serve as members of each committee as well as recommendations
for committee chairs; |
|
● |
reviewing and
recommending changes to procedures whereby shareholders may
communicate with the Board; |
|
● |
reviewing recommendations received
from shareholders for persons to be considered for nomination to
the Board; |
|
● |
monitoring compliance with our
corporate governance guidelines; |
|
● |
developing and implementing an
annual self-evaluation of the Board, both individually and as a
Board, and of its committees; |
Our Amended and Restated Bylaws, as amended (the “Bylaws”) contains
provisions that address the process by which a stockholder may
nominate an individual to stand for election to the Board at our
annual meetings. To recommend a nominee for election to the Board,
a stockholder must submit his or her recommendation to our
Secretary at our corporate offices at 275 Madison Avenue, 7th
Floor, New York, New York 10016. Such nomination must satisfy the
notice, information and consent requirements set forth in our
Bylaws and must be received by us prior to the date set forth under
“Submission of Future Stockholder Proposals” below. A stockholder’s
recommendation must be accompanied by the information with respect
to stockholder nominees as specified in our Bylaws, including among
other things, the name, age, address and occupation of the
recommended person, the proposing stockholder’s name and address,
the ownership interests of the proposing stockholder and any
beneficial owner on whose behalf the nomination is being made
(including the number of shares beneficially owned, any hedging,
derivative, short or other economic interests and any rights to
vote any shares) and any material monetary or other relationships
between the recommended person and the proposing stockholder and/or
the beneficial owners, if any, on whose behalf the nomination is
being made.
Our approach toward Board diversity takes into consideration the
overall composition and diversity of the Board and areas of
expertise that director nominees may be able to offer, including
business experience, knowledge, abilities, customer relationships
and appropriate perspectives on environmental, social and
governance matters. Generally, we strive to assemble and maintain a
Board that brings to us a variety of perspectives and skills
derived from business and professional experience as we may deem
are in our and our stockholders’ best interests. In doing so, we
also consider candidates with appropriate non-business
backgrounds.
Lead Director
In September 2017, our board of directors created the position of
Lead Director. Our board of directors designated David Nicholson,
an existing independent director, as our Lead Director. Pursuant to
the charter of the Lead Director, the Lead Director shall be an
independent, non-employee director designated by our
board of directors who shall serve in a lead capacity to coordinate
the activities of the other non-employee directors,
interface with and advise management, and perform such other duties
as are specified in the charter or as our board of directors may
determine.
Family Relationships
There are no family relationships among any of our officers or
directors.
Involvement in Certain Legal Proceedings
To our knowledge, none of our current directors or executive
officers has, during the past ten years:
|
● |
been
convicted in a criminal proceeding or been subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses); |
|
● |
had
any bankruptcy petition filed by or against the business or
property of the person, or of any partnership, corporation or
business association of which he was a general partner or executive
officer, either at the time of the bankruptcy filing or within two
years prior to that time; |
|
● |
been
subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction or federal or state authority, permanently or
temporarily enjoining, barring, suspending or otherwise limiting,
his involvement in any type of business, securities, futures,
commodities, investment, banking, savings and loan, or insurance
activities, or to be associated with persons engaged in any such
activity; |
| |
● |
been
found by a court of competent jurisdiction in a civil action or by
the SEC or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended, or vacated; |
| |
● |
been
the subject of, or a party to, any federal or state judicial or
administrative order, judgment, decree, or finding, not
subsequently reversed, suspended or vacated (not including any
settlement of a civil proceeding among private litigants), relating
to an alleged violation of any federal or state securities or
commodities law or regulation, any law or regulation respecting
financial institutions or insurance companies including, but not
limited to, a temporary or permanent injunction, order of
disgorgement or restitution, civil money penalty or temporary or
permanent cease-and-desist order, or removal or prohibition order,
or any law or regulation prohibiting mail or wire fraud or fraud in
connection with any business entity; or |
| |
● |
been
the subject of, or a party to, any sanction or order, not
subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act),
any registered entity (as defined in Section 1(a)(29) of the
Commodity Exchange Act), or any equivalent exchange, association,
entity or organization that has disciplinary authority over its
members or persons associated with a member. |
Except as set forth in our discussion below in “Certain
Relationships and Related Transactions,” none of our directors or
executive officers has been involved in any transactions with us or
any of our directors, executive officers, affiliates or associates
which are required to be disclosed pursuant to the rules and
regulations of the SEC.
Code of Ethics
The Company has adopted a code of ethics, a copy of which is
attached as Exhibit 14.1 to the Form 8-K filed on January 2,
2013.
Compliance with Section 16 (a) of the Exchange Act
Under Section 16(a) of the Exchange Act, our directors and certain
of our officers, and persons holding more than 10 percent of our
common stock are required to file forms reporting their beneficial
ownership of our common stock and subsequent changes in that
ownership with the United States Securities and Exchange
Commission.
Based solely upon a review of copies of such forms filed on Forms
3, 4, and 5, and amendments thereto furnished to us, we believe
that as of December 31, 2021, our executive officers and directors
have complied on a timely basis with all Section 16(a) filing
requirements.
Compensation Discussion and Analysis
Our Compensation Committee of our Board of Directors has the
responsibility to review, determine and approve the compensation
for our executive officers. Further, our Compensation Committee
oversees our overall compensation strategy, including compensation
policies, plans and programs that cover all employees. At our 2019
Annual Meeting of Stockholders, our Stockholders voted on an
advisory basis with respect to our compensation program during 2018
for named executive officers. Of the votes cast (excluding
abstentions and broker non-votes), 72.1% were cast in support of
the program. In light of this, in reviewing the executive
compensation program for 2020 and 2021, our Compensation Committee
decided to retain the general overall program design, which ties a
significant portion of the executives’ pay closely with our
performance. In the future, our Compensation Committee will
continue to consider the executive compensation program in light of
changing circumstances and stockholder feedback.
We currently employ two executive officers, each of whom serves as
a “Named Executive Officer” (or NEO) for purposes of SEC reporting:
(1) Sandesh Seth, our Chairman and Chief Executive Officer (who we
refer to in this Compensation Discussion and Analysis as our CEO)
and (2) Steve O’Loughlin, our Chief Financial Officer. Two
executive officers, who were formerly NEOs, Mark Berger, our former
Chief Medical Officer and Dale Ludwig, our former Chief Scientific
and Technology Officer, both resigned from the Company during
2021.
This Compensation Discussion and Analysis sets forth a discussion
of the compensation for our NEOs as well as a discussion of our
philosophies underlying the compensation for our NEOs and our
employees generally.
Objectives of Our Compensation Program
The Compensation Committee’s philosophy seeks to align the
interests of our stockholders, officers and employees by tying
compensation to individual and company performance, both directly
in the form of salary or annual cash incentive payments, and
indirectly in the form of equity awards. The objectives of our
compensation program enhance our ability to:
| |
● |
attract
and retain qualified and talented individuals; and |
| |
● |
provide
reasonable and appropriate incentives and rewards to our team for
building long-term value within our company, in each case in a
manner comparable to companies similar to ours. |
In addition, we strive to be competitive with other similarly
situated companies in our industry. The process of developing
pharmaceutical products and bringing those products to market is a
long-term proposition and outcomes may not be measurable for
several years. Therefore, in order to build long-term value for our
company and its stockholders, and in order to achieve our business
objectives, we believe that we must compensate our officers and
employees in a competitive and fair manner that reflects current
company activities but also reflects contributions to building
long-term value.
We utilize the services of StreeterWyatt Governance LLC to review
compensation programs of peer companies in order to assist the
Compensation Committee in determining the compensation levels for
our NEOs, as well as for other employees of our company.
StreeterWyatt is a recognized independent consulting company and
services clients throughout the United States.
Elements of Our Compensation Program and Why We Chose
Each
Main Compensation Components
Our company-wide compensation program, including for our NEOs, is
broken down into three main components: base salary, performance
cash bonuses and potential long-term compensation in the form of
stock options or restricted stock awards. We believe these three
components constitute the minimum essential elements of a
competitive compensation package in our industry.
Salary
Base salary is used to recognize the experience, skills, knowledge
and responsibilities required of our NEOs as well as recognizing
the competitive nature of the biopharmaceutical industry. This is
determined partially by evaluating our peer companies as well as
the degree of responsibility and experience levels of our NEOs and
their overall contributions to our company. Base salary is one
component of the compensation package for NEOs; the other
components being cash bonuses, annual equity grants, and company
benefit programs. Base salary is determined in advance whereas the
other components of compensation are awarded in varying degrees
following an assessment of the performance of a NEO. This approach
to compensation reflects the philosophy of our board of directors
and its Compensation Committee to emphasize and reward, on an
annual basis, performance levels achieved by our NEOs.
Performance Bonus Plan
We have a performance bonus plan under which bonuses are paid to
our NEOs based on achievement of company performance goals and
objectives established by the Compensation Committee and/or our
board of directors as well as on individual performance. The bonus
program is discretionary and is intended to: (i) strengthen the
connection between individual compensation and our company’s
achievements; (ii) encourage teamwork among all disciplines within
our company; (iii) reinforce our pay-for-performance philosophy by
awarding higher bonuses to higher performing employees; and (iv)
help ensure that our cash compensation is competitive. Depending on
the cash position of the company, the Compensation Committee and
our board of directors have the discretion to not pay cash bonuses
in order that we may conserve cash and support ongoing development
programs and commercialization efforts. Regardless of our cash
position, we consistently grant annual merit-based stock options to
continue incentivizing both our senior management and our
employees.
Based on their employment agreements, each NEO is assigned a target
payout under the performance bonus plan, expressed as a percentage
of base salary for the year. Actual payouts under the performance
bonus plan are based on the achievement of corporate performance
goals and an assessment of individual performance, each of which is
separately weighted as a component of such officer’s target payout.
For the NEOs, the corporate goals receive the highest weighting in
order to ensure that the bonus system for our management team is
closely tied to our corporate performance. Each employee also has
specific individual goals and objectives as well that are tied to
the overall corporate goals. For employees, mid-year and
end-of-year progress is reviewed with the employees’ managers.
Equity Incentive Compensation
We view long-term compensation, currently in the form of stock
options generally vesting in annual increments over four years, as
a tool to align the interests of our NEOs and employees generally
with the creation of stockholder value, to motivate our employees
to achieve and exceed corporate and individual objectives and to
encourage them to remain employed by the company. While cash
compensation is a significant component of employees’ overall
compensation, the Compensation Committee and our board of directors
(as well as our NEOs) believe that the driving force of any
employee working in a small biotechnology company should be strong
equity participation. We believe that this not only creates the
potential for substantial longer-term corporate value but also
serves to motivate employees and retain their loyalty and
commitment with appropriate personal compensation.
Other Compensation
In addition to the main components of compensation outlined above,
we also have provided contractual severance and/or change in
control benefits to several employees including our CEO. The change
in control benefits for all applicable persons have a “double
trigger.” A double-trigger means that the executive officers will
receive the change in control benefits described in the agreements
only if there is both (1) a Change in Control of our company (as
defined in the agreements) and (2) a termination by us of the
applicable person’s employment “without cause” or a resignation by
the applicable persons for “good reason” (as defined in the
agreements) within a specified time period prior to or following
the Change in Control. We believe this double trigger requirement
creates the potential to maximize stockholder value because it
prevents an unintended windfall to management as no benefits are
triggered solely in the event of a Change in Control while
providing appropriate incentives to act in furtherance of a change
in control that may be in the best interests of the stockholders.
We believe these severances or change in control benefits are
important elements of our compensation program that assist us in
retaining talented individuals at the executive and senior
managerial levels and that these arrangements help to promote
stability and continuity of our executives and senior management
team. Further, we believe that the interests of our stockholders
will be best served if the interests of these members of our
management are aligned with theirs. We believe that providing
change in control benefits lessens or eliminates any potential
reluctance of members of our management to pursue potential change
in control transactions that may be in the best interests of the
stockholders. We also believe that it is important to provide
severance benefits to members of our management, to promote
stability and focus on the job at hand.
We also provide benefits to the executive officers that are
generally available to all regular full-time employees of our
company, including our medical and dental insurance, and a 401(k)
plan. Further, we do not have deferred compensation plans, pension
arrangements or post-retirement health coverage for our executive
officers or employees. All of our employees not specifically under
contract are “at-will” employees, which means that their employment
can be terminated at any time for any reason by either us or the
employee.
Determination of Compensation Amounts
A number of factors impact the determination of compensation
amounts for our NEOs, including the individual’s role in the
company and individual performance, length of service with the
company, competition for talent, individual compensation package,
assessments of internal pay equity and industry data. Stock price
performance has generally not been a factor in determining annual
compensation because the price of our common stock is subject to a
variety of factors outside of our control.
Industry Survey Data
In collaboration with StreeterWyatt, we establish and maintain a
list of peer companies to best assure ourselves that we are
compensating our executives on a fair and reasonable basis, as set
forth above under the heading “Objectives of our Compensation
Program.” We also utilize StreeterWyatt-prepared data for
below-executive level personnel, which data focuses on
biotechnology companies that can be considered peers in terms of
numerous variables including phase of development, size,
therapeutic and technological focus among others. The availability
of peer data is used by the Compensation Committee strictly as a
guide in determining compensation levels with regard to salaries,
cash bonuses and performance related annual equity grants to all
employees. However, the availability of this data does not imply
that the Compensation Committee is under any obligation to exactly
follow peer companies in compensation matters.
Determination of Base Salaries
As a guideline for NEO base salary, we perform formal benchmarks
against respective comparable positions in our established peer
group. We adjust salaries based on our assessment of our NEOs’
levels of responsibility, experience, overall compensation
structure and individual performance. The Compensation Committee is
not obliged to raise salaries purely on the availability of data.
Merit-based increases to salaries of executive officers are based
on our assessment of individual performance and the relationship to
applicable salary ranges. Cost of living adjustments may also be a
part of that assessment.
Performance Bonus Plan
Concurrently with the beginning of each calendar year, preliminary
corporate goals that reflect our business priorities for the coming
year are prepared by the CEO with input from the other executive
officers. These goals are weighted by relative importance. The
draft goals and proposed weightings are presented to the
Compensation Committee and the Board and discussed, revised as
necessary, and then approved by our board of directors. The
Compensation Committee then reviews the final goals and their
weightings to determine and confirm their appropriateness for use
as performance measurements for purposes of the bonus program. The
goals and/or weightings may be re-visited during the year and
potentially restated in the event of significant changes in
corporate strategy or the occurrence of significant corporate
events. Following the agreement of our Board on the corporate
objectives, the goals are then shared with all employees in formal
meetings and are reviewed periodically throughout the year.
Determination of Equity Incentive Compensation
To assist us in assessing the reasonableness of our equity grant
amounts, we have reviewed StreeterWyatt supplied information. Such
information included equity data from a cross-section of similar
companies in our industry.
Equity Grant Practices
All stock options and/or restricted stock granted to the NEOs and
other executives are approved by the Compensation Committee.
Exercise prices for options are set at the closing price of our
common stock on the date of grant. Grants are generally made: (i)
on the employee’s start date and (ii) at board of director meetings
held once each year and following annual performance reviews.
However, grants have been made at other times during the year. The
size of year-end grants for each NEO is assessed against our
internal equity guidelines. Current market conditions for grants
for comparable positions and internal equity may also be assessed.
Also, grants may be made in connection with promotions or
job-related changes in responsibilities. In addition, on occasion,
the Compensation Committee may make additional special awards for
extraordinary individual or company performance.
Compensation Setting Process
Annually, at a meeting of our Board of Directors and the
Compensation Committee, overall corporate performance and relative
achievement of the corporate goals for the prior year are assessed.
The relative achievement of each goal is assessed and quantified
and the summation of the individual components results in a
corporate goal rating, expressed as percentages. The Compensation
Committee then approves the final disbursement of salary increases,
cash bonuses and option or restricted stock grants.
The Compensation Committee looks to the CEO’s performance
assessments of the other NEOs and his recommendations regarding a
performance rating for each, as well as input from the other
members of our board of directors. These recommendations may be
adjusted by the Compensation Committee prior to finalization. For
the CEO, the Compensation Committee evaluates his performance,
taking into consideration input from the other members of our board
of directors, and considers the achievement of overall corporate
objectives by both the CEO specifically and the company generally.
The CEO is not present during the Compensation Committee’s
deliberations regarding his compensation.
The Compensation Committee has the authority to directly engage, at
our company’s expense, any compensation consultants or other
advisors (such as StreeterWyatt) that it deems necessary to
determine the amount and form of employee, executive and director
compensation. In determining the amount and form of employee,
executive and director compensation, the Compensation Committee has
reviewed and discussed historical salary information as well as
salaries for similar positions at comparable companies. However,
the availability of this data does not imply that the Compensation
Committee is under any obligation to exactly follow peer companies’
compensation practices.
We paid consultant fees to StreeterWyatt of $22,000 during the year
ended December 31, 2021. NEOs may have indirect input in the
compensation results for other executive officers by virtue of
their participation in the performance review and feedback process
for the other executive officers.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table provides information regarding the compensation
earned during the years ended December 31, 2021 and 2020 for our
named executive officers.
|
Name/Position |
|
Year |
|
Salary |
|
|
Bonus (1) |
|
|
Option
Awards (2) |
|
|
All Other
Compensation |
|
|
Total |
|
| Sandesh Seth |
|
2021 |
|
$ |
615,000 |
|
|
$ |
430,000 |
|
|
$ |
1,290,323 |
|
|
$ |
- |
|
|
$ |
2,335,323 |
|
| Chairman and Chief Executive
Officer |
|
2020 |
|
$ |
578,191 |
|
|
$ |
315,000 |
|
|
$ |
938,537 |
|
|
$ |
- |
|
|
$ |
1,831,728 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Mark Berger (3) |
|
2021 |
|
$ |
304,962 |
|
|
$ |
- |
|
|
$ |
279,395 |
|
|
$ |
- |
|
|
$ |
584,357 |
|
| Former Chief Medical Officer |
|
2020 |
|
$ |
415,000 |
|
|
$ |
100,000 |
|
|
$ |
314,958 |
|
|
$ |
- |
|
|
$ |
829,958 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Dale Ludwig (4) |
|
2021 |
|
$ |
213,068 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
213,068 |
|
| Former Chief Scientific and Technology
Officer |
|
2020 |
|
$ |
375,000 |
|
|
$ |
105,000 |
|
|
$ |
337,453 |
|
|
$ |
- |
|
|
$ |
817,453 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Steve O’Loughlin |
|
2021 |
|
$ |
370,000 |
|
|
$ |
150,000 |
|
|
$ |
447,034 |
|
|
$ |
- |
|
|
$ |
967,034 |
|
| Chief Financial Officer |
|
2020 |
|
$ |
330,000 |
|
|
$ |
90,000 |
|
|
$ |
398,640 |
|
|
$ |
- |
|
|
$ |
818,640 |
|
| (1) |
The bonus disclosed in this column relates to performance in the
prior year, but was contingent upon board approval, and was paid in
the year disclosed.
|
| (2) |
The dollar amounts in this column represent the aggregate grant
date fair value of all option awards granted during the indicated
year. These amounts have been calculated in accordance with FASB
ASC Topic 718, using the Black-Scholes option-pricing model. For a
discussion of valuation assumptions, see Note 6 to our financial
statements. These amounts do not necessarily correspond to the
actual value that may be recognized from the option awards by the
NEOs.
|
| (3) |
On
September 24, 2021, Dr. Berger resigned as the Chief Medical
Officer |
| |
|
| (4) |
On
July 26, 2021, Dr. Ludwig resigned as the Chief Scientific and
Technology Officer |
Narrative Disclosure to Summary Compensation Table
For a discussion of the material terms of each named executive
officer’s employment agreement or arrangement, refer to the
sections above titled “Directors, Executive Officers and Corporate
Governance—Chief Executive Officer Compensation” and “Directors,
Executive Officers and Corporate Governance—Chief Financial
Officer/Principal Financial Officer Compensation.”
On September 1, 2021, Mr. Seth was granted an option to purchase
310,182 shares of common stock and Mr. O’Loughlin was granted an
option to purchase 107,463 shares of common stock. The options have
an exercise price of $6.07 per share and will expire on September
1, 2031. Pursuant to the terms of the Company’s Amended and
Restated 2019 Stock Plan, 2% of the options will vest each month
from September 1, 2021 until fully vested.
Director Compensation
The following table sets forth the compensation of our non-employee
directors for the year ended December 31, 2021:
|
Name |
|
Fees
Earned |
|
|
Stock
Awards |
|
|
Option
Awards
(1)(2) |
|
|
All Other
Compensation |
|
|
Total |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Jeffrey W. Chell |
|
$ |
51,000 |
|
|
|
- |
|
|
$ |
76,338 |
|
|
|
- |
|
|
$ |
127,338 |
|
| David Nicholson |
|
$ |
63,000 |
|
|
|
- |
|
|
$ |
76,338 |
|
|
|
- |
|
|
$ |
139,338 |
|
| Ajit J. Shetty |
|
$ |
58,500 |
|
|
|
- |
|
|
$ |
76,338 |
|
|
|
- |
|
|
$ |
134,838 |
|
| Richard Steinhart |
|
$ |
63,000 |
|
|
|
- |
|
|
$ |
76,338 |
|
|
|
- |
|
|
$ |
139,338 |
|
|
(1) |
The
dollar amounts in this column represent the aggregate grant date
fair value of all option awards granted during the indicated year.
These amounts have been calculated in accordance with FASB ASC
Topic 718, using the Black-Scholes option-pricing model. For a
discussion of valuation assumptions, see Note 6 to our financial
statements. These amounts do not necessarily correspond to the
actual value that may be recognized from the option awards by the
NEOs. |
|
(2) |
At
December 31, 2021, the aggregate number of option awards
outstanding for each director was as follows: (i) for Dr. Chell,
40,017, (ii) for Dr. Nicholson, 46,679, (iii) for Dr. Shetty,
40,017, and (iv) for Mr. Steinhart, 45,015. |
Our non-employee directors are paid an annual fee of $40,000 and
receive annual option grants. Dr. Nicholson as Lead Director
receives an additional annual fee of $10,000. Board committee
members receive the following compensation:
| BOD
Committee |
|
Chairman |
|
|
Member |
|
| |
|
|
|
|
|
|
| Audit |
|
$ |
20,000 |
|
|
$ |
6,000 |
|
| Compensation |
|
$ |
10,000 |
|
|
$ |
5,000 |
|
| Nominating and Corporate
Governance |
|
$ |
7,500 |
|
|
$ |
3,000 |
|
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END - 2021
The following table sets forth all unexercised options that have
been awarded to our named executives by the Company that were
outstanding as of December 31, 2021.
| |
|
Option Awards |
|
|
|
|
Stock Awards |
|
Name
(a) |
|
Number of
Securities
Underlying
Unexercised
Options
(#)
(Exercisable) (b) |
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
(Unexercisable) (c) |
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised Unearned
Options
(#)
(d) |
|
|
Option
Exercise
Price
($)
(e) |
|
|
Option
Expiration
Date
(f) |
|
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
(g) |
|
|
Market
Value of
Shares
or Units
of Stock
That
Have Not
Vested
($)
(h) |
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)
(i) |
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($)
(j) |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sandesh Seth |
|
|
832 |
(1) |
|
|
- |
|
|
|
- |
|
|
|
45.05 |
|
|
8/30/2022 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
832 |
(1) |
|
|
- |
|
|
|
- |
|
|
|
45.05 |
|
|
12/19/2022 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
9,333 |
(1) |
|
|
- |
|
|
|
- |
|
|
|
183.90 |
|
|
9/23/2024 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
5,000 |
(1) |
|
|
- |
|
|
|
- |
|
|
|
107.40 |
|
|
2/15/2025 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
16,666 |
(1) |
|
|
- |
|
|
|
- |
|
|
|
59.70 |
|
|
4/15/2026 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
24,998 |
(1) |
|
|
- |
|
|
|
- |
|
|
|
41.70 |
|
|
3/14/2027 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
27,333 |
(2) |
|
|
6,000 |
|
|
|
- |
|
|
|
23.487 |
|
|
7/13/2028 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
29,000 |
(2) |
|
|
21,000 |
|
|
|
- |
|
|
|
6.96 |
|
|
7/12/2029 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
44,496 |
(2) |
|
|
94,566 |
|
|
|
- |
|
|
|
9.55 |
|
|
8/12/2030 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
18,610 |
(2) |
|
|
291,572 |
|
|
|
- |
|
|
|
6.07 |
|
|
9/01/2031 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steve O’Loughlin |
|
|
3,333 |
(1) |
|
|
- |
|
|
|
- |
|
|
|
53.70 |
|
|
9/28/2025 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
1,666 |
(1) |
|
|
- |
|
|
|
- |
|
|
|
59.70 |
|
|
4/15/2026 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
3,333 |
(1) |
|
|
- |
|
|
|
- |
|
|
|
41.70 |
|
|
3/14/2027 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
7,243 |
(2) |
|
|
1,590 |
|
|
|
- |
|
|
|
23.487 |
|
|
7/13/2028 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
7,733 |
(2) |
|
|
5,600 |
|
|
|
- |
|
|
|
6.96 |
|
|
7/12/2029 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
18,896 |
(2) |
|
|
40,170 |
|
|
|
- |
|
|
|
9.55 |
|
|
8/12/2030 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
6,447 |
(2) |
|
|
101,016 |
|
|
|
- |
|
|
|
6.07 |
|
|
9/01/2031 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| (1) |
Fully
vested. |
| |
|
| (2) |
Pursuant
to the terms of the Company’s 2013 Stock Plan, 2% of these options
vest each month from the date of grant. |
Indemnification of Directors and Officers
Section 102(b)(7) of the Delaware General Corporation Law allows a
corporation to provide in its certificate of incorporation that a
director of the corporation will not be personally liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except where the directors breached
the duty of loyalty, failed to act in good faith, engaged in
intentional misconduct or knowingly violated a law, authorized the
payment of a dividend or approved a stock repurchase in violation
of Delaware corporate law or obtained an improper personal benefit.
Our certificate of incorporation provides for this limitation of
liability.
Section 145 of the General Corporation Law of the State of Delaware
provides that a Delaware corporation may indemnify any person who
was, is or is threatened to be made, party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by
or in the right of such corporation), by reason of the fact that
such person is or was an officer, director, employee or agent of
such corporation or is or was serving at the request of such
corporation as a director, officer employee or agent of another
corporation or enterprise. The indemnity may include expenses
(including attorneys’ fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such
person acted in good faith and in a manner he reasonably believed
to be in or not opposed to the corporation’s best interests and,
with respect to any criminal action or proceeding, had no
reasonable cause to believe that his conduct was illegal. A
Delaware corporation may indemnify any persons who are, or were, a
party to any threatened, pending or completed action or suit by or
in the right of the corporation by reason of the fact that such
person is or was a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses
(including attorneys’ fees) actually and reasonably incurred by
such person in connection with the defense or settlement of such
action or suit, provided such person acted in good faith and in a
manner he reasonably believed to be in or not opposed to the
corporation’s best interests, provided that no indemnification is
permitted without judicial approval if the officer, director,
employee or agent is adjudged to be liable to the corporation.
Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such
officer or directors has actually and reasonably incurred.
Section 145 further authorizes a corporation to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation or is or
was serving at the request of the corporation as a director,
officer, employee or agent of another corporation or enterprise,
against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or
not the corporation would otherwise have the power to indemnify him
under Section 145.
Our bylaws provide that we will indemnify our directors and
officers to the fullest extent authorized by the General
Corporation Law of the State of Delaware. Expenses
(including attorneys’ fees) incurred by an officer or director of
the Corporation in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the Company
in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified by
the Company as authorized under Delaware law. Such
expenses (including attorneys’ fees) incurred by former directors
and officers or other employees and agents of the Company or by
persons serving at the request of the Company as directors,
officers, employees or agents of another corporation, partnership,
joint venture, trust or other enterprise may be so paid upon such
terms and conditions, if any, as the Company deems appropriate.
The indemnification rights set forth above shall not be exclusive
of any other right which an indemnified person may have or
hereafter acquire under any bylaw, agreement, vote of stockholders
or disinterested directors or otherwise, both as to action in such
person’s official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who
has ceased to be a director, officer, employee, or agent and shall
inure to the benefit of the heirs, executors, and administrators of
such person.
We maintain a general liability insurance policy that covers
liabilities of directors and officers of our corporation arising
out of claims based on acts or omissions in their capacities as
directors or officers. We have also entered into Indemnification
Agreements with our executive officers and directors.
At the present time, there is no pending litigation or proceeding
involving a director, officer, employee, or other agent of ours in
which indemnification would be required or permitted. We are not
aware of any threatened litigation or proceeding that may result in
a claim for such indemnification.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table shows the beneficial ownership of our Common
Stock as of March 25, 2022 held by (i) each person known to us to
be the beneficial owner of more than five percent (5%) of any class
of our shares; (ii) each director; (iii) each executive officer;
and (iv) all directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of
the SEC, and generally includes voting power and/or investment
power with respect to the securities held. Shares of
Common Stock subject to options and warrants currently exercisable
or which may become exercisable within 60 days of March 25, 2022,
are deemed outstanding and beneficially owned by the person holding
such options or warrants for purposes of computing the number of
shares and percentage beneficially owned by such person, but are
not deemed outstanding for purposes of computing the percentage
beneficially owned by any other person. Except as
indicated in the footnotes to this table, the persons or entities
named have sole voting and investment power with respect to all
shares of our Common Stock shown as beneficially owned by them.
Unless otherwise indicated, the principal address of each of the
persons below is c/o Actinium Pharmaceuticals, Inc., 275 Madison
Ave, 7th floor, New York, NY 10016.
|
Name of Beneficial Owner |
|
Number of
Shares of
Common
Stock
Beneficially
Owned |
|
|
Percentage
of
Ownership(a)
|
|
| Beneficial Owners of 5% or More of
Our Common Stock |
|
|
|
|
|
|
| Michael Bigger |
|
|
1,314,106 |
(1) |
|
|
5.9 |
% |
| |
|
|
|
|
|
|
|
|
| Name Executive
Officers and Directors |
|
|
|
|
|
|
|
|
| Sandesh Seth |
|
|
235,738 |
(2) |
|
|
1.0 |
% |
| Steve O’Loughlin |
|
|
68,702 |
(3) |
|
|
* |
|
| Jeffrey W. Chell, M.D. |
|
|
16,888 |
(4) |
|
|
* |
|
| David Nicholson, Ph.D. |
|
|
23,883 |
(5) |
|
|
* |
|
| Ajit S. Shetty, Ph.D. |
|
|
17,645 |
(6) |
|
|
* |
|
| Richard I. Steinhart |
|
|
22,182 |
(7) |
|
|
* |
|
| All Directors and
Officers as a Group (6 persons) |
|
|
385,038 |
(8) |
|
|
1.7 |
% |
| (a) |
Based on
22,143,974 shares of common stock outstanding as of March 25,
2022 |
| (1) |
The address of record is 2250 Red Springs Drive,
Las Vegas, NV 89135. Based on the beneficial owner’s Schedule 13G
filed February 9, 2022, shares beneficially owned consist of
323,236 shares of Common Stock owned by Bigger Capital
Fund, LP (“Bigger Capital”), 118,417 shares of Common Stock
issuable upon exercise of Warrants owned by Bigger Capital, 513,099
shares of Common Stock owned by District 2 Capital Fund LP
(“District 2 CF”), 160,475 shares of Common Stock issuable upon
exercise of Warrants owned by District 2 CF, 150,000 shares of
Common Stock held by Mr. Bigger through an IRA and another account,
107,771 shares of Common Stock through an IRA held by Patricia
Winter, the spouse of Mr. Bigger and an aggregate of 220,000 shares
of Common Stock through an IRA held by the sons of Mr. Bigger. The
warrants are subject to a 4.99% beneficial ownership limit. The
number of shares and percentage set forth above assume the no
exercise of the warrants due to the beneficial ownership limit. Mr.
Bigger disclaims beneficial ownership of these
securities. |
| (2) |
Excludes
warrants to purchase an aggregate of 12,518 shares of common stock
of the Company at par value per share, exercisable on a cashless
basis issued to Amrosan, LLC as the warrants are not exercisable
upon less than 90 days’ notice. The holder may waive the 90-day
exercise notice requirement by giving 65 days prior notice of such
waiver. Excludes warrants to purchase an aggregate of 11,767 shares
of common stock issued to Carnegie Hill Asset Partners and
irrevocable trust linked to Mr. Seth’s family and warrants to
purchase an aggregate of 24,035 shares of common stock issued to
Bioche Asset Management, LLC, a partnership in which the majority
member interest is owned by the family of Mr. Seth, whose terms are
the same as those issued to Amrosan LLC. On August 30, 2012 and
December 19, 2012, Mr. Seth was granted options to purchase an
aggregate of 1,664 shares of common stock at an exercise price of
$45.05 per share. On September 23, 2014, Mr. Seth was granted an
option to purchase 9,333 shares of common stock with an exercise
price of $183.90 per share. On February 18, 2015, Mr. Seth was
granted an option to purchase 5,000 shares of common stock with an
exercise price of $107.40 per share. On April 15, 2016, Mr. Seth
was granted an option to purchase 16,666 shares of common stock at
an exercise price of $59.70 per share. On March 14, 2017, Mr. Seth
was granted options to purchase an aggregate of 24,998 shares of
common stock at an exercise price of $41.70 per share. On July 13,
2018, Mr. Seth was granted an option to purchase 33,333 shares of
common stock at an exercise price of $23.487 per share. On July 12,
2019, Mr. Seth was granted an option to purchase 50,000 shares of
common stock at an exercise price of $6.96 per share. On August 12,
2020, Mr. Seth was granted an option to purchase 139,062 shares of
common stock at an exercise price of $9.55 per share. On September
1, 2021, Mr. Seth was granted an option to purchase 310,182 shares
of common stock at an exercise price of $6.07 per share. All
options are subject to vesting. Within 60 days of March 25, 2022,
options to purchase an aggregate of 230,357 shares of common stock
will have vested. Includes 5,381 shares of common
stock. |
|
(3) |
On
October 1, 2015, Mr. O’Loughlin was granted options to purchase
3,333 shares of common stock with an exercise price of $53.70 per
share. On April 15, 2016, Mr. O’Loughlin was granted options to
purchase of 1,666 shares of common stock at an exercise price of
$59.70 per share. On March 14, 2017, Mr. O’Loughlin was granted
options to purchase 3,333 shares of common stock at an exercise
price of $41.70 per share. On July 13, 2018, Mr. O’Loughlin was
granted an option to purchase 8,833 shares of common stock at an
exercise price of $23.487 per share. On July 12, 2019, Mr.
O’Loughlin was granted an option to purchase 13,333 shares of
common stock at an exercise price of $6.96 per share. On August 12,
2020, Mr. O’Loughlin was granted an option to purchase 59,066
shares of common stock at an exercise price of $9.55 per share. On
September 1, 2021, Mr. O’Loughlin was granted an option to purchase
107,463 shares of common stock at an exercise price of $6.07 per
share. All options are subject to vesting. Within 60 days of March
25, 2022, options to purchase an aggregate of 67,519 shares of
common stock will have vested. Includes 1,183 shares of common
stock. |
|
(4) |
On April 27, 2018,
Dr. Chell was granted an option to purchase 2,500 shares of common
stock with an exercise price of $10.41 per share. On July 13, 2018,
Dr. Chell was granted an option to purchase 2,500 shares of common
stock at an exercise price of $23.487 per share. On July 12, 2019,
Dr. Chell was granted an option to purchase 8,333 shares of common
stock at an exercise price of $6.96 per share. On August 12, 2020,
Dr. Chell was granted an option to purchase 8,333 shares of common
stock at an exercise price of $9.55 per share. On September 1,
2021, Dr. Chell was granted an option to purchase 18,351 shares of
common stock at an exercise price of $6.07 per share. All options
are subject to vesting. Within 60 days of March 25, 2022, options
to purchase an aggregate of 16,888 shares of common stock will have
vested. |
| (5) |
On February 12, 2012, Dr. Nicholson
was granted an option to purchase 1,665 shares of common stock at
an exercise price of $23.51 per share and on August 12, 2012 and
December 19, 2012, Dr. Nicholson was granted options to purchase an
aggregate of 1,664 shares of common stock at an exercise price of
$45.05 per share. On February 18, 2015, Dr. Nicholson was granted
an option to purchase 833 shares of common stock with an exercise
price of $107.40 per share. On April 15, 2016, Dr. Nicholson was
granted an option to purchase 2,500 shares of common stock at an
exercise price of $59.70 per share. On March 14, 2017, Dr.
Nicholson was granted an option to purchase 2,500 shares of common
stock at an exercise price of $41.70 per share. On July 13, 2018,
Dr. Nicholson was granted an option to purchase 2,500 shares of
common stock at an exercise price of $23.487 per share. On July 12,
2019, Dr. Nicholson was granted an option to purchase 8,333 shares
of common stock at an exercise price of $6.96 per share. On August
12, 2020, Dr. Nicholson was granted an option to purchase 8,333
shares of common stock at an exercise price of $9.55 per share. On
September 1, 2021, Dr. Nicholson was granted an option to purchase
18,351 shares of common stock at an exercise price of $6.07 per
share. All options are subject to vesting. Within 60 days of March
25, 2022, options to purchase an aggregate of 23,550 shares of
common stock will have vested. Includes 333 shares of common
stock. |
| |
|
| (6) |
On March 28, 2017, Dr. Shetty was
granted an option to purchase 2,500 shares of common stock with an
exercise price of $47.40 per share. On July 13, 2018, Dr. Shetty
was granted an option to purchase 2,500 shares of common stock at
an exercise price of $23.487 per share. On July 12, 2019, Dr.
Shetty was granted an option to purchase 8,333 shares of common
stock at an exercise price of $6.96 per share. On August 12, 2020,
Dr. Shetty was granted an option to purchase 8,333 shares of common
stock at an exercise price of $9.55 per share. On September 1,
2021, Dr. Shetty was granted an option to purchase 18,351 shares of
common stock at an exercise price of $6.07 per share. All options
are subject to vesting. Within 60 days of March 25, 2022, options
to purchase an aggregate of 16,888 shares of common stock will have
vested. Includes 757 shares of common stock. |
| (7) |
On December 16, 2013 Mr. Steinhart
was granted an option to purchase 1,665 shares of common stock at
an exercise price of $201.00 per share. On February 18, 2015, Mr.
Steinhart was granted an option to purchase 833 shares of common
stock at an exercise price of $107.40 per share. On April 15, 2016,
Mr. Steinhart was granted an option to purchase 2,500 shares of
common stock at an exercise price of $59.70 per share. On March 14,
2017, Mr. Steinhart was granted an option to purchase 2,500 shares
of common stock at an exercise price of $41.70 per share. On July
13, 2018, Mr. Steinhart was granted an option to purchase 2,500
shares of common stock at an exercise price of $23.487 per share.
On July 12, 2019, Mr. Steinhart was granted an option to purchase
8,333 shares of common stock at an exercise price of $6.96 per
share. On August 12, 2020, Mr. Steinhart was granted an option to
purchase 8,333 shares of common stock at an exercise price of $9.55
per share. On September 1, 2021, Mr. Steinhart was granted an
option to purchase 18,351 shares of common stock at an exercise
price of $6.07 per share. All options are subject to vesting.
Within 60 days of March 25, 2022, options to purchase an aggregate
of 21,866 shares of common stock will have vested. Includes 316
shares of common stock. |
| (8) |
Includes vested options to purchase
377,068 shares of common stock and 7,970 shares of common
stock. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE
Transactions with Related Persons
None.
Director Independence
For disclosures regarding our policies relating to director
independence, refer to the section above titled “Directors,
Executive Officers and Corporate Governance—Corporate
Governance—Director Independence.”
Non-Competition Agreements
Our executive officers have signed non-competition agreements,
which provide that all inventions become the immediate property of
us and require invention assignments. The agreements provide that
the executive officers will hold proprietary information in the
strictest confidence and not use the confidential information for
any purpose not expressly authorized by us.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The table below shows the aggregate fees billed for professional
services for the audits and audit-related fees of the Company’s
annual financial statements included in Form 10-K for the years
ending December 31, 2021 and 2020, respectively, by Marcum LLP
(PCAOB ID Number 688).
| |
|
Year Ended
December 31,
2021 |
|
|
Year Ended
December 31,
2020 |
|
| Audit Fees |
|
$ |
128,400 |
|
|
$ |
130,004 |
|
| Audit – Related Fees |
|
|
20,600 |
|
|
|
83,630 |
|
| Tax Fees |
|
|
- |
|
|
|
- |
|
| All Other
Fees |
|
|
- |
|
|
|
- |
|
| Total |
|
$ |
149,000 |
|
|
$ |
213,634 |
|
Audit Fees. This category includes the audit of our annual
consolidated financial statements, reviews of our financial
statements included in our Form 10-Qs and services that are
normally provided by our independent registered public accounting
firm in connection with its engagements for those years.
Audit-Related Fees. This category consists of assurance and
related services by our independent registered public accounting
firm that are reasonably related to the performance of the audit or
review of our financial statements and are not reported above under
“Audit Fees.” The services for the fees disclosed under this
category include consents regarding equity issuances.
Pre-Approval Policy
In 2015, the Audit Committee adopted policies and procedures for
the pre-approval of audit and non-audit services performed by the
independent registered public accountants pursuant to which the
Audit Committee generally is required to pre-approve the audit and
permissible non-audit services performed by the independent
registered public accountants in order to ensure that the provision
of such services does not impair the registered accountants’
independence.
All of the services rendered by Marcum in 2021 were pre-approved by
the Audit Committee.
PART IV
ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Exhibit
Number |
|
Description |
|
1.1 |
|
Underwriting Agreement, dated September 28, 2016, by and between
H.C. Wainwright & Co., LLC and Actinium Pharmaceuticals, Inc.
(incorporated by reference to Exhibit 1.1 to Form 8-K filed on
September 29, 2016). |
| |
|
|
| 1.2 |
|
At Market Issuance Sales Agreement, dated March 16, 2017, between
FBR Capital Markets & Co, and Actinium Pharmaceuticals, Inc.
(incorporated by reference to Exhibit 1.2 to Form S-3 filed on
March 16, 2017). |
| |
|
|
| 1.3 |
|
Amended and Restated At-the-Market Market Issuance Sales Agreement,
dated July 3, 2017, among FBR Capital Markets & Co., MLV &
Co. LLC, JonesTrading Institutional Services LLC, and Actinium
Pharmaceuticals, Inc. (incorporated by reference to Exhibit 10.5 to
Form 10-Q filed on August 4, 2017). |
| |
|
|
| 1.4 |
|
Underwriting Agreement, dated as of July 28, 2017, by and
between Actinium Pharmaceuticals, Inc. and Oppenheimer & Co.
Inc. as representative of the several underwriters party thereto
(incorporated by reference to Exhibit 1.1 to Form 8-K filed on July
28, 2017). |
| |
|
|
| 1.5 |
|
Dealer-Manager Agreement, dated February 15, 2018, between Maxim
Group LLC and Actinium Pharmaceuticals, Inc. (incorporated by
reference to Exhibit 1.1 to Form 8-K filed on February 15,
2018). |
| |
|
|
| 1.6 |
|
Underwriting Agreement, dated April 18, 2019, by and between
Actinium Pharmaceuticals, Inc. and William Blair & Company, LLC
(incorporated by reference to Exhibit 1.1 to Form 8-K filed on
April 18, 2019). |
| |
|
|
| 1.7 |
|
Underwriting Agreement, dated as of April 21, 2020, by and
between Actinium Pharmaceuticals, Inc. and H.C. Wainwright &
Co., LLC. (incorporated by reference to Exhibit 1.1 to Form 8-K
filed on April 24, 2020). |
| |
|
|
| 1.8 |
|
Capital on Demand™ Sales Agreement, dated August 7, 2020, by and
between Actinium Pharmaceuticals, Inc. and JonesTrading
Institutional Services LLC (incorporated by reference to Exhibit
1.2 to Registration Statement on Form S-3 filed on August 7,
2020). |
| |
|
|
| 2.1 |
|
Share Exchange Agreement, dated December 28, 2012, by and among
Cactus Ventures, Inc., Actinium Pharmaceuticals, Inc., Diane S.
Button, and the shareholders of Actinium Pharmaceuticals, Inc.
(incorporated by reference to Exhibit 2.1 to Form 8-K filed on
January 2, 2013). |
| |
|
|
| 2.2 |
|
Share Exchange Agreement, dated March 11, 2013, by and among Cactus
Ventures, Inc., Actinium Pharmaceuticals, Inc, and the shareholders
of Actinium Pharmaceuticals, Inc. (incorporated by reference to
Exhibit 10.1 to Form 8-K filed on March 11, 2013). |
| |
|
|
| 2.3 |
|
Share Exchange Agreement, dated August 22, 2013, by and
among Actinium Pharmaceuticals, Inc, Actinium Corporation, and
the shareholders of Actinium Corporation (incorporated by
reference to Exhibit 2.3 to Form S-1/A filed on August 22,
2013). |
| |
|
|
| 3.1 |
|
Certificate of Incorporation of Actinium Pharmaceuticals, Inc.
(incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K
filed with the SEC on April 17, 2013). |
| |
|
|
| 3.2 |
|
Certificate of Amendment to Certificate of Incorporation filed
January 7, 2014 (incorporated by reference to Exhibit 3.5 to Form
S-1 filed on January 31, 2014). |
| |
|
|
| 3.3 |
|
Certificate of Amendment to Certificate of Incorporation filed
February 3, 2014. (incorporated by reference to Exhibit 3.1 to Form
8-K filed on February 7, 2014). |
| |
|
|
| 3.4 |
|
Certificate of Amendment to Certificate of Incorporation
(incorporated by reference to Exhibit 3.1 to Form 8-K filed on
March 4, 2015). |
| |
|
|
| 3.5 |
|
Certificate of Amendment to Actinium’s Certificate of
Incorporation, as amended, filed on February 26, 2018 (incorporated
by reference to Exhibit 3.1 to Form 8-K filed on February 26,
2018). |
|
3.6 |
|
Certificate of Amendment to Actinium’s Certificate of
Incorporation, as amended, filed on March 6, 2019 (incorporated by
reference to Exhibit 3.7 to Form 10-K filed on March 15,
2019). |
| |
|
|
| 3.7 |
|
Certificate of Amendment to Certificate of Incorporation, as
amended, filed on June 16, 2020 (incorporated by reference to
Exhibit 3.1 to Form 8-K filed on June 16, 2020). |
| |
|
|
| 3.8 |
|
Amended and Restated Bylaws, dated August 8, 2018 (incorporated by
reference to Exhibit 3.1 to Form 10-Q filed on August 9,
2018). |
| |
|
|
|
3.9 |
|
Amendment to the Amended and Restated Bylaws, dated May 7, 2020
(incorporated by reference to Exhibit 3.1 to Form 8-K filed on May
5, 2020). |
| |
|
|
| 4.1 |
|
Form of Common Stock Warrant, dated December 27, 2013 and January
10, 2014 (incorporated by reference to Exhibit 4.8 to Form S-1
filed on January 31, 2014). |
| |
|
|
| 4.2 |
|
Form of Warrant (incorporated by reference to Exhibit 4.1 to Form
8-K filed on February 6, 2015). |
| |
|
|
| 4.3 |
|
Form of Warrant (incorporated by reference to Exhibit 10.1 to Form
8-K filed on July 28, 2017). |
| |
|
|
| 4.4 |
|
Form of Warrant Agency Agreement between Action Stock Transfer
Corporation and Actinium Pharmaceuticals, Inc. (incorporated by
reference to Exhibit 4.1 to Form 8-K filed on February 15,
2018). |
| |
|
|
| 4.5 |
|
Form of Series A Warrant (incorporated by reference to Exhibit 4.2
to Form 8-K filed on February 15, 2018). |
| |
|
|
| 4.6 |
|
Form of Series B Warrant (incorporated by reference to Exhibit 4.3
to Form 8-K filed on February 15, 2018). |
| |
|
|
| 4.7 |
|
Form of Non-Transferable Subscription Rights Certificate
(incorporated by reference to Exhibit 4.4 to Form 8-K filed on
February 15, 2018). |
| |
|
|
| 4.8 |
|
Revised Form of Non-Transferable Subscription Rights Certificate.
(incorporated by reference to Exhibit 4.1 to Form 8-K filed on
February 26, 2018). |
| |
|
|
| 4.9 |
|
Amendment to Warrant to Purchase Common Stock, dated November 8,
2018, issued to Amrosan LLC (incorporated by reference to Exhibit
4.1 to Form 10-Q filed on November 9, 2018). |
| |
|
|
| 4.10 |
|
Amendment to Warrant to Purchase Common Stock, dated November 8,
2018, issued to Carnegie Hill Partners (incorporated by reference
to Exhibit 4.2 to Form 10-Q filed on November 9,
2018). |
| |
|
|
| 4.11 |
|
Amendment to Warrant to Purchase Common Stock, dated November 8,
2018, issued to Bioche Asset Management, LLC (incorporated by
reference to Exhibit 4.3 to Form 10-Q filed on November 9,
2018). |
| |
|
|
| 4.12 |
|
Form of Warrant (incorporated by reference to Exhibit 4.1 to Form
8-K filed on April 18, 2019). |
| |
|
|
| 4.13 |
|
Form of Pre-Funded Warrant (incorporated by reference to Exhibit
4.1 to Form 8-K filed on April 24, 2020). |
| |
|
|
| 4.14 |
|
Form of Pre-Funded Common Stock Warrant (incorporated by reference
to Exhibit 4.1 to Form 8-K filed on June 18, 2020). |
| |
|
|
| 4.15 |
|
Description of Securities (incorporated by reference to Exhibit
4.15 to Form 10 K filed on March 31, 2021)
|
| |
|
|
| 10.1# |
|
Third Amendment to the 2013 Amended and Restated Stock Plan,
effective as of December 22, 2015 (incorporated by reference to
Exhibit 10.56 to Form 10-K filed on March 11,
2016). |
| |
|
|
| 10.2 |
|
Office Space License Agreement, dated March 19, 2016, by and
between Actinium Pharmaceuticals, Inc. and Relmada Therapeutics,
Inc. (incorporated by reference to Exhibit 10.57 to Form 10-K filed
on March 11, 2016). |
| |
|
|
| 10.3# |
|
Fourth Amendment to the 2013 Amended and Restated Stock Plan,
effective as of December 13, 2016 (incorporated by reference to
Exhibit 1.1 to Form 8-K filed on December 14,
2016). |
| |
|
|
| 10.4# |
|
Fifth Amendment to the 2013 Amended and Restated Stock Plan, as
amended (incorporated by reference to Exhibit 10.59 to Form 10-K
filed on March 16, 2017). |
| |
|
|
| 10.5# |
|
Amendment to Employment Agreement, dated March 16, 2017, by and
between Actinium Pharmaceuticals, Inc. and Dragan Cicic.
(incorporated by reference to Exhibit 10.60 to Form 10-K filed on
March 16, 2017). |
| 10.6 |
|
Amendment to Actinium Pharmaceuticals, Inc. Warrant to Purchase
Common Stock, dated March 14, 2017 issued to Sandesh Seth
(incorporated by reference to Exhibit 10.61 to Form 10-K filed on
March 16, 2017). |
| |
|
|
| 10.7 |
|
Amendment to Actinium Pharmaceuticals, Inc. Warrant to Purchase
Common Stock, dated March 14, 2017 issued to Amrosan LLC
(incorporated by reference to Exhibit 10.62 to Form 10-K filed on
March 16, 2017). |
| |
|
|
| 10.8 |
|
Warrant to Purchase Common Stock of Actinium Pharmaceuticals, Inc.,
dated March 14, 2017, issued to Sandesh Seth (incorporated by
reference to Exhibit 10.63 to Form 10-K filed on March 16,
2017). |
| |
|
|
| 10.9# |
|
Offer Letter, dated December 27, 2016, by and between Dr. Mark S.
Berger and Actinium Pharmaceuticals, Inc. (incorporated by
reference to Exhibit 10.64 to Form 10-K filed on March 16,
2017). |
| |
|
|
| 10.10 |
|
Confidential Information and Invention Assignment Agreement, dated
December 27, 2016, by and between Dr. Mark S. Berger and Actinium
Pharmaceuticals, Inc. (incorporated by reference to Exhibit 10.65
to Form 10-K filed on March 16, 2017). |
| |
|
|
| 10.11# |
|
Indemnification Agreement, dated March 16, 2017, by and between
Actinium Pharmaceuticals, Inc. and Mark S. Berger (incorporated by
reference to Exhibit 10.66 to Form 10-K filed on March 16,
2017). |
| |
|
|
| 10.12# |
|
Director Agreement, dated March 28, 2017, between Ajit S. Shetty
and Actinium Pharmaceuticals, Inc. (incorporated by reference to
Exhibit 10.1 to Form 8-K filed on March 28, 2017). |
| |
|
|
| 10.13# |
|
Indemnity Agreement, dated March 28, 2017, between Ajit S. Shetty
and Actinium Pharmaceuticals, Inc. (incorporated by reference to
Exhibit 10.2 to Form 8-K filed on March 28, 2017). |
| |
|
|
| 10.14 |
|
Confidential Information and Invention Assignment Agreement, dated
March 28, 2017, between Ajit S. Shetty and Actinium
Pharmaceuticals, Inc. (incorporated by reference to Exhibit 10.3 to
Form 8-K filed on March 28, 2017). |
| |
|
|
| 10.15# |
|
Amendment to Amended and Restated Consulting Agreement, dated May
5, 2017, by and between Actinium Pharmaceuticals, Inc. and Sandesh
Seth (incorporated by reference to Exhibit 10.1 to Form 8-K filed
on May 11, 2017). |
| |
|
|
| 10.16# |
|
Offer Letter, dated September 17, 2015, between Steve O’Loughlin
and Actinium Pharmaceuticals, Inc. (incorporated by reference to
Exhibit 10.1 to Form 10-Q filed on May 15, 2017). |
| |
|
|
| 10.17# |
|
Indemnification Agreement, dated May 15, 2017, between Steve
O’Loughlin and Actinium Pharmaceuticals, Inc. (incorporated by
reference to Exhibit 10.2 to Form 10-Q filed on May 15,
2017). |
| |
|
|
| 10.18 |
|
Assignment and Consent Agreement, dated June 6, 2017,
between 275 Madison Avenue RPW 1 LLC and 275 Madison Avenue
RPW 2 LLC, Relmada Therapeutics, Inc., and Actinium
Pharmaceuticals, Inc. (incorporated by reference to Exhibit 10.1 to
Form 10-Q filed on August 4, 2017). |
| |
|
|
| 10.19 |
|
Amended and Restated License Agreement, Dated June 8, 2017, between
Relmada Therapeutics, Inc., and Actinium Pharmaceuticals, Inc.
(incorporated by reference to Exhibit 10.3 to Form 10-Q filed on
August 4, 2017). |
| |
|
|
| 10.20# |
|
Offer Letter, dated May 26, 2017, between Nitya G. Ray and Actinium
Pharmaceuticals, Inc. (incorporated by reference to Exhibit 10.4 to
Form 10-Q filed on August 4, 2017). |
| |
|
|
| 10.21# |
|
Agreement, dated June 6, 2017, between Sergio Traversa and Actinium
Pharmaceuticals, Inc. (incorporated by reference to Exhibit 10.6 to
Form 10-Q filed on August 4, 2017). |
| |
|
|
| 10.22# |
|
Consulting Agreement, dated May 22, 2017, between Dragan Cicic and
Actinium Pharmaceuticals, Inc. (incorporated by reference to
Exhibit 10.7 to Form 10-Q filed on August 4, 2017). |
| |
|
|
| 10.23# |
|
Separation and Settlement Agreement, dated May 12, 2017, between
Kaushik Dave and Actinium Pharmaceuticals, Inc. (incorporated by
reference to Exhibit 10.8 to Form 10-Q filed on August 4,
2017). |
| |
|
|
| 10.24# |
|
Separation and Settlement Agreement, dated May 12, 2017, between
Dragan Cicic and Actinium Pharmaceuticals, Inc. (incorporated by
reference to Exhibit 10.9 to Form 10-Q filed on August 4,
2017). |
| |
|
|
| 10.25# |
|
Sixth Amendment to the 2013 Amended and Restated Stock Plan, as
amended (incorporated by reference to Exhibit 10.56 to Form 10-K
filed on March 16, 2018). |
| 10.26# |
|
Offer
Letter, effective January 2, 2018, between Dale L. Ludwig and
Actinium Pharmaceuticals, Inc. (incorporated by reference to
Exhibit 10.57 to Form 10-K filed on March 16,
2018). |
| |
|
|
| 10.27# |
|
Indemnification
Agreement, dated January 5, 2018, between Dale L. Ludwig and
Actinium Pharmaceuticals, Inc. (incorporated by reference to
Exhibit 10.58 to Form 10-K filed on March 16,
2018). |
| |
|
|
| 10.28# |
|
Offer
Letter, effective January 31, 2018, between Anil Kapur and Actinium
Pharmaceuticals, Inc. (incorporated by reference to Exhibit 10.59
to Form 10-K filed on March 16, 2018). |
| |
|
|
| 10.29# |
|
Indemnification
Agreement, dated February 8, 2018, between Anil Kapur and Actinium
Pharmaceuticals, Inc. (incorporated by reference to Exhibit 10.60
to Form 10-K filed on March 16, 2018). |
| |
|
|
| 10.30# |
|
Director
Agreement, dated April 27, 2018, by and between Actinium
Pharmaceuticals, Inc. and Jeffrey W. Chell (incorporated by
reference to Exhibit 10.1 to Form 8-K filed on May 1,
2018). |
| |
|
|
| 10.31# |
|
Indemnity
Agreement, dated April 27, 2018, by and between Actinium
Pharmaceuticals, Inc. and Jeffrey W. Chell (incorporated by
reference to Exhibit 10.2 to Form 8-K filed on May 1,
2018). |
| |
|
|
| 10.32 |
|
Confidential
Information and Invention Assignment Agreement, dated April 27,
2018, by and between Actinium Pharmaceuticals, Inc. and Jeffrey W.
Chell (incorporated by reference to Exhibit 10.3 to Form 8-K filed
on May 1, 2018). |
| |
|
|
| 10.33# |
|
Employment
Agreement, dated August 8, 2018, by and between Actinium
Pharmaceuticals, Inc. and Sandesh Seth (incorporated by reference
to Exhibit 10.1 to Form 10-Q filed on August 9,
2018). |
| |
|
|
| 10.34# |
|
Employment
Agreement, dated August 8, 2018, by and between Actinium
Pharmaceuticals, Inc. and Steve O’Loughlin (incorporated by
reference to Exhibit 10.2 to Form 10-Q filed on August 9,
2018). |
| |
|
|
| 10.35 |
|
Purchase
Agreement, dated October 18, 2018, by and between Actinium
Pharmaceuticals, Inc. and Lincoln Park Capital Fund, LLC
(incorporated by reference to Exhibit 10.1 to Form 8-K filed on
October 18, 2018). |
| |
|
|
| 10.36 |
|
Registration
Rights Agreement, dated October 18, 2018, by and between Actinium
Pharmaceuticals, Inc. and Lincoln Park Capital Fund, LLC
(incorporated by reference to Exhibit 10.2 to Form 8-K filed on
October 18, 2018). |
| |
|
|
| 10.37# |
|
Consulting
Agreement, dated December 21, 2018, between Actinium
Pharmaceuticals, Inc. and Nitya Ray (incorporated by reference to
Exhibit 10.37 to Form 10-K filed on March 15,
2019). |
| |
|
|
| 10.38 |
|
Amended
and Restated At Market Issuance Sales Agreement, dated December 28,
2018, by and among Actinium Pharmaceuticals, Inc. and B. Riley FBR,
Inc. and JonesTrading Institutional Services LLC (incorporated by
reference to Exhibit 10.38 to Form 10-K filed on March 15,
2019). |
| |
|
|
| 10.39 |
|
Seventh
Amendment to the 2013 Amended and Restated Stock Plan, as amended
(incorporated by reference to Exhibit 10.39 to Form 10-K filed on
March 15, 2019). |
| |
|
|
| 10.40 |
|
Form
of Securities Purchase Agreement (incorporated by reference to
Exhibit 10.1 to Form 8-K filed on June 18, 2020). |
| 10.41# |
|
Amendment to Warrant to Purchase Common Stock of Actinium
Pharmaceuticals, Inc., dated August 12, 2017, issued to Sandesh
Seth (incorporated by reference to Exhibit 10.2 to Form 10-Q filed
on August 14, 2020).
|
| |
|
|
| 10.42# |
|
Employment
Agreement, dated August 12, 2020, by and between Actinium
Pharmaceuticals, Inc. and Sandesh Seth (incorporated by reference
to Exhibit 10.3 to Form 10-Q filed on August 14,
2020). |
| |
|
|
| 10.43# |
|
Employment
Agreement, dated August 12, 2020, by and between Actinium
Pharmaceuticals, Inc. and Steve O’Loughlin (incorporated by
reference to Exhibit 10.4 to Form 10-Q filed on August 14,
2020). |
| |
|
|
| 10.44# |
|
Employment
Agreement, dated August 12, 2020, by and between Actinium
Pharmaceuticals, Inc. and Dale Ludwig (incorporated by reference to
Exhibit 10.5 to Form 10-Q filed on August 14,
2020). |
| |
|
|
| 10.45# |
|
Employment
Agreement, dated August 12, 2020, by and between Actinium
Pharmaceuticals, Inc. and Mark Berger (incorporated by reference to
Exhibit 10.6 to Form 10-Q filed on August 14,
2020). |
| |
|
|
| 10.46# |
|
Actinium Pharmaceuticals, Inc. 2019 Stock Plan (incorporated by
reference to Exhibit 10.1 to Form 8-K filed on
November 20, 2020). |
| |
|
|
| 10.47# |
|
First Amendment to the Actinium Pharmaceuticals, Inc. 2019 Plan
(incorporated by reference to Exhibit 10.2 to Form 8-K filed
on November 20, 2020). |
| |
|
|
| 10.48# |
|
Second Amendment to the Actinium
Pharmaceuticals, Inc. 2019 Plan (incorporated by reference to
Exhibit 10.1 to Form 8-K filed on November 9,
2021). |
| |
|
|
| 14.1 |
|
Code
of Ethics (incorporated by reference to Exhibit 14.1 to Form 8-K
filed on January 2, 2013). |
| |
|
|
| 21.1 |
|
List
of Subsidiaries (incorporated by reference to Exhibit 21.1 to Form
10-K filed on March 16, 2015). |
| |
|
|
| 23.1* |
|
Consent
of Marcum LLP. |
| |
|
|
| 31.1* |
|
Certification of Principal Executive Officer, pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. |
| |
|
|
| 31.2* |
|
Certification of Principal Financial and Accounting Officer,
pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002. |
| |
|
|
| 32.1** |
|
Certification of Principal Executive Officer, pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. |
| |
|
|
| 32.2** |
|
Certification of Principal Financial and Accounting Officer,
pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002. |
| |
|
|
| 101.INS ** |
|
Inline
XBRL Instance Document |
| 101.SCH ** |
|
Inline
XBRL Taxonomy Schema Document |
| 101.CAL ** |
|
Inline
XBRL Taxonomy Calculation Linkbase Document |
| 101.DEF ** |
|
Inline
XBRL Taxonomy Definition Linkbase Document |
| 101.LAB
** |
|
Inline
XBRL Taxonomy Label Linkbase Document |
| 101.PRE
** |
|
Inline
XBRL Taxonomy Presentation Linkbase Document |
| 104 |
|
Cover Page Interactive Data File
(formatted as Inline XBRL and contained in Exhibit 101). |
| * |
Filed
herewith. |
| ** |
Furnished
herewith. |
| # |
Indicates
a management contract or compensatory plan or
arrangement. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant.
| Dated:
March 25, 2022 |
ACTINIUM
PHARMACEUTICALS, INC. |
| |
|
|
| |
By: |
/s/
Sandesh Seth |
| |
|
Sandesh
Seth |
| |
|
Chairman
and Chief Executive Officer (Duly Authorized Officer,
Principal Executive Officer) |
| |
|
|
| |
By: |
/s/
Steve O’Loughlin |
| |
|
Steve
O’Loughlin |
| |
|
Chief
Financial Officer
(Duly Authorized Officer,
Principal Financial and Accounting Officer) |
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following person on
behalf of the Registrant and in the capacities and on the dates
indicated.
|
Signature |
|
Title |
|
Date |
| |
|
|
|
|
| /s/
Sandesh Seth |
|
Chairman
and Chief Executive Officer |
|
|