Description of Business and Summary of Significant Accounting Policies
|3 Months Ended|
Mar. 31, 2019
|Organization, Consolidation and Presentation of Financial Statements [Abstract]|
|Description of Business and Summary of Significant Accounting Policies||
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 improving patient access and outcomes to cellular therapies such as BMT or Bone Marrow Transplant and CAR-T with our proprietary ARC or Antibody Radiation-Conjugates targeted conditioning technology. We are also developing our proprietary AWE or Antibody Warhead Enabling technology platform, which utilizes radioisotopes including iodine-131 and the highly differentiated actinium-225 coupled with antibodies, to target a variety of antigens that are expressed in hematological and solid tumor cancers. We are developing a multi-disease, multi-target pipeline of clinical-stage targeted ARC’s targeting the antigens CD45 and CD33 for targeting conditioning and as a therapeutic either in combination with other therapeutic modalities or as a single agent for patients with a broad range of hematologic malignancies including Acute Myeloid Leukemia (AML), Myelodysplastic Syndrome (MDS) and Multiple Myeloma (MM). Our lead product candidate, Iomab-B, is in a pivotal Phase 3 trial for re-induction and conditioning prior to a BMT for patients with active, relapsed or refractory AML or Acute Myeloid Leukemia. BMT is the only curative treatment option for this patient population and currently no standard of care exists. Actimab-MDS is our second pivotal program for targeted conditioning that will study the ARC comprised of the anti-CD33 monoclonal antibody lintuzumab linked to the radioisotope actinium-225 in patients with high-risk MDS in combination with RIC or Reduced Intensity Conditioning prior to a BMT. Our Iomab-ACT construct is a lower dose of Iomab-B (CD45 – I-131) that we are developing as a targeted conditioning or lymphodepletion agent prior to CAR-T and adoptive cell therapies. We currently have multiple clinical trials ongoing, in startup phase, or in planning, to use our CD33 ARC in combination with other therapeutic modalities such as chemotherapy, targeted agents or immunotherapy. We have initiated several combination trials, including our doublet combination trial with our CD33 ARC, venetoclax, a BCL-2 inhibitor, for patients with relapsed or refractory AML, our triplet combination trial with our CD33 ARC and venetoclax and an HMA or hypomethylating agent and our CD33 ARC with the salvage chemotherapy regimen CLAG-M (cladribine, cytarabine, filgrastim and mitoxantrone) for patients with relapsed or refractory AML. We are also studying our CD33 ARC as a single agent for patients with penta-refractory multiple myeloma. Our AWE technology platform enables our internal pipeline expansion and with the radioisotope actinium-225 is being utilized in a collaborative research partnership with Astellas Pharma, Inc. Actinium’s clinical programs and AWE technology platform are covered by a portfolio of over 110 patents covering composition of matter, formulations, methods of use, the DOTA linker technology for actinium-225 applications and methods of manufacturing the actinium-225 radioisotope in a cyclotron.
Basis of Presentation - Unaudited Interim Financial Information - The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) with respect to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim consolidated financial statements furnished reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the year ended December 31, 2018.
Principles of Consolidation - The consolidated financial statements include the Company’s accounts and those of the Company’s wholly owned subsidiaries.
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.
Cash, 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 March 31, 2019 and December 31, 2018, respectively:
Leases – See Note 3.
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.
Research and Development Costs - Research and development costs are expensed as incurred. 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.
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 the three months ended March 31, 2019 and 2018, 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.
Reclassification – To conform to the current-year presentation, certain amounts have been reclassified in the presentation of the prior-year financial statements. These reclassifications had no impact on the previously reported Consolidated Balance Sheet, Consolidated Statement of Operations or Consolidated Statement of Cash Flows.
Accounting Standards Recently Adopted -
Historically, the Company accounted for certain instruments, which do not have fixed settlement provisions, as derivative instruments in accordance with FASB ASC 815-40, Derivative and Hedging – Contracts in Entity’s Own Equity. This was due to an anti-dilution provision for the warrants that provided for a reduction to the exercise price if the Company issued equity or equity-linked instruments in the future at an effective price per share less than the exercise price then in effect for the warrant (“down round provision”). As such, the warrants were re-measured at each balance sheet date based on estimated fair value. Changes in estimated fair value were recorded as non-cash adjustments within other income, net, in the Company’s Consolidated Statements of Operations.
In July 2017, the Financial Accounting Standards Board, (“FASB”), issued ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features. These amendments simplify the accounting for certain financial instruments with down-round features. The amendments require companies to disregard the down-round feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability or equity classification. The guidance was adopted as of April 1, 2018. In accordance with the guidance presented in the ASU 2017-11, the fair value of the derivative liability balance for 57,212 warrants as of December 31, 2017 of $16 thousand was reclassified by means of a cumulative-effect adjustment to equity as of January 1, 2018. The adoption of ASU 2017-11 resulted in the elimination of a gain on the change in far value of derivative liabilities of $9,076 on the Company’s Consolidated Statement of Operations previously reported for the three months ended March 31, 2018.
In February 2016, FASB issued ASU No. 2016-02 Leases (Topic 842), which created new accounting and reporting guidelines for leasing arrangements. The standard requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize on its balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The guidance in ASU 2016-02 is effective for annual and interim reporting periods beginning after December 15, 2018. In July 2018, FASB issued ASU No. 2018-11, Leases (Topic 842) -Targeted Improvements, providing an optional transition method that allows entities to initially apply the new leases standard at the adoption date. The Company adopted this Standard effective January 1, 2019, see Note 3.
In June 2018, FASB issued ASU 2018-07 to expand the scope of ASC Topic 718, Compensation - Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. The standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company adopted this Standard effective January 1, 2019; there was no material impact on its financial statements.
Recent Accounting Standards –
In August 2018, FASB issued ASU 2018-13, Fair Value Measurement - Disclosure Framework (Topic 820). The updated guidance improves the disclosure requirements on fair value measurements and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted upon issuance of the standard for disclosures modified or removed with a delay of adoption of the additional disclosures until their effective date. The Company is in the process of evaluating the provisions of the ASU but does not expect it to have a material effect on its consolidated financial statements.
In November 2018, FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606, which, among other things, provides guidance on how to assess whether certain collaborative arrangement transactions should be accounted for under Topic 606. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The Company is in the process of evaluating the impact the standard will have on its financial statements.
The entire disclosure for the organization, consolidation and basis of presentation of financial statements disclosure, and significant accounting policies of the reporting entity. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef