Actinium Pharmaceuticals, Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION FORWARD-LOOKING STATEMENT NOTICE This Form 10-Q contains certain forward-looking statements. For this purpose, any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate” or “continue” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include but are not limited to economic conditions generally and in the industries in which we may participate; competition within our chosen industry, including competition from much larger competitors; technological advances and failure to successfully develop business relationships. Description of Business 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 195 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-001, 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 most advanced 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. 15 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. Iomab-B 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 BMTs 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. In April 2022, we entered into a license and supply agreement with Immedica Pharma AB, or Immedica, pursuant to which Immedica licensed the exclusive product rights for commercialization of Iomab-B in the European Economic Area, Middle East and North Africa. including Algeria, Andorra, Bahrain, Cyprus, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Libya. Monaco, Morocco, Oman, Palestine, Qatar, San Marino, Saudi Arabia, Switzerland, Syria, Tunisia, Turkey, the United Arab Emirates, the United Kingdom, the Vatican City and Yemen. Upon signing, we were entitled to an upfront payment of $35 million from Immedica, which we received in May 2022. Under the terms of the agreement, we are eligible to receive regulatory and commercial milestone payments and we are entitled to receive royalties in the mid-20 percent range on net sales of the product in certain countries that may result from the License Agreement. We will continue to be responsible for certain clinical development activities and the manufacturing of Iomab-B and will retain commercialization rights in the U.S. and rest of the world. 16 Data from full patient enrollment in the SIERRA trial (153 patients), was presented at the Transplantation & Cellular Therapy (TCT) Tandem Meetings of ASTCT and CIBMTR, the combined annual meetings of the American Society for Transplantation and Cellular Therapy (ASTCT) and the Center for International Blood & Marrow Transplant Research (CIBMTR) in April 2022. 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 (66/66) 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 30%. On the control arm, only 18% of patients (14/77) 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 82% of patients failing to achieve a complete remission (“CR”) with conventional care (63/77), 40 patients were eligible and elected 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 (40/40) 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 35% at time of crossover. It was also reported that 100-day TRM of the study or Iomab-B arm was 09% (6/65) of patients that received a BMT compared to 14% of patients (2/14) 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 59 patients potentially evaluable for the primary endpoint compared to 12 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. Top-line data for the primary endpoint of durable Complete Remission is expected to be presented in the fourth quarter of 2022 based on the current status of the data collection and data query process with certain SIERRA trial sites. We believe topline data from SIERRA will support the submission of a Biologics License Application (“BLA”) with the 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. 17 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. 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 over 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. 18 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 who remained in follow-up 230 days (~7.5 months) at the time of data cutoff for ASH. 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 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 (“SITC”) 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 as a backbone AML therapy, and in solid tumors with a HER2 and HER3 targeting ARCs, 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 the novel HER2 magrolimab combination was presented at the 36 th Annual SITC Meeting in April 2022 and at the HER3 magrolimab combination was presented American Association for Cancer Research (“AACR”) Annual Meeting in April 2022 that showed a significant increase in tumor control compared to magrolimab alone in preclinical non-small cell lung cancer (“NSCLC”) 19 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 45 patent families comprised of over 195 issued patents and pending patent applications, of which 12 are issued and 39 are pending in the United States, and 145 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 2043. 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. Our research is 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. 20 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 a HER2-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 April 2022, we presented data at the AACR Annual Meeting showing potent tumor cell cytotoxicity, enhanced antitumor effects and significantly improved survival with an Ac-225 radiolabeled HER3 antibody compared to a naked HER3 antibody in a preclinical NSCLC model. 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. 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 variants of COVID-19, including subvariants BA.4 and BA.5, which appear to be the most transmissible variants to date, have spread globally. The full impact of the Omicron variants, 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 variants 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 hybrid working for our office-based staff, while our research staff has been actively working in our laboratory throughout the pandemic and thus far have not experienced a significant disruption or delay in our operations as it relates to the clinical development, preclinical research or manufacturing 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. 21 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. 22 Results of Operations – Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021 The following table sets forth, for the periods indicated, data derived from our statements of operations: For the Three Months Ended June 30, (in thousands) 2022 2021 Revenue: Revenue $ - $ - Other revenue 45 266 Total revenue 45 266 Operating expenses: Research and development, net of reimbursements 4,662 3,631 General and administrative 3,233 1,710 Total operating expenses 7,895 5,341 Other income: Interest income – net 83 54 Total other income 83 54 Net loss $ (7,767 ) $ (5,021 ) Revenue We recorded no commercial revenue for the three months ended June 30, 2022 and June 30, 2021. 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. Other revenue recognized during the three months ended June 30, 2022 and June 30, 2021 was $45 thousand and $0.3 million respectively. Research and development, net of reimbursements Research and development expenses of $4.7 million for the three months ended June 30, 2022 increased $1.1 million from $3.6 million for the three months ended June 30, 2021. Higher expenses related to increased compensation of $0.5 million, resulting from increased compensation expenses and higher expenses due to an increase in the number of employees and increased research activities at our laboratory space. General and administrative General and administrative expenses of $3.2 million for the three months ended June 30, 2022 increased $1.5 million from $1.7 million for the three months ended June 30, 2021. The increase was primarily attributable to increased compensation of $0.8 million, higher professional fees and consulting fees including recruitment costs, and higher legal fees. 23 Other income Other income is comprised of net interest income in both reporting periods. The amount for the three months ended June 30, 2022 of $83 thousand increased from $54 thousand for the three months ended June 30, 2021 due to a higher average balance. Net loss Net loss of $7.8 million for the three months ended June 30, 2022 increased by $2.8 million from $5.0 million for the three months ended June 30, 2021, due to the increases in research and development expenses and general and administrative expenses. Results of Operations – Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021 The following table sets forth, for the periods indicated, data derived from our statements of operations: For the Six Months Ended June 30, (in thousands) 2022 2021 Revenue: Revenue $ - $ - Other revenue 985 888 Total revenue 985 888 Operating expenses: Research and development, net of reimbursements 9,031 7,907 General and administrative 4,968 3,428 Total operating expenses 13,999 11,335 Other income: Interest income – net 118 106 Total other income 118 106 Net loss $ (12,896 ) $ (10,341 ) Revenue We recorded no commercial revenue for the six months ended June 30, 2022 and June 30, 2021. Other revenue We 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. 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. Other revenue recognized during the six months ended June 30, 2022 and June 30, 2021 was $0.9 million and $0.9 million respectively. 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 for targeted conditioning to achieve lymphodepletion prior to administration of a CD19-targeted CAR T-cell therapy developed at MSK. We recognized other revenue during the six months ended June 30, 2022 of $0.1 million. 24 Research and development, net of reimbursements Research and development expenses of $9.0 million for the six months ended June 30, 2022 increased $1.1 million from $7.9 million for the six months ended June 30, 2021. The increase was due to higher expenses related to our research activities at our laboratory space and government grant program and increased compensation of $0.5 million. General and administrative General and administrative expenses of $5.0 million for the six months ended June 30, 2022 increased $1.6 million from $3.4 million for the six months ended June 30, 2021. The increase was primarily attributable to increased compensation of $0.8 million, higher professional fees and consulting fees including recruitment costs, and higher legal fees. Other income Other income is comprised of net interest income in both reporting periods. The amount for the six months ended June 30, 2022 of $0.1 million was unchanged from the prior-year period. Net loss Net loss of $12.9 million for the six months ended June 30, 2022 increased by $2.6 million from $10.3 million for the six months ended June 30, 2021, due to the increases in research and development expenses and general and administrative expenses. Liquidity and Capital Resources Historically, we have financed our operations primarily through sales of shares of our stock. The following tables sets forth selected cash flow information for the periods indicated: For the Six Months Ended June 30, (in thousands) 2022 2021 Cash provided by/used in operating activities $ 22,137 $ (10,226 ) Cash used in investing activities (277 ) (65 ) Cash provided by financing activities 16,641 28,644 Net change in cash, cash equivalents and restricted cash $ 38,501 $ 18,353 Net cash provided by operating activities for the six months ended June 30, 2022 of $22.1 million increased by $32.3 million from a use of funds of $10.2 million in the prior-year period. This increase was due to the receipt of the $35.0 million up-front payment from Immedica. Net cash used in investing activities of $0.3 million for the six months ended June 30, 2022 and $0.1 million for the prior-year period are primarily due to the acquisition of equipment for our laboratory. Net cash provided by financing activities for the six months ended June 30, 2022 of $16.6 million and for the six months ended June 30, 2021 of $28.6 million was primarily from the sale of shares of our common stock. We entered into a lease for corporate office space effective June 1, 2022 and paid a security deposit to the landlord. The lease has a term of 5 years 2 months, with an expiration date of July 30, 2027, and a current annual rate of $0.6 million. We are also responsible for certain other costs, such as insurance, taxes, utilities and maintenance. In July, 2022 a certificate of deposit was provided as collateral for a letter of credit and the security deposit was returned. 25 In August 2020 we entered into a 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 SEC on August 7, 2020. As of December 31, 2021, we had sold 6.7 million shares of common stock, resulting in gross proceeds of $59.1 million and net proceeds of $57.0 million. For the six months ended June 30, 2022, we sold 2.7 million shares of common stock, resulting in gross proceeds of $17.2 million and net proceeds of $16.7 million. For the six months ended June 30, 2021, we sold 3.5 million shares of common stock, resulting in gross proceeds of $29.6 million and net proceeds of $28.7 million. On June 28, 2022, we entered into an Amendment and Restated Capital on Demand™ Sales Agreement, or the A&R Sales Agreement, with JonesTrading and B. Riley Securities, Inc., or B. Riley Securities. The A&R Sales Agreement modifies the original Capital on Demand™ Sales Agreement to include B. Riley Securities as an additional sales agent thereunder. 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. Critical Accounting Policies and Use of Estimates 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, (“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. Our significant accounting policies are described in detail in the notes to our consolidated financial statements appearing in our Annual Report filed on Form 10-K for the year ended December 31, 2021. 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. 26 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 and comprehensive loss 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 and comprehensive loss 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 . License Revenue We entered into a product licensing agreement whereby we allowed a third party to commercialize a certain product in specified territories using our trademarks. The terms of this arrangement includes payment to us for a combination of one or more of the following: upfront license fees; development, regulatory and sales-based milestone payments; and royalties on net sales of licensed products. We use judgment to determine whether milestones or other variable consideration should be included in the transaction price. Upfront license fees : If the license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we will recognize revenue from upfront license fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, we determine whether the combined performance obligation is satisfied over time or at a point in time. Development, regulatory or commercial milestone payments : At the inception of each arrangement that includes payments based on the achievement of certain development, regulatory and sales-based or commercial events, we evaluate whether the milestones are considered probable of being achieved and estimate 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. Milestone payments that are not within our or the licensee’s control, such as regulatory approvals, are not considered probable of being achieved until regulatory approval is received. At the end of each subsequent reporting period, we will re-evaluate the probability of achieving such development and regulatory milestones and any related constraint, and if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis and recorded as part of license revenues during the period of adjustment. Sales-based milestone payments and royalties : For arrangements that include sales-based royalties, including milestone payments based on the volume of sales, we will determine whether the license is deemed to be the predominant item to which the royalties or sales-based milestones relate and if such is the case, we will recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). Upfront payments and fees may require deferral of revenue recognition to a future period until we perform our obligations under these arrangements or when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with any variable consideration is subsequently resolved. Amounts payable to us are recorded as accounts receivable when our right to consideration is unconditional. 27 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 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. Accounting Standards Recently Adopted 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. We adopted this standard effective January 1, 2022 and the standard did not have a material effect on our financial statements. 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. We adopted this standard effective January 1, 2022 and the standard did not have a material impact on our financial statements. Accounting Standards Recently Issued 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. We will evaluate the impact of ASU 2021-08 on any future business combinations that we may enter in the future. Subsequent Events Since June 30, 2022, we have sold 0.3 million shares of common stock under our A&R Sales Agreement, resulting in net proceeds of $1.4 million. On August 2, 2022, warrants to purchase an aggregate of 0.6 million shares of common stock expired. These warrants were issued on August 2, 2017, when we completed an underwritten offering of 0.7 million shares of our common stock and warrants to purchase an aggregate of 0.6 million shares of our common stock at a price of $22.50 per share and related warrant. The warrants were exercisable for a period of 5 years at an exercise price of $31.50 per share. As of August 12, 2022, we have 1.4 million warrants outstanding. 28