UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| | | | | |
| ☒ | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended September 30, 20222023
or
| | | | | |
| ☐ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from ______to ______.
Commission file number: 001-39311
POINT BIOPHARMA GLOBAL INC.
(Exact name of registrant as specified in its charter)
| | | | | | | | |
| Delaware | 85-0800493 |
| (State or other jurisdiction of | (IRS Employer Identification No.) |
| incorporation or organization) | |
| | |
| 4850 West 78th Street | |
| Indianapolis, | IN | 46268 |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (317) 543-9957
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock | PNT | The | Nasdaq | Capital Market |
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 such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See 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 | | ☒ |
| | | | 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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common Stock, par value $0.0001 per share – 105,644,741106,569,231 shares outstanding as of November 9, 2022.8, 2023.
INDEX
Introductory Note
On October 2, 2023, Eli Lilly and Company, an Indiana corporation (“Parent”), Yosemite Falls Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and POINT Biopharma Global Inc., a Delaware corporation (the “Company” or “POINT”) entered into an Agreement and Plan of Merger (the “Merger Agreement”). Merger Sub commenced a cash tender offer (the “Offer”) to purchase all of the outstanding shares of the Company’s common stock, par value of $0.0001 per share (the “Shares”), at a price of $12.50 per share (the “Offer Price”), net to the stockholder in cash, without interest and less any applicable withholding taxes, upon the terms and subject to the conditions set forth in the Merger Agreement.
Consummation of the Offer is subject to the satisfaction or waiver of various conditions set forth in the Merger Agreement, including (a) there shall have been validly tendered in the Offer (and not properly withdrawn) prior to the expiration of the Offer that number of Shares (excluding Shares tendered pursuant to guaranteed delivery procedures that have not yet been “received” by the “depository,” as such terms are defined by Section 251(h) of the General Corporation Law of the State of Delaware (the “DGCL”)) that, when added to the Shares then owned by Parent, Merger Sub or any subsidiary of Parent, would represent at least a majority of the Shares outstanding as of immediately following the consummation of the Offer, (b) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (as amended, the “HSR Act”), (c) the accuracy of the Company’s representations and warranties contained in the Merger Agreement (except, generally, for any inaccuracies that have not had a Company Material Adverse Effect (as defined in the Merger Agreement)), (d) the Company’s performance in all material respects of its obligations under the Merger Agreement, (e) consent by the U.S. Nuclear Regulatory Commission of the indirect transfer of control with respect to the Company and (f) the other conditions set forth in Exhibit A to the Merger Agreement. The consummation of the Offer and the Merger is not subject to a financing condition. For more information on the Offer and the Merger, refer to the Company's Current Report on Form 8-K filed October 3, 2023.
The Offer commenced on October 13, 2023. The Offer was initially scheduled to expire at one minute after 11:59 p.m., Eastern time, on November 9, 2023. On October 23, 2023, Parent and the Company filed their respective Premerger Notification and Report Forms pursuant to the HSR Act with the U.S. Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice, initiating a 15-day waiting period. The 15-day waiting period under the HSR Act expired on November 7, 2023 at 11:59 p.m., Eastern time. Accordingly, the condition to the Offer relating to the expiration or termination of the waiting period under the HSR Act has been satisfied. On November 8, 2023, Parent extended the expiration of the Offer until 5:00 p.m., Eastern time, on November 16, 2023, unless further extended or earlier terminated in accordance with the terms of the Offer and the Merger Agreement and the applicable rules and regulations of the SEC.
Following consummation of the Offer, Merger Sub will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of Parent (the “Merger”). In the Merger, each Share issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”) that is not tendered and accepted pursuant to the Offer (other than the Shares owned by the Company or any subsidiary of the Company, Shares held by Parent, Merger Sub or any other subsidiary of Parent, and Shares as to which appraisal rights have been perfected in accordance with applicable law) will be canceled and converted into the right to receive the Offer Price in cash and without interest, less any applicable tax withholding. Prior to the Effective Time, each Company stock option that is then outstanding but not then vested or exercisable shall become immediately vested and exercisable in full. At the Effective Time, each Company stock option that has an exercise price less than the Offer Price will be canceled and converted into the right to receive, for each Share underlying such Company stock option, an amount in cash without interest equal to the difference between the Offer Price and the applicable per share exercise price, less any applicable tax withholding. At the Effective Time, each Company stock option that has an exercise price equal to or greater than the Offer Price will be canceled for no consideration. At the Effective Time, each Company performance stock unit will be canceled and converted into the right to receive, for each Share underlying such Company performance stock unit, an amount in cash without interest equal to the Offer Price, less any applicable tax withholding, which replacement cash award will vest and be payable at the same time as the Company performance stock unit would have vested pursuant to its terms.
In connection with the Merger Agreement, each of Joe A. McCann, Allan Charles Silber and Neil E. Fleshner (collectively, the “Supporting Stockholders”), in each case, in his capacity as a stockholder of the Company and who, collectively, beneficially own approximately 15% of the outstanding Shares, entered into a Tender and Support Agreement (together, the “Tender and Support Agreements”) with Parent and Merger Sub. The Tender and Support Agreements provide, among other things, that each of the Supporting Stockholders will tender all of the Shares held by such Supporting Stockholder, as applicable, in the Offer. The foregoing description of the Tender and Support Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of each of the Tender and Support Agreements, which were filed as Exhibits 99.1, 99.2 and 99.3 to our Current Report on Form 8-K filed on October 3, 2023.
The Offer and the Merger are subject to customary closing conditions and are expected to be completed near the end of 2023. The description of the Merger Agreement herein does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, which was filed as Exhibit 2.1 to our Current Report on Form 8-K filed on October 3, 2023.
Unless stated otherwise, any forward-looking information contained in this report does not take into account or give any effect to the consummation of the proposed Offer and Merger.
PART I. FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS
POINT Biopharma Global Inc.
Interim Condensed Consolidated Balance Sheets
(In U.S. dollars)
| | | September 30, 2022 | | | September 30, 2023 | |
| | (Unaudited) | | December 31, 2021 | | (Unaudited) | | December 31, 2022 |
| | $ | | $ | | $ | | $ |
| ASSETS | ASSETS | | | | ASSETS | | | |
| Current assets | Current assets | | | | Current assets | | | |
| Cash and cash equivalents | Cash and cash equivalents | 125,783,126 | | | 238,815,991 | | Cash and cash equivalents | 21,607,412 | | | 286,428,371 | |
| Short-term investments | Short-term investments | 165,735,511 | | | — | | Short-term investments | 317,555,936 | | | 238,783,470 | |
| Prepaid expenses and other current assets | Prepaid expenses and other current assets | 4,711,979 | | | 5,030,565 | | Prepaid expenses and other current assets | 9,901,729 | | | 5,610,889 | |
| Income taxes receivable | | Income taxes receivable | 4,181,469 | | | — | |
| Total current assets | Total current assets | 296,230,616 | | | 243,846,556 | | Total current assets | 353,246,546 | | | 530,822,730 | |
| | Non-current assets | Non-current assets | | Non-current assets | |
| | Long-term investments | | Long-term investments | 59,793,161 | | | 16,119,430 | |
| Note receivable | | Note receivable | 5,116,667 | | | — | |
| Property, plant and equipment, net | Property, plant and equipment, net | 29,457,230 | | | 19,412,086 | | Property, plant and equipment, net | 54,042,353 | | | 31,380,576 | |
| Operating lease right-of-use asset | | Operating lease right-of-use asset | 5,505,693 | | | — | |
| Total non-current assets | Total non-current assets | 29,457,230 | | | 19,412,086 | | Total non-current assets | 124,457,874 | | | 47,500,006 | |
| | Total assets | Total assets | 325,687,846 | | | 263,258,642 | | Total assets | 477,704,420 | | | 578,322,736 | |
| | LIABILITIES & STOCKHOLDERS' EQUITY | LIABILITIES & STOCKHOLDERS' EQUITY | | LIABILITIES & STOCKHOLDERS' EQUITY | |
| Current liabilities | Current liabilities | | Current liabilities | |
| Accounts payable | Accounts payable | 3,198,646 | | | 1,738,470 | | Accounts payable | 8,886,750 | | | 7,703,150 | |
| Accrued liabilities | Accrued liabilities | 13,047,645 | | | 5,990,516 | | Accrued liabilities | 14,529,354 | | | 19,094,454 | |
| Deferred revenue | | Deferred revenue | 12,586,443 | | | 23,242,290 | |
| Income taxes payable | Income taxes payable | 361,723 | | | 250,978 | | Income taxes payable | 736,729 | | | 29,698,546 | |
| Finance lease current liability | | Finance lease current liability | 987,018 | | | — | |
| Operating lease current liability | | Operating lease current liability | 939,983 | | | — | |
| Total current liabilities | Total current liabilities | 16,608,014 | | | 7,979,964 | | Total current liabilities | 38,666,277 | | | 79,738,440 | |
| | Deferred tax liability | — | | | 65,592 | | |
| Deferred revenue, net of current portion | | Deferred revenue, net of current portion | 3,720,881 | | | 10,178,147 | |
| Long-term income taxes payable | | Long-term income taxes payable | 2,389,109 | | | 1,452,356 | |
| Finance lease liability, net of current portion | | Finance lease liability, net of current portion | 4,093,202 | | | — | |
| Operating lease liability, net of current portion | | Operating lease liability, net of current portion | 4,642,565 | | | — | |
| Total liabilities | Total liabilities | 16,608,014 | | | 8,045,556 | | Total liabilities | 53,512,034 | | | 91,368,943 | |
| Commitments and contingencies (note 12) | | |
Commitments and contingencies (Note 12) | | Commitments and contingencies (Note 12) | |
| | Stockholders’ equity | Stockholders’ equity | | Stockholders’ equity | |
| Common Stock, par value $0.0001 per share, 430,000,000 authorized, 104,054,962 and 90,121,794 issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | 10,405 | | | 9,012 | | |
| Common Stock, par value $0.0001 per share, 430,000,000 authorized, 105,765,954 and 105,649,741 issued and outstanding as of September 30, 2023 and December 31, 2022, respectively | | Common Stock, par value $0.0001 per share, 430,000,000 authorized, 105,765,954 and 105,649,741 issued and outstanding as of September 30, 2023 and December 31, 2022, respectively | 10,576 | | | 10,565 | |
| Additional paid-in capital | Additional paid-in capital | 433,936,723 | | | 314,488,782 | | Additional paid-in capital | 453,319,762 | | | 448,391,574 | |
| Accumulated deficit | (124,258,598) | | | (59,284,708) | | |
| (Accumulated deficit) Retained earnings | | (Accumulated deficit) Retained earnings | (27,707,358) | | | 39,008,505 | |
| Accumulated other comprehensive loss | Accumulated other comprehensive loss | (608,698) | | | — | | Accumulated other comprehensive loss | (1,430,594) | | | (456,851) | |
| Total stockholders’ equity | Total stockholders’ equity | 309,079,832 | | | 255,213,086 | | Total stockholders’ equity | 424,192,386 | | | 486,953,793 | |
| | Total liabilities and stockholders’ equity | Total liabilities and stockholders’ equity | 325,687,846 | | | 263,258,642 | | Total liabilities and stockholders’ equity | 477,704,420 | | | 578,322,736 | |
Notesnotes to the Unaudited Interim Condensed Consolidated Financial Statementsunaudited interim condensed consolidated financial statements
POINT Biopharma Global Inc.
Unaudited Interim Condensed Consolidated Statements of Operations
(In U.S. dollars)dollars, except share amounts)
| | | For the three months ended | | For the nine months ended | | For the three months ended | | For the nine months ended |
| | September 30,
2022 | | September 30,
2021 | | September 30,
2022 | | September 30,
2021 | | September 30,
2023 | | September 30,
2022 | | September 30,
2023 | | September 30,
2022 |
| | | $ | | $ | | $ | | $ |
| Revenue | | Revenue | | | | | | | |
| | Service revenue | | Service revenue | 2,789,993 | | | — | | | 17,113,113 | | | — | |
| Total revenue | | Total revenue | 2,789,993 | | | — | | | 17,113,113 | | | — | |
| | $ | | $ | | $ | | $ | |
| Operating expenses | Operating expenses | | | | | | | | Operating expenses | | | |
| Research and development | Research and development | 20,797,406 | | | 13,004,649 | | | 54,112,136 | | | 23,974,809 | | Research and development | 26,910,286 | | | 20,797,406 | | | 85,097,331 | | | 54,112,136 | |
| General and administrative | General and administrative | 3,839,626 | | | 4,026,666 | | | 11,727,969 | | | 7,440,910 | | General and administrative | 5,505,869 | | | 3,839,626 | | | 15,604,401 | | | 11,727,969 | |
| Total operating expenses | Total operating expenses | 24,637,032 | | | 17,031,315 | | | 65,840,105 | | | 31,415,719 | | Total operating expenses | 32,416,155 | | | 24,637,032 | | | 100,701,732 | | | 65,840,105 | |
| Loss from operations | Loss from operations | (24,637,032) | | | (17,031,315) | | | (65,840,105) | | | (31,415,719) | | Loss from operations | (29,626,162) | | | (24,637,032) | | | (83,588,619) | | | (65,840,105) | |
| | Other income (expenses) | Other income (expenses) | | Other income (expenses) | |
| Finance income (costs) | 1,048,254 | | | (6,178) | | | 1,605,927 | | | (11,840) | | |
| Foreign currency (loss) gain | (243,791) | | | 1,905 | | | (287,691) | | | (32,901) | | |
| Investment income | | Investment income | 5,617,736 | | | 1,048,254 | | | 16,717,703 | | | 1,605,927 | |
| Foreign currency gain (loss) | | Foreign currency gain (loss) | 105,522 | | | (243,791) | | | (133,438) | | | (287,691) | |
| Total other income (expenses) | Total other income (expenses) | 804,463 | | | (4,273) | | | 1,318,236 | | | (44,741) | | Total other income (expenses) | 5,723,258 | | | 804,463 | | | 16,584,265 | | | 1,318,236 | |
| | Loss before provision for income taxes | (23,832,569) | | | (17,035,588) | | | (64,521,869) | | | (31,460,460) | | |
| Provision for income taxes | (180,500) | | | (81,044) | | | (452,021) | | | (245,251) | | |
| Loss before income taxes | | Loss before income taxes | (23,902,904) | | | (23,832,569) | | | (67,004,354) | | | (64,521,869) | |
| Income tax (provision) benefit | | Income tax (provision) benefit | (871,449) | | | (180,500) | | | 288,491 | | | (452,021) | |
| Net loss | Net loss | (24,013,069) | | | (17,116,632) | | | (64,973,890) | | | (31,705,711) | | Net loss | (24,774,353) | | | (24,013,069) | | | (66,715,863) | | | (64,973,890) | |
| | Net loss per basic and diluted common share: | Net loss per basic and diluted common share: | | Net loss per basic and diluted common share: | |
| Basic and diluted net loss per common share | Basic and diluted net loss per common share | $ | (0.26) | | | $ | (0.19) | | | $ | (0.71) | | | $ | (0.46) | | Basic and diluted net loss per common share | $ | (0.23) | | | $ | (0.26) | | | $ | (0.63) | | | $ | (0.71) | |
| Basic and diluted weighted average common shares outstanding | Basic and diluted weighted average common shares outstanding | 92,401,484 | | | 90,121,794 | | | 90,891,031 | | | 68,317,492 | | Basic and diluted weighted average common shares outstanding | 105,765,954 | | | 92,401,484 | | | 105,717,330 | | | 90,891,031 | |
|
See accompanying Notesnotes to the Unaudited Interim Condensed Consolidated Financial Statementsunaudited interim condensed consolidated financial statements
POINT Biopharma Global Inc.
Unaudited Interim Condensed Consolidated Statements of Comprehensive Loss
(In U.S. dollars)
| | | For the three months ended | | For the nine months ended | | For the three months ended | | For the nine months ended |
| | September 30,
2022 | | September 30,
2021 | | September 30,
2022 | | September 30,
2021 | | September 30,
2023 | | September 30,
2022 | | September 30,
2023 | | September 30,
2022 |
| | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ |
| Net loss | Net loss | $ | (24,013,069) | | | $ | (17,116,632) | | | $ | (64,973,890) | | | $ | (31,705,711) | | Net loss | (24,774,353) | | | (24,013,069) | | | (66,715,863) | | | (64,973,890) | |
| Other comprehensive loss, net of tax | Other comprehensive loss, net of tax | | Other comprehensive loss, net of tax | |
| Net unrealized loss on available-for-sale debt securities | Net unrealized loss on available-for-sale debt securities | (266,320) | | — | | | (608,698) | | | — | | Net unrealized loss on available-for-sale debt securities | (361,611) | | | (266,320) | | | (973,743) | | | (608,698) | |
| Total comprehensive loss | Total comprehensive loss | $ | (24,279,389) | | | $ | (17,116,632) | | | $ | (65,582,588) | | | $ | (31,705,711) | | Total comprehensive loss | (25,135,964) | | | (24,279,389) | | | (67,689,606) | | | (65,582,588) | |
See accompanying Notesnotes to the Unaudited Interim Condensed Consolidated Financial Statementsunaudited interim condensed consolidated financial statements
POINT Biopharma Global Inc.
Unaudited Interim Condensed Consolidated Statements of Stockholders’ Equity
(In U.S. dollars, except share amounts)
| | | POINT Biopharma Inc.
common shares | | | Common Stock | | Additional
Paid-in Capital | | Accumulated
Deficit | | Accumulated Other Comprehensive Loss | | Total
Equity | | Common Stock | | Additional
Paid-in Capital | | Retained Earnings (Accumulated Deficit) | | Accumulated Other Comprehensive Loss | | Total Equity |
| | Number | | Amount | | | Number | | Amount | | | | | Number | | Amount | | | |
| | # | | $ | | | # | | $ | | $ | | $ | | $ | | $ | | # | | $ | | $ | | $ | | $ | | $ |
| Balance at December 31, 2021 | — | | | — | | | | 90,121,794 | | | 9,012 | | | 314,488,782 | | | (59,284,708) | | | — | | | 255,213,086 | | |
| Balance at December 31, 2022 | | Balance at December 31, 2022 | 105,649,741 | | | 10,565 | | | 448,391,574 | | | 39,008,505 | | | (456,851) | | | 486,953,793 | |
| Issuance of shares of Common Stock in connection with stock option exercises | Issuance of shares of Common Stock in connection with stock option exercises | — | | | — | | | | 678 | | | — | | | 942 | | | — | | | — | | | 942 | | Issuance of shares of Common Stock in connection with stock option exercises | 32,936 | | | 3 | | | 145,861 | | | — | | | — | | | 145,864 | |
| Stock-based compensation | Stock-based compensation | — | | | — | | | | — | | | — | | | 440,450 | | | — | | | — | | | 440,450 | | Stock-based compensation | — | | | — | | | 1,009,496 | | | — | | | — | | | 1,009,496 | |
| Net loss | Net loss | — | | | — | | | | — | | | — | | | — | | | (16,380,574) | | | — | | | (16,380,574) | | Net loss | — | | | — | | | — | | | (16,530,671) | | | — | | | (16,530,671) | |
| Balance at March 31, 2022 | — | | | — | | | | 90,122,472 | | | 9,012 | | | 314,930,174 | | | (75,665,282) | | | — | | | 239,273,904 | | |
| Other comprehensive income, net of tax | | Other comprehensive income, net of tax | — | | | — | | | — | | | — | | | 201,294 | | | 201,294 | |
| Balance at March 31, 2023 | | Balance at March 31, 2023 | 105,682,677 | | | 10,568 | | | 449,546,931 | | | 22,477,834 | | | (255,557) | | | 471,779,776 | |
| Issuance of shares of Common Stock in connection with stock option exercises | Issuance of shares of Common Stock in connection with stock option exercises | — | | | — | | | | 2,490 | | | — | | | 3,461 | | | — | | | — | | | 3,461 | | Issuance of shares of Common Stock in connection with stock option exercises | 83,277 | | | 8 | | | 186,050 | | | — | | | — | | | 186,058 | |
| Stock-based compensation | Stock-based compensation | — | | | — | | | | — | | | — | | | 1,027,563 | | | — | | | — | | | 1,027,563 | | Stock-based compensation | — | | | — | | | 1,710,349 | | | — | | | — | | | 1,710,349 | |
| Net loss | Net loss | — | | | — | | | | — | | | — | | | — | | | (24,580,247) | | | — | | | (24,580,247) | | Net loss | — | | | — | | | — | | | (25,410,839) | | | — | | | (25,410,839) | |
| Other comprehensive loss, net of taxes | — | | | — | | | | — | | | — | | | — | | | — | | | (342,378) | | | (342,378) | | |
| Balance at June 30, 2022 | — | | | — | | | | 90,124,962 | | | 9,012 | | | 315,961,198 | | | (100,245,529) | | | (342,378) | | | 215,382,303 | | |
| Issuance of shares of Common Stock, net of direct and incremental costs | — | | | — | | | | 13,900,000 | | | 1,390 | | | 116,854,772 | | | — | | | — | | | 116,856,162 | | |
| Issuance of shares of Common Stock in connection with stock option exercises | — | | | — | | | | 30,000 | | | 3 | | | 41,697 | | | — | | | — | | | 41,700 | | |
| Other comprehensive loss, net of tax | | Other comprehensive loss, net of tax | — | | | — | | | — | | | — | | | (813,426) | | | (813,426) | |
| Balance at June 30, 2023 | | Balance at June 30, 2023 | 105,765,954 | | | 10,576 | | | 451,443,330 | | | (2,933,005) | | | (1,068,983) | | | 447,451,918 | |
| | Stock-based compensation | Stock-based compensation | — | | | — | | | | — | | | — | | | 1,079,056 | | | — | | | — | | | 1,079,056 | | Stock-based compensation | — | | | — | | | 1,876,432 | | | — | | | — | | | 1,876,432 | |
| Net loss | Net loss | — | | | — | | | | — | | | — | | | — | | | (24,013,069) | | | — | | | (24,013,069) | | Net loss | — | | | — | | | — | | | (24,774,353) | | | — | | | (24,774,353) | |
| Other comprehensive loss, net of taxes | — | | | — | | | | — | | | — | | | — | | | — | | | (266,320) | | | (266,320) | | |
| Balance at September 30, 2022 | — | | | — | | | | 104,054,962 | | | 10,405 | | | 433,936,723 | | | (124,258,598) | | | (608,698) | | | 309,079,832 | | |
| Other comprehensive loss, net of tax | | Other comprehensive loss, net of tax | — | | | — | | | — | | | — | | | (361,611) | | | (361,611) | |
| Balance at September 30, 2023 | | Balance at September 30, 2023 | 105,765,954 | | | 10,576 | | | 453,319,762 | | | (27,707,358) | | | (1,430,594) | | | 424,192,386 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| POINT Biopharma Inc. common shares | | | Common Stock | | Additional
Paid-in
Capital | | Accumulated
Deficit | | Accumulated Other Comprehensive Loss | | Total Equity |
| Number | | Amount | | | Number | | Amount | | | | |
| # | | $ | | | # | | $ | | $ | | $ | | $ | | $ |
| Balance at December 31, 2020 (as previously reported) | 15,233,884 | | | 15,234 | | | | — | | | — | | | 26,847,271 | | | (13,382,227) | | | — | | | 13,480,278 | |
| Retroactive application of the recapitalization due to the Business Combination (refer to Note 3) | (15,233,884) | | | (15,234) | | | | 54,647,656 | | | 5,465 | | | 9,769 | | | — | | | — | | | — | |
| Balance at December 31, 2020, effect of the Business Combination (refer to Note 3) | — | | | — | | | | 54,647,656 | | | 5,465 | | | 26,857,040 | | | (13,382,227) | | | — | | | 13,480,278 | |
| Issuance of shares of Common Stock in connection with exercise of warrants | — | | | — | | | | 2,869,799 | | | 287 | | | 19,999,713 | | | — | | | — | | | 20,000,000 | |
| Issuance of shares of Common Stock in connection with stock option exercises | — | | | — | | | | 64,570 | | | 6 | | | 449,994 | | | — | | | — | | | 450,000 | |
| Stock-based compensation | — | | | — | | | | — | | | — | | | 477,245 | | | — | | | — | | | 477,245 | |
| Net loss | — | | | — | | | | — | | | — | | | — | | | (5,784,421) | | | — | | | (5,784,421) | |
| Balance at March 31, 2021, effect of the Business Combination (refer to Note 3) | — | | | — | | | | 57,582,025 | | | 5,758 | | | 47,783,992 | | | (19,166,648) | | | — | | | 28,623,102 | |
| Issuance of shares of Common Stock, net of direct and incremental costs in connection with the Business Combination (refer to Note 3) | — | | | — | | | | 32,539,769 | | | 3,254 | | | 264,562,167 | | | — | | | — | | | 264,565,421 | |
| Stock-based compensation | — | | | — | | | | — | | | — | | | 1,106,457 | | | — | | | — | | | 1,106,457 | |
| Net loss | — | | | — | | | | — | | | — | | | — | | | (8,804,658) | | | — | | | (8,804,658) | |
| Balance at June 30, 2021, effect of the Business Combination (refer to Note 3) | — | | | — | | | | 90,121,794 | | | 9,012 | | | 313,452,616 | | | (27,971,306) | | | — | | | 285,490,322 | |
| Direct and incremental costs in connection with the Business Combination (refer to Note 3) | — | | | — | | | | — | | | — | | | 317,261 | | | — | | | — | | | 317,261 | |
| Stock-based compensation | — | | | — | | | | — | | | — | | | 348,117 | | | — | | | — | | | 348,117 | |
| Net loss | — | | | — | | | | — | | | — | | | — | | | (17,116,632) | | | — | | | (17,116,632) | |
| Balance at September 30, 2021, effect of the Business Combination (refer to Note 3) | — | | | — | | | | 90,121,794 | | | 9,012 | | | 314,117,994 | | | (45,087,938) | | | — | | | 269,039,068 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Stock | | Additional
Paid-in
Capital | | Accumulated
Deficit | | Accumulated Other Comprehensive Loss | | Total Equity |
| Number | | Amount | | | | |
| # | | $ | | $ | | $ | | $ | | $ |
| Balance at December 31, 2021 | 90,121,794 | | | 9,012 | | | 314,488,782 | | | (59,284,708) | | | — | | | 255,213,086 | |
| Issuance of shares of Common Stock in connection with stock option exercises | 678 | | | — | | | 942 | | | — | | | — | | | 942 | |
| Stock-based compensation | — | | | — | | | 440,450 | | | — | | | — | | | 440,450 | |
| Net loss | — | | | — | | | — | | | (16,380,574) | | | — | | | (16,380,574) | |
| Balance at March 31, 2022 | 90,122,472 | | | 9,012 | | | 314,930,174 | | | (75,665,282) | | | — | | | 239,273,904 | |
| Issuance of shares of Common Stock in connection with stock option exercises | 2,490 | | | — | | | 3,461 | | | — | | | — | | | 3,461 | |
| Stock-based compensation | — | | | — | | | 1,027,563 | | | — | | | — | | | 1,027,563 | |
| Net loss | — | | | — | | | — | | | (24,580,247) | | | — | | | (24,580,247) | |
| Other comprehensive loss, net of tax | — | | | — | | | — | | | — | | | (342,378) | | | (342,378) | |
| Balance at June 30, 2022 | 90,124,962 | | | 9,012 | | | 315,961,198 | | | (100,245,529) | | | (342,378) | | | 215,382,303 | |
| Issuance of shares of Common Stock, net of direct and incremental costs | 13,900,000 | | | 1,390 | | | 116,854,772 | | | — | | | — | | | 116,856,162 | |
| Issuance of shares of Common Stock in connection with stock option exercises | 30,000 | | | 3 | | | 41,697 | | | — | | | — | | | 41,700 | |
| Stock-based compensation | — | | | — | | | 1,079,056 | | | — | | | — | | | 1,079,056 | |
| Net loss | — | | | — | | | — | | | (24,013,069) | | | — | | | (24,013,069) | |
| Other comprehensive loss, net of tax | — | | | — | | | — | | | — | | | (266,320) | | | (266,320) | |
| Balance at September 30, 2022 | 104,054,962 | | | 10,405 | | | 433,936,723 | | | (124,258,598) | | | (608,698) | | | 309,079,832 | |
See accompanying Notesnotes to the Unaudited Interim Condensed Consolidated Financial Statementsunaudited interim condensed consolidated financial statements
POINT Biopharma Global Inc.
Unaudited Interim Condensed Consolidated Statements of Cash Flows
(In U.S. dollars)
| | | For the nine months ended | | For the nine months ended |
| | September 30, 2022 | | September 30, 2021 | | September 30, 2023 | | September 30, 2022 |
| | $ | | $ | | $ | | $ |
| Cash flows from operating activities | Cash flows from operating activities | | | | Cash flows from operating activities | | | |
| Net loss: | Net loss: | (64,973,890) | | | (31,705,711) | | Net loss: | (66,715,863) | | | (64,973,890) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | Adjustments to reconcile net loss to net cash used in operating activities: | | Adjustments to reconcile net loss to net cash used in operating activities: | |
| Depreciation on property, plant and equipment | Depreciation on property, plant and equipment | 980,995 | | | — | | Depreciation on property, plant and equipment | 2,186,253 | | | 980,995 | |
| Deferred income taxes | (65,592) | | | 62,719 | | |
| Deferred and non-current income taxes | | Deferred and non-current income taxes | 936,753 | | | (65,592) | |
| Stock-based compensation expense | Stock-based compensation expense | 2,547,069 | | | 1,931,819 | | Stock-based compensation expense | 4,596,277 | | | 2,547,069 | |
| Amortization of debt issuance costs | — | | | 11,840 | | |
| Non-cash lease expense | | Non-cash lease expense | 196,772 | | | — | |
| Amortization of premiums (accretion of discounts) on investments, net | Amortization of premiums (accretion of discounts) on investments, net | (435,238) | | | — | | Amortization of premiums (accretion of discounts) on investments, net | (9,457,635) | | | (435,238) | |
| Changes in operating assets and liabilities | | |
| Changes in operating assets and liabilities: | | Changes in operating assets and liabilities: | |
| Prepaid expenses and other current assets | Prepaid expenses and other current assets | 318,586 | | | (4,617,873) | | Prepaid expenses and other current assets | 709,160 | | | 318,586 | |
| Accounts payable | Accounts payable | 1,261,082 | | | (1,907,881) | | Accounts payable | (1,060,594) | | | 1,261,082 | |
| Accrued liabilities | Accrued liabilities | 6,942,886 | | | 2,822,714 | | Accrued liabilities | (4,534,719) | | | 6,926,449 | |
| Income taxes payable | 110,745 | | | 113,747 | | |
| Amount due to related party within accrued liabilities | (16,437) | | | 117,526 | | |
| Deferred revenue | | Deferred revenue | (17,113,113) | | | — | |
| Income taxes receivable and payable | | Income taxes receivable and payable | (33,143,286) | | | 110,745 | |
| Operating lease liabilities | | Operating lease liabilities | (62,014) | | | — | |
| Change in accrued interest and dividends within investments | Change in accrued interest and dividends within investments | (67,483) | | | — | | Change in accrued interest and dividends within investments | (1,397,490) | | | (67,483) | |
| Net cash used in operating activities | Net cash used in operating activities | (53,397,277) | | | (33,171,100) | | Net cash used in operating activities | (124,859,499) | | | (53,397,277) | |
| | Cash flows from investing activities | Cash flows from investing activities | | Cash flows from investing activities | |
| Purchase of investments, net of sales and maturities | Purchase of investments, net of sales and maturities | (165,841,488) | | | — | | Purchase of investments, net of sales and maturities | (117,757,923) | | | (165,841,488) | |
| Purchase of property, plant and equipment | Purchase of property, plant and equipment | (10,696,365) | | | (6,320,113) | | Purchase of property, plant and equipment | (17,249,510) | | | (10,696,365) | |
| Purchase of note receivable | | Purchase of note receivable | (5,000,000) | | | — | |
| Net cash used in investing activities | Net cash used in investing activities | (176,537,853) | | | (6,320,113) | | Net cash used in investing activities | (140,007,433) | | | (176,537,853) | |
| | Cash flows from financing activities | Cash flows from financing activities | | Cash flows from financing activities | |
| Issuance of shares of Common Stock in connection with stock option exercises | | Issuance of shares of Common Stock in connection with stock option exercises | 331,922 | | | 46,103 | |
| Payments on finance lease | | Payments on finance lease | (285,949) | | | — | |
| Issuance of shares of Common Stock, net of direct and incremental costs paid | Issuance of shares of Common Stock, net of direct and incremental costs paid | 116,856,162 | | | — | | Issuance of shares of Common Stock, net of direct and incremental costs paid | — | | | 116,856,162 | |
| Issuance of shares of Common Stock in connection with stock option exercises | 46,103 | | | 450,000 | | |
| Repayment of mortgage payable | — | | | (3,562,500) | | |
| Issuance of shares of Common Stock in connection with exercise of warrants | — | | | 20,000,000 | | |
| Issuance of shares of Common Stock in connection with the Business Combination (see note 3), net of costs incurred by RACA and direct and incremental costs paid | — | | | 264,882,682 | | |
| Net cash provided by financing activities | Net cash provided by financing activities | 116,902,265 | | | 281,770,182 | | Net cash provided by financing activities | 45,973 | | | 116,902,265 | |
| | Net (decrease) increase in cash and cash equivalents | (113,032,865) | | | 242,278,969 | | |
| Net decrease in cash and cash equivalents | | Net decrease in cash and cash equivalents | (264,820,959) | | | (113,032,865) | |
| Cash and cash equivalents, beginning of period | Cash and cash equivalents, beginning of period | 238,815,991 | | | 10,546,749 | | Cash and cash equivalents, beginning of period | 286,428,371 | | | 238,815,991 | |
| Cash and cash equivalents, end of period | Cash and cash equivalents, end of period | 125,783,126 | | | 252,825,718 | | Cash and cash equivalents, end of period | 21,607,412 | | | 125,783,126 | |
| | Supplemental disclosure of cash flow information: | Supplemental disclosure of cash flow information: | | Supplemental disclosure of cash flow information: | |
| Cash paid for income taxes | Cash paid for income taxes | (411,424) | | | (68,785) | | Cash paid for income taxes | 31,924,135 | | | 411,424 | |
| Cash paid for interest on mortgage payable | — | | | (92,338) | | |
| Non-cash investment activities: | Non-cash investment activities: | | Non-cash investment activities: | |
| Receivable for investment maturities | | Receivable for investment maturities | 5,000,000 | | | — | |
| Purchase of property, plant and equipment recorded in accounts payable and accrued liabilities | Purchase of property, plant and equipment recorded in accounts payable and accrued liabilities | 1,142,278 | | | 1,784,466 | | Purchase of property, plant and equipment recorded in accounts payable and accrued liabilities | 3,623,314 | | | 1,142,278 | |
See accompanying notes to the unaudited interim condensed consolidated financial statements
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
1. Nature of business
Formation and organization
POINT Biopharma Global Inc., together with its consolidated subsidiaries (the("POINT" or the “Company”), is a globally focused radiopharmaceutical company building a platform for the clinical development and commercialization of radioligands that fight cancer. On September 18, 2019, POINT Theranostics Inc. was incorporated under the General Corporation Law of the State of Delaware (the "DGCL") and amended its name to “POINT Biopharma Inc.” on November 22, 2019. On June 30, 2021, following the Business Combination (as defined in Note 3 below), POINT Biopharma Inc. became a wholly-owned subsidiary of POINT Biopharma Global Inc. Under the terms of the Business Combination Agreement (as defined in Note 3 below), stockholders of POINT Biopharma Inc. received approximately 3.59 shares of common stock, par value $0.0001 per share, of the Company (“Common Stock”) in exchange for each common share of POINT Biopharma Inc. Also in connection with the closing of the Business Combination, RACA (as defined in Note 3 below) consummated the sale of an aggregate of 16,500,000 shares of Class A common stock, par value $0.0001 per share, of RACA (“Class A Common Stock”) in a private placement at a price of $10.00 per share, for aggregate gross proceeds of $165.0 million (“PIPE Financing”). In accordance with the terms of the Business Combination Agreement, upon the closing of the Business Combination, each share of Class A Common Stock and each share of Class B common stock, par value $0.0001 per share, of RACA (“Class B Common Stock”) was converted into one share of Common Stock of the Company. For additional information on the Business Combination, please see Note 3.
The Company was founded on a mission to make radioligand therapy applicable to more cancers and available to more people, thereby improving the lives of cancer patients and their families everywhere.
The Company has four wholly-owned subsidiaries, POINT Biopharma Inc., POINT Biopharma USA Inc. and West 78th Street, LLC, each located in the USA,U.S., and POINT Biopharma Corp., located in Canada (collectively the "Subsidiaries"). The Company’s headquarters is located at 4850 West 78th Street, Indianapolis, Indiana, 46268.
2. Summary of significant accounting policies
Basis of presentation
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 270, Interim Reporting and include the accounts of the Company and the Subsidiaries, for financial information and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the balances and results for the periods presented. Except as described below, the accounting policies and methods of computation applied in the unaudited interim condensed consolidated financial statements and related notes contained therein are consistent with those applied by the Company in its audited consolidated financial statements as of and for the year ended December 31, 20212022 contained in our 2021 Annual Report on Form 10-K for the year ended December 31, 2021,2022, as filed with the SEC on March 25, 202227, 2023 (the “2021“2022 Financial Statements”). These unaudited interim condensed consolidated financial statements should be read in conjunction with the 20212022 Financial Statements.
These unaudited interim condensed consolidated financial statements and accompanying notes have been prepared in accordance with the provisions of ASC Topic 205-40, Presentation of Financial Statements—Going Concern on the basis that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.
Impact of COVID-19 Pandemic, macroeconomics and other geopolitical events
The COVID-19 coronavirus ("COVID-19") pandemic, which was declared byCompany is currently operating in a period of significant economic uncertainty, resulting from, among other things, the World Health Organization as a pandemic in March 2020 and has spread worldwide, has caused many governments to implement measures to slow the spread of the outbreak through quarantines, travel restrictions, heightened border security and other measures. COVID-19 continues to have an impact on the global economy as well as businesses and capital markets around the world. The future progression of the pandemic and its effects on the Company’s business and operations are uncertain.
In response to public health directives and orders and to help minimize the risk of the virus to employees, the Company has taken precautionary measures, including implementing work-from-home policies, mandatory vaccination, daily check-ins, masking and weekly testing for certain employees. The impact of the virus, including work-from-home policies, may negatively impact productivity, disruptCOVID-19 pandemic, geopolitical tensions, such as the Company’s business, and delay its preclinical research and clinical trial activities and its development program timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on the Company’s ability to conduct its business in the ordinary course. Specifically, the Company may not be able to enroll additional patient cohorts on its planned timeline due to disruptions at its clinical trial sites. Other impacts to the Company’s business may include temporary closures of its suppliers and disruptions or restrictions on its employees’ ability to travel. Any prolonged material disruption to the Company’s employees or suppliers could adversely impact the Company’s preclinical research and clinical trial activities, financial condition and results of operations, including its ability to obtain financing. Further, general macroeconomic trends, including rising inflation rates, sustained supply chain disruptions, and any resulting recession, depression or other sustained adverse market event could materially and adversely affect our business, financial condition, results of operations and the value of our Common Stock.
Additionally, financial markets may be adversely affected by the current or anticipated impact ofongoing military conflict including escalating military fighting between Russia and Ukraine, terrorism or other or macroeconomic geopolitical events. The U.S.the Israel-Palestine conflict and heightened tensions between China and Taiwan, trade uncertainty, including changes in tariffs, sanctions, international treaties, and other nations in response to the Russo-Ukrainian conflict have announced economic sanctions which may have an adverse effect on the global financial markets. The Company's SPLASH trial has vendor staff in Ukraine,trade restrictions, rising inflation and any political instabilityinterest rates, and uncertainty and liquidity concerns in the region may disrupt resourcing assigned to the trial and negatively impact our business.broader financial services industry, including those caused by certain recent banking failures.
The Company is monitoringcontinuing to monitor the continuing impact of the COVID-19 pandemicdevelopment and the potential impact of the Russo-Ukrainian conflictthese global economic and other macroeconomicgeopolitical events on its business and unaudited interim condensed consolidated financial statements. To date, the Company has not experienced any material business disruptions or incurred any impairment losses in the carrying values of its assets as a result of these events and it is not aware of any specific related event or circumstance that would require it to revise its estimates reflected in these unaudited interim condensed consolidated financial statements.
Cash However, estimates and Cash Equivalents
The Company considers all highly liquid instrumentsassumptions about future events and their effects cannot be determined with an original maturitycertainty, and therefore, require the exercise of three months or less as cash equivalents.
Investments
The Company determines the appropriate classification of its investments in debt securities at the time of purchase and re-evaluates such determination at each balance sheet date. The Company classifies its investments as current or non-current based on each instrument’s underlying maturity date. Investments with original maturities of greater than three months and less than one year are classified as current and are included in short-term investments in the condensed consolidated balance sheets. Investments with remaining maturities greater than one year from the balance sheet date are classified as non-current and are included in long-term investments in the condensed consolidated balance sheets. The Company’s investments are classified as available-for-sale and reported at fair value. Unrealized gains and losses are included in other comprehensive income (loss)judgment; as a component of shareholders’ equity until realized. Amortizationresult, the Company’s estimates may change as new events occur and accretion of premiums and discounts are recorded in finance income (expense). Realized gains and losses on debt securities are included in other income (expense), net.
The Company evaluates its investments with unrealized losses for other-than-temporary impairment. If any adjustment to fair value reflects a decline in the value of the investment, the Company considers all available evidence to evaluate the extent to which the declineadditional information is other-than-temporary in nature. For any adjustment the Company considers to be other-than-temporary, the Company reduces the investment to fair value through a charge to the statement of operations. No such adjustments were necessary during the periods presented.
Risks and uncertainties
TheExcept for the upfront payment received pursuant to the Lantheus License Agreements (as defined in Note 3 below), the Company has incurred significant net losses since inception and prior to the Business Combination, hadhas funded operations primarily through equity financings. Operating losses and negative cash flows were incurred in the nine months ended September 30, 2023 and are expected to continue for the foreseeable future. As losses continue to be incurred thein future periods. The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, successful discovery and development of its product candidates, regulatory approval of its product candidates, development by competitors of new technological innovations, dependence
on key personnel, the ability to attract and retain qualified employees, protection of proprietary technology, compliance with governmental regulations, the impact of macroeconomic disruptions, such as those arising from public health crisis or military conflicts and adverse developments affecting the COVID-19 coronavirus and the Russo-Ukrainian conflict,financial services industry, the ability to secure additional capital to fund operations and commercial success of its product candidates. Product candidates currently under development will require extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant
amounts of additional capital, adequate personnel, and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s drug development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.
The Company also has a number of risks and uncertainties related to the Offer and Merger described in Note 16. These risks and uncertainties are described in more detail in Part II. Item 1A. “Risk Factors” starting on page 34.
Use of estimates
The preparation of the unaudited interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, related disclosure of contingent assets and liabilities at the date of the unaudited interim condensed consolidated financial statements, and the reported amounts of expenses for the periods presented. Significant estimates and assumptions reflected in these unaudited interim condensed consolidated financial statements include, but are not limited to, the allocation of consideration and the recognition of revenues in respect of the performance obligations under the Lantheus License Agreements, the accrual of research and development expenses, incremental borrowing rates determined in connection with finance and operating lease obligations, the valuations of stock options, the expected recoverability of and warrants.the estimated useful lives of our long-lived assets. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts and experience.experiences. Changes in estimates are recorded in the period in which they become known. Actual results may differ from those estimates or assumptions.
Recently adopted accounting standards
Debt with Conversion and Other OptionsLeases
The FASBCompany accounts for leases in accordance with ASC Topic 842, Leases ("ASC 842"). At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. The Company has elected not to recognize leases with an original term of one year or less in the consolidated balance sheets. The Company has also elected to account for the lease and non-lease components as a combined lease component for its current lease portfolio. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Options to renew or early terminate a lease are included in the initial lease term of a lease when there is reasonable certainty that the option will be applied.
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. The Company's incremental borrowing rate is determined using a secured borrowing rate for the same currency and term as the associated lease in a similar economic environment.
Lease expense for operating leases is recognized on a straight-line basis over the lease term and included in operating expenses in the condensed consolidated statements of operations and comprehensive loss.
Recent accounting pronouncements
The Company has evaluated accounting pronouncements recently issued ASU 2020-06, Debt—Debt with Conversionbut not yet adopted 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 (“ASU 2020-06”). ASU 2020-06 simplifiesbelieves that the accounting for convertible instruments, such as convertible debt or convertible preferred stock, by eliminating two potential methods in accounting forpronouncements currently do not apply to the embedded conversion feature. The standard also removes certain conditions previously usedCompany’s operations and are not expected to evaluate whetherhave a freestanding financial instrument, or certain types of embedded features, are considered to be settled in the issuer’s own equity. Finally, ASU 2020-06 requires that an entity use the if-converted method in calculating the effects of convertible instruments on diluted earnings per share, with one limited exception. The amendments in this ASU are effective for the Company for fiscal years beginning after December 15, 2023. The Company early adopted the provisions of ASU 2020-06 on January 1, 2022 and there was no material impact to itson the Company’s unaudited interim condensed consolidated financial statements.
Issuer’s Accounting for Certain Modificationsstatements or Exchanges of Freestanding Equity-Classified Written Call Options
The FASB has 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 Entity’s Own Equity (Subtopic 815-40). ASU 2021-04 provides guidance that an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as an exchange of the original instrument for a new instrument. The standard also provides guidance on how an entity should measure and recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified. The amendments in this ASU are effective for the Company for fiscal years beginning after December 15, 2021. The Company adopted the provisions of ASU 2021-04 on January 1, 2022 and there was no material impact to its interim condensed consolidated financial statements.disclosures.
3. Business CombinationRevenue
On March 15, 2021,In November 2022, POINT Biopharmaannounced strategic collaboration and exclusive license agreements with Lantheus Holdings Inc. entered into a definitive business combination agreement("Lantheus") for exclusive worldwide rights for POINT's programs in prostate cancer (PNT2002) and neuroendocrine tumors (PNT2003), excluding certain territories (Japan, South Korea, Singapore, Indonesia, and China including Hong Kong, Macau and Taiwan) (the “Business Combination Agreement”"PNT2002 Agreement" and the "PNT2003 Agreement", respectively, and collectively the "Lantheus License Agreements"). The collaboration pairs POINT's expertise in next generation radioligand development and manufacturing with Lantheus’ commercial leadership in Prostate-Specific Membrane Antigen ("PSMA") with Therapeutics Acquisition Corp. (NASDAQ:RACA), d/b/a Research Alliance Corp. I (“RACA”), a special purpose acquisition company sponsored by RA Capital Management L.P., that was createdPET and radiopharmaceuticals.
In December 2022, closing conditions for the purposeLantheus transaction, including antitrust clearance under the Hart-Scott-Rodino Antitrust Improvements Act of effecting1976 (as amended, the "HSR Act"), were satisfied. POINT received a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination$250.0 million upfront payment under the PNT2002 Agreement and will receive an additional payment of up to $250.0 million upon U.S. regulatory approval. In addition, once certain return on investment financial thresholds have been achieved and other conditions satisfied, POINT will be eligible to receive royalties of 20% on all net sales (prior to which there is a period of sales in which the royalty may be based on only a portion of the gross profit), and contingent upon the satisfaction of certain net sales milestones, additional payments of up to $1.3 billion. POINT received a $10.0 million upfront payment under the PNT2003 Agreement, and will receive up to an additional $30.0 million upon U.S. regulatory approval. The PNT2003 Agreement also provides that POINT will receive royalties of 15% on net sales and, contingent upon the satisfaction of certain net sales milestones, an additional payment of up to $275.0 million.
In connection with one or more businesses. On June 30, 2021, (the “Closing Date”the PNT2002 Agreement, the Company is responsible for completing the Company's multi-center, randomized, open label phase 3 Study evaluating metastatic castration-resistant Prostate cancer using 177Lu-PNT2002 PSMA therapy After Second-line Hormonal treatment (“SPLASH"), Bodhi Merger Sub, Inc., a wholly-owned subsidiary of RACA, merged with trial and into POINT Biopharma Inc. (the “Business Combination”the parties will work together to file the New Drug Application (“NDA”), with POINT Biopharma Inc. as the surviving companycosts incurred in connection with the U.S. Food and Drug Administration ("FDA") submission being borne by Lantheus. Thereafter, Lantheus will be responsible for all additional clinical and regulatory costs in the Business CombinationU.S., as well as all costs for development, clinical trials and after giving effectregulatory approval in the rest of its territories outside the U.S., except Asia.
To determine the appropriate amount of revenue to such Business Combination, POINT Biopharma Inc. became a wholly-owned subsidiarybe recognized under ASC Topic 606, Revenue from Contracts with Customers, the Company performs the following steps: (i) identify the promised goods or services in the contract, (ii) determine whether the promised goods or services are performance obligations, including whether they are distinct in the context of RACA. RACA was then renamed “POINT Biopharma Global Inc.”the contract, (iii) measure the transaction price, including the constraint on variable consideration, (iv) allocate the transaction price to the performance obligations and (v) recognize revenue when (or as) the Company satisfies each performance obligation.
In accordanceconnection with the termsPNT2002 Agreement, the Company identified the following performance conditions: (i) the license it conveyed to Lantheus with respect to certain intellectual property, (ii) service provided to complete the SPLASH trial, support the NDA submission and participate in joint steering activities and (iii) manufacturing activities. The Company determined the transaction price under ASC Topic 606 at the inception of the Business CombinationPNT2002 Agreement to be the $250.0 million upfront payment and has allocated this to the first two performance obligations based on a relative standalone selling price basis. The standalone selling prices for the first two performance obligations were determined using the adjusted market assessment approach and the expected cost plus a margin assessment approach, respectively. The Company concluded that variable consideration associated with the product manufacturing relates solely to the manufacturing activities performance obligation on the basis that it believes that the expected margin associated with this consideration is in line with market standards and specifically relates to the Company's efforts to satisfy its manufacturing obligations.
In connection with the PNT2003 Agreement, the Company identified the following performance conditions: (i) the license it conveyed to Lantheus with respect to certain intellectual property, (ii) service provided to complete the necessary submissions for regulatory approval and participate in joint steering activities and (iii) manufacturing activities. The Company determined the transaction price under ASC Topic 606 at the inception of the PNT2003 Agreement to be the $10.0 million upfront payment and has allocated this to the first two performance obligations based on a relative standalone selling price basis. The standalone selling prices for the first two performance obligations were determined using the adjusted market assessment approach and the expected cost plus a margin assessment approach, respectively. The Company concluded that variable consideration associated with the product manufacturing relates solely to the manufacturing activities performance obligation on the basis that it believes that the expected margin associated with this consideration is in line with market standards and specifically relates to the Company's efforts to satisfy its manufacturing obligations.
The Company does not include variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will occur. Variable consideration in the PNT2002 Agreement and PNT2003 Agreement consists of:
•Potential future regulatory milestone payments. The Company concluded that this variable consideration is constrained considering that achievement of the milestones is outside its control and contingent upon the closingfuture success of clinical trials and regulatory approval by the FDA and in respect of other territories outside the U.S.
•Potential future milestone payments in connection with certain sales targets as well as any future royalties. The Company concluded that these payments qualify for the royalty exception. Under the royalty exception, sales-based royalties are recognized at the later of when (1) the subsequent sale or usage occurs or (2) the performance obligation to which some or all of the Business Combination:
(i)each share and vested equity awardsales- or usage-based royalty has been allocated is satisfied (in whole or in part). That is, an entity does not estimate the amount of POINT Biopharma Inc. outstanding as of immediately prior to the Closing Date was converted into shares of Common Stock of the Company or comparable vested equity awards that area sales-based royalty at contract inception; rather, revenue
exercisablewould be recognized when the subsequent sales occur (under the assumption that the associated performance obligation has been satisfied or partially satisfied).
•Potential payments for sharesthe manufacturing and supply of Common Stockcommercial product. The Company concluded that this variable consideration is constrained as it is contingent upon future regulatory approvals and the execution of a manufacturing and supply agreement.
The estimate of the Company’s variable consideration to be included in the transaction price is updated at each reporting date as a change in estimate. For the potential future regulatory milestone payments, the Company based on an implied vested equityutilizes the most likely amount approach to determine the amounts recognized and timing of recognition. For the potential payments for manufacturing and supply of commercial product, the Company utilizes the expected value approach to determine the amounts recognized and timing of $585.0 million (whichrecognition. Once the constraint is equalremoved, the milestone payments will be accounted for and allocated to a conversion ratio of approximately 3.59-for-1);the performance obligations.
For the licenses conveyed to Lantheus, the Company recognized revenue upon execution and
(ii)all unvested equity awards of POINT Biopharma Inc. were converted into comparable equity awards that are exercisable for shares of Common Stock regulatory approval of the Lantheus License Agreements. The Company determined based on the same conversion ratio at which the vested equity awards are converted into shares of Common Stock of the Company; and
(iii)each share of RACA Class A Common Stock and each share of RACA Class B Common Stock that was issued and outstanding immediately prior to the Closing Date became one share of Common Stock of the Company.
In connection with the Business Combination, the Company consummated the PIPE Financing, pursuant to which it received $165.0 million in exchange for 16,500,000 shares of Common Stock of the Company.
After giving effect to the Business Combination, there were 90,121,794 shares of Common Stock issued and outstanding.
We accounted for the Business Combination as a reverse recapitalization, in accordance with U.S. GAAP. POINT Biopharma Inc. is treated as the accounting acquirer (legal acquiree), while RACA is the accounting acquiree (legal acquirer) for financial reporting purposes. This determination is primarily based on the factconcluded that the former POINT Biopharma Inc. stockholders retainedlicenses represent that of functional intellectual property as each has significant standalone functionality and derives a majoritysubstantial portion of its utility from that standalone functionality.
For the voting power ofobligations to complete the CompanySPLASH trial, support the NDA submission and comprise a majority of the governing body of the Company, and the former POINT Biopharma Inc. senior management comprise substantially all of the senior management of the Company. Accordingly, for accounting purposes, the Business Combination is treated as the equivalent of POINT Biopharma Inc. issuing shares for the net assets of RACA, accompanied by a recapitalization. The net assets of RACA are stated at historical costs. No goodwill or other intangible assets is recorded.
In connection with the Business Combination, the Company incurred underwriting fees and other costs considered to be direct or incremental to the proceeds raisedparticipate in joint steering activities in connection with the Business Combination and PIPE Financing totaling approximately $21.9 million, consisting of costs incurred by RACA prior to the completion of the Business CombinationPNT2002 Agreement as well as investment banker, legal, audit, tax, accountingthe obligations to complete the necessary submissions for regulatory approval and listing fees. These amounts are reflected within additional paid-in capitalparticipate in joint steering activities for the interim condensed consolidated balance sheetsPNT2003 Agreement, the Company recognizes revenue using the cost-to-cost method, which it concluded best depicts the transfer of control to the customer. Under the cost-to-cost method, the extent of progress towards completion is measured based on the ratio of actual costs incurred to the total estimated costs expected upon satisfying the identified performance obligation. Under this method, revenue is recorded as a percentage of the estimated transaction price based on the extent of progress towards completion.
The following table presents the Company’s contract liabilities as of September 30, 20222023 and December 31, 2021.2022:
Summary of net proceeds | | | | | | | | | | | |
| September 30, 2023 | | December 31, 2022 |
| Deferred revenue | | | |
| Deferred revenue, current | $ | 12,586,443 | | | $ | 23,242,290 | |
| Deferred revenue, net of current portion | 3,720,881 | | | 10,178,147 | |
| Total | $ | 16,307,324 | | | $ | 33,420,437 | |
The following table summarizes the elementsAt inception of the net proceeds fromLantheus License Agreements, deferred revenue of $34.8 million was recognized in connection with future performance. During the Business Combination:
| | | | | |
| Recapitalization |
Cash - RACA Trust and cash (net of redemptions) | 121,770,367 | |
Cash - PIPE Financing | 165,000,000 | |
Less: Underwriting fees, costs incurred by RACA and other direct and incremental costs | (21,887,685) | |
Net proceeds from the Business Combination, net of costs incurred by RACA and direct and incremental costs paid per the statement of cash flows | 264,882,682 | |
The net proceeds noted above exclude approximately $4.7three and nine months ended September 30, 2023, the Company recognized $2.8 million and $17.1 million in transactionrevenue for services performed (three and nine months ended September 30, 2022 — $nil and $nil, respectively). The current portion of deferred revenue reflects the Company’s estimate of the revenue it expects to recognize within the next 12 months. The Company expects to recognize the remainder of the deferred revenue balance in subsequent periods through the year ending December 31, 2028. No contract assets were recognized in connection with the Lantheus License Agreements, including costs that were not considered direct and incremental to the raising of capital. These costs consist of corporate expenses in the normal course of business comprised of accounting, consulting, insurance and board retainer fees. These costs were recorded as incurred in accordance withobtaining the nature of the services received.
Summary of shares of Common Stock issued
The following table summarizes the number of shares of Common Stock outstanding immediately following the consummation of the Business Combination:
| | | | | |
| Number of
Shares |
RACA Class A and Class B shares outstanding prior to the Business Combination | 16,039,769 | |
Class A shares issued pursuant to the PIPE Financing | 16,500,000 | |
Business Combination and PIPE Financing shares as converted into Common Stock | 32,539,769 | |
Conversion of POINT Biopharma Inc. common shares into Common Stock | 57,582,025 | |
Total shares of POINT Biopharma Global Inc. Common Stock outstanding immediately following the Business Combination | 90,121,794 | |
4. Cash, cash equivalents and investments
Cash, cash equivalents and investments consisted of the following:
| | | As of September 30, 2022 | | As of December 31, 2021 | | As of September 30, 2023 | | As of December 31, 2022 |
| Cash | Cash | $ | 5,571,190 | | | $ | 238,815,991 | | Cash | $ | 11,446,728 | | | $ | 12,429,627 | |
| Cash equivalents: | Cash equivalents: | | Cash equivalents: | |
| Money market funds | Money market funds | 120,211,936 | | | — | | Money market funds | 6,852,616 | | | 273,998,744 | |
| | Commercial paper | | Commercial paper | 3,308,068 | | | — | |
| Total cash and cash equivalents | Total cash and cash equivalents | 125,783,126 | | | 238,815,991 | | Total cash and cash equivalents | 21,607,412 | | | 286,428,371 | |
| Short-term investments | Short-term investments | | Short-term investments | |
| Commercial paper | Commercial paper | 54,570,816 | | | — | | Commercial paper | 107,567,350 | | | 115,156,455 | |
| Corporate bonds | Corporate bonds | 49,216,990 | | | — | | Corporate bonds | 93,787,733 | | | 45,219,042 | |
| U.S. Government agency debt securities | U.S. Government agency debt securities | 42,026,016 | | | — | | U.S. Government agency debt securities | 35,942,645 | | | 42,577,762 | |
| Asset backed securities | Asset backed securities | 19,921,689 | | | — | | Asset backed securities | 80,258,208 | | | 35,830,211 | |
| Total short-term investments | Total short-term investments | 165,735,511 | | | — | | Total short-term investments | 317,555,936 | | | 238,783,470 | |
| | Long-term investments | | Long-term investments | |
| U.S. Government agency debt securities | | U.S. Government agency debt securities | 16,098,662 | | | — | |
| Asset backed securities | | Asset backed securities | 8,634,828 | | | 16,119,430 | |
| Corporate bonds | | Corporate bonds | 35,059,671 | | | — | |
| Total long-term investments | | Total long-term investments | 59,793,161 | | | 16,119,430 | |
| Total cash, cash equivalents and investments | Total cash, cash equivalents and investments | $ | 291,518,637 | | | $ | 238,815,991 | | Total cash, cash equivalents and investments | $ | 398,956,509 | | | $ | 541,331,271 | |
Available-for-sale investments
The amortized cost, gross unrealized gains, gross unrealized losses and fair value of available-for-sale investments by type of security as atof September 30, 2023 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Amortized Cost | | Unrealized Gains | | Unrealized Losses | | Fair Value | | Current | | Non-current |
| Commercial paper | $ | 107,597,155 | | | $ | 981 | | | $ | (30,786) | | | $ | 107,567,350 | | | $ | 107,567,350 | | | $ | — | |
| Corporate bonds | 129,438,450 | | 5,918 | | (596,964) | | | 128,847,404 | | 93,787,733 | | 35,059,671 | |
| Asset backed securities | 89,554,665 | | 204 | | | (661,833) | | | 88,893,036 | | 80,258,208 | | 8,634,828 | |
| U.S. Government agency debt securities | 52,186,023 | | — | | | (144,716) | | | 52,041,307 | | 35,942,645 | | 16,098,662 | |
| Total available-for-sale securities | $ | 378,776,293 | | | $ | 7,103 | | | $ | (1,434,299) | | | $ | 377,349,097 | | | $ | 317,555,936 | | | $ | 59,793,161 | |
The amortized cost, gross unrealized gains, gross unrealized losses and fair value of available-for-sale investments by type of security as of December 31, 2022 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Amortized Cost | | Unrealized Gains | | Unrealized Losses | | Fair Value | | Current | | Non-current |
| Commercial paper | $ | 54,570,816 | | | $ | — | | | $ | — | | | $ | 54,570,816 | | | $ | 54,570,816 | | | $ | — | |
| Corporate bonds | 49,493,760 | | 6,300 | | $ | (283,070) | | | 49,216,990 | | 49,216,990 | | — | |
| U.S. Government agency debt securities | 42,204,488 | | — | | | $ | (178,472) | | | 42,026,016 | | 42,026,016 | | — | |
| Asset backed securities | 20,075,145 | | — | | | $ | (153,456) | | | 19,921,689 | | 19,921,689 | | — | |
| Total available-for-sale securities | $ | 166,344,209 | | | $ | 6,300 | | | $ | (614,998) | | | $ | 165,735,511 | | | $ | 165,735,511 | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Amortized Cost | | Unrealized Gains | | Unrealized Losses | | Fair Value | | Current | | Non-current |
| Commercial paper | $ | 115,156,455 | | | $ | — | | | $ | — | | | $ | 115,156,455 | | | $ | 115,156,455 | | | $ | — | |
| Asset backed securities | 52,019,619 | | | 26,527 | | | (96,505) | | | 51,949,641 | | | 35,830,211 | | | 16,119,430 | |
| Corporate bonds | 45,468,482 | | | — | | | (249,440) | | | 45,219,042 | | | 45,219,042 | | | — | |
| U.S. Government agency debt securities | 42,715,195 | | | — | | | (137,433) | | | 42,577,762 | | | 42,577,762 | | | — | |
| Total available-for-sale securities | $ | 255,359,751 | | | $ | 26,527 | | | $ | (483,378) | | | $ | 254,902,900 | | | $ | 238,783,470 | | | $ | 16,119,430 | |
The following table summarizes the fair value of available-for-sale investments based on stated contractual maturities as of September 30, 2023: | | | | | | | | | | | |
| Amortized Cost | | Fair Value |
| Due within one year | $ | 318,607,866 | | | $ | 317,555,936 | |
| Due between one and five years | 60,168,427 | | | 59,793,161 | |
| Total | $ | 378,776,293 | | | $ | 377,349,097 | |
The following table summarizes the fair value of available-for-sale investments based on stated contractual maturities as of December 31, 2022:
| | | | | | | | | | | |
| Amortized Cost | | Fair Value |
| Due within one year | $ | 166,344,209 | | | $ | 165,735,511 | |
| Due between one and five years | — | | | — | |
| Total | $ | 166,344,209 | | | $ | 165,735,511 | |
| | | | | | | | | | | |
| Amortized Cost | | Fair Value |
| Maturing within one year | $ | 239,236,498 | | | $ | 238,783,470 | |
| Maturing between one and five years | 16,123,253 | | | 16,119,430 | |
| Total | $ | 255,359,751 | | | $ | 254,902,900 | |
The primary objective of our investment portfolio is to maintain safety of principal balances, provide sufficient levels of liquidity and enhance overall returns in an efficient manner with acceptable levels of risk. Our investment policy limits interest-bearing security investments to certain types of debt and money market instruments issued by institutions with primarily investment-grade credit ratings, and it places restrictions on maturities and concentration by asset class and issuer.
During the three and nine months ended September 30, 2022,2023, we had $nil and $nil$611 of realized gains or losses, respectively, on available-for-sale investments.
5. Fair value measurements
We measure fair value based on the prices that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. These tiers include the following:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that are accessible at the measurement date. The fair value hierarchy gives the highest priority to Level 1 inputs.
Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. These inputs include quoted prices for similar assets or liabilities; quoted market prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.
The following tables present information about the Company’s financial assets and liabilities as of September 30, 2023 and December 31, 2022, that are measured at fair value on a recurring basis and indicates the level of the fair value hierarchy used to determine such fair values (in thousands):values:
| | | | | | | | | | | | | | | | | | | | | | | |
| Level 1 | | Level 2 | | Level 3 | | Total |
| September 30, 2023 | | | | | | | |
| Cash equivalents: | | | | | | | |
| Money market mutual fund | $ | 6,852,616 | | | $ | — | | | $ | — | | | $ | 6,852,616 | |
| Commercial paper | — | | | 3,308,068 | | | — | | | 3,308,068 | |
| Available-for-sale debt securities: | | | | | | | |
| Commercial paper | — | | | 107,567,350 | | | — | | | 107,567,350 | |
| Corporate bonds | — | | | 128,847,404 | | | — | | | 128,847,404 | |
| Asset backed securities | — | | | 88,893,036 | | | — | | | 88,893,036 | |
| U.S. Government agency debt securities | 52,041,307 | | | — | | | — | | | 52,041,307 | |
| Total | $ | 58,893,923 | | | $ | 328,615,858 | | | $ | — | | | $ | 387,509,781 | |
| | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total |
| September 30, 2022 | | | | | | | | |
| December 31, 2022 | | December 31, 2022 | | | | | | | |
| Cash equivalents: | Cash equivalents: | | Cash equivalents: | |
| Money market mutual fund | Money market mutual fund | $ | 120,211,936 | | | $ | — | | | $ | — | | | $ | 120,211,936 | | Money market mutual fund | $ | 273,998,744 | | | $ | — | | | $ | — | | | $ | 273,998,744 | |
| | Commercial paper | | Commercial paper | — | | | — | | | — | | | — | |
| Available-for-sale debt securities: | Available-for-sale debt securities: | | Available-for-sale debt securities: | |
| Commercial paper | Commercial paper | — | | | 54,570,816 | | | — | | | $ | 54,570,816 | | Commercial paper | — | | | 115,156,455 | | | — | | | 115,156,455 | |
| Asset backed securities | | Asset backed securities | — | | | 51,949,641 | | | — | | | 51,949,641 | |
| Corporate bonds | Corporate bonds | — | | | 49,216,990 | | | — | | | $ | 49,216,990 | | Corporate bonds | — | | | 45,219,042 | | | — | | | 45,219,042 | |
| U.S. Government agency debt securities | U.S. Government agency debt securities | 42,026,016 | | | — | | | — | | | $ | 42,026,016 | | U.S. Government agency debt securities | 42,577,762 | | | — | | | — | | | 42,577,762 | |
| Asset backed securities | — | | | 19,921,689 | | | — | | | $ | 19,921,689 | | |
| Total | Total | $ | 162,237,952 | | | $ | 123,709,495 | | | $ | — | | | $ | 285,947,447 | | Total | $ | 316,576,506 | | | $ | 212,325,138 | | | $ | — | | | $ | 528,901,644 | |
Certain of our available-for-sale debt securities, including U.S. Government agency debt securities, are valued using inputs observable in active markets for identical securities and are therefore classified as Level 1 within the fair value hierarchy.
On May 7, 2023, POINT Biopharma Inc. entered into a Convertible Note Purchase Agreement (the "Convertible Note Agreement") with Ionetix Alpha Corporation ("Ionetix-α"), a subsidiary of IONETIX Corporation. On June 1, 2023, the Company purchased $5.0 million in unsecured promissory notes (the "Note Receivable") convertible into common stock of Ionetix-α at a conversion price that is calculated based on certain conditions as defined in the Convertible Note Agreement. Management assessed all features in the Convertible Note Agreement to determine embedded derivatives requiring bifurcation. In accordance with the Convertible Note Agreement, Ionetix-α has a voluntary redemption option, subject to certain terms and conditions, and may provide notice to the Company upon which the Company can elect to either redeem the Note Receivable at 150% of principal and interest outstanding or convert it into common stock of Ionetix-α. Management concluded that this put option meets the definition of a derivative and it is not clearly and closely related to the Note Receivable, thus requiring bifurcation from the host instrument and recognition at fair value. Further, management concluded the Note Receivable host instrument is to be classified as a loan receivable and therefore is measured at amortized cost but disclosure of fair value is required. Management determined the fair values of both the Note Receivable and the embedded derivative under Level 3 in the fair value hierarchy. Management concluded that the fair value of the Note Receivable as of September 30, 2023 approximated amortized cost and that the fair value of the embedded derivative was nil both at inception of the arrangement and on September 30, 2023. On September 29, 2023, POINT Biopharma Inc. entered into the Amendment of Convertible Note Purchase Agreement (the "Amendment"), whereby in connection with the Amendment, the Company and Ionetix-α agreed to accelerate the purchase of an additional $5.0 million of unsecured promissory notes subject to certain closing conditions. Those conditions were met and the additional purchase was made on October 2, 2023. See Note 16.
We did not have any financial liabilities measured at fair value on a recurring basis as of September 30, 2022.
2023. The carrying values of the Company’s cash and cash equivalents, accounts payable and accrued liabilities approximate fair value due to their short maturities. There have been no transfers of assets or liabilities between the fair value measurement levels.levels as of September 30, 2023.
6. Prepaid expenses and other current assets
Prepaid expenses and other current assets consisted of the following:
| | | As of September 30, 2022 | | As of December 31, 2021 | | As of September 30, 2023 | | As of December 31, 2022 |
| | $ | | $ | | $ | | $ |
| Clinical trial expenses | 2,418,057 | | | 1,973,609 | | |
| Insurance | 1,823,595 | | | 2,175,379 | | |
| Prepaid clinical trial expenses | | Prepaid clinical trial expenses | 2,812,270 | | | 4,011,419 | |
| Prepaid insurance | | Prepaid insurance | 1,390,347 | | | 1,310,314 | |
| Receivable on matured short-term investment | | Receivable on matured short-term investment | 5,000,000 | | | — | |
| Canadian harmonized sales tax receivable | Canadian harmonized sales tax receivable | 169,610 | | | 72,666 | | Canadian harmonized sales tax receivable | 206,326 | | | 60,222 | |
| Deposit on production equipment | Deposit on production equipment | 79,969 | | | 703,461 | | Deposit on production equipment | — | | | 13,738 | |
| Other | Other | 220,748 | | | 105,450 | | Other | 492,786 | | | 215,196 | |
| Total | Total | 4,711,979 | | | 5,030,565 | | Total | 9,901,729 | | | 5,610,889 | |
7. Property, plant and equipment, net
Property, plant and equipment, net consisted of the following:
| | | As of September 30, 2022 | | As of December 31, 2021 | | As of September 30, 2023 | | As of December 31, 2022 |
| | $ | | $ | | $ | | $ |
| Land and building | Land and building | 18,098,025 | | | — | | Land and building | 19,992,990 | | | 18,163,962 | |
| Machinery and equipment | | Machinery and equipment | 11,241,336 | | | 5,328,639 | |
| Property, plant and equipment, in development | Property, plant and equipment, in development | 7,292,900 | | | 16,561,032 | | Property, plant and equipment, in development | 19,827,730 | | | 8,434,384 | |
| Machinery and equipment | 4,282,756 | | | 2,132,768 | | |
Facility lease (Note 9) | | Facility lease (Note 9) | 5,384,707 | | | — | |
| Furniture and fixtures | Furniture and fixtures | 614,653 | | | 590,545 | | Furniture and fixtures | 938,909 | | | 698,728 | |
| Computer equipment | Computer equipment | 149,891 | | | 127,741 | | Computer equipment | 237,963 | | | 149,892 | |
| | 30,438,225 | | | 19,412,086 | | | 57,623,635 | | | 32,775,605 | |
| Less: Accumulated depreciation | Less: Accumulated depreciation | (980,995) | | | — | | Less: Accumulated depreciation | (3,581,282) | | | (1,395,029) | |
| Total | Total | 29,457,230 | | | 19,412,086 | | Total | 54,042,353 | | | 31,380,576 | |
OnIn July 2020, the Company purchased land and a building in Indianapolis, Indiana (which has been expanded to approximately 81,000 square feet) for the purpose of retrofitting the existing building into a state-of-the-art, Current Good Manufacturing Practices ("GMP"cGMP") compliant facility that will support the Company’s drug manufacturing operations. The purchase of the property was financed by a mortgage that was repaid on July 29, 2021 (see Note 9).
The Company commenced the manufacture of clinical supply in the Indianapolis manufacturing facility in January 2022, however, construction2022. Construction continues on the facility to expand capacity. The Company has determined this to be the date upon which its property, plant and equipment was available for its intended use.
Property, plant and equipment that have finite lives are recorded at cost less accumulated depreciation and impairment losses. Depreciation is expensed from the month the particular asset is available for its intended use, using the straight-line method over the estimated useful life of such asset at the following rates, which in each case are intended to reduce the carrying value of the asset to the estimated residual value:
| | | | | |
| Asset Category | Estimated Useful Life |
| Computer equipment | 5 years |
| Machinery and equipment | 7 years |
| Furniture and fixtures | 7 years |
| Facility lease | 7 years |
| Building | 20 years |
8. Accrued expensesliabilities
Accrued liabilities consisted of the following:
| | | | | | | | | | | |
| As of September 30, 2022 | | As of December 31, 2021 |
| $ | | $ |
| Accrued research and development costs | 7,979,788 | | | 1,142,056 | |
| Accrued personnel costs | 3,749,454 | | | 3,440,558 | |
| Accrued costs for purchases of property, plant and equipment | 778,876 | | | 648,196 | |
| Accrued corporate legal fees and other professional services | 362,352 | | | 654,945 | |
| Other accrued costs | 177,175 | | | 104,761 | |
| Total | 13,047,645 | | | 5,990,516 | |
| | | | | | | | | | | |
| As of September 30, 2023 | | As of December 31, 2022 |
| $ | | $ |
| Accrued personnel costs | 5,663,218 | | | 7,116,382 | |
| Accrued research and development costs | 7,766,189 | | | 9,645,594 | |
| Accrued corporate legal fees and other professional services | 907,019 | | | 2,068,793 | |
| Accrued costs for purchases of property, plant and equipment | 75,360 | | | 105,741 | |
| Other accrued costs | 117,568 | | | 157,944 | |
| Total | 14,529,354 | | | 19,094,454 | |
9. Mortgage payableLeases
Right-of-use assets and lease liabilities are recognized at the lease 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 current portfolio of leases, the incremental borrowing rate was used based on the information available at the commencement date in determining the present value of lease payments. The Company has not incurred any material short-term lease costs or variable lease costs associated with its finance and operating leases.
On July 10, 2020,February 2, 2023, POINT Biopharma Corp., entered into a Facility Agreement (the "UHN Agreement") with University Health Network (“UHN”), a not-for-profit corporation incorporated under the laws of Canada. Pursuant to the UHN Agreement, the Company obtainedwas provided access to utilize a mortgage loan7,700 square foot, licensed research and development space with cGMP manufacturing suites (the “Facility”), which the Company will use to develop and expand its pipeline of next-generation radioligands. The lease commencement date was determined to be April 1, 2023, the date upon which the Company was provided access to the Facility. The lease is accounted for as a finance lease in accordance with ASC 842 as one lease component for the facility, infrastructure and equipment, and the right-of-use asset has been included within property, plant and equipment. Management concluded the lease represents a finance lease on the basis that management believes the lease term covers the remaining economic life of the primary lease component. The initial term of the UHN Agreement will run for five years from the lease commencement date, with an option to renew for additional two-year terms thereafter, subject to certain conditions described in the amount of $3,562,500 (the “Mortgage”)UHN Agreement. Management included the first option to renew for the purpose of purchasing its manufacturing facility and related land located in Indianapolis, Indiana (the “Property”) (see Note 7). The Mortgage was collateralized by a first charge over the Property. Astwo years as part of the financinglease term in determining the right-of-use asset and lease liability. The UHN Agreement does not transfer any title in the Facility to the Company. During the term, the Company incurred $17,194shall be responsible for day-to-day management activities and decision-making regarding the Facility. General governance of coststhe Facility will be exercised by the Company and feesUHN through a joint committee. The joint committee, which will meet quarterly, will have a minimum of six people and will be comprised of an equal number of members from each of the Company and UHN.
On March 10, 2023, the Company entered into a lease for an approximately 103,000 square foot facility in Indianapolis (the "Indianapolis Lease"). The lease commencement date was determined to be July 1, 2023, the date upon which the Company was provided access to the facility. The initial term of the lease will run for 121 months from the lenderlease commencement date, with an option to renew for two ten-year terms thereafter, subject to certain conditions described in the Indianapolis Lease. Management did not include either option to renew as part of the lease term in determining the right-of-use asset and lease liability. Management has accounted for the lease as an operating lease as it believes that were capitalized and recorded as finance costs over the lease term does not cover a substantial portion of the economic life of the Mortgage. On July 29, 2021,primary lease component nor does the Mortgagepresent value of the minimum lease payments exceed 90% of the fair value of the facility. The lease is recorded on the manufacturing facilityinterim condensed consolidated balance sheet as an operating lease right-of-use asset with a related operating lease liability as of September 30, 2023. The agreement does not transfer any title in Indianapolis, Indianathe property to the Company.
On April 12, 2023, the Company entered into an operating lease for laboratory space with a lease term of two years. The lease commencement date was repaid anddetermined to be April 15, 2023, the related mortgagedate upon which the Company was provided access to the laboratory space. The lease is recorded on the Company's facility in Indianapolis, Indiana was released.
Prior to its repayment, the Mortgage bore interest at 2.85% plusinterim condensed consolidated balance sheet as an operating lease right-of-use asset with a minimum raterelated operating lease liability as of 1-month LIBOR, subject to a LIBOR floor of 0.25%. The Mortgage required quarterly interest payments, which commenced on October 1, 2020, with the principal amount originally due at maturity on January 10, 2022.
For the three and nine months ended September 30, 2021,2023. The agreement does not transfer any title in the Company recorded $8,590 and $63,195, respectively,laboratory space to the Company.
The components of interest costs whichlease expense are as follows:
| | | | | |
| For the nine months ended September 30, 2023 |
| Operating lease expense | $ | 303,215 | |
| |
| Finance lease cost | |
| Amortization of right-of-use asset | 384,622 | |
| Interest on lease liability | 196,027 | |
| Total finance lease cost | $ | 580,649 | |
As of September 30, 2022, there were capitalized within property,no operating or finance leases recognized in development, and recorded amortizationthe condensed consolidated financial statements.
Supplemental cash flow information related to leases is as follows:
| | | | | | | |
| For the nine months ended September 30, 2023 | | |
| Cash flow information: | | | |
| Cash paid for amounts included in the measurement of lease liabilities: | | | |
| Operating cash flow use from operating leases | $ | 167,397 | | | |
| Operating cash flow use from finance lease | $ | 196,027 | | | |
| Financing cash flow use from finance lease | $ | 285,949 | | | |
| | | |
| Non-cash activity: | | | |
| Right-of-use assets obtained in exchange for lease obligations: | | | |
| Operating leases | $ | 5,644,563 | | | |
| Finance lease | $ | 5,384,707 | | | |
The following table summarizes the weighted average remaining lease terms for the Company’s leases:
| | | | | |
| As of September 30, 2023 |
| Weighted-average remaining lease term (in years): | |
| Operating leases | 9.2 |
| Finance lease | 6.5 |
Below is information on the weighted average discount rates used at the time that the leases were commenced:
| | | | | |
| As of September 30, 2023 |
| Weighted-average discount rates: | |
| Operating leases | 7.8 | % |
| Finance lease | 7.7 | % |
The following table summarizes the future maturities of debt issuance coststhe Company's lease liabilities as of $6,178 and $11,840, respectively, through finance costs.September 30, 2023:
| | | | | | | | | | | |
| Operating Leases | | Finance Lease |
| 2023 | $ | 232,797 | | | $ | 246,755 | |
| 2024 | 689,632 | | | 987,018 | |
| 2025 | 797,739 | | | 987,018 | |
| 2026 | 746,332 | | | 987,018 | |
| 2027 | 768,722 | | | 987,018 | |
| Thereafter | 4,732,515 | | | 2,220,793 | |
| Total lease payments | $ | 7,967,737 | | | $ | 6,415,620 | |
| Less: imputed interest | (2,385,189) | | | (1,335,399) | |
| Present value of lease liabilities | $ | 5,582,548 | | | $ | 5,080,221 | |
10. Stockholders’ equity
The Company is authorized to issue 430,000,000 shares of Common Stock,common stock, with a par value of $0.0001 per share ("Common Stock"), as well as 20,000,000 of shares of preferred stock, with a par value of $0.0001 per share (“Preferred Stock”). The figures below are presented giving effect to a retroactive application
During the three months ended September 30, 2023, there were no issuances of Common Stock. During the Business Combination which resulted in a conversion ofnine months ended September 30, 2023, the previous POINT Biopharma Inc. common shares toCompany issued (i) 86,585 shares of Common Stock in connection with the exercise of stock options granted to non-employee consultants, resulting in total cash proceeds of $120,353 and (ii) 29,628 shares of Common Stock in connection with the Company at a conversion ratioexercise of approximately 3.59:1. The par valuestock options granted to employees and directors, resulting in total cash proceeds of previous POINT Biopharma Inc. common shares was $0.001. See Note 3 for additional details.$211,569.
During the three months ended September 30, 2022, the Company issued (a) issued 13,900,000 shares of Common Stock in connection with an underwritten public share offering at the price of $9.00 per share pursuant to a registration statement on Form S-3 previously filed and declared effective by the Securities and Exchange Commission, resulting in total gross proceeds of $125.1 million (excluding approximately $8.2 million of issuance costs) and (b) issued 30,000 shares of Common Stock in connection with the exercise of stock options grantedissued to a non-employee consultant, resulting in total cash proceeds of $41,700. During the nine months ended September 30, 2022, the Company issued 13,933,168 shares of Common Stock, including the 13,930,000 shares of Common Stock discussed above. The Company issuedabove, as well as 3,168 shares of Common Stock in connection with the exercise of stock options issued to non-employee consultants, resulting in total cash proceeds of $4,403.
During the three months ended September 30, 2021, there were no issuances of Common Stock. During the nine months ended September 30, 2021, the Company (a) issued 32,539,769 shares of Common Stock in connection with the Business Combination and PIPE Financing (see Note 3), resulting in total cash proceeds of $264.9 million and (b) issued 800,000 shares of common stock of POINT Biopharma Inc. (exchanged for 2,869,799 shares of Common Stock) in connection with the exercise of warrants and 18,000 shares of common stock of POINT Biopharma Inc. (exchanged for 64,570 shares of Common Stock) in connection with the exercise of stock options issued to a non-employee consultant, resulting in total cash proceeds of $20.5 million.
As of September 30, 2022,2023, the total number of total issued and outstanding shares of Common Stock was 104,054,962105,765,954 (December 31, 2021 – 90,121,794)2022 — 105,649,741). As of September 30, 2022,2023, there were no issued and outstanding shares of Preferred Stock (December 31, 20212022 — nil)$nil).
Each share of Common Stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Holders of Common stockholdersStock are entitled to receive dividends, if any, as may be declared by the Company’s board of directors.directors (the “Board”). During the three and nine months ended September 30, 2022,2023, no cash dividends were declared or paid by the Company (September 30, 20212022 — $nil).
The Company’s board of directorsBoard has the authority to issue shares of Preferred Stock from time to time on terms it may determine, to divide shares of Preferred Stock into one or more series and to fix the designations, preferences, privileges, and restrictions of Preferred Stock, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preference, sinking fund terms, and the number of shares constituting any series or the designation of any series to the fullest extent permitted by the DGCL.Delaware General Corporation Law ("DGCL"). During the nine months ended September 30, 2022,2023, no shares of Preferred Stock were issued by the Company (September 30, 2021 — nil).Company.
11. Stock-based compensation
In March 2020, the board of directors of POINT Biopharma Inc. approved the 2020 Equity Incentive Plan (the “2020 EIP”). The 2020 EIP provided for the granting of incentive and non-qualified stock options, stock appreciation rights, restricted stock units, performance awards and other stock-based awards to employees, directors, and consultants of POINT Biopharma Inc. Effective as of June 30, 2021, in connection with the Business Combination, the Company’s board of directorsBoard adopted the POINT Biopharma Global Inc. 2021 Equity Incentive Plan (the “2021 EIP”) to replace the 2020 EIP and allow the Company to grant equity and equity-based incentive awards to officers, employees, non-employee directors and consultants of the Company. Upon the closing of the Business Combination, theThe Company assumed the outstanding equity awards under the 2020 EIP, and each outstanding option to acquire common shares of POINT Biopharma Inc. (whether vested or unvested) under the 2020 EIP was substituted with a substantially equivalent option to acquire shares of Common Stock of the Company based on the conversion ratio for the POINT Biopharma Inc. common shares in the Business Combination and remained outstanding under the 2020 EIP. Nobut no further grants may be made under the 2020 EIP. The 2021 EIP provides that the
number of shares reserved and available for issuance under the 2021 EIP will automatically increase each January 1, beginning on January 1, 2022, by 4% of the number of outstanding shares of Common Stock on the immediately preceding December 31, or such lesser amount as determined by the Company's board of directors.Board. As of January 1, 2022,2023, the number of shares of Common Stock available under the 2021 EIP increased by 3,604,8714,225,990 for a total of 7,976,4529,049,548 shares of Common Stock authorized for issuance under the 2021 EIP as of September 30, 2022.2023.
The Company concluded that the replacement stockStock options issued in connection with the Business Combination did not require accounting for effects of the modification under the ASC 718 – Compensation – Stock Compensation (“ASC 718”) as it was concluded that (a) the fair value of the modified award is the same as the fair value of the original award immediately before the original award was modified, (b) there are no changes to the vesting conditions of the award, and (c) there is no change to the classification of the award.
The Company recorded $476,481$666,368 and $1,220,426$1,797,759 to research and development expenseexpenses and $602,575$1,210,064 and $1,326,643$2,798,518 to general and administrative expenses for stock-based compensation for the three and nine months ended September 30, 2022,2023, respectively (September 30, 20212022 — $222,135$476,481 and $1,650,804$1,220,426 to research and development expenseexpenses and $125,982$602,575 and $281,015$1,326,643 to general and administrative expenses for the three and nine months ended, respectively). The Company did not recognize a tax benefit related to stock-based compensation expense during the three and nine months ended September 30, 2023 as well as during the three and nine months ended September 30, 2022, as the Company had net operating lossesloss carryforwards and recorded a valuation allowance against the deferred tax asset.
The following table summarizes the activity relating to the Company’s stock options. The below stock option figures are presented giving effect to a retroactive application of
| | | | | | | | | | | | | | | | | |
| Number of
Shares | | Weighted
Average Exercise
Price Per Share
($) | | Weighted-
Average
Remaining
Contractual
Term (in years) |
| Outstanding as of December 31, 2022 | 5,592,173 | | 5.85 | | |
| Granted | 3,294,071 | | 7.09 | | |
| Exercised | (116,213) | | 2.86 | | |
| Forfeited | (176,942) | | 7.23 | | |
| Expired | (15,510) | | 8.29 | | |
| Outstanding as of September 30, 2023 | 8,577,579 | | 6.33 | | 4.4 |
| Vested and expected to vest as of September 30, 2023 | 8,577,579 | | 6.33 | | 4.4 |
| Options exercisable as of September 30, 2023 | 2,985,114 | | 5.19 | | 3.7 |
During the Business Combination which resulted in a replacement of the previous POINT Biopharma Inc.three months ended September 30, 2023, 150,000 stock options with stock optionswere granted to an employee of the Company, with a weighted average grant date fair value of $4.57 per share. During the nine months ended September 30, 2023, 3,294,071 stock options were granted, including the 150,000 stock options discussed above as described above, atwell as 3,144,071 stock options granted to employees and directors of the Company, with a conversion ratioweighted average grant date fair value of approximately 3.59:1. In addition,$3.85 per share. The vesting terms of the exercise price for each replacementoptions granted to employees of the Company are such that 25% of the options vest on the one-year anniversary of the date of grant and the remaining 75% of such stock option is also adjusted usingoptions vest in three equal annual installments thereafter. The vesting terms of the ratiooptions granted to directors of approximately 3.59:1. See Note 3 for additional details:the Company are such that they vest on the one-year anniversary of the date of grant.
| | | | | | | | | | | | | | | | | |
| Number of
Shares | | Weighted
Average Exercise
Price | | Weighted-
Average
Remaining
Contractual
Term (in years) |
| Outstanding as of December 31, 2021 | 3,825,751 | | 4.78 | | |
| Granted | 1,948,614 | | 8.01 | | |
| Exercised | (33,168) | | 1.39 | | |
| Forfeited | (49,255) | | 7.71 | | |
| Outstanding as of September 30, 2022 | 5,691,942 | | 5.88 | | 4.8 |
| Vested and expected to vest as of September 30, 2022 | 5,691,942 | | 5.88 | | 4.8 |
| Options exercisable as of September 30, 2022 | 1,767,003 | | 4.55 | | 4.7 |
During the three months ended September 30, 2022, there were no stock options granted. During the nine months ended September 30, 2022, 1,948,614 stock options were granted to employees and directors of the Company, with a weighted average grant date fair value of $4.59. The$4.59 per share. Except as provided below with respect to options granted to directors, the vesting terms of these options are such that 25% of the options vest on the one-year anniversary of the date of grant and the remaining 75% of such stock options vest ratably over the remaining in three years. equal annual installments thereafter. On June 6, 2022, the terms of 128,070 stock options granted to directors of the Company during the quarter were amended to reduce the vesting period to one year. This amendment was accounted for as a modification and there was no material impact to stock-based compensation recorded.
During the three months ended September 30, 2021, 1,004,959 stock options were granted to employees and directors of the Company, with a weighted average grant date fair value of $4.70. The vesting terms of these options are such that 25% of the options vest on the one-year anniversary of the date of grant and the remaining 75% of such stock options vest ratably over the remaining three years. During the nine months ended September 30, 2021, 1,363,683 stock options were granted, including the 1,004,959 stock options discussed above as well as 358,724 stock options granted to a non-employee consultant of the Company, with a weighted average grant date fair value of $3.89. The vesting terms of the grant to the non-employee consultant were such that 25% of the options vested immediately upon grant, 10% of the options were initially to vest in a year following the grant and the remaining options were initially to vest based on certain performance milestones. Upon completion of the Business Combination, the remaining 269,043 unvested stock options immediately vested and all remaining unrecognized stock-based compensation expense associated with these stock options was recorded.
The following table presents the assumptions used in the Black-Scholes-Merton option-pricing model to determine the grant date fair value of stock options granted:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended September 30, 2022 | | Three months ended September 30, 2021 | | Nine months ended September 30, 2022 | | Nine months ended September 30, 2021 |
| Risk-free interest rate | — | | 0.664% | | 1.24% - 3.13% | | 0.664% - 0.716% |
| Expected term (in years) | — | | 4.25 | | 4.25 | | 4.25 - 5.38 |
| Expected volatility | — | | 73% | | 72% - 75% | | 65% - 73% |
| Expected dividend yield | — | | — | | —% | | —% |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended September 30, 2023 | | Three months ended September 30, 2022 | | Nine months ended September 30, 2023 | | Nine months ended September 30, 2022 |
| Risk-free interest rate | 4.47% | | — | | 3.71% - 4.47% | | 1.24% - 3.13% |
| Expected term (in years) | 4.25 | | — | | 3.50 - 4.25 | | 4.25 |
| Expected volatility | 66% | | —% | | 66% - 68% | | 72% - 75% |
| Expected dividend yield | —% | | —% | | —% | | —% |
During the three months ended September 30, 2023, there were no stock option exercises. During the nine months ended September 30, 2023, non-employee consultants of the Company exercised 86,585 stock options with an intrinsic value of $700,217, and employees and directors of the Company exercised 29,628 stock options with an intrinsic value of $38,300, for total cash proceeds to the Company of $331,922.
During the three and nine months ended September 30, 2022, non-employee consultants of the Company exercised 30,000 and 33,168 stock options with intrinsic values of $238,300 and $257,601, respectively. The exercises resulted in cash proceeds to the Company of $41,700 and $46,103, respectively.
As of September 30, 2022,2023, the unrecognized stock-based compensation expense related to unvested stock options was $11,879,466$17,944,644 and the estimated weighted average remaining vesting period was 2.32.9 years.
Performance Share Units
During the year ended December 31, 2022, 146,044 performance share units ("PSUs") were granted to employees of the Company, with a grant date fair value of $6.61 per unit based on the closing share price of the Company's Common Stock on the date of grant. The vesting terms of these PSUs are such that 100% vest upon the regulatory approval of PNT2002 by the FDA. During the three and nine months ended September 30, 2023, the Company did not record any stock-based compensation expense related to these PSUs on the basis that they cannot be considered probable to vest as the regulatory approval requirement is outside the control of the Company and the clinical trial remains ongoing.
12. Commitments and contingencies
Indianapolis facility commitments
The Company is party to certain agreements for the continuing expansion of the manufacturing capabilities of the Indianapolis facility.facility (see Note 7). Effective in the second quarter of 2022, the Company entered into an agreement for the design and build of a commercial manufacturing line. As of September 30, 2022,2023, the Company is committed to aggregate future payments of approximately $15.2$22.5 million in connection with these agreements. During the three and nine months ended September 30, 2022,2023, approximately $3.7$5.2 million and $7.7$15.5 million, respectively, has been recorded within property, plant and equipment in connection with these agreements.
agreements (three and nine months ended September 30, 2022 — approximately $3.7 million and $7.7 million, respectively). Clinical trial and commercial commitments
The Company, in the normal course of business, enters into various services and supply agreements in connection with its clinical trials to ensure the supply of certain productproducts and product lines during the Company’s clinical phase. These agreements often have minimalminimum purchase commitments and generally terminate upon the termination of the clinical trial. Minimum purchase commitments under these agreements include individual commitments up to $1.8 million. AggregateAs at September 30, 2023, aggregate remaining minimum commitments amount to approximately $4.0$5.4 million with payments ranging from three to eight years or upon completion of the clinical trial, if earlier. The Company recorded research and development expenses in connection with its supplythese agreements of approximately $3.8$3.1 million and $8.1$14.4 million during the three and nine months ended September 30, 2022,2023, respectively (three and nine months ended September 30, 2021 – $1.12022 — $3.8 million and $2.4$8.1 million, respectively).
The Company also has supply agreements with third parties to purchase certain products for use in the Company’s full scale production process. The Company is committed to purchase a minimum quantity of productproducts in the amount of approximately $108.3$109.2 million ($147.9148.3 million CAD) over the contract term.with payments ranging from two to nine years. The purchase commitments are contingent upon the completion of certain milestones by the third-party suppliers. TheDuring the three and nine months ended September 30, 2023 and September 30, 2022, the Company recorded $nildid not record any research and $nildevelopment expenses in connection with this agreement.
On May 10, 2023, the Company entered into an Irradiation Services Agreement (the "Irradiation Agreement") which expands the Company's reactor network. Pursuant to the Irradiation Agreement, the Company will receive irradiation services to irradiate ytterbium-176 (“176Yb”) and has minimum purchase commitments of approximately $32.4 million over
the ten-year contract term. During the three and nine months ended September 30, 2023, the Company did not record any research and development expenses in connection with this agreement.
On September 25, 2023, the Company entered into a Supply Agreement (the "Supply Agreement") for the supply of carrier-free lutetium-177 (n.c.a.177Lu). The Supply Agreement has a term of ten years and has minimum purchase commitments of approximately $107.4 million (€101.8 million) subject to certain conditions in the Supply Agreement, including the successful validation of the supplier-produced 177Lu with the intended compounds. The Company recorded research and development expenses in connection with this agreement of approximately $0.2 million and $0.2 million during the three and nine months ended September 30, 2022, respectively (three and nine months ended September 30, 2021 - $nil and $nil, respectively).2023, respectively.
The Company also has an agreement with a third party to provide certain services in connection with the Company’s SPLASH clinical phase study. The agreement expires on the date of the completion or termination of the clinical trial. TheAs of September 30, 2023, the remaining minimum purchase commitment under this agreement is approximately $31.9$23.7 million with payments that range from one to sixfive years. The Company recorded research and development expenses in connection with this agreement of approximately $6.5$3.5 million and $15.4$14.6 million during the three and nine months ended September 30, 2022,2023, respectively (three and nine months ended September 30, 2021 – $3.92022 — $6.5 million and $6.9$15.4 million, respectively).
License agreements
The Company, in the normal course of business, enters into license and sublicense agreements in connection with its clinical trials and product development. For additional details ofabout the Company’s license agreements, see Note 13 in15 to the 20212022 Financial Statements.
On May 6, 2022,April 17, 2023, POINT Biopharma Inc. entered into first and second amendments (the "Amendments") to that certain Sublicense Agreement, dated November 14, 2019, between POINT Biopharma Inc. and Scintomics GmbH ("Scintomics"). Pursuant to the Amendments, the exclusive, sublicensable, license was expanded to include all geographies worldwide and the Company has increased flexibility in connection with sublicense arrangements.
On September 11, 2023, POINT Biopharma Inc. entered into a fourth amendment (the “Fourth Amendment”) to that certain Exclusive Sublicense Agreement, dated April 2, 2020,collaboration and license agreement between POINT Biopharma Inc. and Bach Biosciences, LLC, (“Bach Biosciences”Athebio AG ("Athebio") (the "Athebio Agreement"). Pursuant to the Fourth Amendment,Agreement, the Company is granted exclusive access to Athebio's intellectual property and Bach Biosciences agreed to remove all regulatory and sales milestones which would have been payable fromcapabilities in the Company to Bach Biosciences, as well as to reduce the royalty rate payable by Company to Bach Biosciences by fifty percent (one-half). In signing the Fourth Amendment, the Company agreed to pay a one-time amendment fee to Bach Biosciences of $2.0 million, and to extend the duration of the Company’s sponsored research relationship relating to the generation of new FAPi-targeting drugs with Bach Biosciences and Tufts Medical School by an additional two (2) years at the current sponsorship rate.
designed ankyrin repeat proteins ("DARPins") development. The Company recorded research and development expenses in connection to its license agreementswith this agreement of approximately $0.8 million and $5.3$1.0 million during the three and nine months ended September 30, 2022,2023. In addition, in connection with the Athebio agreement, the Company is committed to enter into a stock purchase agreement by which the Company will invest a total of $5.0 million subject to certain conditions and milestones set forth in the Athebio Agreement.
The Company recorded aggregate research and development expenses in connection with its license agreements of approximately $1.5 million and $5.0 million during the three and nine months ended September 30, 2023, respectively (three and nine months ended September 30, 2021 – $4.02022 — $0.8 million and $4.9$5.3 million, respectively).
On November 8, 2022, POINT entered into a first amendment (the “First Amendment”) to the Exclusive License and Commercialization Agreement (the “CanProbe Agreement”), dated December 16, 2020 between POINT; the Canadian Molecular Probe Consortium; the Centre for Probe Development and Commercialization; and The University Health Network, collectively the (“Parties”) pursuant to which certain amendments have been made to the Company's royalty obligations. Refer to note 16 for additional details.
On November 11, 2022, POINT entered into two License and Collaboration Agreements with affiliates of Lantheus Holdings, Inc. (NASDAQ:LNTH) ("Lantheus") pursuant to which Lantheus was granted exclusive world-wide licenses (excluding certain countries in Asia) to commercialize the Company's PNT2002 and PNT2003 late-stage product radiopharmaceutical therapies (such agreements, respectively, the “PNT2002 Agreement” and the “PNT2003 Agreement”). Refer to note 16 for additional details.
13. Net loss per share
Basic loss earnings per share is computed by dividing the loss available to common stockholders by the weighted-average number of shares of Common Stock outstanding during the period. Diluted loss per share is computed by dividing loss available to common stockholders by the weighted-average number of shares of Common Stock outstanding during the period increased to include the number of additional shares of Common Stock that would have been outstanding if the potentially dilutive securities had been issued, using the treasury stock method. The below figures are presented giving effect to a retroactive application of the Business Combination which resulted in a conversion of the previous POINT Biopharma Inc. common shares to shares of Common Stock of the Company at a conversion ratio of approximately 3.59:1. See Note 3.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended September 30, 2022 | | Three months ended September 30, 2021 | | Nine months ended September 30, 2022 | | Nine months ended September 30, 2021 |
| Net loss attributable to common stockholders | $ | 24,013,069 | | | $ | 17,116,632 | | | $ | 64,973,890 | | | $ | 31,705,711 | |
| Weighted-average common shares outstanding-basic and diluted | 92,401,484 | | | 90,121,794 | | | 90,891,031 | | | 68,317,492 | |
| Net loss per share attributable to common stockholders-basic and diluted | $ | 0.26 | | | $ | 0.19 | | | $ | 0.71 | | | $ | 0.46 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended September 30, 2023 | | Three months ended September 30, 2022 | | Nine months ended September 30, 2023 | | Nine months ended September 30, 2022 |
| Net loss | $ | 24,774,353 | | | $ | 24,013,069 | | | $ | 66,715,863 | | | $ | 64,973,890 | |
| Weighted-average common shares outstanding-basic and diluted | 105,765,954 | | | 92,401,484 | | | 105,717,330 | | | 90,891,031 | |
| Net loss per share-basic and diluted | $ | 0.23 | | | $ | 0.26 | | | $ | 0.63 | | | $ | 0.71 | |
The Company’s potentially dilutive securities, which include stock options, and warrants, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. The Company's PSU's are considered contingently issuable shares for the purpose of the computation of loss per share and have been excluded on the basis that
as of September 30, 2023, the performance condition for vesting had not been achieved. Therefore, the weighted-average number of shares of Common Stock outstanding used to calculate both basic and diluted net loss per share attributable to common stockholdersthe holders of Common Stock is the same.
14. Income Taxes
The Company calculates its interim tax provision at the end of each interim period and estimates the annual effective tax rate, which is applied to its ordinary quarterly earnings. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year, projections of the proportion of income earned and taxed in foreign jurisdictions, permanent and temporary differences between book and tax amounts, and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained or as the tax environment changes.
The Company has operations in both the United States and Canada, and as such it is subject to tax in both countries. The income tax expense for the three months ended September 30, 20222023 and September 30, 20212022 was $180,500$871,449 and $81,044$180,500, respectively and the income tax benefit and expense for the nine months ended September 30, 20222023 and September 30, 20212022 was $288,491 and $452,021, respectively. The income tax amounts for the three and $245,251 respectively, each primarilynine months ended September 30, 2023, include tax benefits related to research and development tax credits partially offset by current federal, state, and Canadian income tax adjustments. The three months ended September 30, 2023 also includes prior year current income tax adjustments in respectthe United States jurisdictions. The income tax expense for the three and nine months ended September 30, 2022, consists of current taxes in Canada. As of September 30, 2022, the Company had no uncertain tax positions (December 31, 2021 — $nil).
The Company files income tax returns in the U.S. federal, certain state,states, and Canada with varying statutes of limitations. The Company is not currently subject to tax examinations by any taxing jurisdiction. However, in the event of any such examination, of its tax years 2020 and 2021, there may or may not be an impact on the Company’s net operating loss carryforwards and credits. The Company does not anticipate that any potential tax adjustments resulting from such examinations would have a significant impact on its financial position or results of operations.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was passed into law. The CARES Act includes several significant business tax provisions including modification to the taxable income limitation for utilizationAs of net operating losses incurred in 2020 and 2021, an increase to the limitation on deductibility of certain business interest expense, bonus depreciation for purchases of qualified improvement property and special deductions on certain corporate charitable contributions. The Company analyzed the provisions of the CARES Act and determined there was no impact to its income tax provision for the three and nine months ended September 30, 2022 and 2021.2023, the Company believes no significant changes in the unrecognized tax benefits will occur within the next 12 months.
15. Related party transactions
The Company recognized expenses in connection with related party transactions in the unaudited interim condensed consolidated statements of operations as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended September 30, 2022 | | Three months ended September 30, 2021 | | Nine months ended September 30, 2022 | | Nine months ended September 30, 2021 |
| $ | | $ | | $ | | $ |
| Consulting fees on business activities to Board member | 90,040 | | | 143,668 | | | 259,132 | | | 227,546 | |
| Reimbursement to Board member for occupancy costs | 17,395 | | | 18,285 | | | 53,071 | | | 55,104 | |
| Total | 107,435 | | | 161,953�� | | | 312,203 | | | 282,650 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended September 30, 2023 | | Three months ended September 30, 2022 | | Nine months ended September 30, 2023 | | Nine months ended September 30, 2022 |
| Consulting fees on business activities to Board member | $ | 90,161 | | | $ | 90,040 | | | $ | 296,072 | | | $ | 259,132 | |
| Reimbursement to Board member for occupancy costs | 18,219 | | | 17,395 | | | 53,532 | | | 53,071 | |
| Total | $ | 108,380 | | | $ | 107,435 | | | $ | 349,604 | | | $ | 312,203 | |
Transactions with related parties are in the normal course of operations and have been measured at their agreed upon exchange amount.
During the three and nine-month periods ended September 30, 20222023 and 2021,2022, the Company received consulting services for research and development from a Board member. As of September 30, 2022, $56,5322023, $43,859 is recorded within accrued liabilities in relation to this consulting arrangement.
The Company currently has a lease arrangement in place with a Board member for the use of office space. The arrangement does not have a defined contractual lease term and is payable monthly. The Company has applied the short-term lease exemption under ASC Topic 842Leases to this arrangement and is recording the lease payments of approximately $6,000 monthly as rent expense.
16. Subsequent events
Option exercise
On October 3, 2022, POINT issued an additional 1,589,779 sharesIonetix Amendment of Common Stock at a public offering price of $9.00 per share for net proceeds to the Company of approximately $13.4 million. The additional shares were issued as a result of an underwriters exercising their option to purchase additional shares pursuant to the underwriting agreement in the underwritten public share offering in September 2022 as disclosed inConvertible Note 10 above.
License agreements
On November 8, 2022, POINT entered into the First Amendment to the CanProbe Agreement. Pursuant to the First Amendment, the Parties agreed to amend POINT’s royalty obligation under the CanProbePurchase Agreement from a direct percentage of Net Sales by Sublicensee (each as defined in the CanProbe Agreement) to now including royalty payments received by POINT from Sublicensees as part of its very low double digit sublicense income sharing obligation on all payments received from Sublicensees, subject to a minimum of a low single digit royalty based on Net Sales of the Sublicensee. In addition, the definition of products for which royalties would be owed by POINT or for which sublicense income would be shared by POINT was amended to include all Lutetium-177 Octreotate products.
On November 11, 2022, POINT entered into the PNT2002 Agreement and the PNT2003 Agreement (collectively the "Agreements") with affiliates of Lantheus pursuant to which Lantheus was granted exclusive world-wide licenses (excluding certain countries in Asia) to commercialize the Company's PNT2002 and PNT2003 late-stage product radiopharmaceutical therapies. The closings of the Agreements are conditional upon, among other things, Hart-Scott-Rodino antitrust clearance and customary closing conditions which are expected to be satisfied in the first half of 2023.
In connection with the PNT2002 Agreement, and subject to the closing conditions noted above, POINT will receive an up-front payment of $250 million and a regulatory milestone payment upon FDA approval of up to $250 million. POINT will also receive up to an additional $530 million on various Lantheus annual net sales milestones up to $600 million, plus up to an additional $750 million in payments on various Lantheus annual net sales in excess of $600 million. Once certain financial thresholds have been achieved, POINT will receive a royalty rate of 20 percent on all net sales. In the event Lantheus sub-licenses the product outside the U.S., POINT will be entitled to 40 percent of all sublicense income (i.e., up-front, milestone and royalty payments) received by Lantheus.
In addition, POINT will also be entitled to milestone payments upon European Union (“EU”), Middle East and Africa approval of $25 million for the EU, $4 million for the Middle East and $2 million for any African country.
POINT will be responsible for completing the SPLASH trial and the parties will work together to file the New Drug Application (“NDA”) with the costs incurred in connection with the U.S. Food and Drug Administration ("FDA") submission being borne by Lantheus. Thereafter, Lantheus will be responsible for all additional clinical and regulatory costs in the U.S., as well as all costs for development, clinical trials and regulatory approval in the rest of its territories outside the U.S., except Asia.
In connection with the PNT2003 Agreement, and subject to customary closing conditions, the Company will receive an up-front payment of $10 million, a regulatory milestone payment upon FDA approval of up to $30 million, net sales milestone payments of up to $275 million on various Lantheus annual net sales milestones, and a royalty rate of 15 percent of net sales. In the event Lantheus sub-licenses the product outside the U.S., POINT will be entitled to 40 percent of all sublicense income (i.e., up-front, milestone and royalty payments) received by Lantheus. Any costs incurred in connection with the FDA submission and development costs will be the responsibility of Lantheus. For any sublicensing of PNT2003, POINT is obligated to pay the original sublicensor of PNT2003 a low double digit percent royalty fee on any upfront and milestone payments and a low-single digit percent royalty fee based on such sub-licensing royalties.
On September 29, 2023, POINT Biopharma Inc. entered into the Amendment, whereby on October 2, 2023 the Company purchased an additional $5.0 million of unsecured promissory notes from Ionetix-α. In connection with the Convertible Note Agreement, this additional purchase was originally scheduled for six months from the initial purchase date of June 1, 2023. See Note 5.
Merger Agreement
As previously announced, on October 2, 2023, Eli Lilly and Company, an Indiana corporation (“Parent”), Yosemite Falls Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”). Merger Sub commenced the cash tender offer (the “Offer”) to purchase all of the outstanding shares of Common Stock (the “Shares”), at a price of $12.50 per share, net to the stockholder in cash, without interest and less any applicable withholding taxes, upon the terms and subject to the conditions set forth in the Merger Agreement. The Offer commenced on October 13, 2023 and was initially scheduled to expire at one minute after 11:59 p.m., Eastern time, on November 9, 2023. On November 8, 2023, Parent extended the expiration of the Offer until 5:00 p.m., Eastern Time, on November 16, 2023, unless further extended or earlier terminated in accordance with the terms of the Offer and the Merger Agreement and the applicable rules and regulations of the SEC.
In addition, POINT will also be entitledConsummation of the Offer is subject to milestone payments upon EU, Middle Eastthe satisfaction or waiver of various conditions set forth in the Merger Agreement, including (a) there shall have been validly tendered in the Offer (and not properly withdrawn) prior to the expiration of the Offer that number of Shares (excluding Shares tendered pursuant to guaranteed delivery procedures that have not yet been “received” by the “depository,” as such terms are defined by Section 251(h) of the DGCL) that, when added to the Shares then owned by Parent, Merger Sub or any subsidiary of Parent, would represent at least a majority of the Shares outstanding as of immediately following the consummation of the Offer, (b) the expiration or termination of the waiting period under the HSR Act, (c) the accuracy of the Company’s representations and Africa approval of $2.5 million forwarranties contained in the EU, $1 million for the Middle East and $1 millionMerger Agreement (except, generally, for any African country.
POINTinaccuracies that have not had a Company Material Adverse Effect (as defined in the Merger Agreement)), (d) the Company’s performance in all material respects of its obligations under the Merger Agreement, (e) consent by the U.S. Nuclear Regulatory Commission of the indirect transfer of control with respect to the Company and Lantheus also expect(f) the other conditions set forth in Exhibit A to enter into a Manufacturethe Merger Agreement. On October 23, 2023, Parent and Supply Agreementthe Company filed their respective Premerger Notification and Report Forms pursuant to which the HSR Act with the U.S. Federal Trade Commission (the “FTC”) and the Antitrust Division of the U.S. Department of Justice (the “Antitrust Division”), initiating a 15-day waiting period. The 15-day waiting period under the HSR Act expired on November 7, 2023 at 11:59 p.m., Eastern Time. Accordingly, the condition to the Offer relating to the expiration or termination of the waiting period under the HSR Act has been satisfied. The Company will manufacturecould be required to pay the PNT2002Parent a termination fee of approximately $54.4 million if the Merger Agreement is terminated under specific circumstances described in the Merger Agreement. The consummation of the Offer and PNT2003 licensed products.the Merger is not subject to a financing condition.For more information on the Offer and the Merger, refer to the Company's Current Report on Form 8-K filed October 3, 2023.
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited interim condensed consolidated financial statements and notes thereto for the three and nine months ended September 30, 2022 and 20212023 (the “Q3 20222023 Financial Statements”) appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and notes thereto for the periods ended December 31, 2022 and 2021 and 2020 (the “2021“2022 Financial Statements”) contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021,2022, as filed with the Securities and Exchange Commission ("SEC") on March 25, 202227, 2023 (the "2021"2022 Form 10-K"). Please also see the section entitled “Cautionary Note Regarding Forward-Looking Statements.”
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions (including the negative of any of the foregoing) may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These factors include, but are not limited to, the following:
•risks to the Company with respect to the Offer and the Merger, including: (a) uncertainties as to the timing of the Offer and the Merger, or that the closing of the proposed Merger will not occur including in circumstances which would require the Company to pay the termination fee or other expenses; (b) uncertainties as to how many of POINT’s stockholders will tender their shares in the Offer; (c) the possibility that competing offers will be made; (d) the possibility that various closing conditions for the proposed transactions may not be satisfied or waived, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the proposed transactions; (e) stockholder litigation that has or may be filed in connection with the proposed Merger, which may affect the timing or occurrence of the proposed Merger or result in significant costs of defense, indemnification and liability; (f) the effects of the proposed transactions on relationships with employees, other business partners or governmental entities; (g) unanticipated difficulties or expenditures relating to the Merger; and (h) risks related to disruption of management’s attention from the Company’s ongoing business operations due to the Merger;
•the success, cost and timing of our product development activities and clinical trials, our plans for clinical development of our product candidates and the initiation and completion of any other clinical trials and related preparatory work and the expected timing of the availability of results of the clinical trials;
•our ability to recruit and enroll suitable patients in our clinical trials;
•the potential attributes and benefits of our product candidates;
•our ability to obtain and maintain regulatory approval for our product candidates, and any related restrictions, limitations or warnings in the label of an approved product candidate;
•our ability to obtain funding for our operations, including funding necessary to complete further development, approval and, if approved, commercialization of our product candidates;
•the period over which we anticipate our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements;
•the potential for our business development efforts to maximize the potential value of our portfolio;
•our ability to identify, in-license or acquire additional product candidates;
•our ability to maintain the license agreements underlying our product candidates;
•our ability to compete with other companies currently marketing or engaged in the development of treatments for the indications that we are pursuing for our product candidates;
•our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidates and the duration of such protection;
•our ability to contract with and rely on third parties to assist in conducting our clinical trials and manufacture our product candidates;
•the development and expansion of our own manufacturing facility in Indianapolis, Indiana and the ability of this facility to provide adequate production capacity to meet future clinical and commercial demands for our product candidates;
•the size and growth potential of the markets for our product candidates, and our ability to serve those markets, either alone or in partnership with others;
•the rate and degree of market acceptance of our product candidates, if approved;
•the pricing and reimbursement of our product candidates, if approved;
•regulatory developments in the United States and foreign countries;
•the impact of laws and regulations;
•our ability to attract and retain key scientific, medical, commercial or management personnel;
•our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
•our financial performance;
•the ability to recognize the anticipated benefits of the Business Combination, as defined below, which may be affected by, among other things, competition and our ability to grow and manage growth profitably;
•our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
•the level of activity in the trading market for our common stock, par value $0.0001 per share ("Common StockStock") and the volatility of the market price of our Common Stock;
•the effect of the COVID-19 coronavirus (“COVID-19”) pandemic, andthe Russo-Ukrainian conflict, Taiwan and China tensions, Israel-Palestine conflict and/or bank failures on the foregoing; and
•other factors detailed under the section entitled “Risk Factors” in the 20212022 Form 10-K.
These forward-looking statements are based on current expectations and beliefs concerning future developments and their potential effects. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” in the 20212022 Form 10-K. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Some of these risks and uncertainties may in the future be amplified by the COVID-19 outbreak, the Russo-Ukrainian conflict, the Israel-Palestine conflict and/or adverse developments affecting the financial services industry and there may be additional risks that we consider immaterial or which are unknown. It is not possible to predict or identify all such risks. Readers are cautioned not to place undue reliance on forward-looking statements because of the risks and uncertainties related to them and to the risk factors. We do not undertake any obligation to update or revise any forward-looking statements, which speak only as of the date made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Overview
Introduction
We are a globally focused radiopharmaceutical company building a platform for the clinical development and commercialization of radioligands that fight cancer. We have a pipeline of product candidates and early-stage development programs, in-house manufacturing capabilities, and a secured supply for rare medical isotopes like Actinium-225actinium-225 ("225Ac") and Lutetium-177lutetium-177 ("177Lu").
Our team brings decades of combined experience in radiopharmaceuticalradioligand clinical development and manufacturing. In a space where supply chainmanufacturing is often overlooked, the Company has carved outunique capabilities. In addition to our Center of Radioligand Excellence (CORE), a unique advantage for itself: a 100% Company-owned facility, locatedcommercial-scale radioligand production campus in Indianapolis, Indiana, which includes an office space occupying 10,500 square feet andwe also operate the POINT Institute for Radioligand Innovation (PIRI) in Toronto, Ontario, a manufacturing facility occupying 70,200 square feet, and which we believe hasstate of the capacity for expansionart Current Good Manufacturing Practices ("cGMP") R&D center focused on bringing novel programs from discovery to commercially supply both North America and Europe with large volumes.the clinic. Furthermore, management has leveraged their prior relationships to assemble resilient radioisotope supply chains, for the Company, which even includes manufacturing the Company'sprocessing our own n.c.a.no-carrier-added ("n.c.a") 177Lu isotope in-house.
Our predecessor was incorporated on September 18, 2019 as POINT Theranostics Inc. under the DGCL and subsequently amended its name to “POINT Biopharma Inc.” on November 22, 2019. Subsequent to the Business Combination, POINT Biopharma Inc. became a wholly-owned subsidiary of POINT Biopharma Global Inc. (together with its consolidated subsidiaries, “POINT” or the “Company”)pursuant to a merger on June 30, 2021.
Business CombinationMerger Agreement
On June 30, 2021, we consummated
As previously announced, on October 2, 2023, Parent, Merger Sub, and the Business Combination with POINT Biopharma Inc., pursuantCompany entered into the Merger Agreement. Merger Sub commenced the Offer to purchase all of the Shares, at the Offer Price, net to the terms of the Business Combination Agreement, dated as of March 15, 2021, bystockholder in cash, without interest and among Therapeutics Acquisition Corp. ("RACA"), Bodhi Merger Sub, Inc., a Delaware corporationless any applicable withholding taxes and wholly-owned subsidiary of RACA ("Merger Sub"), and POINT Biopharma Inc. Pursuant to the Business Combination Agreement, on the closing date, (i) Merger Sub merged with and into POINT Biopharma Inc., with POINT Biopharma Inc. as the surviving company in the Business Combination as a wholly-owned subsidiary of RACA and (ii) RACA changed its name to “POINT Biopharma Global Inc.”
In accordance withterms, upon the terms and subject to the conditions set forth in the Merger Agreement. The Offer commenced on October 13, 2023 and was initially scheduled to expire at one minute after 11:59 p.m., Eastern time, on November 9, 2023. On November 8, 2023, Parent extended the expiration of the Business Combination Agreement, atOffer until 5:00 pm, Eastern Time, on November 16, 2023, unless further extended or earlier terminated in accordance with the effective timeterms of the Business Combination, (i) each shareOffer and vested equity award of POINT Biopharma Inc. outstanding as of immediately prior to the effective time was exchanged for sharesMerger Agreement and the applicable rules and regulations of the Common Stock of POINT or comparable vested equity awards that are exercisable for shares of Common Stock, as applicable, based on an implied POINT Biopharma Inc. vested equity value of $585.0 million (which results in a conversion ratio of approximately 3.59:1); (ii) all unvested equity awards ofSEC.
POINT Biopharma Inc. were exchanged for comparable unvested equity awards that are exercisable for sharesConsummation of Common Stock, determined based on the same exchange ratio at whichOffer is subject to the vested equity awards were exchanged for sharessatisfaction or waiver of Common Stock; and (iii) each share of Class A Common Stock of RACA and each share of Class B common stock, par value $0.0001 per share, of RACA that was issued and outstanding immediatelyvarious conditions set forth in the Merger Agreement, including (a) there shall have been validly tendered in the Offer (and not properly withdrawn) prior to the effective time became one shareexpiration of Common Stockthe Offer that number of Shares (excluding Shares tendered pursuant to guaranteed delivery procedures that have not yet been “received” by the “depository,” as such terms are defined by Section 251(h) of the DGCL) that, when added to the Shares then owned by Parent, Merger Sub or any subsidiary of Parent, would represent at least a majority of the Shares outstanding as of immediately following the consummation of the Business Combination.
In addition, concurrentlyOffer, (b) the expiration or termination of the waiting period under the HSR Act, (c) the accuracy of the Company’s representations and warranties contained in the Merger Agreement (except, generally, for any inaccuracies that have not had a Company Material Adverse Effect (as defined in the Merger Agreement)), (d) the Company’s performance in all material respects of its obligations under the Merger Agreement, (e) consent by the U.S. Nuclear Regulatory Commission of the indirect transfer of control with respect to the Company and (f) the other conditions set forth in Exhibit A to the Merger Agreement. The consummation of the Offer and the Merger is not subject to a financing condition. On October 23, 2023, Parent and the Company filed their respective Premerger Notification and Report Forms pursuant to the HSR Act with the executionFTC and the Antitrust Division, initiating a 15-day waiting period. The 15-day waiting period under the HSR Act expired on November 7, 2023 at 11:59 p.m., Eastern time. Accordingly, the condition to the Offer relating to the expiration or termination of the Business Combination Agreement,waiting period under the HSR Act has been satisfied. For more information on March 15, 2021, RACA entered into Subscription Agreements with certain investors (the "PIPE Investors"), pursuant to which the PIPE Investors agreed to subscribe forOffer and purchase, and RACA agreed to issue and sellthe Merger, refer to the PIPE Investors, an aggregate of 16,500,000 shares of Class A Common Stock at a price of $10.00 per share, for aggregate gross proceeds of $165.0 million (the "PIPE Financing"). The PIPE Financing was consummated concurrently with the closing of the Business Combination. We received net proceeds of approximately $260.0 million consisting of proceeds of the PIPE Financing and the proceeds remaining in RACA’s trust account. Transaction costs of approximately $27.0 million consisted of investment banker, legal, audit, tax, accounting, consulting, insurance, board retainer fees and listing fees.
Recent Developments
License agreements
On November 11, 2022, POINT entered into two License and Collaboration Agreements with affiliates of Lantheus Holdings, Inc. (NASDAQ:LNTH) ("Lantheus") pursuant to which Lantheus was granted exclusive world-wide licenses (excluding certain countries in Asia) to commercialize the Company's PNT2002 and PNT2003 late-stage product radiopharmaceutical therapies (such agreements, respectively, the “PNT2002 Agreement” and the “PNT2003 Agreement” and collectively, the “Agreements”). The closings of the Agreements are conditional upon, among other things, Hart-Scott-Rodino antitrust clearance and customary closing conditions which are expected to be satisfied in the first half ofCurrent Report on Form 8-K filed October 3, 2023.
In connection with the PNT2002 Agreement, and subject to the closing conditions noted above, POINT will receive an up-front payment of $250 million and a regulatory milestone payment upon FDA approval of up to $250 million. POINT will also receive up to an additional $530 million on various Lantheus annual net sales milestones up to $600 million, plus up to an additional $750 million in payments on various Lantheus annual net sales in excess of $600 million. Once certain financial thresholds have been achieved, POINT will receive a royalty rate of 20 percent on all net sales. In the event Lantheus sub-licenses the product outside the U.S., POINT will be entitled to 40 percent of all sublicense income (i.e., up-front, milestone and royalty payments) received by Lantheus.
In addition, POINT will also be entitled to milestone payments upon European Union (“EU”), Middle East and Africa approval of $25 million for the EU, $4 million for the Middle East and $2 million for any African country.
POINT will be responsible for completing the SPLASH trial and the parties will work together to file the New Drug Application (“NDA”) with the costs incurred in connection with the U.S. Food and Drug Administration ("FDA") submission being borne by Lantheus. Thereafter, Lantheus will be responsible for all additional clinical and regulatory costs in the U.S., as well as all costs for development, clinical trials and regulatory approval in the rest of its territories outside the U.S., except Asia.
In connection with the PNT2003 Agreement, and subject to customary closing conditions, the Company will receive an up-front payment of $10 million, a regulatory milestone payment upon FDA approval of up to $30 million, net sales milestone payments of up to $275 million on various Lantheus annual net sales milestones, and a royalty rate of 15 percent of net sales. In the event Lantheus sub-licenses the product outside the U.S., POINT will be entitled to 40 percent of all sublicense income (i.e., up-front, milestone and royalty payments) received by Lantheus. Any costs incurred in connection with the FDA submission and development costs will be the responsibility of Lantheus. For any sublicensing of PNT2003, POINT is obligated to pay the original sublicensor of PNT2003 a low double digit percent royalty fee on any upfront and milestone payments and a low-single digit percent royalty fee based on such sub-licensing royalties.
In addition, POINT will also be entitled to milestone payments upon EU, Middle East and Africa approval of $2.5 million for the EU, $1 million for the Middle East and $1 million for any African country.
POINT and Lantheus also expect to enter into a Manufacture and Supply Agreement pursuant to which the Company will manufacture the PNT2002 and PNT2003 licensed products.
PNT2002: 177Lu-based PSMA-targeted radiopharmaceutical
In September 2022, the Company published a poster at ESMO Congress 2022 containing efficacy and safety data from the 27-patient safety and dosimetry lead-in cohort for the Company’sEnrollment in PNT2002's phase 3 SPLASH trial (NCT04647526) evaluating PNT2002 for the treatment of metastatic castration-resistant prostate cancer (mCRPC). The poster was titled “Efficacyis complete and Safety of 177Lu-PNT2002 prostate-specific membrane antigen (PSMA) Therapy in Metastatic Castration Resistant Prostate Cancer (mCRPC): Initial Results from SPLASH” (e-Poster #1400P). Key findings include a median rPFS time of 11.5 months, along with a well-tolerated safety profile with no treatment-related deaths and few treatment-related adverse events of grade 3 or higher.
The SPLASH trial is currently enrolling patients across 55 sites in North America, Europe, and United Kingdom, and recruitmenttopline data is expected to be completed byin the endfourth quarter of the calendar year. The Company continues to expect to report top line data from SPLASH in mid-2023.2023.
PNT2004: Ffibroblastibroblast activation protein-alpha (FAP-alpha) inhibitor
The PNT2004 program leverages the D-ala-boroPro FAP targeting warhead, which is a potent and selective FAP inhibitor. PNT6555 is the current clinical lead in the PNT2004 program.
The phase 1 FRONTIER trial (NCT05432193) for the Company’s pan-cancer fibroblast activation protein-α (FAP-α) targeted program, PNT2004, commenced in July 2022. FRONTIER is evaluating PNT6555 (the lead candidate of PNT2004) in approximately 30 patients in five FAP-avid cancer indications: colorectal, pancreatic, esophageal, melanoma, and soft tissue sarcomas. A gallium-68 (utilizing 68Ga)-based PNT6555 molecular imaging agent is being used to select patients for the study, those selected then receive a no-carrier-added (n.c.a.) lutetium-177 (Ga/177Lu)-basedLu-labelled PNT6555 therapeutic agent.closed enrollment after the dosing of cohort 3 (12 GBq) in October. There are no plans for expansion of the third cohort, and there were no dose limiting toxicities. Analysis of the dosimetry and clinical data from the FRONTIER trial is underway and includes pancreatic ductal adenocarcinoma, colorectal cancer, cholangiocarcinoma, and esophageal cancer subjects.
The primary objectivePresentation of data from the FRONTIER study is anticipated in the first half of 2024, and based on initial promising data we expect to determineadvance at least one 2nd-generation D-ala-boroPro-based lead into the recommended phase 2 dose (RP2D), as guided by a modified toxicity probability interval-2 design. Phase 1 data from FRONTIER is expected in H1 2024.clinic next year.
PNT2001: 225Ac-labelled next-generation PSMA-targeted radiopharmaceutical
In October 2022, POINT published promising new pre-clinical data fromFor the Company’s next-generation radioligand therapy (RLT)phase 1 portion of ACCEL, the first-in-human phase 1/2 clinical trial for PNT2001's actinium-225 program, for prostate cancer, PNT2001. The new PNT2001 data were shared in E-poster #039, “Development and characterization of a next-generation 225Ac-PMSA radioligand,” at the 35th Annual Congress of the European Association of Nuclear Medicine (EANM) in Barcelona, Spain. The Company is targeting an IND/CTA submission for PNT2001 in H1 2023, withwe expect the first patient expected for a phase 1 clinicaldosed in this trial by EOY 2023.to be in the first quarter of 2024. The trial was designed to enable the parallel exploration of PNT2001 in two populations: patients with later-stage mCRPC and patients with earlier-stage BCR or PSMA-positive oligorecurrent disease.
CorporateManufacturing & Supply Chain Updates
In July 2023, we announced an expanded agreement with ITM Isotope Technologies Munich SE (ITM), which broadens the supply of ITM’s no-carrier-added lutetium-177 (n.c.a. 177Lu) to POINT to enable its usage in the clinical and potential future commercial development of the 177Lu-based molecules in POINT’s development pipeline.
In September 2023, we signed a supply agreement with Eckert & Ziegler AG for no-carrier-added lutetium-177 (n.c.a. 177Lu).
Discovery Updates
In September 2022,2023, we announced a collaboration and license agreement to develop and commercialize DARPin-targeted radioligands (“Radio-DARPins”). The collaboration gives POINT exclusive access to Athebio’s intellectual property and capabilities in DARPin development in the Company closed a previously announced underwritten public offeringradioligand therapy field. Together, the parties will collaborate in discovery, candidate selection and preclinical development of 13,900,000 sharesAthebody® DARPins for use as Radio-DARPin drug entities. POINT
will be solely responsible for the clinical development and commercialization of $9.00 per share. Subsequent to closing, the underwriter exercised its option to purchase an additional 1,589,779 shares. The gross proceeds to the CompanyRadio-DARPins translated from the offering, before deducting underwriting discounts and commissions and other estimated offering expenses, were approximately $140 million.discovery collaboration.
Risks & Liquidity
Drug research and development is very expensive and involves a high degree of risk. Only a small number of research and development programs result in the commercialization of a product. We will not generate revenue from product sales unless and until we successfully complete clinical development andof, are able to obtain regulatory approval for and successfully commercialize, the product candidates we are currently developing or may develop. We currently do not have any product candidates approved for commercial sale.
Our product candidates, currently under development or that we may develop, will require significant additional research and development efforts, including extensive clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance and reporting capabilities. There can be no assurance that our research and development activities will be successfully completed, that adequate protection for our licensed or developed technology will be obtained and maintained, that products developed will obtain necessary regulatory approval or that any approved products will be commercially viable.
If we obtain regulatory approval for one or more of our product candidates, we expect to incur significant expenses related to developing our commercialization capabilities to support product sales, marketing, and distribution activities, either alone or in collaboration with others. Further, as a public company followingPrior to the Business Combination, we have incurred and expect to continue incurring additional costs associated with operating as a public company. As a result, we will require substantial additional funding to support our continuing operations and pursue our growth strategy.
We haveLantheus License Agreements, the Company had incurred significant net losses since our inception and have relied on the ability to fundhad funded operations primarily through equity financings. We expect to continue to incur significant operatingOperating losses and net losses, as well as negative cash flows from operations, forwere incurred during the foreseeable future as we continuethree and nine months ended September 30, 2023 and are expected to complete clinical trials for our products and prepare for potential future regulatory approvals and commercialization of our products, if approved. We have not generated any revenue to date and do not expect to generate product revenue unless and until we successfully complete development and obtain regulatory approval for at least one of our product candidates.be incurred in the future.
OnIn September 16, 2022, we issued 13,900,000 shares of Common Stock in connection withPOINT closed a previously announced underwritten public share offering at the price of $9.00 per share, resulting in net proceeds of approximately $117.3 million (excluding $0.4 million of issuance costs incurred in connection with filing the S-3, as defined below) and on October 3, 2022, we issued an additional 1,589,77915,500,000 shares of Common Stock at a public offering price of $9.00 per share for net(the "2022 Public Offering"). The gross proceeds to the Company offrom the 2022 Public Offering, before deducting underwriting discounts and commissions and other estimated offering expenses, were approximately $13.4 million as a result of an underwriters exercising their option to purchase additional shares pursuant to the underwriting agreement.
$140.0 million. We believe that the net proceeds from the 2022 Public Offering and the Lantheus License Agreements, together with our available resources and existing cash, cash equivalents and investments, which include the net proceeds from the Business Combination, PIPE Financing and recent issuance of Common Stock, are sufficient to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2024.2026.
As losses continue to be incurred, weWe are subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, successful discovery and development of our product candidates, development by competitors of new technological innovations, dependence on key personnel, the ability to attract and retain qualified employees, protection of proprietary technology, compliance with governmental regulations, the impact of macroeconomic disruptions, such as those arising from the COVID-19, pandemic and the Russo-Ukrainian conflict, the ability to secure additional capital to fund operations and commercial success of our product candidates. Product candidates currently under development will require extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel, and infrastructure and extensive compliance-reporting capabilities. Even if our drug development efforts are successful, it is uncertain when, if ever, we will realize significant revenue from product sales.
We anticipate that our expenses will increase significantly in connection with our ongoing activities, as we:
•advance our clinical-stage product candidates:candidates 177Lu-PNT2003Lu-PNT2002 and 177Lu-PNT2002Lu-PNT6555 through clinical development;
•advance our preclinical stagepreclinical-stage product candidates:candidate 177225Lu-PNT2004, 177Lu-PNT2001,Ac-PSMA-62, along with candidates developed with our CanSEEKTM Prodrug Platform, into clinical development;
•seek to identify, acquire, and develop additional product candidates, including through business development efforts to invest in or in-license other technologies or product candidates;
•hire additional clinical, quality control, medical, scientific, and other technical personnel to support our clinical operations;
•expand our operational, financial and management systems and increase personnel to support our operations;
•meet the requirements and demands of being a public company;
•maintain, expand, and protect our intellectual property portfolio;
•make milestone, royalty, or other payments due under various in-license or collaboration agreements;
•seek regulatory approvals for any product candidates that successfully complete clinical trials; and
•undertake any pre-commercialization activities to establish sales, marketing, and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products on our own or jointly with third parties.
The Company also has a number of risks and uncertainties related to the Offer and Merger described under “- Merger Agreement” above. These risks and uncertainties are described in more detail in Part II.Item 1A. “Risk Factors” starting on page 34.
COVID-19 Pandemic, macroeconomic and other geopolitical events
The COVID-19 pandemic, which was declared byCompany is currently operating in a period of significant economic uncertainty, resulting from, among other things, the World Health Organization as a pandemic in March 2020 and has since spread worldwide, has caused many governments to implement measures to slow the spread of the outbreak through quarantines, travel restrictions, heightened border security and other measures. COVID-19 continues to have an impact on the global economy as well as businesses and capital markets around the world. The future progression of the pandemic and its effects on our business and operations are uncertain.
In response to public health directives and orders and to help minimize the risk of the virus to employees, we have taken precautionary measures, including implementing work-from-home policies, mandatory vaccination, masking and weekly testing for certain employees. The impact of the virus, including work-from-home policies, may negatively impact
productivity, disrupt our business, and delay our preclinical research and clinical trial activities and our development program timelines,COVID-19 pandemic, geopolitical tensions, such as the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course. Specifically, we may not be able to fulfill enrollment expectations on our planned timeline or visit clinics to conduct on-site monitoring due to disruptions at our clinical trial sites. We are currently unable to predict when potential disruptions to our clinical programs resulting from the pandemic will resolve. Other impacts to our business may include temporary closures of our suppliers and disruptions or restrictions on our employees’ ability to travel. Any prolonged material disruption to our employees or suppliers could adversely impact our preclinical research and clinical trial activities, financial condition and results of operations, including our ability to obtain financing.
Additionally, financial markets may be adversely affected by the current or anticipated impact ofongoing military conflict including escalating military fighting between Russia and Ukraine, terrorism or other geopolitical events. The U.S.the Israel-Palestine conflict and heightened tensions between China and Taiwan, trade uncertainty, including changes in tariffs, sanctions, international treaties, and other nations in response to the Russo-Ukrainian conflict have announced economic sanctions which may have an adverse effect on the global financial markets. Further, general macroeconomic trends, includingtrade restrictions, rising inflation and interest rates, sustained supply chain disruptions, and any resulting recession, depression or other sustained adverse market event could materiallyuncertainty and adversely affect our business,liquidity concerns in the broader financial condition, results of operations and the value of our Common Stock.services industry, including those caused by certain recent banking failures.
We are monitoringcontinuing to monitor the continuing impact of the COVID-19 pandemicdevelopment and the potential impact of the Russo-Ukrainian conflictthese global economic and other macroeconomicgeopolitical events on our business and consolidated financial statements.results. To date, we have not experienced any material business disruptions or incurred any impairment losses in the carrying values of our assets as a result of these events and we are not aware of any specific related event or circumstance that would require us to revise our estimates reflected in the Q3 20222023 Financial Statements. However, estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgment; as a result, our estimates may change as new events occur and additional information is obtained.
Components of Operating Results
See Item 7.7 “Management's Discussion and Analysis of Financial Condition and Results of Operations - Components of Operating Results” in our 20212022 Form 10-K, for a discussion of the nature of our operating expense line items within our accompanying Condensed Consolidated Statementsunaudited interim condensed consolidated statements of Operations.operations.
Results of Operations - Three Months Ended September 30
The following table summarizes our results of operations for the three months ended September 30, 20222023 and 2021:2022:
| | | For the three
months
ended
September 30,
2022 | | For the three
months
ended
September 30,
2021 | | Change | | For the three
months ended
September 30, 2023 | | For the three
months ended
September 30, 2022 | | Change |
| (In U.S. dollars) | (In U.S. dollars) | $ | | $ | | $ | | % | (In U.S. dollars) | $ | | $ | | $ | | % |
| Revenue | | Revenue | | | | | |
| Service revenue | | Service revenue | 2,789,993 | | | — | | | 2,789,993 | | | 100.0 | % |
| Total revenue | | Total revenue | 2,789,993 | | | — | | | 2,789,993 | | | 100.0 | % |
| Operating expenses: | Operating expenses: | | | | | | | | Operating expenses: | | | | | | | |
| Research and development | Research and development | 20,797,406 | | | 13,004,649 | | | 7,792,757 | | | 59.9 | % | Research and development | 26,910,286 | | | 20,797,406 | | | 6,112,880 | | | 29.4 | % |
| General and administrative | General and administrative | 3,839,626 | | | 4,026,666 | | | (187,040) | | | (4.6) | % | General and administrative | 5,505,869 | | | 3,839,626 | | | 1,666,243 | | | 43.4 | % |
| Total operating expenses | Total operating expenses | 24,637,032 | | | 17,031,315 | | | 7,605,717 | | | 44.7 | % | Total operating expenses | 32,416,155 | | | 24,637,032 | | | 7,779,123 | | | 31.6 | % |
| Loss from operations | Loss from operations | (24,637,032) | | | (17,031,315) | | | (7,605,717) | | | 44.7 | % | Loss from operations | (29,626,162) | | | (24,637,032) | | | (4,989,130) | | | 20.3 | % |
| Other income (expenses): | Other income (expenses): | | Other income (expenses): | |
| Finance income (costs) | 1,048,254 | | | (6,178) | | | 1,054,432 | | | (17,067.5) | % | |
| Foreign currency loss (gain) | (243,791) | | | 1,905 | | | (245,696) | | | (12,897.4) | % | |
| Investment income | | Investment income | 5,617,736 | | | 1,048,254 | | | 4,569,482 | | | 435.9 | % |
| Foreign currency gain (loss) | | Foreign currency gain (loss) | 105,522 | | | (243,791) | | | 349,313 | | | (143.3) | % |
| Total other income (expenses) | Total other income (expenses) | 804,463 | | | (4,273) | | | 808,736 | | | (18,926.7) | % | Total other income (expenses) | 5,723,258 | | | 804,463 | | | 4,918,795 | | | 611.4 | % |
| Loss before provision for income taxes | (23,832,569) | | | (17,035,588) | | | (6,796,981) | | | 39.9 | % | |
| Provision for income taxes | (180,500) | | | (81,044) | | | (99,456) | | | 122.7 | % | |
| Loss before income taxes | | Loss before income taxes | (23,902,904) | | | (23,832,569) | | | (70,335) | | | 0.3 | % |
| Income tax provision | | Income tax provision | (871,449) | | | (180,500) | | | (690,949) | | | (382.8) | % |
| Net loss | Net loss | (24,013,069) | | | (17,116,632) | | | (6,896,437) | | | 40.3 | % | Net loss | (24,774,353) | | | (24,013,069) | | | (761,284) | | | 3.2 | % |
Service Revenue
Research and Development
The following table summarizes the components of research and development expenseexpenses for the three months ended September 30, 20222023 and 2021:2022:
| | | For the three
months
ended
September 30,
2022 | | For the three
months
ended
September 30,
2021 | | Change | | For the three
months ended
September 30, 2023 | | For the three
months ended
September 30, 2022 | | Change |
| (In U.S. dollars) | (In U.S. dollars) | $ | | $ | | $ | | % | (In U.S. dollars) | $ | | $ | | $ | | % |
| Clinical trials | Clinical trials | 9,956,461 | | | 4,399,327 | | | 5,557,134 | | | 126.3 | % | Clinical trials | 6,314,574 | | | 9,956,461 | | | (3,641,887) | | | (36.6) | % |
| Salaries and benefits | Salaries and benefits | 5,033,778 | | | 2,135,742 | | | 2,898,036 | | | 135.7 | % | Salaries and benefits | 8,186,525 | | | 5,033,778 | | | 3,152,747 | | | 62.6 | % |
| Contract manufacturing | Contract manufacturing | 3,579,255 | | | 2,400,794 | | | 1,178,461 | | | 49.1 | % | Contract manufacturing | 7,150,118 | | | 3,579,255 | | | 3,570,863 | | | 99.8 | % |
| Depreciation and overhead | Depreciation and overhead | 1,364,368 | | | — | | | 1,364,368 | | | 100.0 | % | Depreciation and overhead | 3,505,030 | | | 1,364,368 | | | 2,140,662 | | | 156.9 | % |
| Sponsored research & product licenses | Sponsored research & product licenses | 750,000 | | | 3,950,000 | | | (3,200,000) | | | (81.0) | % | Sponsored research & product licenses | 1,500,000 | | | 750,000 | | | 750,000 | | | 100.0 | % |
| Regulatory consulting | Regulatory consulting | 113,544 | | | 118,786 | | | (5,242) | | | (4.4) | % | Regulatory consulting | 254,039 | | | 113,544 | | | 140,495 | | | 123.7 | % |
| Total | Total | 20,797,406 | | | 13,004,649 | | | 7,792,757 | | | 59.9 | % | Total | 26,910,286 | | | 20,797,406 | | | 6,112,880 | | | 29.4 | % |
For the three months ended September 30, 20222023, as compared to the three months ended September 30, 2021,2022, the increase in research and development expenseexpenses was primarily due to increases in (a) costs incurred in clinical trials and contract manufacturing as we continue to increase the scale of our trials and operations, (b) personnel costs as the Company continues to expand its research and development headcount, most notably in our Indianapolis manufacturing facility and the PIRI, (b) costs incurred for contract manufacturing across all of our programs, (c) depreciation and overhead primarily related to our Indianapolis manufacturing facility. This was partially offset by decreased costs associated withfacility and (d) our licensing agreements and related sponsored research in connection with our product candidates both preclinical and clinical which required up-front paymentsincluding an incremental $1 million incurred in connection with the Athebio Agreement. This was partially offset by decreased clinical trial costs as our phase SPLASH trial costs have started to decline as we prepare to provide top line data in the prior year period. Althoughfourth quarter of 2023. For the three months ended September 30, 2023, the Company doesincurred approximately $8.2 million and $0.5 million of direct costs associated with its PNT2002 and PNT2003 programs, respectively. These figures exclude amounts for salaries and benefits, depreciation and overhead costs which are not currently track its research and development expendituresallocated by product, it intends to begin tracking such expenditures by product in the near future.program.
General and administrative
General and administrative expenses were relatively flatincreased for the three months ended September 30, 20222023, as compared to the three months ended September 30, 2021,2022, primarily in connection with increased headcount and personnel costs compared to the prior year period as the Company incurred certainwell as increased legal, consulting and professional fees inas the prior year period in connection with the having become a publicly traded company.scale of our operations continues to increase.
Other Income (Expenses)
For the three months ended September 30, 2023 and 2022, other income (expenses) consist mainly of (a) interest and other income earned on the Company's cash, cash equivalents and investments partially offset byand (b) a foreign exchange lossgains and losses primarily associated with foreign currency transactions occurring within the Company’s Canadian subsidiary. ForThe increase in interest and other income in the three months ended September 30, 2021, other expenses mainly consisted of accretion expense related tocurrent period reflects the amortization of capitalized transaction costsincrease in short and long-term investments primarily in connection with our previous mortgage payable which was partially offset by a foreign exchange gain associatedcash received in connection with foreign currency transactions primarily occurring withinequity financings and the Company’s Canadian subsidiary.Lantheus License Agreements.
Income Tax ExpenseProvision
For the three months ended September 30, 2022 and 2021,2023, the increase in the income tax expense consistedprovision consists primarily of a) prior year current income tax adjustments in connection with the application of emerging guidance surrounding the section 174 rules around the capitalization of research and development expenses and b) taxes owing in Canada in relation to taxable income generated through management and research and development services performed by the Canadian subsidiary of the Company. This is partially offset by estimated research and development tax credits available for carryback.
Results of Operations - Nine Months Ended September 30
The following table summarizes our results of operations for the nine months ended September 30, 2023 and 2022:
| | | | | | | | | | | | | | | | | | | | | | | |
| For the nine
months ended
September 30, 2023 | | For the nine
months ended
September 30, 2022 | | Change |
| (In U.S. dollars) | $ | | $ | | $ | | % |
| Revenue | | | | | | | |
| Service revenue | 17,113,113 | | | — | | | 17,113,113 | | | 100.0 | % |
| Total revenue | 17,113,113 | | | — | | | 17,113,113 | | | 100.0 | % |
| Operating expenses: | | | | | | | |
| Research and development | 85,097,331 | | | 54,112,136 | | | 30,985,195 | | | 57.3 | % |
| General and administrative | 15,604,401 | | | 11,727,969 | | | 3,876,432 | | | 33.1 | % |
| Total operating expenses | 100,701,732 | | | 65,840,105 | | | 34,861,627 | | | 52.9 | % |
| Loss from operations | (83,588,619) | | | (65,840,105) | | | (17,748,514) | | | 27.0 | % |
| Other income (expenses): | | | | | | | |
| Investment income | 16,717,703 | | | 1,605,927 | | | 15,111,776 | | | 941.0 | % |
| Foreign currency loss | (133,438) | | | (287,691) | | | 154,253 | | | (53.6) | % |
| Total other income (expenses) | 16,584,265 | | | 1,318,236 | | | 15,266,029 | | | 1,158.1 | % |
| Loss before income taxes | (67,004,354) | | | (64,521,869) | | | (2,482,485) | | | 3.8 | % |
| Income tax benefit (provision) | 288,491 | | | (452,021) | | | 740,512 | | | 163.8 | % |
| Net loss | (66,715,863) | | | (64,973,890) | | | (1,741,973) | | | 2.7 | % |
Service Revenue
The Company recognized $17.1 million in revenue for services performed in connection with the Lantheus License Agreements for the nine months ended September 30, 2023 (nine months ended September 30, 2022 and 2021:
| | | | | | | | | | | | | | | | | | | | | | | |
| For the nine
months
ended
September 30,
2022 | | For the nine
months
ended
September 30,
2021 | | Change |
| (In U.S. dollars) | $ | | $ | | $ | | % |
| Operating expenses: | | | | | | | |
| Research and development | 54,112,136 | | | 23,974,809 | | | 30,137,327 | | | 125.7 | % |
| General and administrative | 11,727,969 | | | 7,440,910 | | | 4,287,059 | | | 57.6 | % |
| Total operating expenses | 65,840,105 | | | 31,415,719 | | | 34,424,386 | | | 109.6 | % |
| Loss from operations | (65,840,105) | | | (31,415,719) | | | (34,424,386) | | | 109.6 | % |
| Other income (expenses): | | | | | | | |
| Finance income (costs) | 1,605,927 | | | (11,840) | | | 1,617,767 | | | (13,663.6) | % |
| Foreign currency loss | (287,691) | | | (32,901) | | | (254,790) | | | 774.4 | % |
| Total other income (expenses) | 1,318,236 | | | (44,741) | | | 1,362,977 | | | (3,046.4) | % |
| Loss before provision for income taxes | (64,521,869) | | | (31,460,460) | | | (33,061,409) | | | 105.1 | % |
| Provision for income taxes | (452,021) | | | (245,251) | | | (206,770) | | | 84.3 | % |
| Net loss | (64,973,890) | | | (31,705,711) | | | (33,268,179) | | | 104.9 | % |
Research and Development
The following table summarizes the components of research and development expenseexpenses for the nine months ended September 30, 20222023 and 2021:2022:
| | | For the nine
months
ended
September 30,
2022 | | For the nine
months
ended
September 30,
2021 | | Change | | For the nine
months ended
September 30, 2023 | | For the nine
months ended
September 30, 2022 | | Change |
| (In U.S. dollars) | (In U.S. dollars) | $ | | $ | | $ | | % | (In U.S. dollars) | $ | | $ | | $ | | % |
| Clinical trials | Clinical trials | 22,972,208 | | | 8,613,078 | | | 14,359,130 | | | 166.7 | % | Clinical trials | 24,487,852 | | | 22,972,208 | | | 1,515,644 | | | 6.6 | % |
| Salaries and benefits | Salaries and benefits | 13,085,024 | | | 4,722,395 | | | 8,362,629 | | | 177.1 | % | Salaries and benefits | 22,677,568 | | | 13,085,024 | | | 9,592,544 | | | 73.3 | % |
| Contract manufacturing | Contract manufacturing | 9,662,996 | | | 3,934,564 | | | 5,728,432 | | | 145.6 | % | Contract manufacturing | 22,572,138 | | | 9,662,996 | | | 12,909,142 | | | 133.6 | % |
| Depreciation and overhead | | Depreciation and overhead | 9,402,634 | | | 2,847,830 | | | 6,554,804 | | | 230.2 | % |
| Sponsored research & product licenses | Sponsored research & product licenses | 5,305,325 | | | 6,333,269 | | | (1,027,944) | | | (16.2) | % | Sponsored research & product licenses | 5,036,390 | | | 5,305,325 | | | (268,935) | | | (5.1) | % |
| Depreciation and overhead | 2,847,830 | | | — | | | 2,847,830 | | | 100.0 | % | |
| Regulatory consulting | Regulatory consulting | 238,753 | | | 371,503 | | | (132,750) | | | (35.7) | % | Regulatory consulting | 920,749 | | | 238,753 | | | 681,996 | | | 285.6 | % |
| Total | Total | 54,112,136 | | | 23,974,809 | | | 30,137,327 | | | 125.7 | % | Total | 85,097,331 | | | 54,112,136 | | | 30,985,195 | | | 57.3 | % |
For the nine months ended September 30, 20222023, as compared to the nine months ended September 30, 2021,2022, the increase in research and development expenseexpenses was due to the same or substantially the same reasonsfactors as discussednoted above for the three months ended September 30, 2023 with the exception that clinical trial costs increased during the nine month period primarily in connection with randomization phase of the three month results of operations above. Althoughphase 3 SPLASH trial. For the nine months ended September 30, 2023, the Company doesincurred approximately $31.1 million and $3.2 million of direct costs associated with its PNT2002 and
PNT2003 programs, respectively. These figures exclude amounts for salaries and benefits, depreciation and overhead costs which are not currently track its research and development expendituresallocated by product, it intends to begin tracking such expenditures by product in the near future.program.
General and administrative
ForGeneral and administrative expenses increased for the nine months ended September 30, 20222023, as compared to the nine months ended September 30, 2021, the increase in general and administrative expenses was primarily2022, due to increased (a) personnel coststhe same or substantially the same factors as noted above for the Company continues to expand its finance, information technology, human resources and other administrative headcount, and (b) insurance, legal, professional and consulting services, each in support of the growth in scale of the operations of the Company.
three months ended September 30, 2023. Other Income (Expenses)
For the nine months ended September 30, 2023 and 2022, other income (expenses) consistconsists mainly of (a) interest and other income earned on the Company's cash, cash equivalents and investments partially offset byand (b) a foreign exchange lossgains and losses primarily associated with foreign currency transactions occurring within the Company’s Canadian subsidiary. ForThe increase in the ninecurrent period reflects the same or substantially the same factors as noted above for the three months ended September 30, 2021, other expenses mainly consisted of (i) a foreign exchange loss associated with foreign currency transactions primarily occurring within the Company’s Canadian subsidiary, and (ii) accretion expense related to the amortization of capitalized transaction costs in connection with our previous mortgage payable.2023.
Income Tax ExpenseBenefit (Provision)
For the nine months ended September 30, 2022 and 2021,2023, the Company recorded income tax expensebenefit compared with an income tax provision recorded for the nine months ended September 30, 2022. The recognition of an income tax benefit in the quarter was primarily the result of estimated research and development tax credits available for carryback. This is partially offset by a) prior year current income tax adjustments in connection with the application of emerging guidance surrounding the section 174 rules around the capitalization of research and development expenses and b) taxes owing in Canada in relation to taxable income generated through management and research and development services performed by the Canadian subsidiary of the Company. The income tax provision in the prior year period consisted primarily of taxes owing in Canada in relation to taxable income generated through management and research and development services performed by the Canadian subsidiary of the Company.
Liquidity and Capital Resources
Merger Agreement Impact on Liquidity
The Company expects to complete the Merger near the end of 2023, however, consummation of the Merger is subject to the satisfaction or (to the extent permitted by applicable law) waiver of the conditions to the completion of the Merger. The Company is unable to fully predict the impact that the timing, completion, or termination of the Merger will have on its liquidity, financial condition and results of operations due to numerous uncertainties.
Sources of Liquidity and Capital
We have
Except for the upfront payment received pursuant to the Lantheus License Agreements, the Company has incurred significant net losses since the Company’s inception and currently rely on the proceeds for the Business Combination to fund our operations.funded operations primarily through equity financings. Operating losses and negative cash flows from operationswere incurred in the nine months ended September 30, 2023 and investing activities are expected to continue for the foreseeable future. As losses continue to be incurred wein future periods. We are subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, successful discovery and development of our product candidates, development by competitors of new technological innovations, dependence on key personnel, the ability to attract and retain qualified employees, protection of proprietary technology, compliance with governmental regulations, the impact of COVID-19, the ability to secure additional capital to fund operations and commercial success of our product candidates.industry. Product candidates currently under development will require extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel, and infrastructure and extensive compliance-reporting capabilities. Even if our drug development efforts are successful, it is uncertain when, if ever, we will realize significant revenue from product sales.
Net losses totaled $24.0$24.8 million and $17.1$24.0 million for the three months ended September 30, 20222023 and 2021,2022, respectively, and $65.0$66.7 million and $31.7$65.0 million for the nine months ended September 30, 20222023 and 2021,2022, respectively.
On January 28, 2021, warrants for the purchase of common shares of POINT Biopharma Inc. were exercised resulting in net proceeds of $20.0 million. On June 30, 2021, we received net proceeds of approximately $260.0 million inIn connection with the Business Combination consisting of proceeds of the PIPE Financing and the proceeds remaining in RACA’s trust account. On2022 Public Offering, (a) on September 16, 2022, we issued 13,900,000 shares of Common Stock in connection with a public share offering at the price of $9.00 per share, resulting in net proceeds of approximately $117.3 million, excluding certain transaction costs incurred in connection with filing the S-3.S-3 (defined below), and (b) on October 3, 2022, we issued an additional 1,589,779 shares of Common Stock for net proceeds to the Company of approximately $13.4 million as a result of underwriters exercising their option to purchase additional shares pursuant to the underwriting agreement. On December 22, 2022, we received $260.0 million in connection with the Lantheus License Agreements. We intend to use the net proceeds from these transactions to fulfill our obligations under the Lantheus License Agreements, and for general corporate purposes, funding of development programs, payment of milestones pursuant to our license agreements, general and administrative expenses, licensing of additional product candidates, and to supportsupporting our working capital needs.
Future Funding Requirements
Our primary use of cash is to fund operating expenses, primarily related to our research and development activities. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses and prepaid expenses.
We expectOperating losses and negative cash flows are expected to continue to incur significant and increasing expenses and operating losses forbe incurred in the foreseeable future. We may require additional capital to meet operational needs and capital requirements for clinical trials, for other research and development expenditures, and for business development activities. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated clinical trials and preclinical studies.
Our future funding requirements will depend on many factors, including, but not limited to:
•the scope, progress, results and costs of researching and developing our current product candidates, as well as other additional product candidates we may develop and pursue in the future;
•the timing of, and the costs involved in, obtaining regulatory and marketing approvals for our product candidates and any other additional product candidates we may develop and pursue in the future;
•the number of future product candidates that we may pursue and their development requirements;
•subject to receipt of regulatory approval, if any, the costs of commercialization activities for our product candidates, to the extent such costs are not the responsibility of any future collaborators, including the costs and timing of establishing product sales, marketing, distribution, and manufacturing capabilities;
•subject to receipt of regulatory approval, revenue, if any, received from commercial sales of our product candidates or any other additional product candidates we may develop and pursue in the future;
•the achievement of milestones that trigger payments under our various license agreements;
•the extent to which we in-license or acquire rights to other products, product candidates or technologies;
•our ability to establish collaboration arrangements for the development of our product candidates on favorable terms, if at all;
•our headcount growth and associated costs as we expand our research and development and establish a commercial infrastructure;
•the costs of preparing, filing and prosecuting patent applications, and maintaining and protecting our intellectual property rights, including enforcing and defending intellectual property related claims; and
•the costs of operating as a public company.
As of September 30, 2022,2023, we had cash, cash equivalents and investments of approximately $291.5 million. We expect that our cash, cash equivalents and investments are sufficient$399.0 million, which is anticipated to fund our operating expenses and capital expenditure requirementsoperations into the fourth quarter of 2024.2026. We have based this estimate on current assumptions that may change or prove to be wrong, and we couldwhich would cause us to utilize our available capital resources sooner than we expect. In addition, our cash, cash equivalents and investments are subject to the economic pressures or uncertainties associated with local or global economic recessions, and ongoing geopolitical events. The failure of one or more of the financial institutions in which our cash, cash equivalents or investments are held, any resulting inability for us to obtain the return of our funds from any of those financial institutions, or any other adverse condition suffered by those financial institutions, could impact access to our cash, cash equivalents or investments and could adversely impact our operating liquidity and financial performance.
On July 11, 2022 the SEC declared effective our shelf registration statement on Form S-3 (the “S-3”) that allows the Company to offer and sell to the public up to $400.0 million of our Common Stock, preferred stock, debt securities, warrants to purchase our Common Stock, preferred stock or debt securities, subscription rights to purchase our Common Stock, preferred stock or debt securities and/or units consisting of some or all of these securities, from time to time in one or more offerings. The details of any future offerings, along with the use of proceeds from any securities offered, will be described in a prospectus supplement or other offering materials, at the time of offering. Also covered under the S-3 as part of the $400.0 million total amount registered is an at-the-market offering (“ATM”) of up to $150.0 million of our Common Stock pursuant to a distribution agreement with Piper Sandler & Co. No shares of Common Stock were issued in connection with the ATM as atof September 30, 2022.2023. Pursuant to the S-3 and in connection with the 2022 Public Offering, (a) on September 16, 2022 we issued 13,900,000 shares of Common Stock in connection with aat the public share offering at the price of $9.00 per share, or an aggregate of $125.1 million, resulting in net proceeds to the Company of approximately $117.3 million, excluding certain transaction costs incurred in connection with filing the S-3.S-3, and (b) on October 3, 2022, we issued an additional 1,589,779 shares of Common Stock at the public offering price of $9.00 per share, for net proceeds to the Company of
approximately $13.4 million as a result of an underwriters exercising their option to purchase additional shares pursuant to the underwriting agreement.
Until such time as we can generate substantial product revenue, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, our stockholders' ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect rights of our stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or drug candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Going Concern
We assess and determine our ability to continue as a going concern in accordance with the provisions of ASC Topic 205-40, Presentation of Financial Statements—Going Concern. We have determined that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.
Working Capital
Working capital is defined as current assets less current liabilities.
The following table summarizes our total working capital and current assets and liabilities as of September 30, 20222023 and December 31, 2021:2022:
| | | As of
September 30,
2022 | | As of
December 31,
2021 | | Change | | As of
September 30,
2023 | | As of
December 31,
2022 | | Change |
| (In U.S. dollars) | (In U.S. dollars) | $ | | $ | | $ | | % | (In U.S. dollars) | $ | | $ | | $ | | % |
| Current assets | Current assets | 296,230,616 | | | 243,846,556 | | | 52,384,060 | | | 21.5 | % | Current assets | 353,246,546 | | | 530,822,730 | | | (177,576,184) | | | (33.5) | % |
| Current liabilities | Current liabilities | 16,608,014 | | | 7,979,964 | | | 8,628,050 | | | 108.1 | % | Current liabilities | 38,666,277 | | | 79,738,440 | | | (41,072,163) | | | (51.5) | % |
| Total working capital | Total working capital | 279,622,602 | | | 235,866,592 | | | 43,756,010 | | | 18.6 | % | Total working capital | 314,580,269 | | | 451,084,290 | | | (136,504,021) | | | (30.3) | % |
The increasedecrease in working capital as of September 30, 2022,2023, primarily reflects proceeds of approximately $116.9 million from the issuance of Common Stock net of approximately $8.2 million of transaction costs, which also includes certain costs incurred in connection with filing the S-3. This is partially offset by cash used for (a) operating expenses, including personnel costs and research and development costs as we advance our clinical trials and continue to expand our pipeline, and (b) capital expenditures for equipment and machinery used in our manufacturing facility in Indiana. This was partially offset by interest and other income earned on the Company's cash, cash equivalents and investments. The decrease in current liabilities includes the impact of the payment of income taxes during the nine months ended September 30, 2023 of approximately $31.9 million, which had an equal and offsetting impact to current assets.
Cash Flows
The following table summarizes our sources and uses of cash for the nine months ended September 30, 20222023 and 2021:2022:
| | | For the nine
months
ended
September 30,
2022 | | For the nine
months
ended
September 30,
2021 | | Change | | For the nine
months ended
September 30, 2023 | | For the nine
months ended
September 30, 2022 | | Change |
| (In U.S. dollars) | (In U.S. dollars) | $ | | $ | | $ | | % | (In U.S. dollars) | $ | | $ | | $ | | % |
| Net cash flows used in operating activities | Net cash flows used in operating activities | (53,397,277) | | | (33,171,100) | | | (20,226,177) | | | 61.0 | % | Net cash flows used in operating activities | (124,859,499) | | | (53,397,277) | | | (71,462,222) | | | 133.8 | % |
| Net cash flows used in investing activities | Net cash flows used in investing activities | (176,537,853) | | | (6,320,113) | | | (170,217,740) | | | 2,693.3 | % | Net cash flows used in investing activities | (140,007,433) | | | (176,537,853) | | | 36,530,420 | | | (20.7) | % |
| Net cash flows provided by financing activities | Net cash flows provided by financing activities | 116,902,265 | | | 281,770,182 | | | (164,867,917) | | | (58.5) | % | Net cash flows provided by financing activities | 45,973 | | | 116,902,265 | | | (116,856,292) | | | (100.0) | % |
| Net (decrease)/increase in cash and cash equivalents | (113,032,865) | | | 242,278,969 | | | (355,311,834) | | | (146.7) | % | |
| Net decrease in cash and cash equivalents | | Net decrease in cash and cash equivalents | (264,820,959) | | | (113,032,865) | | | (151,788,094) | | | 134.3 | % |
Cash flows used in operating activitiesOperating Activities
Net cash flows used in operating activities represent the cash receipts and disbursements related to all of our activities other than investing and financing activities. Cash used in operating activities increased for the nine months ended September 30, 20222023 compared to the nine months ended September 30, 2021 as we advance2022 primarily due to (a) continued advancement of our clinical
trials and continue to expandexpansion of our pipeline, as described above.above, (b) income taxes paid of approximately $31.9 million and (c) the timing of payments of our accounts payable and accrued liabilities.
We believe that the net proceeds from the Lantheus License Agreements and the 2022 Public Offering, together with our available resources and existing cash and cash equivalents, are sufficient to fund our operating expenses capital expenditure requirements into 2026.
Cash flows used in Investing Activities
For the nine months ended September 30, 2023 and 2022, and 2021,net cash used in investing activities reflected $176.5totaled $140.0 million and $6.3$176.5 million, respectively. The increasedecrease in cash used in investing activities relates to (a)a reduction in the Company's investment of its available cash resources into fixed income investments and (b)investments. This was partially offset by (a) increased capital expenditures for purchases in connection with our Indianapolis manufacturing facility.facility and (b) purchase of the Note Receivable from Ionetix-α.
Cash flows provided by Financing Activities
For the nine months ended September 30, 2023, net cash provided by financing activities totaled $46.0 thousand which consists of net proceeds received from the exercise of stock options, partially offset by payments made in connection with the Company's finance lease obligation. For the nine months ended September 30, 2022, net cash provided by financing activities totaled $116.9 million which consisted of the net proceeds received (a) from the (a) issuance of Common Stock as discussed abovein connection with filing the S-3 and (b) from the exercise of stock options issued to a non-employee consultant. For the nine months ended September 30, 2021, net cash provided by financing activities totaled $281.8 million, which consisted of the net proceeds received (a) in connection with the Business Combination and related PIPE Financing and (b) from the exercise of warrants and stock options, each as discussed above.
Contractual Obligations and Other Commitments
The Company, in the normal course of business, enters into various services and supply agreements in connection with its clinical trials to ensure the supply of certain product and product lines during the Company’s clinical phase. These agreements often have minimum purchase commitments and generally terminate upon the termination of the clinical trial. For additional information, see Note 12 to the Q3 20222023 Financial Statements.
For additional information related to our license agreements, please also see Note 12 to the Q3 20222023 Financial Statements and Notes 1214 and 1315 to the 20212022 Financial Statements.
Off-balance sheet arrangementsSheet Arrangements
We do not have any off-balance sheet arrangements or holdings in any variable interest entities.
Critical Accounting Policies and Estimates
This management’s discussionManagement’s Discussion and analysisAnalysis of our financial conditionFinancial Condition and resultsResults of operationsOperations is based on our Q3 20222023 Financial Statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries, POINT Biopharma Inc., POINT Biopharma Corp., POINT Biopharma USA, Inc. and West 78th Street, LLC, for financial information and pursuant to the rules and regulations of the SEC.
The preparation of the Q3 20222023 Financial Statements in conformity with GAAP requires us to make estimates, judgments and assumptions that may affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities atas of the date of the Q3 20222023 Financial Statements and the reported amounts of expenses during the reporting periods. Our estimates are based on our historical experience 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. Actual results may differ from these estimates under different assumptions or conditions.
There have been no significant changes to our critical accounting policies and estimates from the information provided in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our 20212022 Form 10-K.10-K except as described below:
Leases
The Company accounts for leases in accordance with ASC Topic 842, Leases ("ASC 842"). At the inception of an arrangement, we determine whether the arrangement is or contains a lease based on the unique facts and circumstances present. The Company has elected not to recognize leases with an original term of one year or less on the consolidated balance sheets. We have also elected to account for the lease and non-lease components as a combined lease component for our current lease portfolio. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Options to renew or early terminate a lease are included in the initial lease term of a lease when there is reasonable certainty that the option will be applied.
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. The Company's incremental borrowing rate is determined using a secured borrowing rate for the same currency and term as the associated lease in a similar economic environment.
Lease expense for operating leases is recognized on a straight-line basis over the lease term and included in operating expenses in the unaudited interim condensed consolidated statements of operations and comprehensive loss.
ITEM 3. – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risks relating to our operations result primarily from interest rate risk and foreign exchange risk. As of September 30, 2022,2023, there were no material changes to our market risks from the information provided in Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in our 20212022 Form 10-K.
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 three and nine months ended September 30, 20222023 and 2021.2022.
ITEM 4. – CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Such disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
As of September 30, 2022,2023, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Our Chief Executive Officer and Chief Financial Officer have concluded that, based on the evaluation described above, as of September 30, 2022,2023, our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
During the fiscal quarter ended September 30, 2022 we continued to (i) adopt, improve and maintain policies, processes and documentation procedures to improve the overall efficiency and accuracy of our financial reporting; and (ii) we continued to work with third-party consultants to review the design of our systems of internal control over financial reporting and to recommend improvements. As part of this process, during the fiscal quarter ended September 30, 2022, we continued to refine our processes in respect of our new general ledger system to improve our internal control framework.
Except as disclosed above, thereThere was no change in our internal control over financial reporting that occurred during the fiscal quarter ended September 30, 20222023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. – LEGAL PROCEEDINGS
From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. WeOther than as noted below, we are not currently aware of any such proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations.
On October 24, 2023, a purported POINT stockholder filed a complaint against POINT and each member of the POINT Board in the United States District Court for the District of Delaware, captioned Clark v. POINT Biopharma Global Inc., et al., Case No. 1:23-cv-01207-UNA (the “Clark Complaint”). On October 25, 2023, a purported POINT stockholder filed a complaint against POINT and each member of the POINT Board in the United States District Court for the District of Delaware, captioned Jones v. POINT Biopharma Global Inc., et al., Case No. 1:23-cv-01213-UNA (the “Jones Complaint”). On October 25, 2023, a purported POINT stockholder filed a complaint against POINT and each member of the POINT Board in the United States District Court for the Southern District of New York, captioned Trinh v. POINT Biopharma Global Inc., et al., Case No. 1:23-cv-09394 (the “Trinh Complaint” and, together with the Clark Complaint and the Jones Complaint, the “Disclosure Complaints”).
The Disclosure Complaints allege, among other things, violations of Sections 14(d) and 14(e) of the Exchange Act and Rule 14d-9 thereunder against all defendants and violations of Section 20(a) of the Exchange Act against the individual defendants. The plaintiffs contend that the Schedule 14D-9 omitted and/or misrepresented material information regarding the transactions. The Complaints seek injunctive relief preventing the consummation of the transactions, rescissory damages or rescission to the extent the transactions are consummated, an order directing the individual defendants to file a Solicitation/Recommendation Statement on Schedule 14D-9 that does not contain any untrue statements of material fact, an award of plaintiff’s expenses including attorneys’ fees and expenses, and such other relief the court may deem just and proper. POINT has also received certain demand letters from purported stockholders making allegations similar to those contained in the Disclosure Complaints.
In addition, on October 27, 2023, POINT received a demand letter, made pursuant to Section 220 of the DGCL, from a purported stockholder seeking to access and inspect certain of POINT’s books and records relating to the transactions contemplated by the Offer and the Merger Agreement. On November 8, 2023, such purported stockholder filed a complaint against POINT in the Court of Chancery of the State of Delaware pursuant to Section 220 of the DGCL, captioned Samson Ghebremariam v. POINT Biopharma Global, Inc. [sic], Case No. 2023-1135-SEM (the “Section 220 Complaint” and collectively with the Disclosure Complaints, the “Complaints”). Pursuant to the Section 220 Complaint, the plaintiff seeks (i) the right to access and inspect certain of POINT’s books and records relating to the transactions contemplated by the Offer and the Merger Agreement, in order to investigate the processes leading thereto and the independence of POINT’s directors and officers in connection therewith and (ii) an award of the plaintiff’s expenses, including reasonable attorneys’ fees.
POINT believes that each of the claims contained in the Complaints and the related demand letters are without merit.
ITEM 1A. – RISK FACTORS
Factors that could cause our actual results to differ materially from those described in this Quarterly Report on Form 10-Q areinclude, but not limited to, any of the risks and uncertainties described in our 20212022 Form 10-K. If any of these risks are realized, our business, financial condition, operating results and prospects could be materially and adversely affected. We are also including the following additional risk factors below related to the Offer and the Merger, which should be read in conjunction with our description of risk factors in Item 1A, "Risk Factors" of our 2022 Form 10-K. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operation.
Risks Related to the Pending Offer and Merger
We may not complete the pending Offer and Merger within the timeframe we anticipate or at all, which could have an adverse effect on our business, financial results and/or operations.
As described above, on October 2, 2023, we entered into the Merger Agreement, with Parent and Merger Sub. Merger Sub commenced a cash tender offer to purchase all of the dateShares, at a price of this Quarterly Report$12.50 per share, net to the stockholder in cash, without interest and less any applicable withholding taxes, upon the terms and subject to the conditions set forth in the Merger Agreement. The Offer commenced on Form 10-Q, there have been noOctober 13, 2023 and was initially scheduled to expire at one minute after 11:59 p.m., Eastern time, on November 9, 2023. On November 8, 2023, Parent extended the expiration of the Offer until 5:00 p.m., Eastern Time, on November 16, 2023, unless further extended or earlier terminated in accordance with the terms of the Offer and the Merger Agreement and the applicable rules and regulations of the SEC.
If the Offer and the Merger are not completed within the expected timeframe or at all, we may be subject to a number of material changesrisks in addition to the risks and uncertainties disclosedof continuing to operate our business. The price of our Common Stock may decline to the extent that current market prices of our Common Stock reflect a market assumption that the Merger will be completed on a timely basis or at all. We could be required to pay Parent a termination fee of approximately $54.4 million if the Merger Agreement is terminated under specific circumstances described in the 2021 Form 10-K except as amendedMerger Agreement. The failure to complete the transaction also may result in negative publicity and supplemented by the additional risk factor below.negatively affect our relationship with our stockholders, employees, collaborators and suppliers. We may disclose changesalso be required to such factorsdevote significant time and resources to litigation related to any failure to complete the Merger or disclose additional factors from timerelated to time inany enforcement proceeding commenced against us to perform our future filings withobligations under the SEC.Merger Agreement.
Our ability to complete the Merger is subject to certain closing conditions that could adversely affect us or cause the Merger to be abandoned.
We may be adversely affectedConsummation of the Offer is subject to the satisfaction or waiver of various conditions set forth in the Merger Agreement, including (a) there shall have been validly tendered in the Offer (and not properly withdrawn) prior to the expiration of the Offer that number of Shares (excluding Shares tendered pursuant to guaranteed delivery procedures that have not yet been “received” by the effects“depository,” as such terms are defined by Section 251(h) of uncertaintythe DGCL) that, when added to the Shares then owned by Parent, Merger Sub or any subsidiary of Parent, would represent at least a majority of the Shares outstanding as of immediately following the consummation of the Offer, (b) the expiration or termination of the waiting period under the HSR Act, (c) the accuracy of the Company’s representations and warranties contained in macroeconomicthe Merger Agreement (except, generally, for any inaccuracies that have not had a Company Material Adverse Effect (as defined in the Merger Agreement)), (d) the Company’s performance in all material respects of its obligations under the Merger Agreement, (e) consent by the U.S. Nuclear Regulatory Commission of the indirect transfer of control with respect to the Company and (f) the other conditions such as rising inflation, supply chain disruptionsset forth in Exhibit A to the Merger Agreement. On October 23, 2023, Parent and concerns regardingthe Company filed their respective Premerger Notification and Report Forms pursuant to the HSR Act with the FTC and the Antitrust Division, initiating a potential global recession.15-day waiting period. The 15-day waiting period under the HSR Act expired on November 7, 2023 at 11:59 p.m., Eastern time. Accordingly, the condition to the Offer relating to the expiration or termination of the waiting period under the HSR Act has been satisfied. The consummation of the Offer and the Merger is not subject to a financing condition. We cannot provide any assurance that the conditions to the consummation of the Offer and/or the Merger will be satisfied or waived, or will not result in the abandonment or delay of the Offer and the Merger. If we do not consummate the Offer and Merger, the price of our Common Stock may decline significantly from the current market price, which may reflect a market assumption that the Offer and Merger will be consummated. Any of these events could have a material adverse effect on our business, operating results and financial condition and could cause a decline in the price of our Common Stock.
Our operationsStockholder litigation could prevent or delay the consummation of the Offer and performance depend on worldwide economic conditions. These conditions have been adversely impacted by continued global economic concerns over rising inflation rates, supply chain disruptions, a potential recession and other monetaryMerger or otherwise negatively impact our business, operating results and financial uncertainties. Rising inflationcondition.
We may incur additional costs in connection with the defense or settlement of any existing and future stockholder litigation
in connection with the Offer and Merger. These lawsuits or other future litigation may adversely affect our liquidity,ability to complete the Offer and Merger. We could incur significant costs in connection with any such litigation, including costs associated with the indemnification of our directors and officers.
Furthermore, one of the conditions to the consummation of the Offer and the Merger is the absence of any governmental order or law preventing the consummation of the Merger. Consequently, if a plaintiff were to secure injunctive or other relief prohibiting, delaying or otherwise adversely affecting our ability to complete the consummation of the Offer and the Merger, then such injunctive or other relief may prevent the Offer and the Merger from becoming effective within the expected time frame or at all.
The Offer and the Merger will involve substantial costs and will require substantial management resources.
In connection with the consummation of the Offer and the Merger, management and financial resources have been diverted and will continue to be diverted towards the completion of the Offer and the Merger. We expect to incur substantial costs and expenses relating to, as well as the direction of management resources towards, the Offer and the Merger. Such costs, fees and expenses include fees and expenses payable to financial advisors, other professional fees and expenses, fees and costs relating to regulatory filings and filings with the SEC and notices and other transaction-related costs, fees and expenses. Further, if the Merger Agreement is terminated by us under specified circumstances, we will be required to pay Parent a termination fee of approximately $54.4 million. If the Merger is not completed, we will have incurred substantial expenses and expended substantial management resources for which we will have received little or no benefit if the closing of the Merger does not occur.
The Merger Agreement contains provisions that could discourage a potential competing acquirer.
The Merger Agreement provides that, upon the terms and subject to the conditions thereof, we and our representatives cannot solicit or initiate discussions with third parties regarding other proposals to acquire the Company and we are subject to restrictions on our ability to respond to any such proposal, except as permitted under the terms of the Merger Agreement. In the event that we receive an acquisition proposal from a third party, we must notify Parent of such proposal and negotiate in good faith with Parent prior to terminating the Merger Agreement or effecting a change in the recommendation of the Board to our stockholders with respect to the Offer and the Merger. The Merger Agreement also contains certain termination rights for Parent and us and further provides that, upon termination of the Merger Agreement under specified circumstances, including certain terminations in connection with an alternative business combination transaction as permitted by the terms of the Merger Agreement, we will be required to pay Parent a termination fee of approximately $54.4 million. These provisions could discourage a potential third-party acquirer that might have an interest in acquiring all or a significant portion of us from considering or proposing that acquisition, even if it were prepared to pay consideration with a higher per share cash or market value than the market value proposed to be received or realized in the transaction. These provisions also might result in a potential third-party acquirer proposing to pay a lower price to our stockholders than it might otherwise have proposed to pay due to the added expense of the termination fee that may become payable in certain circumstances. If the Merger Agreement is terminated and we determine to seek another business combination, we may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the Offer and Merger.
The pendency of the transactions with Parent and Merger Sub could adversely affect our business, financial conditionresults and/or operations.
Our efforts to complete the transactions with Parent and Merger Sub could cause substantial disruptions in, and create uncertainty surrounding, our business, which may materially adversely affect our business, financial results and/or operations. Uncertainty as to whether the Offer and the Merger will be completed may affect our ability to recruit prospective employees or to retain and motivate existing employees. Employee retention may be particularly challenging while the transactions are pending because employees may experience uncertainty about their roles following consummation of the Merger. A substantial amount of our management’s and employees’ attention is being directed toward the completion of the transactions and thus is being diverted from our day-to-day operations. Uncertainty as to our future could adversely affect our business and our relationship with collaborators and suppliers. Changes to or termination of existing business relationships could adversely affect our results of operations by increasing our overall cost structure. The existence of inflation in the economy has resulted in, and may continue to result in, higher interest rates and capital costs, supply shortages, increased costs of labor, components, manufacturing and shipping,financial condition, as well as weakening exchange ratesthe market price of our Common Stock. The adverse effects of the pendency of the transaction could be exacerbated by any delays in completion of the transactions or termination of the Merger Agreement.
Our executive officers and directors may have interests in the Offer and the Merger that are different from, or in addition to, those of our stockholders generally.
Our executive officers and directors may have interests in the Offer and the Merger that are different from, or are in addition to, those of our stockholders generally. These interests include direct or indirect ownership of our Shares and equity awards, the acceleration of equity awards upon consummation of the transactions and other similar effects.interests. Such interests of our directors and executive officers are set forth in further detail in the Schedule 14D-9 filed with the SEC on October 13, 2023.
If the Merger occurs, our stockholders will not be able to participate in any financial upside to our business after the Merger.
Pursuant to the Merger Agreement, on October 13, 2023, Merger Sub commenced the Offer to purchase, subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement, any and all of the issued and outstanding Shares, at a price of $12.50 per Share, to the stockholder in cash, without interest and less any applicable withholding taxes, upon the terms and subject to the conditions set forth in the Merger Agreement. In responsethe Merger, each Share issued and outstanding immediately prior to recent inflationary pressure, the U.S. Federal ReserveEffective Time that is not tendered and accepted pursuant to the Offer (other than the Shares owned by the Company or any subsidiary of the Company, Shares held by Parent, Merger Sub or any other subsidiary of Parent, and Shares as to which appraisal rights have been perfected in accordance with applicable law) will be canceled and converted into the right to receive the Offer Price in cash and without interest, less any applicable tax withholding. Our stockholders will not receive any shares of Parent or Merger Sub common stock in connection with the Offer or the Merger. As a result, if our business following the consummation of the Merger performs well, our current stockholders will not receive any benefit from the performance of our business following the consummation of the Merger.
In certain instances, the Merger Agreement requires us to pay a termination fee to Parent, which could require us to use available cash that would have otherwise been available for general corporate purposes.
Under the terms of the Merger Agreement, we may be required to pay Parent a termination fee of approximately $54.4 million if the Merger Agreement is terminated under specific circumstances described in the Merger Agreement, including, but not limited to, our entry into an agreement with respect to a superior proposal or a change in the recommendation of our Board. If the Merger Agreement is terminated under such circumstances, the termination fee we may be required to pay under the Merger Agreement may require us to use available cash that would have otherwise been available for general corporate purposes and other global central banks have raised interest ratesuses.
The Offer consideration payable to holders of our Common Stock will not be adjusted for changes in 2022,our business, assets liabilities, prospects, outlook, financial condition or results of operations, or in the event of any change in the price of our Common Stock.
The Offer consideration payable to holders of our common stock will not be adjusted for changes in our business, assets, liabilities, prospects, outlook, financial condition or results of operations, or changes in the market price of, analyst estimates of, or projections relating to, our Common Stock. For example, if we experienced an improvement in our business, assets, liabilities, prospects, outlook, financial condition or results of operations prior to the consummation of the Offer and further interest rate increasesMerger, there would be no adjustment to the amount of the proposed Offer consideration.
While the Merger Agreement is in effect, we are anticipated.subject to restrictions on our business activities.
While the Merger Agreement is in effect, we are subject to restrictions on our business activities, generally requiring us to conduct our business in the ordinary course, consistent with past practice, and subjecting us to a variety of specified limitations absent Parent’s prior consent. These increases have led to concerns of a potential global recession. Any such events are likely to result in significant disruption of global financial markets, which may reducelimitations include, among other things, restrictions on our ability to accessacquire other businesses and assets, dispose of our assets, make investments, enter into certain contracts, repurchase or issue securities, pay dividends, make capital on favorable terms expenditures, take certain actions relating to intellectual property, amend our organizational documents and incur indebtedness. These restrictions could prevent us from pursuing strategic business opportunities, taking actions with respect to our business that we may consider advantageous and responding effectively and/or at all. In addition,timely to competitive pressures and industry developments, and may as a recession, depressionresult materially and adversely affect our business, results of operations and financial condition.
We have incurred, and will continue to incur, direct and indirect costs as a result of the pending transactions with Parent.
We have incurred, and will continue to incur, significant costs and expenses, including fees for professional services and other transaction costs, in connection with the transactions contemplated by the Merger Agreement. We are obligated to pay these costs and expenses whether or other sustained adverse market eventnot the transactions are completed. There are a number of factors beyond our control that could affect the total amount or the timing of these costs and expenses, any of which could materially and adversely affect our business, financial condition and results of operations.
If the valueMerger is not consummated, we may need to raise additional capital to continue our operations and execute our operating plans.
If the Merger is not consummated, we may need to raise additional capital or we may need to delay, scale back or eliminate some planned operations or reduce expenses to remain a going concern, any of which would have a significant negative impact on our prospects and financial condition, as well as the trading price of our Common Stock.Although There can be no assurance that we can raise capital when needed or on terms favorable to us and our stockholders. Macroeconomic conditions and heightened global uncertainties may take measuresadversely affect general commercial activity and the U.S. and global economies and financial markets, which increases uncertainty around our ability to mitigate these events, if these measures are not effective, our business, financial condition, results of operationsaccess the capital markets when needed and liquidity could be materially adversely affected. Even if such measures are effective, there could be a difference between the timing of when these beneficial actions impact our results of operations and when the costs are incurred.on acceptable terms.
ITEM 2. – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.PROCEEDS
Unregistered Sales of Equity Securities
We did not have any unregistered sales of equity securities during the quarter ended September 30, 2022.2023.
Issuer Purchases of Equity Securities
We did not repurchase any of our equity securities during the quarter ended September 30, 2022.2023.
ITEM 3. – DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. – MINE SAFETY DISCLOSURES.DISCLOSURES
Not applicable.
ITEM 5. – OTHER INFORMATION.INFORMATION
On November 8, 2022, we entered into a first amendment (the “First Amendment”) to the Exclusive License and Commercialization Agreement (the “CanProbe Agreement”), dated December 16, 2020 between POINT; the Canadian Molecular Probe Consortium; the Centre for Probe Development and Commercialization; and The University Health Network, collectively the (“Parties”). Pursuant to the First Amendment, the Parties agreed to amend POINT’s royalty obligation under the CanProbe Agreement from a direct percentage of Net Sales by Sublicensee to now including royalty payments received by POINT from Sublicensees as part of its very low double digit sublicense income sharing obligation
on all payments received from Sublicensees, subject to a minimum of a low single digit royalty based on Net SalesNone of the Sublicensee. In addition,Company’s directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the definition of products for which royalties would be owed by POINT or for which sublicense income would be shared by POINT was amended to include all Lutetium-177 Octreotate products.Company’s fiscal quarter ended September 30, 2023.
On November 11, 2022, we entered into two License and Collaboration Agreements with affiliates of Lantheus Holdings, Inc. (“Lantheus”), pursuant to which we granted Lantheus exclusive worldwide licenses (except for certain Asian territories) to commercialize the Company's PNT2002 and PNT2003 late-stage product radiopharmaceutical therapies (such agreements, respectively, the “PNT2002 Agreement” and the “PNT2003 Agreement” and collectively, the “Agreements”). The effectiveness of the transactions contemplated by the Agreements are conditioned upon, among other things, Hart-Scott-Rodino antitrust clearance and customary closing conditions which are expected to be satisfied in the first half of 2023.
In connection with the PNT2002 Agreement, and subject to the satisfaction of certain closing conditions contained therein, the Company will receive an upfront, one-time, nonrefundable and non-creditable fee of $250 million, and may be eligible to receive (i)a regulatory milestone payment upon FDA approval of up to $250 million,as well as additional ex-U.S. regulatory milestone payments of up to $31 million; (ii) up to $1.28 billion in potential total milestone payments based upon the achievement of specified net sales milestones; and (iii) a royalty rate of 20 percent on all net sales (once certain financial thresholds have been achieved), including a percentage of sublicensing revenues received by Lantheus.
In connection with the PNT2003 Agreement, and subject the satisfaction of certain closing conditions contained therein, the Company will receive an upfront, one-time, nonrefundable and non-creditable fee of $10 million, and may be eligible to receive (i) a regulatory milestone payment upon FDA approval of up to $30 million, as well as additional ex-U.S. regulatory milestone payments of up to $4.5 million; (ii) up to $275 million in potential total milestone payments based upon the achievement of specified net sales milestones; and (iii) royalties at a rate of 15 percent of net sales, including a percentage of sublicensing revenues received by Lantheus.
See Note 16 to our condensed financial statements, included elsewhere in this Report, for further detail regarding the First Amendment and the Agreements.
The foregoing description of the Agreements does not purport to be complete and is qualified in its entirety by reference to the PNT2002 Agreement and the PNT2003 Agreement, copies of which are filed as Exhibit 10.1 and Exhibit 10.2 hereto, respectively and are hereby incorporated into this report by reference.
ITEM 6. – EXHIBITS.EXHIBITS
The following exhibits are filed as part of this Quarterly Report on Form 10-Q.
Exhibit Index
| | | | | | | | |
Exhibit
Number | | Description |
| 2.1† | | |
| 3.1 | | |
| 3.2 | | |
10.1*#10.1 | | |
10.2*#10.2 | | |
| 10.3 | | |
| 31.1* | | |
| 31.2* | | |
| 32* | | |
| 101.INS* | | XBRL Instance Document |
| 101.SCH* | | XBRL Taxonomy Extension Schema Document |
| 101.CAL* | | XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF* | | XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB* | | XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE* | | XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* Filed herewith.
# Certain confidential portions (indicated by brackets† Schedules and asterisks) have beenexhibits to this Exhibit omitted from this exhibit.pursuant to Regulation S-K Item 601(a)(5). The Registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | | | | | | | | | |
| | | POINT BIOPHARMA GLOBAL INC. |
| | |
Date: November 14, 202213, 2023 | | |
| | |
| | By: | /s/Joe McCann.McCann |
| | | Dr. Joe McCann, Ph.D. |
| | | Chief Executive Officer |
| | | (Principal Executive Officer) |
| | |
| | By: | /s/Bill Demers |
| | | Bill Demers |
| | | Chief Financial Officer |
| | | (Principal Financial Officer) |