ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes appearing at the end of this Annual Report on Form10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form10-K, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. You should read “Cautionary Note Regarding Forward-Looking Statements” and Item1A. Risk Factors of this Annual Report on Form10-K ("Annual Report" or "Form 10-K") for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
General Presentation
This Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) generally discusses year-to-year comparisons between the year ended December 31, 2023 and the comparative year ended December 31, 2022. Due to our change in fiscal year from June 30 to December 31, the comparative year ended December 31, 2022 was unaudited. A discussion of the changes in our financial condition and results of operations for the six-month transition period ended December 31, 2022 and the fiscal years ended June 30, 2022 and 2021, has been omitted from this report, but may be found in Item 7, MD&A, of our Annual Reports on Form 10-KT for the six months ended December 31, 2022 and Form 10-K for the year ended June 30, 2022, filed with the Securities and Exchange Commission ("SEC") on May 1, 2023 and September 28, 2022, respectively, which are available free of charge on the SEC’s website at www.sec.gov.
Overview
We are developing the next generation of precision-targeted alpha therapies (“TAT”) for oncology that have the potential to treat a large population of cancer patients across multiple tumor types, including those with metastatic disease. By leveraging our proprietary TAT platform, we aim to develop alpha-emitting radiopharmaceuticals that can be attached to targeting peptides to deliver the radioactive payload directly to difficult-to-treat tumors. The foundation of our TAT platform is our Pb-specific chelator ("PSC") and peptide linker technology, which is designed to enable us to connect our alpha-emitting isotope of choice, Lead-212 (“212Pb” or “Pb-212”), to a desired targeting peptide to deliver radiation directly to cancer cells. Unlike commercially available chelators and linkers, our proprietary PSC and peptide linker have shown, in preclinical studies, the differentiated ability to promote enhanced clearance of the non-tumor localized 212Pb payload without sacrificing the uptake of the alpha particle into the tumor. Rapid clearance of the alpha-emitting isotope from normal tissues is important to enhance tolerability and widen the therapeutic window of our program candidates. We are also developing complementary diagnostics that utilize the same targeting peptide and imaging isotopes such as Lead-203 (“203Pb” or “Pb-203”), Gallium-68 (“68Ga” or “Ga-68”), or Copper-64 (“64Cu” or “Cu-64”) to provide the opportunity to understand which patients may respond to targeted therapy.
Our platform generates TATs that are comprised of three components: (i) a targeting peptide that is designed to selectively target ligands that are unique to, or preferentially expressed on, cancer cells throughout the body; (ii) the alpha-emitting medical isotope 212Pb designed to kill cancer cells; and (iii) our proprietary linker that attaches the targeting molecule to the radioactive payload.
We utilized our TAT platform to discover, design and develop our initial programs, VMT-α-NET and VMT01, which are currently in ongoing Phase 1 clinical trials, and we plan to continue to leverage our platform to assess the potential of and develop multiple additional pipeline programs. Using our proprietary platform technology, VMT-α-NET and VMT01 are engineered to target cancer-specific receptors on tumor cells. [212Pb]VMT-α-NET is a TAT in development for patients with unresectable or metastatic somatostatin receptor type 2 ("SSTR2")-expressing tumors who have not previously received peptide-targeted radiopharmaceutical therapy, such as Lutathera. [212Pb]VMT01 is a TAT in development for second-line or later treatment of patients with progressive MC1R-positive metastatic melanoma.
We have had recurring losses since inception. We expect our expenses to increase in connection with our ongoing activities, particularly as we advance and expand preclinical activities, clinical trials and potential commercialization of our product candidates. Our costs will also increase as we:
● continue the development of our other program candidates;
● hire additional clinical, medical and development personnel.
As of December 31, 2023, we had cash and cash equivalents of $9.2 million. We believe our cash and cash equivalents, including the cash we raised through the Lantheus Investment Agreement, the January 2024 Public Offering and the March 2024 Private Placement will be sufficient to fund our operations for at least the next 12 months from the date the consolidated financial statements in this report were issued and into 2026. For additional information regarding the cash we raised, see "- Liquidity and Capital Resources - Sources of Liquidity" below and Note 20, Subsequent Events in this Form 10-K. Monthly operating expenses are budgeted to increase for research and development and general and administrative expenses in fiscal year 2024 as management works to implement its strategy to advance its two clinical assets, VMT01 and VMT-α-NET, in their clinical trials and to progress its preclinical assets towards clinical trials. Management anticipates a significant increase of expenses, particularly in research and development, as it undertakes these activities in fiscal year 2024.
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On February 3, 2023, we completed the merger of Isoray Acquisition Corp., a Delaware corporation and our wholly owned subsidiary, with Viewpoint Molecular Targeting, Inc. (“Viewpoint”) (such transaction being the “Merger”). Pursuant to the Merger, we issued 136,545,075 shares of common stock, representing approximately 49% of our fully diluted outstanding capital stock. Viewpoint is an alpha-particle radiopharmaceutical company in the alpha-emitter market developing oncology therapeutics and complementary imaging agents.
For a more detailed summary of the Merger, see our Forms 8-K filed with the Securities and Exchange Commission (“SEC”) on September 28, 2022, and on February 6, 2023, and our Form 8-K/A filed with the SEC on April 21, 2023, which are available free of charge on the SEC’s website at www.sec.gov.
Historically, we operated a brachytherapy division and since the Merger, we now operate as a radiopharmaceutical development division. On December 7, 2023, we entered into an Asset Purchase Agreement (the “GT Medical APA”) with Isoray and GT Medical Technologies, Inc. (“GT Medical”).
Subject to the satisfaction or waiver of the conditions set forth in the GT Medical APA, Isoray will sell to GT Medical, and GT Medical will purchase from Isoray, all of Isoray’s right, title and interest in and to substantially all of the assets of Isoray related to Isoray’s commercial Cesium-131 business including equipment, certain contracts and leases, inventory and intellectual property (the “GT Medical Asset Purchase”). Subject to limited exceptions set forth in the GT Medical APA, GT Medical is not assuming the liabilities of Isoray.
The GT Medical APA also includes customary termination provisions, including that, in general, either party may terminate the GT Medical APA if the transaction has not been consummated by March 31, 2024, or if any governmental authority issues any order that restrains, enjoins or otherwise prohibits or prevents the transaction. We expect the GT Medical Asset Purchase to be completed in the first half of 2024.
As a result of the transaction, we have effectively exited the brachytherapy segment and will now focus exclusively on our radiopharmaceutical development segment. The sale of the brachytherapy segment represents a strategic shift that will have a major effect on our operations. We accounted for the transaction as discontinued operations on the date the divestiture was announced. Accordingly, we are reporting the results of the brachytherapy segment operations and cash flows, and balance sheet classifications for the current and comparative periods as discontinued operations. Prior to the consummation of the sale, we were neither actively marketing the brachytherapy business for sale nor had intentions to abandon it and, as a result, did not present the results as assets held for sale or discontinued operations in prior filings. See footnotes to the financial statements for our discontinued operations reporting.
For a full discussion of the GT Medical Asset Purchase, see "Item 1A - Business."
Critical Accounting Policies and Estimates
Management’s discussion and analysis of the Company’s financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent liabilities. On an ongoing basis, management evaluates past estimates and judgments, including those related to accrued liabilities, derivative liabilities and contingencies. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.
Share-Based Compensation
The Company measures and recognizes expense for all share-based payments at fair value. The Company uses the Black-Scholes option valuation model to estimate fair value for all stock options on the date of grant. For stock options that vest over time, the Company recognizes compensation cost on a straight-line basis over the requisite service period for the entire award. The Company recognizes forfeitures as they occur.
Research and Development Costs
Research and development costs, including salaries, benefits, and share-based compensation, research materials, facility overhead, lab supplies, depreciation, administrative expenses and contractor fees, are charged to operations as incurred.
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Legal Contingencies
The Company may, in the ordinary course of business, be involved in legal proceedings involving securities, contractual and employment relationships, product liability claims, patent rights, environmental matters, and a variety of other matters, the outcomes of which are not within the Company’s complete control and may not be known for extended periods of time. Legal costs associated with defending these matters are expensed as incurred.
The Company records a liability in its consolidated financial statements for damages and/or costs related to claims, settlements, and judgments where the Company has assessed that the loss is probable and an amount can be reasonably estimated.
Business Acquisition Accounting
The Company applies the acquisition method of accounting for those that meet the criteria of a business combination. The Company allocates the purchase price of its business acquisition based on the fair value of identifiable tangible and intangible assets and liabilities. The difference between the total cost of the acquisition and the sum of the fair values of acquired tangible and identifiable intangible assets less liabilities is recorded as goodwill. Transaction costs are expensed as incurred in general and administrative expenses.
If applicable, the Company records deferred taxes for any differences between the assigned values and tax basis of assets and liabilities. Estimated deferred taxes are based on available information concerning the tax basis of assets acquired and liabilities assumed at the acquisition date, although such estimates may change in the future as additional information becomes known.
Goodwill and In-Process Research and Development (“IPR&D”)
The fair value of acquired intangible assets is determined using an income-based approach referred to as the multi-period excess-earnings approach.
Goodwill is tested at least annually for impairment by assessing qualitative factors in determining whether it is more likely than not that the fair value of net assets is below their carrying amounts.
IPR&D assets represent the fair value of incomplete research and development (“R&D”) projects that had not reached technological feasibility as of the date of the acquisition. Initially, these assets are classified as IPR&D and are not subject to amortization. IPR&D assets that reach commercialization are amortized on a straight-line basis over their estimated useful life. Estimated useful lives are determined considering the period the assets are expected to contribute to future cash flows. IPR&D is tested for impairment at least annually or more frequently if events occur or circumstances change that would indicate a potential reduction in the fair values of the assets below their carrying value. Impairment charges are recognized to the extent the carrying value of IPR&D is determined to exceed its fair value. Post-acquisition R&D expenses related to these projects are expensed as incurred.
Grant Revenue Recognition
The Company enters into contracts with governmental agencies for services. These contracts are analyzed in order to determine if they should be accounted for under a revenue recognition model pursuant to Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, or a grant model pursuant to ASC 958, Not-for-Profit Entities. If accounted for pursuant to a grant model, the Company must determine if the grant is conditional or unconditional, and if any conditional barriers exist which must be overcome. If unconditional, the grant is recognized as revenue immediately, and if conditional, the grant is recognized as revenue as and when the barriers are overcome. We concluded that payments received under the current grants represent conditional, nonreciprocal contributions, as described in ASC 958, and that the grants are not within the scope of ASC 606, as the organizations providing the grants do not meet the definition of a customer. The significant barrier to the current conditional grants is that the expenses incurred must meet the qualifications as established by the respective governmental agencies, so that the grant revenue is recognized as the qualified expenses are incurred. Expenses for grants are tracked using a project code specific to the grant, and the employees also track hours worked by using the project code. Under ASC 958, grants related to income are presented as part of the consolidated statements of operations, either separately or under a general heading. Both methods are acceptable under ASC 958. The Company has elected to record grants related to income separately on the consolidated statements of operations as grant revenue. The related expenses are recorded within R&D and general and administrative.
Assets Held for Sale and Discontinued Operations
The Company classifies assets and liabilities to be sold ("disposal group") as held for sale in the period when all of the applicable criteria are met, including: (i) management commits to a plan to sell, (ii) the disposal group is available to sell in its present condition, (iii) there is an active program to locate a buyer, (iv) the disposal group is being actively marketed at a reasonable price in relation to its fair value, (v) significant changes to the plan to sell are unlikely, and (vi) the sale of the disposal group is generally probable of being completed within one year. Management performs an assessment at least quarterly or when events or changes in business circumstances indicate that a change in classification may be necessary.
Assets and liabilities held for sale are presented separately within the consolidated balance sheets with any adjustments necessary to measure the disposal group at the lower of its carrying value or fair value less costs to sell. Depreciation of property and equipment and amortization right-of-use assets are not recorded while these assets are classified as held for sale. For each period the disposal group remains classified as held for sale, its recoverability is reassessed and any necessary adjustments are made to its carrying value.
The Company categorizes the assets and liabilities of a business component as discontinued operations once management commits to a plan to sell, the business segment is available for immediate sale, management has initiated a plan to sell at a price that is reasonable in relation to its fair value, management anticipates the sale will occur within one year, and it is unlikely that significant changes will be made to the plan to sell. In addition, the business component must be comprised of operations and cash flows that are clearly distinguished from the rest of the entity. The results of discontinued operations are aggregated and presented separately in the consolidated balance sheets and consolidated statements of operations.
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Results of Operations
Financial Presentation
The following sets forth a discussion and analysis of the Company’s financial condition and results of operations for the years ended December 31, 2023 and 2022. This discussion and analysis should be read in conjunction with our consolidated financial statements appearing elsewhere in this Annual Report. The following discussion contains forward-looking statements. Our actual results may differ significantly from the results discussed in such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in “Item 1A — Risk Factors,” beginning on page 34 of this Annual Report.
The Company has previously presented its results in two segments: Drug Operations and Brachytherapy. Due to the divestiture of all of the brachytherapy segment to GT Medical and the classification of the assets and operations of the brachytherapy segment as discontinued operations in our financial statements, we have now determined that we operate in only one segment. As a result, the following does not include a discussion of the results of our discontinued operations. For additional information regarding our discontinued operations and transitional period comparative data, see Note 4, Discontinued Operations, and Note 18, Transitional Period Comparative Data, to the financial statements in this Form 10-K.
For the year ended December 31,
(in thousands)
Operating expenses:
Loss on disposal of property and equipment - 305 (305 )
Revenue
Grant Revenue
Grant revenue of $1.4 million is derived from our work for the National Institutes of Health. We did not have any grant revenue prior to the acquisition of Viewpoint on February 3, 2023.
Operating Expenses
Research and Development Expenses
Research and development expenses consisted primarily of the costs related to employee and third-party research and development activities. Contributing to the increase of $20.4 million from $0.9 million for the year ended December 31, 2022 to $21.3 million for the year ended December 31, 2023 were the increased costs related to the development of our targeted alpha therapy drug programs gained through the merger with Viewpoint.
Management believes that research and development expenses will increase as we continue to invest in the development of new drugs and products in the alpha-emitter space.
General and Administrative Expenses
General and administrative expenses consist primarily of the costs related to the executive, finance, human resources and information technology functions of the Company.
The primary reasons for the increase of $13.6 million in general and administrative expenses for the year ended December 31, 2023 compared to the year ended December 31, 2022 were change of control payments and the acceleration of share-based compensation as a result of the merger with Viewpoint, increased personnel and other expenses related to the former Viewpoint operations, along with increased consulting, legal and audit expenses.
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Liquidity and Capital Resources
The Company assesses its liquidity in terms of its ability to generate cash to fund its operating, investing and financing activities. The Company has historically financed its operations through selling equity to investors. During the year ended December 31, 2023, the Company raised approximately $0.6 million pursuant to the exercise of options to purchase common stock. Existing cash reserves from prior capital raises and $0.4 million raised from the ATM Agreement were used to fund the Company's operations and capital expenditures during the year ended December 31, 2023.
Our cash flows for the years ended December 31, 2023 and 2022 (unaudited), respectively, are summarized as follows (in thousands):
For the year ended December 31,
Net cash used by operating activities $ (36,913 ) $ (10,401 )
Net cash provided by (used in) investing activities 24,373 (28,988 )
Net cash provided by financing activities 785 28
Net decreases in cash and cash equivalents $ (11,755 ) $ (39,361 )
As of December 31,
Cash Flows from Operating Activities
Net cash used by operating activities in the year ended December 31, 2023 was primarily due to an approximate net loss of $46.5 million, net of approximately $7.3 million in adjustments for non-cash activity such as depreciation and amortization expense, the accretion of asset retirement obligation, and share-based compensation. Changes in operating assets and liabilities contributed approximately $2.3 million to the cash used by operating activities.
Net cash used by operating activities in the year ended December 31, 2022 was primarily due to an approximate net loss of $10.8 million, net of approximately $1.4 million in adjustments for non-cash activity such as depreciation and amortization expense, the accretion of asset retirement obligation and share-based compensation. Changes in operating assets and liabilities contributed approximately $1.0 million to the cash provided by operating activities.
Cash Flows from Investing Activities
Investing activities for both years are presented by primary transaction category. Investing activities consisted of transactions related to the purchase of fixed assets as well as the purchase and subsequent maturity of certificates of deposit or U.S. Treasury Bills. Management will continue to invest in resources to further develop our internal manufacturing process and capabilities and to invest and reinvest maturing certificates of deposit and U.S. Treasury Bills in low-risk investment opportunities that safeguard assets and provide greater assurance those resources will be liquid and available for business needs as they arise.
Cash Flows from Financing Activities
Financing activities for both years are presented by primary transaction category. Financing activities for the year ended December 31, 2023 were primarily due to option exercises and $0.4 million raised from the ATM Agreement. Financing activities for the year ended December 31, 2022 were primarily due to option exercises.
Sources of Liquidity
ATM Agreement
We have an At Market Issuance Sales Agreement (the "ATM Agreement") with Oppenheimer & Co., Inc., B. Riley Securities, Inc. and JonesTrading Institutional Services LLC, dated November 17, 2023, to create an "at-the-market" equity program under which we may offer and sell shares of our common stock, from time to time.
On November 17, 2023, we filed a shelf registration statement on Form S-3 with the SEC (File No. 333-275638) and accompanying base prospectus, declared effective by the SEC on December 14, 2023, for the offer and sale of up to $200 million of our securities (the "December 2023 Registration Statement"). Also on November 17, 2023, we filed a prospectus supplement with the SEC in connection with the offering of up to $50 million of shares of our common stock pursuant to the ATM Agreement under the December 2023 Registration Statement.
During the year ended December 31, 2023, we issued 1,238,826 shares of our common stock under the Sales Agreement, resulting in net proceeds of approximately $0.4 million. As of December 31, 2023, we had an aggregate of $199.6 million available under the December 2023 Registration Statement.
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Funding Requirements
We expect our expenses to increase in connection with our ongoing activities, particularly as we advance and expand preclinical activities, clinical trials and potential commercialization of our program candidates. Our costs will also increase as we:
● continue the development of our other program candidates;
● hire additional clinical, medical and development personnel.
As of December 31, 2023, we had cash and cash equivalents of $9.2 million and an accumulated deficit of $152.4 million. Our continued viability is dependent on the ability to successfully obtain additional working capital and ultimately attain profitable operations if we commercialize our program candidates. We believe our cash and cash equivalents, including the cash we raised through the Lantheus Investment Agreement, the January 2024 Public Offering and the March 2024 Private Placement, will be sufficient to fund our operations and capital investments into 2026. For additional information regarding the cash we raised, see Financing Activities below and Note 20, Subsequent Events in this Form 10-K. Monthly operating expenses are budgeted to increase for research and development and general and administrative expenses in fiscal year 2024 as management works to implement our strategy to advance our two clinical assets, VMT-α-NET and VMT01, in our clinical trials and to progress our preclinical assets towards clinical trials. Management anticipates a significant increase of expenses, particularly in research and development, as we undertake these activities in fiscal year 2024 and beyond.
We expect we will need to raise additional capital until we are profitable, which may never occur. If no additional capital is raised through either additional public or private equity financings, debt financings, strategic relationships, alliances and licensing agreements, or a combination thereof, we may delay, limit or reduce discretionary spending in areas related to research and development activities and other general and administrative expenses in order to fund our operating costs and working capital needs.
We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. We expect that we will require additional capital to pursue in-licenses or acquisitions of other product candidates. If we receive regulatory approvals for our product candidates, we expect to incur commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize or whether we commercialize jointly or on our own.
Because of the numerous risks and uncertainties associated with research, development and commercialization of our program candidates, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on and could increase significantly as a result of many factors, including:
● the costs, timing and outcome of regulatory review of our program candidates;
● the costs and timing of hiring new employees to support our continued growth;
Until such time, if ever, that we can generate product revenue sufficient to achieve profitability, we expect to finance our cash needs through a combination of public and private equity offerings, debt financings, other third-party funding, strategic alliances, licensing arrangements or marketing and distribution arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our existing shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing shareholders. 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 capital expenditures or declaring dividends. If we raise additional funds through other third-party funding, strategic alliances, licensing arrangements, outright sales of product candidates or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product 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 when needed, we will be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves.
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Capital Expenditures
Management is reviewing all aspects of research and development and general and administrative functions to evaluate the most efficient deployment of capital to ensure that the appropriate materials, systems and personnel are available to support and drive clinical trials and preclinical activities.
Financing Activities
During the year ended December 31, 2023, the Company received approximately $0.6 million as a result of the exercise of 1,913,185 options to purchase common stock.
During the year ended December 31, 2022, the Company received approximately $28 thousand as a result of the exercise of 72,500 options to purchase common stock.
On March 4, 2024, Perspective entered into an investment agreement (the "March 2024 Investment Agreement”) with certain accredited institutional investors (“Institutional Investors”) pursuant to which Perspective agreed to issue and sell, in a private placement (the “March 2024 Private Placement”), 92,009,981 shares of Perspective’s common stock, par value $0.001 per share (the “Common Stock”), for a purchase price of $0.95 per share, representing the closing price of the Common Stock on March 1, 2024. The closing of the March 2024 Private Placement occurred on March 6, 2024 (the "March 2024 Closing"). The gross proceeds to the Company from the March 2024 Private Placement were approximately $87.4 million, before deducting fees and other estimated transaction expenses. Perspective intends to use the net proceeds from the March 2024 Private Placement for general corporate and working capital purposes, which may include research and development expenditures, preclinical study and clinical trial expenditures, manufacturing expenditures, commercialization expenditures, capital expenditures, acquisitions of new technologies, products or businesses and investments.
On January 8, 2024, Perspective entered into an investment agreement (the “Lantheus Investment Agreement”) with Lantheus Alpha Therapy, LLC, a Delaware limited liability company and wholly owned subsidiary of Lantheus Holdings, Inc. (“Lantheus”), pursuant to which Perspective agreed to sell and issue to Lantheus in a private placement transaction (the “Lantheus Private Placement”) certain shares (the “Lantheus Shares”) of Perspective’s Common Stock. The closing of the purchase and sale of the Lantheus Shares to Lantheus by Perspective (the “Lantheus Closing”) were subject to Perspective raising at least $50.0 million of gross proceeds (excluding Lantheus’ investment) in a qualifying third-party financing transaction, which occurred on January 22, 2024. The number of Lantheus Shares sold was 56,342,355, representing 19.99% of the outstanding shares of Common Stock as of January 8, 2024. Pursuant to the Lantheus Investment Agreement, Perspective agreed to cooperate in good faith to negotiate and enter into a registration rights agreement with Lantheus, obligating Perspective to file a registration statement on Form S-3 with the U.S. Securities and Exchange Commission to register for resale the Lantheus Shares issued at the Lantheus Closing. The Lantheus Investment Agreement also contains agreements of Perspective and Lantheus whereby Lantheus is provided certain board observer and information rights of Perspective, as well as standstill provisions prohibiting Lantheus from taking certain actions for a specified period of time, subject to certain exceptions.
On January 17, 2024, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Oppenheimer & Co. Inc., as representative of the underwriters named therein (the “Underwriters”), in connection with its previously announced underwritten public offering (the “Public Offering”) of 132,075,218 shares (the “Public Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”), and, in lieu of Public Shares to certain investors, pre-funded warrants (the “Pre-funded Warrants”) to purchase 30,086,944 shares of Common Stock. The price to the public for the Public Shares was $0.37 per Public Share, and the price to the public for the Pre-funded Warrants was $0.369 per Pre-funded Warrant, which represents the per share price for the Public Shares less the $0.001 per share exercise price for each such Pre-funded Warrant. Under the terms of the Underwriting Agreement, the Company granted the Underwriters an option, exercisable for 30 days, to purchase up to an additional 24,324,324 shares of Common Stock at the same price per share as the Public Shares, which such option was fully exercised by the Underwriters on January 18, 2024. The Public Offering closed on January 22, 2024.
The gross proceeds to the Company from the Public Offering were approximately $69.0 million, before underwriting discounts and commissions and estimated expenses of the Public Offering. The Company intends to use the net proceeds from the Public Offering for general corporate purposes, which may include research and development expenditures, preclinical study and clinical trial expenditures, manufacturing expenditures, commercialization expenditures, working capital, capital expenditures, acquisitions of new technologies, products or businesses and investments.
The Public Offering was made pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-275638), declared effective by the Securities and Exchange Commission on December 14, 2023, a base prospectus dated December 14, 2023, and the related prospectus supplement dated January 17, 2024.
The Pre-funded Warrants are exercisable at any time after the date of issuance. The exercise price and the number of shares of Common Stock issuable upon exercise of each Pre-funded Warrant (the “Warrant Shares”) are subject to appropriate adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the Common Stock as well as upon any distribution of assets, including cash, stock or other property, to the Company’s stockholders. The Pre-funded Warrants will not expire and are exercisable in cash or by means of a cashless exercise. A holder of Pre-funded Warrants may not exercise such Pre-funded Warrants if the aggregate number of shares of Common Stock beneficially owned by such holder, together with its affiliates, would beneficially own more than 4.99% of the issued and outstanding shares of Common Stock following such exercise, as such percentage ownership is determined in accordance with the terms of the Pre-funded Warrants. A holder of Pre-funded Warrants may increase or decrease this percentage not in excess of 19.99% by providing at least 61 days’ prior notice to the Company.
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On November 17, 2023, the Company filed a Form S-3 registration statement which was amended on December 7, 2023, and became effective on December 14, 2023, with the potential to register up to $200 million of equity securities. On November 17, 2023, the Company entered into an At Market Issuance Sales Agreement (the “ATM Agreement”) with Oppenheimer & Co., Inc., B. Riley Securities, Inc. and JonesTrading Institutional Services LLC (each and “Agent” and together the “Agents”) to create an “at-the-market” equity program under which the Company from time to time may offer and sell shares (the “ATM Shares”) of its common stock, par value $0.001 per share, through or to the Agents. The common stock sold pursuant to the ATM Agreement will be distributed at the market prices prevailing at the time of sale. The ATM Agreement provides that the Agents will be entitled to compensation for its services at a commission rate of 3.0% of the gross sales price per share of common stock sold plus reimbursement of certain expenses. As of December 31, 2023, the Company had sold an aggregate of 1,238,826 shares under the distribution agreement at an average price of approximately $0.303 per common share for gross proceeds of approximately $0.4 million.
When it does require capital in the future, the Company expects to finance its cash needs through sales of equity, possible strategic collaborations, debt financing or through other sources that may be dilutive to existing stockholders, Management anticipates that if it raises additional financing that it will be at a discount to the market price and it will be dilutive to stockholders.
Other Commitments and Contingencies
The Company’s purchase commitments and obligations include all open purchase orders and contractual obligations entered into in the ordinary course of business, including commitments with contract manufacturers and suppliers, for which we have not received the goods or services and acquisition and licensing of intellectual property. Although open purchase orders are considered enforceable and legally binding, the terms generally allow us the option to cancel, reschedule and/or adjust our requirements based on our business needs prior to the delivery of goods or performance of services.
On July 1, 2023, the Company entered into a lease with Unico Properties LLC for office space in Seattle, Washington, that terminates October 2028. Upon entering this lease, the Company recognized a right-of-use asset and lease liability of approximately $0.8 million on the balance sheet based upon the present value of the future base payments discounted at an 8% discount rate using the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment as the lease does not provide an implicit discount rate. The weighted average remaining term and discount rate as of December 31, 2023, was 4.83 years and 8%, respectively. Over the next five years, our lease liability less imputed interest totals approximately $0.8 million. For additional information related to the Company's leases, see Note 10, Leases.
Merger
On September 27, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Isoray Acquisition Corp., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), Viewpoint Molecular Targeting, Inc. (“Viewpoint”), and Cameron Gray, as the representative of the Owners (as defined therein), as amended by the First Amendment to Agreement and Plan of Merger entered into by the parties on October 21, 2022 (the “Amendment”). On February 3, 2023 (the “Merger Closing”), the Company completed the merger of Merger Sub with Viewpoint (such transaction being the “Merger”). Viewpoint is an alpha-particle radiopharmaceutical company in the alpha-emitter market developing oncology therapeutics and complementary imaging agents. In connection with the Merger Closing, the Company issued 136,545,075 shares of common stock, representing approximately 49% of the fully diluted outstanding capital stock of the Company, to the stockholders of Viewpoint, with 10% of those shares being held in escrow by U.S. Bank National Association (“U.S. Bank”) for the 12-month period following the Merger Closing pursuant to the terms of the Merger Agreement and an escrow agreement entered into among the Company, U.S. Bank and Cameron Gray. On February 5, 2024, the Company notified U.S. Bank that all of the escrow shares were to be released and distributed to the stockholders of Viewpoint.
For a more detailed summary of the Merger Agreement, see our Forms 8-K filed with the SEC on September 28, 2022 and on February 6, 2023 and our Form 8-K/A filed with the SEC on April 21, 2023.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
Impact of Inflation
Inflation had minimal impact on our net sales and revenues but had an impact on loss from continuing operations as we have experienced increases in costs for materials and services.
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that we adopt as of the specified effective date. See Note 2, Summary of Significant Accounting Policies, to the financial statements in this Form 10-K for additional discussion of our adopted accounting policies and recent accounting pronouncements.
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ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, the Company is not required to provide Item 7A disclosure in this Annual Report.
ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this Item 8 is incorporated by reference to our Consolidated Financial Statements and the Report of Independent Registered Public Accounting Firm beginning at page F-1 of this Report.
ITEM 9 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A – CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and co-principal financial officers, we conducted an evaluation of the design and operation of our disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended ("Exchange Act"), as of December 31, 2023. Based on that evaluation, our principal executive officer and our co-principal financial officers concluded that the design and operation of our disclosure controls and procedures were effective. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. However, management believes that our system of disclosure controls and procedures are designed to provide a reasonable level of assurance that the objectives of the system will be met.
Management’s Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance concerning both the reliability of our financial reporting and the preparation of our financial statements in accordance with generally accepted accounting principles. This control includes policies and procedures that obligate us to maintain reasonably detailed records that accurately and fairly reflect our transactions and the disposition of our assets, provide assurance that our transactions are properly recorded, ensure that our receipts and expenditures are authorized by management and, where applicable, our board of directors, and prevent or allow us to timely detect material unauthorized acquisitions, uses or dispositions of our assets.
We have evaluated the effectiveness of our internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control Integrated Framework (2013). This evaluation was performed under the supervision and with the participation of our management, including our chief executive officer and our co-principal financial officers and principal accounting officer, all of whom concluded that our internal control over financial reporting was effective as of December 31, 2023. Our evaluation of the effectiveness of our internal control over financial reporting in future periods may differ due to changing conditions or noncompliance with the policies and procedures we have established.
Changes in Internal Control over Financial Reporting
There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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ITEM 9B – OTHER INFORMATION
Trading Plans
None.
ITEM 9C - DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III
ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Board Membership and Board Committees
Upon the closing of the Merger with Viewpoint Molecular Targeting, Inc., Perspective increased the size of its Board of Directors (the "Board of Directors" or the "Board") from four members to five members. During the year ended December 31, 2023:
● Heidi Henson was appointed to the Board on June 1, 2023.
The current directors of the Company are as follows:
Audit Compensation Nominations and Corporate Governance
Name Type Age Committee Committee Committee
Lori Woods, Chairperson Non-independent 61 N/A Member Member
Heidi Henson Independent 58 Chair Member N/A
Robert Froman Williamson, III Independent 58 Member Chair Member
Frank Morich, M.D., Ph.D. Independent 70 Member N/A Chair
Johan (Thijs) Spoor Employee 51 N/A N/A N/A
Each member of the Board serves a one-year term and is subject to reelection at the Company’s Annual Meeting of Stockholders held each year.
The Company’s directors, as named above, will serve until the next annual meeting of the Company’s stockholders or until their successors are duly elected and have qualified. Directors will be elected for one-year terms at the annual stockholders meeting. There is no arrangement or understanding between any of the directors or officers of the Company and any other person pursuant to which any director or officer was or is to be selected as a director or officer, and there is no arrangement, plan or understanding as to whether non-management stockholders will exercise their voting rights to continue to elect the current directors to the Board. There are also no arrangements, agreements or understandings between non-management stockholders that may directly or indirectly participate in or influence the management of the Company’s affairs.
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Lori Woods – Ms. Woods has been a Director of the Company since June 4, 2018, and has served as Chairperson of the Board since February 3, 2023. Most recently, Ms. Woods served as Chief Executive Officer of the Company from December 2018 to February 2023. Ms. Woods returned to the Company after previously serving as Vice President from 2006 to February 2008, at which time she was appointed Acting Chief Operating Officer before her appointment to Chief Operating Officer in February 2009, a position she held until January 2010. Beginning in February 2016, and continuing until her appointment as Interim CEO on June 4, 2018, Ms. Woods served as a senior consultant to the Company. From February 2016 to June 2018, Ms. Woods was a founder of Medvio, LLC, a medical device consulting company focused on the urology and oncology space. During her time at Medvio she worked with large public and international medical device companies, supporting the approval process and distribution of products in diverse international markets. Further, she worked with various partners to develop proprietary technologies for the colorectal and liver treatment markets. Previously, from January 2002 to July 2006, Ms. Woods served as Chief Executive Officer of Pro-Qura, Inc., a privately owned cancer treatment management company focused on the quality delivery of brachytherapy treatments for prostate cancer. She has also served as the Director of Business Development for the Tumor Institute Radiation Oncology Group and the Seattle Prostate Institute ("SPI") in Seattle, WA. SPI was an early innovator in prostate brachytherapy treatments and assisted in the training of more than 2,000 physicians in the use of prostate brachytherapy. Ms. Woods previously served as a board member of the Northwest division of the Juvenile Diabetes Research Foundation, focusing on their digital awareness programs, including their website and SEO strategy, and their public relations efforts. Ms. Woods earned a Bachelor of Science degree in Business Administration – Marketing and Communications from Loma Linda University, CA. Our Board of Directors believes that Ms. Woods' prior experience as our Chief Executive Officer, extensive experience and credibility in the brachytherapy industry, and strong relationships with suppliers and distributors of brachytherapy products qualifies her to serve on our Board.
Heidi Henson – Ms. Henson has been a director of the Company since June 1, 2023. Ms. Henson served as the Chief Financial Officer of Pardes Biosciences, Inc., a publicly listed biopharmaceutical company, from 2021 until the completion of their tender offer in August 2023. Prior to that, she was a financial consultant for the same company from 2020 until her appointment as Chief Financial Officer. From 2019 through 2020, she was the Chief Financial Officer of Imbria Pharmaceuticals, Inc., a private biopharmaceutical company. From 2018 through 2019, she was the Chief Financial Officer of Respivant Sciences, Inc., a private biopharmaceutical company. From 2014 through 2018, she was the Chief Financial Officers of Kura Oncology, Inc., a publicly listed biopharmaceuticals company. From 2012 through 2018, Ms. Henson was the Chief Financial Officer for Wellspring Biosciences LLC and Araxes Pharma LLC (its parent company), a private biopharmaceutical company. Ms. Henson currently serves on the board of directors of PepGen, Inc. and Lista Therapeutics, Inc., where she is the Chair of both of their audit committees. Ms. Henson holds a Bachelor of Accountancy from the University of San Diego and is a member of the Association of Bioscience Financial Officers, or ABFO. Our Board of Directors believes that Ms. Henson’s experience as a financial professional with over 25 years of experience in both public and private companies qualifies her to serve on our Board.
Robert Froman Williamson, III – Mr. Williamson has been a director of the Company since February 5, 2023. Mr. Williamson was appointed as a director in connection with the merger with Viewpoint. Since September 2022, Mr. Williamson has worked at Triumvira Immunologicals, a cell therapy company, most recently as President, COO and Director, and since March 2022, as a senior adviser to SyntheX, a protein interaction and degrader company. From February to September 2022, he was the CBO/CFO of OncoMyx, an oncolytic virus company. From 2020 to 2021 he was CEO of BioTheryX, a protein degradation therapeutics company, raising a $100 million crossover round and preparing the company for an IPO. Prior to that, Mr. Williamson served as CEO of PharmAkea from 2013 to 2019, and of ATXCo in 2019, both oncology and fibrosis companies financed through a partnership with Celgene, until PharmAkea’s acquisition by Galecto and ATXCo’s acquisition by Blade Therapeutics, both in 2019. Previously, Mr. Williamson was Executive Chairman and founder of Strategic Enzyme Applications, CEO of Arriva Pharmaceuticals, President and COO of Eos Biotechnology, which was sold to Protein Design Labs, and COO of DoubleTwist, Inc. through its acquisition by Merck and Hitachi. Mr. Williamson also serves on the Coulter Oversight Board for University of Miami, Florida, is a qualified financial expert and has chaired both the Compensation and Audit Committees of the Company. Notably, Mr. Williamson served as an early Director of Pharmasset, Inc., where he helped finance, grow and advance the company into the public markets and through its acquisition by Gilead in 2011 for $11 billion. Earlier, Mr. Williamson was a partner with The Boston Consulting Group and a research assistant for the Federal Reserve Board. Mr. Williamson received a BA in economics from Pomona College and an MBA from Stanford University. Our Board of Directors believes that Mr. Williamson’s active involvement in building biotechnology and related technology companies for over two decades qualifies him to serve on our Board.
Frank Morich, M.D., Ph.D. – Dr. Frank Morich has been a director of the Company since February 5, 2023. Dr. Morich was appointed as a director in connection with the merger with Viewpoint. Dr. Morich served on the board of directors of Viewpoint, from February 2021 until February 3, 2023. He has also served on the board of directors of CUE-Biopharma, located in Boston, Massachusetts, a company working on protein therapeutics with applications in immune-oncology, autoimmunity and potentially antiviral applications since August 2018, and as its Chairman since April 2021. Dr. Morich served on the board of directors for MorphoSys from 2015 to 2021, and for Innate Pharma from 2004 to 2010, both clinical-stage biotechnology companies specializing in antibody development. Dr. Morich serves as Executive Chairman of Aphaia Pharma, located in Zug, Switzerland, a clinical-stage biopharmaceutical company working to treat and prevent metabolic disorders such as obesity and diabetes, a position he has held since June 2022. Prior to focusing on board service, Dr. Morich was Chief Commercial Officer at Takeda Pharmaceuticals, a global pharmaceutical company, from 2011 to 2014, and as its Executive Vice President of International Operations from 2010 to 2011. From 2008 to 2010, Dr. Morich served as Chief Executive Officer of NOXXON Pharma AG, a clinical-stage drug development company, and, from 2005 to 2007, as Chief Executive Officer and member of the board of directors of Innogenetics N.V., an international in vitro diagnostics company. Prior to that, Dr. Morich held several positions at Bayer, a global pharmaceutical and life sciences company, including as a member of the Board of Management of Bayer AG, Head of Global Product Development, and Head of Research and Development. Dr. Morich holds an M.D. and Ph.D. from the University of Marburg where he specialized in immunology with a focus on monoclonal antibodies. He also served as a military physician before moving to the private sector. Our Board of Directors believes that Dr. Morich’s experience as a biopharmaceutical professional with more than 35 years of industry experience qualifies him to serve on our Board.
Johan (Thijs) Spoor – Mr. Spoor has been a director of the Company and has served as our Chief Executive Officer since February 5, 2023. Mr. Spoor was appointed as a director in connection with the merger with Viewpoint. From February 2022 until February 2023, Mr. Spoor served as the Chief Executive Officer of Viewpoint. Prior to joining Viewpoint, from October 2019 until June 2021, Mr. Spoor served as the President and CEO of KBP Biosciences, a global, clinical-stage biotechnology company focused on discovering, developing, and commercializing innovative small-molecule therapeutics for the treatment of serious cardiorenal and infectious diseases. While at KBP Biosciences, Mr. Spoor led all operations for major fund-raising and initial public officer (“IPO”) readiness, and drove the company’s small molecule clinical development programs, including toxicology, clinical pharmacology, Phase 2 studies, and discussions with regulators. Prior to KBP BioSciences, from January 2016 until October 2019, Mr. Spoor served as the President and CEO of AzurRx BioPharma, Inc., where he led its Nasdaq IPO, completion of animal studies, regulatory approvals and multiple Phase 2 studies. From September 2010 until December 2015, Mr. Spoor served as the President and CEO of FluoroPharma Medical, Inc., which he took public. He was previously a Health and Life Sciences strategy consultant to Fortune 500 companies at Oliver Wyman. Mr. Spoor previously worked on Wall Street as an equity research analyst at JP Morgan and Credit Suisse where he covered biotechnology stocks and medical device companies. He started his career with formal training in nuclear pharmacy which led to increasing commercial leadership roles in the imaging business at GE Healthcare (Amersham) in cardiology and oncology. Mr. Spoor also serves on the board of directors of Verifi Water, Inc. Mr. Spoor holds a Pharmacy degree from the University of Toronto and an MBA from Columbia Business School. Our Board of Directors believes that Mr. Spoor’s experience as our Chief Executive Officer and experience as an established leader with nearly 30 years of combined executive, broad management and capital markets expertise across healthcare and medical device industries qualifies him to serve on our Board.
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Executive Officers
The executive officers serving the Company as of March 22, 2024 were as follows:
Name Age Position Held
Johan (Thijs) Spoor1 51 Chief Executive Officer, Director
Markus Puhlmann, M.D. 58 Chief Medical Officer
Jonathan Hunt 57 Chief Financial Officer, Co-Principal Financial Officer
Markus Puhlmann, M.D., MBA – Dr. Puhlmann has served as the Chief Medical Officer of Perspective Therapeutics since February 3, 2023. Dr. Puhlmann is a clinical researcher with over 30 years of combined experience in healthcare and the pharmaceutical industry with leadership positions in oncology drug development for solid and liquid tumor indications involving all phases of clinical development. Before joining Perspective Therapeutics, Dr. Puhlmann served as the CD30 Franchise Head of Global Clinical Development at Seagen from 2019 to 2022, where he built programs to explore the immune modulating properties of ADCs for various oncology and non-oncology indications. Prior to his time at Seagen, Dr. Puhlmann joined Merck & Co where he worked on the clinical development of pembrolizumab from 2015 to 2019. After initiating the pembrolizumab GYN program, Dr. Puhlmann focused on the expansion of the GU indications and developed an extensive trial portfolio. In this capacity, Dr. Puhlmann led and contributed to many successful regulatory filings for pembrolizumab across different indications such as urothelial carcinoma, RCC and cervical cancer. In addition, Dr. Puhlmann led the clinical development program for the collaboration of the partnership between Merck and EISAI. Earlier in his career, he held various positions with increasing responsibilities in clinical development and medical affairs at Schering Plough, Bayer and Amgen. Dr. Puhlmann also spent six years at the Surgery Branch, NCI, NIH, where he researched suicide gene therapy approaches including the effects of cytokines on tumor neovasculature. Dr. Puhlmann trained as a surgeon in the UK and Germany and holds a medical degree from the Ludwig Maximilians University, Munich, Germany as well as an Executive MBA from Georgetown’s McDonough School of Business.
Jonathan Hunt – Mr. Hunt was appointed as Chief Financial Officer of the Company on December 3, 2018. On February 12, 2019, Mr. Hunt was appointed as Co-Principal Financial Officer. Before joining the Company, Mr. Hunt was Chief Financial Officer at Vivid Learning Systems, an online safety training company, from 2009 to 2018, where he had a central role in its turnaround, including growing revenues and implementing financial policy and process changes that ultimately resulted in the successful sale of the business. Mr. Hunt previously served as Chief Financial Officer of the Company from 2006 to 2009. Prior to that, Mr. Hunt worked at Hypercom Corporation, a global provider of electronic payment solutions and manufacturer of credit card terminals, where he served as Assistant Corporate Controller from 2005 to 2006. Mr. Hunt holds a Bachelor of Science, Accountancy, and a Masters of Accountancy degree from Brigham Young University.
Mark Austin – Mr. Austin has served as Controller, Principal Financial and Accounting Officer, since July 2017 and Co-Principal Financial Officer since February 12, 2019. On September 15, 2020, Mr. Austin was appointed Corporate Secretary. On August 16, 2021, Mr. Austin was appointed Vice President of Finance and Corporate Controller. Prior to joining the Company, Mr. Austin practiced as a Certified Public Accountant with the accounting firm KPMG where he worked from October 2009 to July 2017. At KPMG, Mr. Austin served as a Senior Manager and before that, as a Manager and Senior Associate in Portland, Oregon, where he served as lead for financial statement and internal control audits within the technology industry, including for software and manufacturing companies. While at KPMG, Mr. Austin served as lead manager for a global public company where he supervised, coached and led teams and team members, and researched technical accounting issues relevant to the technology industry. Mr. Austin holds a Bachelor of Science in Commerce degree in Accounting from Santa Clara University, in Santa Clara, California.
There are no agreements or understandings for any officer or director to resign at the request of another person, and none of the officers or directors is acting on behalf of, or will act at the direction of, any other person. There are no family relationships among our executive officers and directors.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who beneficially own more than 10% of a registered class of our equity securities, to file with the Securities and Exchange Commission ("SEC") initial reports of beneficial ownership and reports of changes in beneficial ownership of our Common Stock. The rules promulgated by the SEC under Section 16(a) of the Exchange Act require those persons to furnish us with copies of all reports filed with the SEC pursuant to Section 16(a). The information in this section is based solely upon a review of Forms 3, Forms 4, and Forms 5 received by us.
Based on company records and other information, we believe that all reporting requirements for the year ended December 31, 2023 were complied with by each person who at any time during such year was a director or an executive officer or beneficially owned more than 10% of our common stock, except that one Form 3 filing for Robert Froman Williamson, III was not filed on a timely basis and one Form 4 filing for each of Robert Froman Williamson, III and Lori Woods were not filed on a timely basis.
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Code of Ethics
We have adopted a Code of Conduct and Ethics that applies to all of our officers, directors and employees and a separate Code of Ethics for Chief Executive Officer and Senior Financial Officers that supplements our Code of Conduct and Ethics (together, the "Codes").
The Code of Ethics for Chief Executive Officer and Senior Financial Officers is available to the public on our website at http://www.perspectivetherapeutics.com/investors/governance-documents. Each of these Codes comprises written standards that are reasonably designed to deter wrongdoing and to promote the behavior described in Item 406 of Regulation S-K promulgated by the Securities and Exchange Commission. Any amendments to or waivers of the Codes will be promptly posted on our website at www.perspectivetherapeutics.com or in a Report on Form 8-K, as required by applicable laws. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding any amendment to, or waiver from, a provision of the Codes by posting such information on the website address and location specified above.
Nominating Procedures
There have been no material changes to the procedures by which our stockholders may recommend nominees to the Board of Directors during our last fiscal year.
Audit Committee
The Company has a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Charter of the Audit Committee (the "Audit Committee Charter") lists the purposes of the Audit Committee as overseeing the accounting and financial reporting processes of the Company and audits of the financial statements of the Company and providing assistance to the Board of Directors: (1) in monitoring (a) the integrity of the Company’s financial statements, (b) the Company’s compliance with legal and regulatory requirements, (c) the independent auditor’s qualifications and independence, and (d) the performance of the Company’s internal audit function, if any, and independent auditor, and (2) preparing the report that the SEC rules require be included in the Company's annual proxy statement.
The current members of the Audit Committee are Ms. Henson (Chair), Mr. Williamson and Dr. Morich. The Audit Committee operates under the Audit Committee Charter, which has been approved by the Board. The Board has determined that Ms. Henson is an “audit committee financial expert” as defined under SEC rules. The Board has affirmatively determined that none of the members of the Audit Committee have a material relationship with the Company that would interfere with the exercise of independent judgment and each of the members of the Audit Committee is “independent” as independence is defined in Section 803B(2) of the NYSE American listing standards and Rule 10A-3 under the Exchange Act.
ITEM 11 – EXECUTIVE COMPENSATION
Our named executive officers for the fiscal year ended December 31, 2023, which consisted of our Chief Executive Officer ("CEO"), our former Chief Executive Officer, and our two most highly compensated executive officers other than our CEO were:
● Johan (Thijs) Spoor, CEO and Director;
● Lori Woods, former CEO1
● Jonathan Hunt, Chief Financial Officer; and
● Markus Puhlmann, Chief Medical Officer.
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The following summary compensation table sets forth information concerning compensation for services rendered in all capacities during the year ended December 31, 2023, the six-month transition period (“TP”) ended December 31, 2022, and the fiscal year ended June 30, 2022, earned by or paid to our named executive officers. Messrs. Spoor, Puhlmann and Hunt were not named executive officers during 2022; accordingly, compensation for 2022 (which includes the TP and the fiscal year ended June 30, 2022) is not included in the following table. Salary and other compensation for the named executive officers are set or recommended to the Board by the Compensation Committee.
Summary Compensation Table
Non-equity
Name and Option incentive plan All other
principal Salary Bonus awards compensation compensation Total
position Year ($) ($) 4 ($)1 ($)5 ($) ($)
CEO and Director
Chief Medical Officer
Chief Financial Officer
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Narrative to Summary Compensation Table
Our Compensation Committee typically reviews and discusses management’s proposed compensation with the Chief Executive Officer for all executives other than the Chief Executive Officer. Based on those discussions and its discretion, the Compensation Committee then approves the compensation of each executive officer after discussions without members of management present.
Annual Base Salary
The annual base salaries of our named executive officers are determined, approved and reviewed by our Compensation Committee. Annual base salaries are intended to provide a fixed component of compensation to our named executive officers.
On February 3, 2023, at the closing of the acquisition of Viewpoint, Mr. Spoor and Dr. Puhlmann became employees of the Company. Mr. Spoor’s annual salary was $510,000 and increased to $575,000 on June 1, 2023. Dr. Puhlmann’s annual salary was $450,000 and increased to $460,000 on June 1, 2023.
Prior to becoming employees of the Company, Mr. Spoor was the Chief Executive Officer of Viewpoint and was paid a salary of $39,231 for the period from January 1, 2023 to February 2, 2023, and Dr. Puhlmann was the Chief Medical Officer of Viewpoint and was paid a salary of $34,615 for the period from January 1, 2023 to February 2, 2023. See “Employment Agreements and Separation Agreement – Current Employment Agreements with our Chief Executive Officer, Chief Financial Officer and Chief Medical Officer” below for more information.
Prior to her resignation on February 3, 2023, Ms. Woods’ annual base salary was $504,000.
Non-Equity Incentive Plan Compensation
We provide for annual cash incentives that reinforces our pay-for-performance approach. This incentive compensation is a short-term incentive program that rewards achievement. Annual incentive awards are awarded at the sole determination of the Compensation Committee (on behalf of the Board) based on the actual and measurable performance of the Company based on a set of corporate objectives for the previous year and are paid in the first quarter of the following year.
For the year ended December 31, 2023, our Chief Executive Officer had an opportunity to earn a bonus of 50% of his annual base salary and each other named executive officer had an opportunity to earn a bonus of 40% of his annual base salary by meeting the target metrics as determined by the Compensation Committee.
For the year ended December 31, 2023, the Compensation Committee determined that 100% of the metrics were achieved for each named executive officer and approved individual performance achievement payouts for such named executive officers in the amounts reflected in the column of the “Summary Compensation Table” above entitled “Non-Equity Incentive Plan Compensation.” Ms. Woods did not earn an annual performance bonus for 2023 given her departure in February 2023.
Equity-Based Compensation
Stock options are granted to reward individuals for current performance, as an incentive for future performance and to align the long-term interests of our named executive officers with our stockholders. Stock options are granted under the Company’s Second Amended and Restated 2020 Equity Incentive Plan (the “Second Amended and Restated Plan”).
Stock options are generally awarded to named executive officers at commencement of employment and annually thereafter after taking into consideration the results of a competitive analysis that benchmarks long-term incentive awards granted to executives in comparable positions at peer companies. The exercise price for each option grant is the closing price of our common stock on the date of grant. Each option grant is for a term of 10 years from the date of grant and the options subject to each grant vest 25% immediately, 25% on the first anniversary of the grant date, 25% on the second anniversary of the grant date, and 25% on the third anniversary of the grant date subject to continued employment with the Company. During the year ended December 31, 2023, Mr. Spoor was granted 3,338,878 options, Mr. Puhlmann was granted 1,477,619 options, and Mr. Hunt was granted 1,248,776 options.
During the year ended December 31, 2023, the six-month transition period ended December 31, 2022, and the fiscal year ended June 30, 2022, no options were repriced or otherwise materially modified.
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401(k) Plan
The Company has a 401(k) plan that covers all eligible full-time employees of the Company. Contributions to the 401(k) plan are made by participants to their individual accounts through payroll withholding. Additionally, the 401(k) plan allows the Company to make contributions at the discretion of management. Through December 31, 2022, the Company had not made any contributions to the 401(k) plan. Beginning January 1, 2022, the Company implemented a Company 401(k) match where 50% of the first 4% of the participants’ contributions will be matched, up to a maximum company match of 2% of eligible compensation. The Company matching contributions were made during January 2023 for the 401(k) plan year January 1, 2022 to December 31, 2022. Beginning January 1, 2023, the Company changed its 401(k) match for the 401(k) plan where 100% of the first 4% of the participants’ contributions will be matched, up to a maximum company match of 4% of eligible compensation. The Company matching contributions were made during January 2024 for the 401(k) plan year January 1, 2023 to December 31, 2023.
From the merger date through December 31, 2023, Viewpoint had a separate 401(k) plan with a company match where 100% of the first 6% of participants contributions were matched, up to a maximum company match of 6% of eligible compensation.
Outstanding Equity Awards at December 31, 2023
The following table sets for certain information concerning equity awards granted to our named executive officers that were outstanding as of December 31, 2023.
Option awards
Equity Incentive Plan awards:
Number of Number of
securities securities
underlying underlying
unexercised unexercised Option
options options exercise Option
(#) (#) price expiration
Name exercisable unexercisable ($) date
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Employment Agreements and Separation Agreement
The following is a discussion of the material terms of each contract, agreement, plan or arrangement that provides for payments to our named executive officers at, following, or in connection with the resignation, retirement or other termination of such named executive officers, or a change in control of our company or a change in the named executive officer's responsibilities following a change in control, with respect to each named executive officer.
Current Employment Agreements with our Chief Executive Officer, Chief Financial Officer and Chief Medical Officer
The Company has entered into employment agreements with Johan (Thijs) Spoor, Jonathan Hunt, and Dr. Markus Puhlmann (each an “Executive”). The term of each employment agreement began on June 16, 2023.
Under the employment agreements, Mr. Spoor’s initial annual salary is set at $575,000, Mr. Hunt’s at $430,000 and Dr. Puhlmann’s at $460,000, payable in accordance with the Company’s standard payroll practices. The employment agreements provide that each Executive may be eligible for periodic increases of his annual salary as determined by the Company in its sole discretion. Further, each Executive’s annual salary may not be decreased without his written consent, other than as part of a general arrangement implemented by the Board affecting all of the Company’s senior executive officials.
Under Mr. Hunt’s previous employment agreement with Isoray, Mr. Hunt was entitled to certain compensation based on the merger between the Company and Viewpoint, as such transaction was a Change of Control, as that term is defined in his previous employment agreement. The execution of Mr. Hunt’s current employment agreement did not terminate the Company’s obligation regarding such payment until it was fully satisfied.
Additionally, each Executive is eligible for a quarterly and an annual discretionary bonus as periodically established by the Compensation Committee based upon metrics to be established by the Compensation Committee. See “Non-Equity Incentive Plan Compensation” above for additional information. Each Executive is also eligible to participate in and receive stock options under the Second Amended and Restated Plan. See “Equity-Based Compensation” above for additional information.
Pursuant to the terms of the employment agreements, each Executive is an “at-will” employee. Either the Executive or the Company can terminate his employment with or without cause, for any reason or no reason, and at any time. If an Executive’s employment ends due to mutual written agreement with the Company, or an Executive resigns or is terminated for cause, the Company will pay his accrued but unpaid wages and approved but unreimbursed business expenses. If an Executive is terminated without cause or at-will, the Company will pay his accrued but unpaid wages, any bonus announced but not yet paid, approved but unreimbursed business expenses, twelve months’ severance based on his then-current base salary, a pro-rated amount of the quarterly and annual discretionary bonuses based on the number of full months the Executive has been employed during the fiscal year of his termination, and COBRA premiums for up to twelve months of coverage. Each Executive is subject to standard confidentiality provisions and a non-compete, non-solicitation covenant for one year following termination of employment.
In the event of a Change of Control (as defined in the employment agreements), if an Executive is not retained by the new company, the Company will pay his accrued but unpaid wages, approved but unreimbursed business expenses, twelve months’ severance based on his then-current base salary, a pro-rated amount of the quarterly and annual discretionary bonus based on the number of full months the executive has been employed during the fiscal year of his termination, and COBRA premiums for up to twelve months of coverage. Additionally, regardless of whether an Executive is retained by the new company, the Company will pay the Executive twelve months’ salary based on his then-current base salary in accordance with the Company’s regular payroll practices. However, if the Executive’s employment with the new company terminates within twelve months of the Change of Control, the Executive will not be entitled to the severance pay described above other than in an amount equivalent to such portion of the Change in Control Compensation (as defined in the employment agreements) that the Executive has not then already received. Also, upon a Change of Control, all of the Executive’s outstanding unvested equity-based awards, at his option, will vest and become immediately exercisable and unrestricted.
Past Employment Agreement and Separation Agreement with our Former Chief Executive Officer
The Company previously entered into an employment agreement with Lori A. Woods, which was effective as of May 24, 2021, and originally provided for her employment to continue until June 30, 2024, subject to successive one-year renewals.
In connection with her resignation as CEO of the Company, the Company and Lori A. Woods entered into a separation agreement on February 3, 2023, pursuant to which the Company agreed to pay Ms. Woods the amount of $504,000, minus required withholdings, to be paid biweekly in accordance with the Company’s regular payroll practice. Additionally, Ms. Woods received payment of health insurance premiums for a period of one year, plus reimbursement for reasonable attorneys’ fees. The Company also agreed to accelerate the vesting of 1,007,498 options to purchase shares of common stock of the Company held by Ms. Woods. Subject to the terms of the Company’s Amended and Restated 2020 Equity Incentive Plan pursuant to which the options were granted, Ms. Woods will have the time set forth in each vested option to exercise such option before it expires.
The separation agreement contains a release by Ms. Woods of any and all issues and claims she may have against the Company in any way related to her employment with or separation from employment with the Company, including a release of any liabilities and claims under any local, state, or federal statutes, wage claims, and claims of discrimination. The separation agreement does not impact any future claims that Ms. Woods may raise during her tenure as Chairperson of the Board, nor does it serve to release any claims she may have for advances of fees and costs and indemnity under any applicable contract of insurance, corporate policy, or operation of law.
Role of the Compensation Consultant
Pursuant to its Charter, the Compensation Committee has the authority to engage independent compensation consultants and other professionals to assist in the design, formulation, analysis, and implementation of compensation programs for our executive officers. In 2023, the Committee engaged Anderson Pay Advisors to review various elements of the Company's overall compensation program, including performing reviews of the Company's 2023 executive compensation plans.
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Role of Benchmarking and Peer Groups
As part of our pay philosophy, our executive compensation program is designed to attract, motivate and retain our executives in an increasingly competitive market. To this end, in 2023 we evaluated industry-specific and general market compensation practices and trends to ensure that our program features and named executive officer pay opportunities remain appropriately competitive. When determining salaries, target bonus opportunities and long-term incentive grants for our named executive officers, the Compensation Committee considers the performance of the Company and the individual, the nature of an individual's role within the Company, experience in the officer's current role, as well as input from its independent compensation consultant, among other variables.
In 2023, to facilitate its review and determination of executive compensation, the Committee engaged Anderson Pay Advisors to conduct a comprehensive competitive review of our executive compensation program. In connection with this review, Anderson Pay Advisors identified a peer group comprised of pharmaceutical and biotechnology companies roughly similar to the Company in market capitalization and focused on cancer treatments to the extent possible. The peer group consists of the 20 companies listed below:
Aadi Bioscience Actinium Pharmaceuticals Alaunos therapeutics
Capricor Therapeutics, Inc. Chimerix Cytosorbents Corp
DermTech Eiger Biopharmaceuticals Fusion Pharmaceuticals
Graphite Bio Ikena Oncology ORIC Pharmaceuticals
Pieris Pharmaceuticals Point Biopharma Prelude Therapeutics
Sensus Healthcare Shattuck Labs Spectrum Pharmaceuticals
UroGen Pharma Y-mAbs Therapeutics
The median market capitalization of the peer group was $166.3 million, and Perspective Therapeutics' market capitalization was roughly $105.9 million at the time of the analysis.
Based on the Anderson Pay Advisors data and performance metrics, the Compensation Committee of the Company increased the annual base salary for Thijs Spoor, our Chief Executive Officer and Director, to $575,000 (a 12.7% increase), for Markus Puhlmann, our Chief Medical Officer, to $460,000 (a 2.2% increase) and for Jonathan Hunt, our Chief Financial Officer, to $430,000 (a 26.5% increase), effective June 1, 2023.
Director Compensation
In February 2023, the Compensation Committee approved changes to the non-employee director compensation program to provide: (i) a $60,000 annual cash retainer; (ii) an additional annual cash retainer of $30,000 for service as Chairperson of the Board of Directors; and (iii) additional annual cash retainers for committee chairs equal to $15,000. Each non-employee director was granted 470,000 stock options for a term of 10 years from the date of grant, which vest monthly over 36 months from the date of grant. Additionally, each non-employee director was granted 230,000 stock options for a term of 10 years from the date of grant and the options vested 100% on the first anniversary of the grant date. Employee directors do not receive any compensation for their service on the Board.
The following table sets forth information concerning the compensation of the non-employee directors of the Company who served for all or a portion of the year ended December 31, 2023. Johan (Thijs) Spoor, our CEO and a director, did not receive any compensation for his service on the Board in 2023. Lori Woods, our former CEO, did not receive any compensation for her service as a member of our Board during 2023 prior to her cessation as an employee of the Company on February 3, 2023. Mr. Spoor and Ms. Woods’ compensation for services as employees and Ms. Woods’ compensation for services as Chairperson of our Board for fiscal year 2023 are presented in “Executive Officer Compensation – Summary Compensation Table” above.
Fees earned
or paid in Option
cash awards Total
Name ($) ($)(1)(2) ($)
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Risks Related to Compensation Policies and Practices
The Compensation Committee has considered whether our overall compensation program for employees in 2023 creates incentives for employees to take excessive or unreasonable risks that could materially harm our Company. We believe that several features of our compensation policies for management employees appropriately mitigate such risks, including a mix of long- and short-term compensation incentives that we believe is properly weighted, our Incentive Compensation Recovery Policy and the uniformity of compensation practices across our Company, which the Compensation Committee regards as setting an appropriate level of risk taking for us. We also believe our internal legal and financial controls appropriately mitigate the probability and potential impact of an individual employee committing us to a harmful long-term business transaction in exchange for short-term compensation benefits.
Recoupment Policy
In order to align further management’s interests with the interests of our stockholders and to support good corporate governance practices, the Board has adopted a recoupment policy. Subject to rules of the SEC and NYSE American, in the event that we are required to prepare an accounting restatement due to the material noncompliance with any financial reporting requirement under the federal securities laws, the Compensation Committee has the authority to determine the appropriate means of recovering from any of our current or former executive officers, as determined in accordance with such rules, who received performance-based compensation (including stock options awarded as compensation) during the period for which we are required to prepare an accounting restatement, based on the erroneous data, in excess of what would have been paid to the executive officer under the accounting restatement. The committee may also take any other actions authorized by our Incentive Compensation Recovery Policy.
ITEM 12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following tables set forth certain information regarding the beneficial ownership of the Company’s common stock and preferred stock as of March 22, 2024 for (a) each person known by the Company to be a beneficial owner of 5% or more of the outstanding common stock of the Company, (b) each named executive officer, director and nominee for director of the Company, and (c) directors and executive officers of the Company as a group. As of March 22, 2024, the Company had 586,915,977 shares of common stock outstanding. Except as otherwise indicated below, the address for each listed beneficial owner is c/o Perspective Therapeutics, Inc., 2401 Elliott Avenue, Suite 320, Seattle, WA 98121.
Named Executive Officers and Directors:
Frank Morich, M.D., Ph.D. - 1,533,306 - *
Greater than 5% Stockholders:
* Less than one percent.
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Securities Authorized for Issuance Under Equity Compensation Plans
On June 15, 2017, the Company's Stockholders approved the Company's 2017 Equity Incentive Plan (the “2017 Incentive Plan”). The 2017 Incentive Plan allows the Board of Directors to grant up to 4,000,000 shares of common stock to directors, officers, employees and consultants in a combination of equity incentive forms including incentive stock options ("ISOs"), non-qualified stock options ("NQSOs"), stock appreciation rights ("SARs") or restricted shares of common stock.
On December 7, 2021, the Company's stockholders approved the Company's Amended and Restated 2020 Equity Incentive Plan (the “Amended 2020 Incentive Plan”), which amended and restated the Company's 2020 Equity Incentive Plan in its entirety. The Amended 2020 Incentive Plan increased the number of shares of common stock available for the grant of awards under the plan by 10,000,000, to a total of 16,000,000 available shares, removed the limit on the number of incentive stock options that can be granted under the plan, and authorized the granting of restricted stock units ("RSUs") under the plan. On December 13, 2022, the Company's stockholders approved the Company's Amended and Restated 2020 Equity Incentive Plan (“Amended and Restated 2020 Incentive Plan”), which increased the number of shares of common stock available for grant of awards under the plan by 30,000,000, to a total of 46,000,000 available shares. Under the Amended and Restated 2020 Incentive Plan, the Board of Directors may grant to directors, officers, employees and consultants various forms of equity, including ISOs, NQSOs, SARs and RSUs. On October 6, 2023, the Company’s stockholders approved the Company’s Second Amended and Restated 2020 Equity Incentive Plan (the “Second Amended and Restated Plan”) which, among other things, (a) increased the aggregate number of shares of common stock authorized for issuance under the Second Amended and Restated Plan by 10,000,000 for a total of 56,000,000 shares of common stock, (b) implemented an “evergreen” provision, which contemplates that on the first day of each fiscal quarter, unless the Board of Directors of the Company (the “Board”) determines otherwise, the number of shares of common stock authorized for issuance under the Second Amended and Restated Plan will be adjusted to be (subject to adjustment in the event of stock splits and other similar events) the greater of 56,000,000 shares of common stock or 13% of the number of shares of common stock issued and outstanding on the last day of the immediately preceding fiscal quarter, and (c) extended the term of the Second Amended and Restated Plan such that it will be terminated, if not earlier terminated, on the 10-year anniversary of October 6, 2023.
Options granted under both plans have a 10-year maximum term, an exercise price equal to at least the fair market value of the Company’s common stock (based on the closing share price of the common stock on the NYSE American on the date of the grant), and with varying vesting periods as determined by the Board.
As of December 31, 2023, the following options had been granted under the Second Amended and Restated Plan, the 2017 Incentive Plan, and prior stock option plans that have now expired.
Equity compensation plans not approved by securityholders 288,000 3 $ 1.45 -
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ITEM 13 – CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Review, Approval or Ratification of Transactions with Related Persons
The Company’s Code of Ethics emphasizes the importance of avoiding situations or transactions in which personal interests may interfere with the best interests of the Company or its stockholders. In addition, the Company’s general corporate governance practice includes Board-level discussion and assessment of procedures for discussing and assessing relationships, including business, financial, familial and nonprofit, among the Company and its officers and directors or their immediate family members, to the extent that they may arise. The Board and the Audit Committee review any transaction with an officer or director or their immediate family members to determine, on a case-by-case basis, whether a conflict of interest exists. The Board ensures that all directors voting on such a matter have no interest in the matter and discusses the transaction with counsel as the Board deems necessary. The Board will generally delegate the task of discussing, reviewing and approving transactions between the Company and any related persons to the Audit Committee. The Audit Committee approved all of the below transactions.
Transactions with Related Persons
The following includes a summary of transactions since January 1, 2022 to which we have been a party in which the amount involved exceeded or will exceed the lesser of $120,000 and one percent of the average of our total assets at year end for the last two completed fiscal years, and in which any of our directors, director nominees, executive officers or beneficial owners of more than 5% of our common stock, or any members of their immediate family, had or will have a direct or indirect material interest, other than compensation arrangements that we have entered into with our executive officers and directors.
As of March 22, 2024, Lantheus Alpha Therapy, LLC, a Delaware limited liability company and wholly owned subsidiary of Lantheus Holdings, Inc. (“Lantheus”) owned approximately 19.90% of our outstanding common shares and is a related person” for purposes of the SEC rules.
See the section entitled “Agreements and Collaborations – Lantheus Agreements” in Part I, Item I of this Form 10-K for a description of certain transactions between us and Lantheus.
In addition, Lantheus participated the March 2024 Private Placement, described more fully in the section entitled “Agreements and Collaborations – Equity Financings” in Part I, Item I of this Form 10-K. In the March 2024 Private Placement, Lantheus purchased 60,431,039 shares of Common Stock for an aggregate purchase price of $57.4 million.
During the year ended June 30, 2022, the Company engaged with SphereRx, LLC, owned by Lori Woods, our Chairperson and board member, to assist in making payments to suppliers in Russia as our bank had an internal policy that it could not send wires to Russia due to the ongoing Russia-Ukrainian conflict. There were four payments totaling $2,389,787. The Company reimbursed SphereRx, LLC for wire fees. There was no other consideration or compensation related to these payments.
Director Independence
Using the standards of the NYSE American, the Company’s Board has determined that Ms. Henson, Mr. Williamson, and Dr. Morich each qualify under such standards as an independent director. Ms. Henson, Mr. Williamson, and Dr. Morich each meet the NYSE American listing standards for independence both as a director and as a member of the Audit Committee. The Board has affirmatively determined that each of the members of the Compensation Committee, except for Ms. Woods, is “independent” as independence is defined in Section 805(c) of the NYSE American listing standards and Rule 10C-1 under the Exchange Act. Even though Ms. Woods is not independent due to her service in the capacity of CEO until her resignation on February 3, 2023, the Board has determined she is able to comply with Section 805(b) of the NYSE American listing standards, which establishes criteria permitting her to serve as a non-independent director on the Compensation Committee. No other directors are independent under these standards.
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None of our existing directors were disqualified from independent status under the objective standards of the NYSE American other than Mr. Spoor, who did not qualify as he is an employee director and Ms. Woods, who did not qualify as she was an employee of the Company within the last three years. In reviewing the subjective criteria of “any relationship that would interfere with the exercise of independent judgment” in carrying out the responsibilities of a director, the Board determined that all directors, other than Mr. Spoor and Ms. Woods, met this criterion well.
The Company did not consider any other relationship or transaction between itself and these independent directors not already disclosed in this Report in making this independence determination.
ITEM 14 – PRINCIPAL ACCOUNTANT FEES AND SERVICES
The Company paid or accrued the following fees in the periods presented below to its principal accountant, Assure CPA, LLC (in thousands):
Audit-related fees - - -
All other fees 21 - 4
Audit fees include fees for the audit of our annual financial statements, reviews of our quarterly financial statements, and related consents for documents filed with the SEC.
There were no audit-related fees for the periods presented above.
Tax fees include fees for the preparation of our federal and state income tax returns.
All other fees are from consulting costs created by the review of documents related to equity offerings.
As part of its responsibility for oversight of the independent registered public accountants, the Audit Committee has established a pre-approval policy for engaging audit and permitted non-audit services provided by our independent registered public accountants, Assure CPA, LLC. In accordance with this policy, each type of audit, audit-related, tax and other permitted service to be provided by the independent auditors is specifically described and each such service, together with a fee level or budgeted amount for such service, is pre-approved by the Audit Committee. The Audit Committee has delegated authority to its Chairman to pre-approve additional non-audit services (provided such services are not prohibited by applicable law) up to a pre-established aggregate dollar limit. All services pre-approved by the Chairman of the Audit Committee must be presented at the next Audit Committee meeting for review and ratification. All of the services provided by Assure CPA, LLC, described above were approved by our Audit Committee.
The Company’s principal accountant, Assure CPA, LLC, did not engage any other persons or firms other than the principal accountant’s full-time, permanent employees.
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PART IV
ITEM 15 – EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
1. For a list of the financial statements included herein, see Index to the financial statements of this Form 10-K, incorporated into this Item by reference.
2. Financial statement schedules have been omitted because they are either not required or not applicable or the information is included in the financial statements or the notes thereto.
3. Exhibits:
Exhibit # Description
4.1* Description of Securities.
10.6* Form of Indemnification Agreement.
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21.1* Subsidiaries of the Company.
23.1* Consent of Assure CPA, LLC.
97* Incentive Compensation Recovery Policy.
101.INS* Inline XBRL Instance Document.
101.SCH* Inline XBRL Taxonomy Extension Schema Document.
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document.
* Filed Herewith
** Furnished Herewith
*** Denotes Management Contract or Compensatory Plan or Arrangement
ITEM 16 – FORM 10-K SUMMARY
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: March 28, 2024
PERSPECTIVE THERAPEUTICS, INC., a Delaware corporation
By /s/ Johan (Thijs) Spoor
Johan (Thijs) Spoor, Chief Executive Officer, Director
By /s/ Jonathan Hunt
Jonathan Hunt, Chief Financial Officer,
Co-Principal Financial Officer
By /s/ Mark J. Austin
Mark J. Austin, Vice President of Finance and Corporate Controller,
Co-Principal Financial and Principal Accounting Officer, Corporate Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Dated: March 28, 2024
/s/ Johan (Thijs) Spoor
Johan (Thijs) Spoor, Chief Executive Officer, Director
/s/ Jonathan Hunt
Jonathan Hunt, Chief Financial Officer,
Co-Principal Financial Officer
/s/ Mark J. Austin
Mark J. Austin, Vice President of Finance and Corporate Controller,
Co-Principal Financial and Principal Accounting Officer, Corporate Secretary
/s/ Lori A. Woods
Lori A. Woods, Chairperson
/s/ Heidi Henson
Heidi Henson, Director
/s/ Robert F. Williamson III
Robert F. Williamson III, Director
/s/ Frank Morich
Frank Morich, Director
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Perspective Therapeutics, Inc. and Subsidiaries
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID: 444) F-2
Consolidated Balance Sheets F-3
Consolidated Statements of Operations F-4
Consolidated Statements of Changes in Stockholders’ Equity F-5
Consolidated Statements of Cash Flows F-6
Notes to the Consolidated Financial Statements F-7
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the board of directors of Perspective Therapeutics, Inc. and Subsidiaries
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Perspective Therapeutics and Subsidiaries (“the Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the year ended December 31, 2023, the six-month period ended December 31, 2022, and the year ended June 30, 2022, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the year ended December 31, 2023, the six-month period ended December 31, 2022, and the year ended June 30, 2022 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Acquisition of Viewpoint Molecular Targeting, Inc - Valuation of In-process Research and Development Intangible Assets
As disclosed in Note 3 to the consolidated financial statements, during 2023, the Company completed the acquisition of Viewpoint Molecular Targeting, Inc. for total consideration of approximately $68.6 million. The transaction was accounted for as business combination. Of the acquired net assets, in-process research and development (“IPR&D”) intangible asset of $50.0 million was recorded. The fair value of acquired IPR&D intangible asset was determined using the multi-period excess earnings method. The significant assumptions used to estimate the fair value of the IPR&D intangible asset included forecasted cash flows and discount rates.
Auditing the Company's valuation of the IPR&D intangible asset was complex and required significant auditor judgment due to the significant estimation uncertainty in evaluating certain assumptions required to estimate the fair value. The fair value measurement was sensitive to underlying assumptions including certain assumptions that form the basis of the forecasted results (e.g., operating income and growth rates). The significant assumptions are forward-looking and could be affected by future economic and market conditions.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included evaluating:
ii. The appropriateness of the valuation method;
iii. The reasonableness of the significant assumptions;
a. company specific factors of the acquired business;
b. consistency with external market and industry data; and
/s/ Assure CPA, LLC
We have served as the Company’s auditor since 2005.
Spokane, Washington
March 28, 2024
F-2
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Perspective Therapeutics, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except shares)
December 31, December 31,
ASSETS
Current assets:
Short-term investments - 22,764
Note receivable - 6,109
Prepaid expenses and other current assets 1,133 443
Current assets held for sale - discontinued operations 5,301 1,543
Noncurrent assets:
Property and equipment, net 5,576 371
Right of use asset, net 747 -
Intangible assets: In-process research and development 50,000 -
Noncurrent assets of discontinued operations - 4,148
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 6,107 $ 1,541
Lease liability 46 -
Accrued protocol expense 322 233
Accrued radioactive waste disposal 480 571
Accrued payroll and related taxes 3,128 212
Note payable, current 49 -
Current liabilities of discontinued operations 5,072 276
Noncurrent liabilities:
Lease liability 780 -
Notes payable 1,676 -
Noncurrent liabilities of discontinued operations - 331
Deferred tax liability 4,592 -
Commitments and contingencies (Note 16)
Stockholders' equity:
Total liabilities and stockholders' equity $ 97,891 $ 58,091
The accompanying notes are an integral part of these consolidated financial statements.
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Perspective Therapeutics, Inc. and Subsidiaries
Consolidated Statements of Operations
(Dollars and shares in thousands, except for per share amounts)
Year ended December 31, Six months ended December 31, Year ended June 30,
Grant revenue $ 1,434 $ - $ -
Gross profit 1,434 - -
Operating expenses:
Loss on disposal of property and equipment - 305 -
Non-operating income:
Interest expense (84 ) - -
Other income 2 - -
Equity in loss of affiliate (17 ) - -
Net loss from discontinued operations (9,053 ) (2,275 ) (972 )
Deferred income tax benefit 2,651 - -
Basic and diluted loss per share:
Loss from continuing operations $ (0.14 ) $ (0.04 ) $ (0.04 )
Loss from discontinued operations (0.03 ) (0.01 ) (0.01 )
Basic and diluted loss per share $ (0.17 ) $ (0.05 ) $ (0.05 )
Weighted average shares used in computing net loss per share:
The accompanying notes are an integral part of these consolidated financial statements.
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Perspective Therapeutics, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity
(In thousands, except shares)
Common Stock
Shares Amount Additional Paid-in Capital Accumulated Deficit Total
Issuance of common stock pursuant to exercise of options 125,000 - 56 - 56
Share-based compensation - - 1,087 - 1,087
Net loss for the year - - (7,272 ) (7,272 )
Issuance of common stock pursuant to exercise of options 72,500 - 28 - 28
Share-based compensation - - 672 - 672
Net loss for the six months ended - - - (7,335 ) (7,335 )
Issuance of common stock pursuant to exercise of options 1,913,185 2 552 - 554
Share-based compensation - - 3,738 - 3,738
The accompanying notes are an integral part of these consolidated financial statements.
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Perspective Therapeutics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
Year ended December 31, Six months ended December 31, Year ended June 30,
CASH FLOWS FROM OPERATING ACTIVITIES:
Adjustments to reconcile net loss to net cash used by operating activities:
Write-off of inventory associated with discontinued product 298 - -
Loss on disposal of property and equipment 22 305 -
Amortization of other assets 40 21 41
Accretion of asset retirement obligation 35 17 32
Equity in loss of affiliate 17 - -
Accrued interest on short-term investments - (226 ) -
Change in allowance for doubtful accounts 624 - -
Change in estimate of asset retirement obligation (15 ) - -
Loss recognized on classification as held for sale 4,170 - -
Deferred income tax benefit (2,651 ) - -
Changes in operating assets and liabilities:
Prepaid expenses and other current assets (325 ) (249 ) 46
Accounts payable and accrued expenses 1,584 573 236
Accrued protocol expense 89 83 52
Accrued radioactive waste disposal (100 ) 9 20
Accrued payroll and related taxes 1,274 (297 ) 70
Accrued vacation (159 ) 32 (6 )
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (1,072 ) (151 ) (266 )
Additions to other assets (18 ) - (18 )
Additions to equity method investment - (150 ) -
Proceeds from maturity of short-term investments 22,764 12,538 -
Purchases of short-term investments - (35,076 ) -
Investment in note receivable - (6,000 ) -
Net cash acquired in acquisition of Viewpoint 2,699
Net cash provided by (used in) investing activities 24,373 (28,839 ) (284 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable (68 ) - -
Proceeds from sales of common stock, pursuant to exercise of options 554 28 56
Proceeds from at the market offering 364 - -
Net cash provided by financing activities 785 28 56
Total cash, cash equivalents and restricted cash $ 9,420 $ 21,175 $ 56,072
Supplemental disclosure of cash flow information:
Interest paid $ 84 $ - $ -
Noncash investing and financing activities:
Fair value of Viewpoint assets acquired including goodwill $ 82,628 $ - $ -
Assumption of Viewpoint stock options and warrants at fair value (7,836 ) - -
Note receivable and accrued interest from Viewpoint forgiven (6,171 ) - -
Modification of operating lease liability and right of use asset 557 - -
Operating lease liability and right of use asset for new lease 811 - -
The accompanying notes are an integral part of these consolidated financial statements.
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Perspective Therapeutics, Inc.
Notes to Consolidated Financial Statements
1. Organization
Perspective Therapeutics, Inc. ("Perspective Therapeutics" or the "Company") (formerly known as Isoray, Inc. and Century Park Pictures Corporation) was incorporated in Minnesota in 1983. On July 28, 2005, Isoray Medical, Inc. ("Isoray") became a wholly owned subsidiary of Perspective Therapeutics pursuant to a merger. In December 2018, upon approval of a majority of stockholders, Perspective Therapeutics was redomiciled to Delaware. Isoray was formed under Delaware law on June 15, 2004, and on October 1, 2004, acquired two affiliated predecessor companies which began operations in 1998. Isoray, a Delaware corporation, develops, manufactures and sells isotope-based medical products and devices for the treatment of cancer and other malignant diseases. Isoray is headquartered in Richland, Washington.
Isoray International, LLC ("International"), a Washington limited liability company, was formed on November 27, 2007, and is a wholly owned subsidiary of Perspective Therapeutics.
On February 3, 2023, the Company completed the merger of Isoray Acquisition Corp., a Delaware corporation and wholly owned subsidiary of the Company, with Viewpoint Molecular Targeting, Inc. (“Viewpoint”) (such transaction being the “Merger”). Pursuant to the Merger, the Company issued 136,545,075 shares of common stock, representing approximately 49% of its fully diluted outstanding capital stock. Viewpoint is an alpha-particle radiopharmaceutical company in the alpha-emitter market developing oncology therapeutics and complementary imaging agents. For additional information, see Note 3,Merger with Viewpoint Molecular Targeting, Inc.
On February 6, 2023, the Company announced that on January 31, 2023, the Company's board of directors approved a change in the Company's fiscal year end from June 30 to December 31, effective as of December 31, 2022.
Perspective Therapeutics Pty Ltd, an Australian registered company, was formed on April 14, 2023 as a wholly owned subsidiary of the Company. It was formed to assist in certain clinical trial aspects of the alpha-emitter therapeutic agents.
On December 7, 2023, the Company announced the anticipated sale of its Cesium-13 brachytherapy business. Accordingly, the financial information and operating results of the Cesium-131 brachytherapy business have been presented as discontinued operations in the financial statements for all periods presented. Unless otherwise noted, discussion within these notes to the financial statements relates to continuing operations. For additional information, see Note 4,Discontinued Operations.
2. Summary of Significant Accounting Policies
Reclassifications
Certain prior period amounts have been reclassified to conform to the current period presentation as further described in Note 4,Discontinued Operations.
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries (collectively, the "Company"). All significant inter-company transactions and balances have been eliminated in consolidation.
Cash Equivalents
The Company considers currency on hand, demand deposits, time deposits, and all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash and cash equivalents. Cash and cash equivalents are held in various financial institutions in the United States.
Investments
Investments in debt securities with original maturities greater than three months and remaining maturities less than one year are classified as “Short-term investments” and included in current assets. Investments with remaining maturities greater than one year are classified as “Investments, noncurrent” and are included in noncurrent assets. These investments are classified as held-to-maturity are carried at amortized cost because they are purchased with the intent and ability to be held to maturity.
Property and Equipment
Property and Equipment is capitalized and carried at cost less accumulated depreciation. Depreciation expense is recorded to cost of sales and operating expenses. Normal maintenance and repairs are charged to expense as incurred. When any assets are sold or otherwise disposed of, the cost and accumulated depreciation are reversed with any resulting gain or loss being recognized on the consolidated statement of operations.
Depreciation is computed using the straight-line method over the following estimated useful lives:
Research and development equipment (in years) 3 to 7
Office equipment (in years) 2 to 10
Furniture and fixtures (in years) 2 to 10
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Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the asset.
Property and equipment that is acquired but not yet placed in service is recorded on the balance sheets at cost and no depreciation expense or accumulated depreciation is recognized until the property and equipment is placed in service.
Management periodically reviews the net carrying value of all of its long-lived assets on an asset-by-asset basis. An impairment loss is recognized if the carrying amount of a defined asset group is not recoverable and exceeds its fair value.
Although management has made its best estimate of the factors that affect the carrying value based on current conditions, it is reasonably possible that changes could occur which could adversely affect management’s estimate of net cash flows expected to be generated from its assets that could result in an impairment adjustment.
Prepaid Expenses and Other Assets
Prepaid expenses and other assets, which include website development costs, trademarks, patents and licenses, are stated at cost, less accumulated amortization. For website development, costs incurred in the planning stage are expensed as incurred whereas costs associated with the application and infrastructure development, graphics development, and content development are capitalized. Amortization of website development costs is computed using the straight-line method over the estimated economic useful lives of the asset. Trademarks and patents include costs, primarily legal, incurred in obtaining them. Amortization of trademarks and patents is computed using the straight-line method over the estimated economic useful lives of the assets. Licenses include costs related to licenses pertaining to the use of technology or operational licenses. These licenses are recorded at stated cost, less accumulated amortization. Amortization of licenses is computed using the straight-line method over the estimated economic useful lives of the assets. The Company periodically reviews the carrying values of other assets and evaluates the recorded basis for any impairment. Any impairment is recognized when the expected future operating cash flows to be derived from the licenses are less than their carrying value.
Asset Retirement Obligation
The estimated fair value of the future retirement costs of the Company’s leased assets and the costs for the decontamination and reclamation of equipment located within the leased assets are recorded as a liability on a discounted basis when a contractual obligation exists; an equivalent amount is capitalized to property and equipment. The initial recorded obligation is discounted using the Company's credit-adjusted risk-free rate and is reviewed periodically for changes in the estimated future costs underlying the obligation. The Company amortizes the initial amount capitalized to property and equipment and recognizes accretion expense in connection with the discounted liability over the estimated remaining useful life of the leased assets. Adjustments and changes to either the timing or amount of the original present value estimate underlying the obligation are made in the period incurred.
Financial Instruments
The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than a forced liquidation sale. At December 31, 2023 and 2022, the carrying value of financial instruments, which included restricted cash, short-term investments, note receivable, note payable and equity method investment approximated fair value.
Fair Value Measurement
When required to measure assets or liabilities at fair value, the Company uses a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used. The Company determines the level within the fair value hierarchy in which the fair value measurements in their entirety fall. The categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Level 1 uses quoted prices in active markets for identical assets or liabilities, Level 2 uses significant other observable inputs, and Level 3 uses significant unobservable inputs. The amount of the total gains or losses for the period are included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date. The Company has no financial assets or liabilities that are adjusted to fair value on a recurring basis.
At December 31, 2023 and 2022, there were no assets or liabilities measured at fair value on a nonrecurring basis. Certain assets and liabilities, including net assets acquired in business combinations, are measured at fair value on a nonrecurring basis; that is, the assets or liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment or an acquisition of a business).
Share-Based Compensation
The Company measures and recognizes expense for all share-based payments at fair value. The Company uses the Black-Scholes option valuation model to estimate fair value for all stock options and stock warrants on the date of grant. For stock options that vest over time, the Company recognizes compensation cost on a straight-line basis over the requisite service period for the entire award. The Company recognizes forfeitures as they occur.
Research and Development Costs
Research and development costs, including salaries, research materials, administrative expenses and contractor fees, are charged to operations as incurred. The cost of equipment used in research and development activities which has alternative uses is capitalized as part of fixed assets and not treated as an expense in the period acquired. Depreciation of capitalized equipment used to perform research and development is classified as research and development expense in the year recognized.
Legal Contingencies
The Company records contingent liabilities resulting from asserted and unasserted claims against it, when it is probable that a liability has been incurred and the amount of the loss is reasonably estimable. Estimating probable losses requires analysis of multiple factors, in some cases including judgments about the potential actions of third-party claimants and courts. Therefore, actual losses in any future period are inherently uncertain. Currently, the Company does not believe any probable legal proceedings or claims will have a material adverse effect on its financial position or results of operations other than the estimated liability recorded during the fiscal year ended December 31, 2023. However, if actual or estimated probable future losses exceed the Company’s recorded liability for such claims, it would record additional charges as other expense during the period in which the actual loss or change in estimate occurred. For additional information, see Note 16,Commitments and Contingencies.
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Income Taxes