Perspective Therapeutics Inc

Basis of Presentation and Summary of Significant Accounting Policies

Perspective Therapeutics, Inc. is 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. The accompanying unaudited condensed consolidated financial statements are those of Perspective Therapeutics, Inc., and its wholly owned subsidiaries, referred to herein as “Perspective Therapeutics” or the “Company.” All significant intercompany accounts and transactions have been eliminated in the consolidation. In the opinion of management, all adjustments necessary for the fair statement of the condensed consolidated financial statements have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes as set forth in the Company’s Annual Report on Form 10-K for the period ended December 31, 2023 filed with the SEC on March 28, 2024 (2023 Form 10-K).

The unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP). Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures are adequate for the information not to be misleading. The unaudited condensed consolidated financial statements reflect, in management’s opinion, all adjustments of a normal, recurring nature that are necessary for the fair statement of the Company’s financial position, results of operations and cash flows for the interim periods, but are not necessarily indicative of the results expected for the full fiscal year or any other period.

The Company anticipates that as the result of continuing operating losses and the significant net operating losses available from prior fiscal years, its effective income tax rate for fiscal year 2024 will be 0%.

Merger

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 13,654,507 shares of its common stock, par value $0.001 per share (Common Stock), representing approximately 49% of its fully diluted outstanding capital stock as of the close of the Merger. Viewpoint is an alpha-particle radiopharmaceutical company in the alpha-emitter market developing oncology therapeutics and complementary imaging agents. For additional information, see Note 14, Merger, in this Form 10-Q.

Discontinued Operations

On April 12, 2024, the Company completed the sale of its Cesium-131 brachytherapy business and substantially all of the assets of Isoray Medical, Inc. (Isoray), a wholly owned subsidiary of Perspective Therapeutics, to GT Medical Technologies, Inc., a Delaware corporation (GT Medical) (such transaction being the GT Medical Closing). Pursuant to the GT Medical Closing, GT Medical issued to Isoray 279,516 shares of GT Medical’s common stock, par value $0.0001 per share, representing 0.5% of GT Medical’s issued and outstanding capital stock on a fully diluted basis as of the closing. Accordingly, the financial information and operating results of the Cesium-131 brachytherapy business have been presented as discontinued operations in the condensed consolidated financial statements for all periods presented. Unless otherwise noted, discussion within these notes to the condensed consolidated financial statements relates to continuing operations. For additional information, see Note 4, Discontinued Operations, in this Form 10-Q.

Reverse Stock Split

On June 14, 2024, the Company effected a 1-for-10 reverse stock split (Reverse Split) of the Company’s issued and outstanding shares of Common Stock, and the Common Stock began trading on a split-adjusted basis on June 17, 2024. The Reverse Split did not reduce the total number of authorized shares of Common Stock or the Company’s preferred stock (Preferred Stock), or change the par values of the Common Stock or Preferred Stock. The Reverse Split affected all stockholders uniformly and did not affect any stockholder’s ownership percentage of the shares of Common Stock (except to the extent that the Reverse Split resulted in some of the stockholders receiving cash in lieu of fractional shares). All outstanding options and warrants entitling their holders to purchase shares of Common Stock were adjusted as a result of the Reverse Split, in accordance with the terms of each such security. In addition, the number of shares reserved for future issuance pursuant to the Company’s equity incentive plans was also adjusted accordingly. As a result, all historical per share data, number of shares issued and outstanding, and outstanding options and warrants for the periods presented in the accompanying condensed consolidated financial statements and notes thereto have been adjusted retroactively in this Form 10-Q, where applicable, to reflect the Reverse Split.

Liquidity

The Company assesses its liquidity in terms of its ability to generate cash to fund its operating, investing and financing activities. The Company has had a history of operating losses and an absence of significant recurring cash inflows from revenue. At June 30, 2024, the

Company had cash, cash equivalents and short-term investments of$292.9 million and total accumulated deficit of$176.4 million. The Company has historically financed its operations primarily through selling equity.

The Company believes that its$292.9 million of cash, cash equivalents and short-term investments as of June 30, 2024 will enable it to fund its current planned operations into mid-2026, though it may raise additional capital through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements and/or government funding and grants.

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The operating plan may change as a result of many factors currently unknown to management, and there can be no assurance that the current operating plan will be achieved in the timeframe anticipated by management or at all, and the Company may need to seek additional funds sooner than anticipated. The unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from potential unknown factors.

Reclassifications

In addition to the discontinued operations discussed above, during the first quarter of 2024, the Company made certain reclassifications to prior period amounts in the condensed consolidated financial statements and accompanying notes to conform to the current period presentation. The reclassification of these items had no impact on net loss, financial position or cash flows in the current or prior periods. Specifically, accrued payroll and related taxes and accrued vacation were combined to create accrued personnel, and accrued protocol expense and accrued waste disposal were included in accounts payable and accrued expenses, all of which are presented on the condensed consolidated balance sheets and condensed consolidated statement of cash flows.

Significant Accounting Policies

The Company’s significant accounting policies and recent accounting pronouncements are described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements in Item 8 of the 2023 Form 10-K. There have been no changes to the Company’s significant accounting policies, and the Company has not adopted any significant accounting policies during the six months ended June 30, 2024.

Loss per Share

Basic and diluted loss per share is calculated by dividing net loss by the weighted average number of shares of Common Stock outstanding and does not include the impact of any potentially dilutive common stock equivalents. In January 2024 and May 2024, the Company issued pre-funded warrants in connection with the Public Offering (as defined below) and the Registered Offering (as defined below), respectively (see Note 3, Investments and Agreements, in this Form 10-Q). As the pre-funded warrants’ exercise price is nominal and there are no conditions that must be satisfied prior to their exercise, the pre-funded warrants are included in the calculation of the basic and diluted earnings per share as of June 30, 2024. At each of June 30, 2024 and 2023, the calculation of diluted weighted average shares did not include common stock warrants or options that were potentially convertible into Common Stock as those would be antidilutive due to the Company’s net loss position.

Securities not considered in the calculation of diluted loss per share, but that could be dilutive in the future, are as follows (in thousands):

Effective upon the closing of the Merger with Viewpoint on February 3, 2023, the Company assumed 338,709 warrants to purchase shares of Common Stock with an exercise price of $2.70 per share and 2,426,342 options to purchase shares of Common Stock with exercise prices ranging from $1.30 to $3.00 per share.

Investments and Agreements

May 2024 Registered Offering

On May 24, 2024, the Company entered into an underwriting agreement with BofA Securities, Inc., as representative of the underwriters named therein, in connection with its previously announced underwritten offering (Registered Offering) of 5,151,588 shares (Registered Offering Shares) of Common Stock and, in lieu of Registered Offering Shares to certain investors, pre-funded warrants (May 2024 Pre-funded Warrants) to purchase 146,425 sharesof Common Stock. The price to the investors for the Registered Offering Shares was

$15.10 per Registered Offering Share, and the price to the investors for the May 2024 Pre-funded Warrants was $15.09 per May 2024 Pre-funded Warrant, which represents the per share price for the Registered Offering Shares less the $0.01 per share exercise price for each such May 2024 Pre-funded Warrant. The Registered Offering closed on May 29, 2024. BofA Securities, Inc., Oppenheimer & Co. Inc. and RBC Capital Markets, LLC acted as joint book-running managers for the Registered Offering and B. Riley Securities, Inc. acted as a co-manager for the Registered Offering. JonesTrading Institutional Services LLC acted as a financial advisor for the Registered Offering.

The gross proceeds to the Company from the Registered Offering were approximately $80 million, before underwriting discounts and commissions and estimated expenses of the Registered Offering.

The Company intends to use the net proceeds from the Registered Offering for: (i) the continued clinical development of VMT-α-NET, VMT-01/02 and PSV359; (ii) the continued development of PSV40X and additional preclinical product candidates as well as a broader development platform; and (iii) the build out, operation and expansion of manufacturing facilities, as well as for working capital and other general corporate purposes. A portion of the net proceeds may also be used to acquire, license or invest in complementary products, technologies, intellectual property or businesses, although the Company has no present commitments or agreements to do so.

The Registered Offering was made pursuant to the Company’s automatic shelf registration statement on Form S-3 (File No. 333-279692) (the May 2024 Registration Statement), which became effective upon filing with the SEC on May 24, 2024, a related base prospectus, free writing prospectus and prospectus supplement each dated May 24, 2024.

The May 2024 Pre-funded Warrants became exercisable subsequent to the filing and effectiveness of an amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware on June 14, 2024. The exercise price and the number of shares of Common Stock issuable upon exercise of each May 2024 Pre-funded Warrant 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 May 2024 Pre-funded Warrants will not expire and are exercisable in cash or by means of a cashless exercise. A holder of May 2024 Pre-funded Warrants may not exercise such May 2024 Pre-funded Warrants if the aggregate number of shares of Common Stock beneficially owned by such holder, together with its affiliates, would be more than 4.99% or 9.99%, as elected by such holder, 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 May 2024 Pre-funded Warrants. A holder of May 2024 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.

March 2024 Private Placement with Institutional Investors

On March 4, 2024, the Company entered into an investment agreement (the March 2024 Investment Agreement) with certain accredited institutional investors (Institutional Investors) pursuant to which the Company agreed to issue and sell, in a private placement (the March 2024 Private Placement),9,200,998 shares of Common Stock, for a purchase price of $9.50 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 gross proceeds to the Company from the March 2024 Private Placement were approximately $87.4 million, before deducting fees payable to the Placement Agents (as defined below) and other estimated transaction expenses. The Company 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.

The March 2024 Private Placement was conducted pursuant to a Placement Agency Agreement, dated March 4, 2024 (the Placement Agency Agreement), by and between the Company and Oppenheimer & Co. Inc., as representative of the placement agents named therein (the Placement Agents). Per the Placement Agency Agreement, the Company agreed to: (i) pay the Placement Agents a cash fee equal to 5.85% of the gross proceeds received by the Company from the sale of the shares; and (ii) reimburse the Placement Agents for certain fees and expenses.

Lantheus Agreements

Investment Agreement

On January 8, 2024, the Company 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 the Company agreed to sell and issue to Lantheus in a private placement transaction certain shares (the Lantheus Shares) of Common Stock. The closing of the purchase and sale of the Lantheus Shares to Lantheus by the Company (the Lantheus Closing)

was subjectto the Company 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 5,634,235, representing 19.99% of the outstanding shares of Common Stock as of January 8, 2024. Pursuant to the Lantheus Investment Agreement, the Company agreed to cooperate in good faith to negotiate and enter into a registration rights agreement with Lantheus, obligating the Company to file a registration statement on Form S-3 with the SEC to register for resale the Lantheus Shares issued at the Lantheus Closing. The Company filed such Form S-3 on March 29, 2024, and the SEC declared it effective on April 9, 2024 (File No. 333-278362).

The Lantheus Investment Agreement also contains agreements of the Company and Lantheus whereby Lantheus is provided certain board observer and information rights of the Company, as well as standstill provisions prohibiting Lantheus from taking certain actions for a specified period of time, subject to certain exceptions.

The Lantheus Investment Agreement also provides Lantheus with certain pro rata participation rights to maintain its ownership position in the Company in the event that the Company makes any public or non-public offering of any equity or voting interests in the Company or any securities that are convertible or exchangeable into (or exercisable for) equity or voting interests in the Company, subject to certain exceptions.

Pursuant to the Lantheus Investment Agreement, the Company is required to notify Lantheus within 10 business days of the end of a fiscal quarter in which the Company issued shares of Common Stock pursuant to that certain At Market Issuance Sales Agreement among the Company, Oppenheimer & Co. Inc., B. Riley Securities, Inc., and JonesTrading Institutional Services LLC dated November 17, 2023 (the ATM Agreement), of (i) the number of shares of Common Stock issued during such fiscal quarter pursuant to the ATM Agreement and (ii) the average price per share received by the Company before commissions (the ATM Average Price). Upon receipt of such notice, Lantheus may elect, at its option, to purchase all or a portion of its Pro Rata Portion (as defined in the Lantheus Investment Agreement) of such shares at an aggregate price equal to the number of shares purchased multiplied by the ATM Average Price for such quarter (the ATM Participation Right). Pursuant to the Lantheus Investment Agreement, Lantheus may not exercise the ATM Participation Right more than two times per calendar year.

Asset Purchase Agreement

On January 8, 2024, the Company entered into an Asset Purchase Agreement (the Progenics APA) with Progenics Pharmaceuticals, Inc., a Delaware corporation (Progenics) and affiliate of Lantheus, pursuant to which the Company acquired certain assets and the associated lease of Progenics’ radiopharmaceutical manufacturing facility in Somerset, New Jersey for a purchase price of $8.0 million in cash. The transactions contemplated by the Progenics APA closed on March 1, 2024.

Option Agreement

On January 8, 2024, the Company entered into an option agreement (the Option Agreement) with Lantheus whereby Lantheus was granted an exclusive option to negotiate an exclusive, worldwide, royalty- and milestone-bearing right and license to [212 Pb]VMT-α-NET, the Company’s clinical-stage alpha therapy developed for the treatment of neuroendocrine tumors. If good-faith negotiations fail, Lantheus has a one-year right to reenter negotiations if a third party offers to purchase or license the [212 Pb]VMT-α-NET program. Additionally, Lantheus has a right to co-fund the Investigational New Drug (IND) application, enabling studies for early-stage therapeutic candidates targeting prostate-specific membrane antigen and gastrin-releasing peptide receptor and, prior to IND filing, a right to negotiate for an exclusive license to such candidates. In consideration of the rights granted by the Company to Lantheus pursuant to the Option Agreement, Lantheus paid to the Company a one-time payment of $28.0 million, subject to certain withholding provisions associated with the closing of the Progenics APA.

Under the terms of the Option Agreement, Lantheus also has a right of first offer and last look protections for any third-party merger and acquisition transactions involving the Company for a 12-month period beginning on January 8, 2024.

The Company determined that the Option Agreement should be accounted for as a research and development arrangement in accordance with ASC 730-20, Research and Development Arrangements, as Lantheus held approximately 19.9% of the Company’s outstanding Common Stock at March 31, 2024. The Option Agreement containsno repayment provisions, does not create any obligation to enter into any license, transfer or sale agreements with Lantheus, and does not restrict the use of the funds in any way.

Accordingly, the balance sheet reports current and long-term liabilities related to these options under the caption, “Deferred Income.” The values for each distinct option within the Option Agreement were determined by estimating the fair value of each distinct option by a third-party valuation firm and the liabilities will be recognized as income in the condensed consolidated statement of operations as the various options expire.

January 2024 Public Offering

On January 17, 2024, the Company entered into an underwriting agreement (Underwriting Agreement) with Oppenheimer & Co. Inc., as representative of the underwriters named therein (the Underwriters), in connection with its previously announced underwritten public offering (Public Offering) of 13,207,521 shares (Public Shares) of Common Stock and, in lieu of Public Shares to certain investors, pre-funded warrants (Jan. 2024 Pre-funded Warrants) to purchase 3,008,694 shares of Common Stock. The price to the public for the Public Shares was $3.70 per Public Share, and the price to the public for the Jan. 2024 Pre-funded Warrants was $3.69 per Jan. 2024 Pre-funded Warrant, which represents the per share price for the Public Shares less the $0.01 per share exercise price for each such Jan. 2024 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 2,432,432 shares of Common Stock at the same price per share as the Public Shares, which 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 SEC on December 14, 2023, a base prospectus dated December 14, 2023, and the related prospectus supplement dated January 17, 2024.

The Jan. 2024 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 Jan. 2024 Pre-funded Warrant 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 Jan. 2024 Pre-funded Warrants will not expire and are exercisable in cash or by means of a cashless exercise. A holder of Jan. 2024 Pre-funded Warrants may not exercise such Jan. 2024 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 Jan. 2024 Pre-funded Warrants. A holder of Jan. 2024 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.

ATM Agreement

Pursuant to the ATM Agreement, the Company has established an “at-the-market” equity program under which it may offer and sell shares of its Common Stock, from time to time.

On November 17, 2023, the Company 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 its securities (December 2023 Registration Statement). Also on November 17, 2023, the Company filed a prospectus supplement with the SEC in connection with the offering of up to $50 million of shares of its Common Stock pursuant to the ATM Agreement under the December 2023 Registration Statement. In December 2023, the Company sold 123,882 shares under the ATM Agreement at an average price of approximately $3.03 per common share for gross proceeds of approximately $0.4 million.

On April 11, 2024, the Company sold 3,535,246 shares of its Common Stock under the ATM Agreement at an average price of approximately $14.00 per common share, resulting in gross proceeds of approximately $49.5 million.

On May 25, 2024, the Company terminated the offering of securities pursuant to the December 2023 Registration Statement in connection with the filing and effectiveness of the May 2024 Registration Statement.

For additional information related to the various agreements discussed above, see Note 20, Subsequent Events, in the Company’s 2023 Form 10-K.

Discontinued Operations

The GT Medical Closing occurred on April 12, 2024 (GT Medical Closing Date). Previously, the Company announced that on December 7, 2023, Isoray entered into an Asset Purchase Agreement (GT Medical APA) by and among Isoray, the Company, and GT Medical pursuant to which Isoray would sell to GT Medical, and GT Medical would 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 (the Business) including equipment, certain contracts, inventory and intellectual property. Subject to limited exceptions set forth in the GT Medical APA, GT Medical did not assume the liabilities of Isoray.

Pursuant to the terms of, and subject to the conditions specified in, the GT Medical APA, at the GT Medical Closing, (i) GT Medical issued to Isoray 279,516 shares of GT Medical’s common stock, par value $0.0001 per share, representing 0.5% of GT Medical’s issued and outstanding capital stock on a fully diluted basis as of the GT Medical Closing Date and (ii) Isoray has the right to receive, and GT Medical is obligated to pay, certain cash royalty payments during each of the first four years beginning upon the GT Medical Closing Date (each such year, a Measurement Period), as summarized below:

•

with respect to GT Medical’s net sales of Cesium-131 brachytherapy seeds for cases that do not utilize GT Medical’s GammaTile Therapy: (a) if such net sales for a Measurement Period are $10 million or less,3.0% of such net sales; (b) if such net sales for a Measurement Period are greater than $10 million and less than $15 million,4.0% of such net sales; and (c) if such net sales for a Measurement Period are $15 million or more,5.0% of such net sales; and

•

with respect to GT Medical’s net sales of GT Medical’s GammaTile Therapy utilizing Cesium-131 brachytherapy seeds:0.5% of such net sales for a Measurement Period.

In accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations, the following table presents the major classes of assets and liabilities of discontinued operations of the Business reported in the condensed consolidated balance sheets and prior year amounts have been reclassified.

The following table presents the components of discontinued operations in relation to the Business reported in the unaudited condensed consolidated statements of operations (in thousands):

The Company determined the loss recognized on classification as held for sale by identifying the assets and liabilities that are included in the GT Medical APA and are included in the table above. Additionally, the loss recognized on classification as held for sale was determined using the estimated fair value of the GT Medical stock of $0.2 million received less the carrying value of the net assets sold. The fair value of the stock received was determined based on information provided to the Company by GT Medical from a current valuation study that was prepared for them. Excluded from the calculation of the loss are contingent royalties that could be received from future sales.

Certain amounts included in the unaudited condensed consolidated statements of cash flows related to the discontinued operations are as follows (in thousands):

For the three and six months ended June 30, 2024 and 2023, there wasno provision (benefit) for income taxes recorded related to the discontinued operations. Additionally, the Company is in a loss position and has recorded a full valuation allowance for the deferred tax assets associated with the discontinued operations.

Property and Equipment

The Company’s property and equipment consisted of the following as of:

Property and equipment not placed in service are items that meet the capitalization threshold, or which management believes will meet the threshold at the time of completion and which have yet to be placed into service as of the date of the balance sheets and, therefore, no depreciation expense has been recognized.

On July 15, 2024 and August 2, 2024, the Company purchased a building located in Houston, Texas, for $4.7 million and a building in Chicago, Illinois, for $5.0 million, respectively, which it intends to use for the manufacture of its program candidates upon completion of modifications and installation of equipment.

Goodwill and Other Intangible Assets

Goodwill

The carrying amount of goodwill as of both June 30, 2024 and December 31, 2023 was $24.1 million and has been recorded in connection with the Company’s Merger of Viewpoint in February 2023. The Company tests goodwill and indefinite-lived intangible assets for impairment during the fourth quarter of each year, or more frequently should circumstances change or events occur that would more likely than not reduce the fair value of its assets. No testing was deemed necessary during thethree and six months ended June 30, 2024.

The following table summarizes the components of the Company’s other intangible assets (in thousands):

The Company’s IPR&D assets represent the estimated fair value of Viewpoint’s pipeline of radiotherapy product candidates acquired in February 2023. The estimated fair value of the IPR&D assets at the acquisition date was determined using a probability-weighted income approach, which discounts expected future cash flows to present value. The projected cash flow estimates for Viewpoint’s pipeline of radiotherapy program candidates were based on certain key assumptions, including estimates of future revenue and expenses, taking into account the stage of development of the technology at the Merger date and the time and resources needed to complete development.

Held-to-Maturity Investments

The following table summarizes the carrying values and fair values of the Company’s financial instruments (in thousands):

The Company has investments in U.S. Treasury Bills, some of which mature over a period greater than 90 days and are classified as short-term investments. The U.S. Treasury Bills are carried at amortized cost and classified as held-to-maturity as the Company has the intent and the ability to hold them until they mature. The carrying value of the U.S. Treasury Bills are adjusted for accretion of discounts over the remaining life of the investment. Income related to the U.S. Treasury Bills is recognized in interest income in the Company’s condensed consolidated statement of operations. Based on its analysis of the held-to-maturity securities, the Company determined the gross unrealized losses were primarily due to changes in interest rates and not due to credit risks. As such, the Company didnot record a credit allowance as of June 30, 2024. As of December 31, 2023, the Company hadno held-to-maturity investments, andno held-to-maturity investments were presented in cash and cash equivalents on its condensed consolidated balance sheet.

Fair Value Measurements

Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1 - Observable inputs such as quoted prices in active markets;

Level 2 - Inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-driven valuations in which all significant inputs are observable or can be derived principally from, or corroborated with, observable market data; and

Level 3 - Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

Included in the Company’s cash and cash equivalents in the condensed consolidated balance sheet is its money market fund, which is measured at fair value on a recurring basis and categorized using the fair value hierarchy (in thousands):

There wereno Level 2 or Level 3 financial instruments measured at fair value on a recurring basis at June 30, 2024, and the Company didnot have any financial instruments measured at fair value on a recurring basis at December 31, 2023.

For information related to our short-term investments, see Note 7, Held-to-Maturity Investments.

Share-Based Compensation

On May 31, 2024, the Company held its 2024 Annual Meeting of Stockholders (Annual Meeting). At the Annual Meeting, the Company’s stockholders approved the Company’s Third Amended and Restated 2020 Equity Incentive Plan (the Amended and Restated Plan) which, among other things, (a) increased the aggregate number of shares of Common Stock authorized for issuance under the Amended and Restated Plan by 4,870,092 for a total of 12,500,000 shares of Common Stock, and (b) adjusted the “evergreen” provision included therein, such that the number of shares of Common Stock available for the grant of awards under the Amended and Restated Plan will automatically increase on January 1 of each year in an amount equal to 5% of the number of shares of Common Stock issued and outstanding on December 31 of the immediately preceding year (subject to adjustment in the event of stock splits and other similar events); provided, however, that the Company’s Board of Directors may act prior to January 1 of a given year to provide that there will be no increase in the share limit for such year or provide that the increase for such year will be a lesser number of shares of Common Stock.

The following table presents the share-based compensation expense recognized for all share-based compensation arrangements (in thousands):

Commitments and Contingencies

The Company has been in settlement negotiations with a representative forsix stockholder plaintiff firms alleging the Company violated Delaware law in its preliminary proxy statement that was disseminated to stockholders in November 2022 for the Company’s annual meeting held in December 2022. Based on these settlement negotiations to date, the Company estimates that it will settle for no more than an aggregate of $0.2 million and, therefore, recorded an estimated liability of $0.2 million as of December 31, 2023. There was no change in the estimate as of June 30, 2024. This balance is included in accrued expenses on the unaudited condensed consolidated balance sheets.

Related Parties

In connection with the Lantheus Investment Agreement entered into with Lantheus on January 8, 2024, the Company agreed to sell and issue the Lantheus Shares. The number of Lantheus Shares sold was 5,634,235, representing 19.99% of the outstanding shares of Common Stock as of January 8, 2024.

On January 8, 2024, the Company entered into the Progenics APA with Progenics, an affiliate of Lantheus, for a purchase price of $8.0 million. On March 1, 2024, the Company closed on the transactions contemplated by the Progenics APA.

On March 4, 2024, the Company entered into the March 2024 Investment Agreement in which the Company agreed to issue and sell 9,200,998 shares of Common Stock. Lantheus, a significant stockholder of the Company, purchased part of the shares issued to increase their ownership percentage to approximately 19.9% in the Company following the closing of the March 2024 Investment Agreement on March 6, 2024.

For additional information regarding the Lantheus Investment Agreement, the Progenics APA and the March 2024 Investment Agreement, see Note 3, Investments and Agreements.

Leases

The Company accounts for its leases under ASC 842, Leases. Effective April 1, 2024, the Company entered into a lease with the Board of Regents, State of Iowa, for lab and office space at the BioVentures Center. The lease terminates in March 2026. Upon entering into this lease, the Company recognized a right-of-use asset and lease liability of approximately $1.1 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 Company acquired a lease from Progenics, an affiliate of Lantheus, for a production facility in Somerset, New Jersey effective on March 1, 2024 (see Note 3, Investments and Agreements, in this Form 10-Q). The lease terminates on November 29, 2028. Upon entering into this lease, the Company recognized a right-of-use asset and lease liability of approximately $0.3 millionon the balance sheet based uponthe 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.

On July 1, 2023, the Company entered into a lease with Unico Properties LLC for office space in Seattle, Washington that terminates in October 2028. Upon entering into 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 for the Company’s operating leases as of June 30, 2024 was 3.2 years and 8%, respectively.

The Company’s operating lease expense was $0.2 million and $0.3 million for thethree and six months ended June 30, 2024, respectively, and there wasno operating lease expense for thethree and six months ended June 30, 2023.

The following table presents the future operating lease payments and lease liability included on the condensed consolidated balance sheet related to the Company’s operating leases as of June 30, 2024 (in thousands):

Asset Retirement Obligation

The Company had an asset retirement obligation (ARO) associated with the facility it leased in Richland, Washington. This lease is included in the GT Medical APA and was assigned to GT Medical upon the GT Medical Closing, which occurred on April 12, 2024. As such, this liability is no longer reported as an ARO in the Company’s condensed consolidated financial statements as of June 30, 2024 and December 31, 2023. However, the Company maintains the estimated liability in its condensed consolidated financial statements related to hazardous waste removal. The estimated liability at each of June 30, 2024 and December 31, 2023 was$0.5 million and is included within the accounts payable and accrued expenses in the condensed consolidated balance sheets.

Notes Payable

The Company assumed two notes payable effective upon the closing of the Merger with Viewpoint on February 3, 2023. On July 19, 2019, Viewpoint entered in a promissory note agreement with the Iowa Economic Development Authority (IEDA) for $0.1 million at 3% interest rate to be paid over 36 monthly payments beginning on the first day of the first month following Viewpoint closing on a $1.0 million equity fundraising round. Final payment was paid in September 2023. The loan was granted as a form of financial assistance to Viewpoint from IEDA.

On December 29, 2022, Viewpoint obtained a promissory note in the amount of $1.7 million for the purpose of purchasing land and a building in Coralville, Iowa. The note bears interest at 6.15% per annum and is collateralized by the property. The note requires monthly principal and interest payments, and a balloon payment of approximately $1.5 million is due on December 29, 2027.

The following table presents the current and long-term portions of the note payable (in thousands):

The following table presents the future principal payments included on the condensed consolidated balance sheet related to the Company’s note payable as of June 30, 2024 (in thousands):

Merger

On February 3, 2023, the Company acquired 100% of the issued and outstanding equity and voting shares of Viewpoint Molecular Targeting, Inc. in exchange for 13,654,507 shares of Common Stock with a fair value of $54.6 million based on the closing market price of $4.00 per share on the acquisition date. At the closing of the Merger, the Company forgave the note receivable entered into in November 2022 and the associated accrued interest with Viewpoint that was included in the note receivable. The total amount forgiven was $6.2 million, representing the $6.0 million loan and $0.2 million accrued interest. The Company also assumed all of Viewpoint’s outstanding stock options and warrants as of the Merger date.

Viewpoint is developing the next generation of 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 its proprietary TAT platform, Viewpoint aims to develop alpha-emitting radiopharmaceuticals that can be attached to targeting peptides to deliver the radioactive payload directly to difficult to treat tumors. The Merger was completed to provide the Company with a new isotope in a larger market.

The Company accounted for the transaction as a business combination in accordance ASC 805, Business Combinations. The Company has performed an allocation of the purchase price paid for the assets acquired and the liabilities assumed with the assistance of an independent valuation firm. The Viewpoint purchase price consideration and allocation to net assets acquired is presented below (in thousands except for share price):

Goodwill is calculated as the difference between the acquisition date fair value of the consideration and the values assigned to the assets acquired and liabilities assumed. Goodwill is not amortized and is not currently assumed to be deductible for tax purposes. The goodwill is attributable to the workforce of the acquired business and the synergies expected to arise from the acquisition of Viewpoint.

Upon completion of the Merger, Viewpoint became a wholly owned subsidiary of the Company and its results of operations have been included in the Company’s condensed consolidated financial statements.

Since the closing date, Viewpoint’s results of operations have been reported in the Company’s condensed consolidated financial statements and include grant revenue of approximately$0.5 million and$0.6 million, respectively, and operating loss of $13.6 million and $7.3 million, respectively, for thethree months ended June 30, 2024 and 2023, and grant revenue of approximately$0.9 million and$0.8 million, respectively, and operating loss of $23.7 million and $11.1 million, respectively, for thesix months ended June 30, 2024 and 2023.

The pro forma financial information below represents the combined results of operations as if the acquisition had occurred on January 1, 2022, the beginning of the comparable prior year reporting period. The unaudited pro forma financial information is presented for informational purposes only and is neither indicative of the results of operations that would have occurred if the acquisition had taken place at the beginning of the period presented nor indicative of future operating results.

The information below reflects certain nonrecurring pro forma adjustments that were directly related to the business combination based on available information and certain assumptions that we believe are reasonable: