Actinium (OTC:ATNM) has been lightly covered here on SA, with only one post on the name in the past few years. I believe it's an interesting name with an asymmetric risk/reward profile at these levels and, albeit small cap and thinly traded, could get more interesting into 2014 here.
Actinium is a biotech developing innovative targeted payload immunotherapeutics for the treatment of advanced cancers. Actinium's targeted radiotherapy is based on its proprietary Alpha Particle Immunotherapy platform, which is is a highly potent and selective form of targeted radiotherapy and allows powerful alpha emitting radioisotopes (Actinium 225* or Bismuth 213) to be carried by monoclonal antibodies (mAbs) directly to cancer cells. By virtue of carrying alpha emitters, mAbs bring them directly to cancer cells where alpha emitters can selectively kill the targeted cell.
Brief Technology Description
To describe the benefits of the Alpha Particule Immunotherapy Platform, as the company puts it- alpha emitters are best understood when compared to beta emitters, an alternative form of radioisotope used in cancer drugs. The killing power of a radioactive particle is directly proportional to its energy and inversely proportional to its range. Alpha particle carries the most energy but travels the shortest path, while beta particle has less energy but goes farther in the body.
Being 100 times more powerful than beta particles, alpha therapy is effective in cancers that are not sensitive to beta irradiation. Prime examples are the past and current clinical trials in AML. APIT has demonstrated extremely high cancer cell kill levels even though AML is not considered particularly radiosensitive and radiotherapy is not used in treating the disease. While their potency which is 100-fold higher than beta's and cytotoxins' significantly increases the killing power of alpha particle drugs against targeted tumor cells, their extremely short range limits any damage inflicted on healthy tissues.
Comparison between α and β irradiation's effect on cancer cells and healthy tissues
Clinical Stage Compounds
ATNM has 2 drugs in clinical trials: Iomab-A and Actimab-A. Iomab-B is a combination of a mAb and beta-emitting radio-isotope, and is being developed for patients needing a hematopoietic stem cell transplant (HSCT). The drug has completed a Phase I/II trial in bone marrow conditioning for hematopoietic stem cell transplantation (HSCT) in relapsed and/or refractory elderly acute myeloid leukemia (AML) patients demonstrating a clear survival benefit which is potentially curative- i.e. all patients had complete response, 1 year survival at 30% (in acute myeloid leukemia pts vs. 10% normal). It is entering phase III in 2014. The company will be hosting a Webinar on October 15th to discuss its progress with Iomab-B as well.
As far as the Phase III trial, management has estimated the costs of $15-20mm, and read out in 2016. While the trial is indicated for AML, based on prior data, clearly utility may be demonstrated for other indications such as Acute Lymphoblastic Leukemia, Hodgkin's Disease, Non-Hodgkin Lymphoma, or Multiple Myeloma.
Its other drug, Actimab-A, is a radioimmunoconjugate combining a mAb and actinium-225 (also for AML). Here too, the drug had good early data, with ph-I showing eradication of leukemia in 67% of pts. For this drug, phase II should read out in middle of 2014.
Potential markets: overall and addressable
Monoclonal antibodies for cancer indications represent approximately 30% of all cancer drug sales, or about $15 billion per year. A total of 11 mAbs for treating cancer have been approved to date. Many approved mAbs are commercially very successful. API is primarily focused on blood borne cancers and metastases of solid cancers. Based on pricing of $50k per patient (which is equal to already approved radio-immunotherapy drugs), OVERALL market opportunities could look like this:
At a price of $5.45, the stock has a market cap of $140mm, and is thinly traded, with trading of about 4,000 shares a day ($20k notional). The stock is up 250% YTD, although it was trading in the $4 range for much of the year until mid-September when the shares began to break out and approached >$6 as recently as last week. On the downside, as of 2Q (ended 6/30), the company had $5.6mm in cash on its balance sheet, and is burning about $1-2mm a quarter. With 16mm shares outstanding, cash per share is about $0.40. A downside scenario pegs the stock at about $3, based on the pipeline value, the platform and IP position, and a total market value of $50mm (3 x 16).
On the upside, I think about the market potential as such- with peak year sales occurring 5 years post launch:
- Iomab-B peak year sales of $400mm in the US for AML, with a 2018 launch (based on phase III starting in '14 and completing in '16)
- Actimab peak year sales of $200m in the US for AML, with a 2019 launch (based on phase II completing in '14, and phase III starting in '15)
Note that these estimates are well within the overall addressable markets that I outlined earlier- the combined AML market is only $770mm, but the HSCT is >$2b and I am not ascribing any value to the other cancers (as they are not indicated yet), but clearly those numbers are materially larger.
Based on this staggered peak year sales outlook, I ascribe a DCF based 'target' price of about $12 ($200mm market cap), which I think it could hit next year as data comes together. Specifically, as the company announces it is moving into ph-III validated trial in '14 after getting through the FDA meetings, and as it reads out from Actimab data next year (ph-II), I believe that those 2 catalysts should get the stock moving as investors position around data (and improve volume). As such, it's worth keeping on the radar for now and monitoring the price action & volume to set up into a 2014 trade. With a downside of $2.50 per share and an upside of $6+ per share, it's an attractive time to take a look.