Dr Boreham's Crucible: Radiopharm hopes to turn up the sweet sound of success

Viewed as a ‘mini me’ version of the all-conquering Telix Pharmaceuticals, the $60 million market cap Radiopharm Theranostics (ASX:RAD) is emerging from unloved status to that of a genuine contender in the red-hot radiopharmaceutical sector.

But don’t take our word for it: heed the actions of the Massachusetts-based, US$6.8 billion Nasdaq-listed Lantheus, an acknowledged leader in the sector.

Having agreed to a $7.5 million investment in Radiopharm in June last year, Lantheus this month doubled down with a further US$5m ($8m) placement, at 6 cents a share.

Tellingly, the price was at a 150% premium to the previous closing price.

The deal means that Lantheus becomes Radiopharm’s biggest holder with a 12.6% stake.

“Delighted” Radiopharm CEO Riccardo Canevari says the company had worked closely with Lantheus since last year’s initial investment.

The bolstered investment follows the December 30 announcement of a ‘strategic co-development partnership’ between the duo, with the initial focus on a phase I imaging trial.

Lantheus kindly funds the clinical development costs, while Radiopharm will receive up to $US2 million on milestones, including ethics committee approval and completing patient enrolment.

“This partnership strengthens our ability to bring innovative treatments to patients in need and demonstrates the power of combining our expertise and resources,” Canevari says.

About Radiopharm

Radiopharm operates in nuclear medicine, which is about combining a molecule and an isotope to form a radioactive tracer which is then detected by scans such as positron emission tomography (PET).

Radiopharm has programs covering the use of several different isotopes with agents to target cancer biomarkers including PDL-1, HER-2, the integrin alpha V beta 6 peptide (AVB6) and the fatty acid synthase.

A creation of biotech entrepreneur Paul Hopper, Radiopharm listed on the ASX in November 2021, with assets acquired from Imperial College London, New York’s Sloan Kettering Memorial Hospital and the Technical University of Munich.

Radiopharm has tweaked targeting agents and isotopes to address multiple indications, notably brain cancer, non-small cell lung cancer and breast, gastric and pancreatic cancers.

“The thinking was to do something different in the space … and bring innovation to the market,” Canevari says.

Complementing the company’s own programs, two years ago Radiopharm formed a private joint venture with the Texas-based MD Anderson Cancer Center (MDACC) to in-license MDACC technologies.

Radiopharm owns 75% of the JV with the first program in pre-clinical stage, a molecule targeting B7H3 in multiple cancers.

Mixing and matching

The ‘theranostics’ in the company’s name refers to developing both diagnostic and therapeutic radiopharmaceuticals for cancer.

The diagnostic leg involves the use of low energy radioisotopes to allow physicians to ‘see’ and measure tumours. The treatment bit involves high-energy particles.

The process involves attaching a radioactive isotope to a targeting agent, such as a small molecule or antibody.

“With the same molecule using different isotopes you can have an imaging agent to detect where the tumour is – both large tumours and small metastases,” Canaveri says.

“Then you switch isotopes to get the therapeutic model going to the same place the imaging agent went.”

Targeting the brain

Radiopharm’s most advanced program, RAD-101, aims to develop an imaging tool for brain metastases. It involves using the isotope F18 (not the fighter jet) and combining it with a radiotracer called pivalate.

The target is the fatty acid synthase, which is overexpressed in cancerous brain cells but not healthy ones.

In 2022, the company reported positive results of a phase II imaging trial involving 17 patients (11 of them treatment-naïve). The gist was that the injected radiotracers migrated to the tumours effectively, which is crucial for a targeted treatment that does not zap healthy cells.

The company has received US Food and Drug Administration approval for a phase IIb trial, targeting 30 patients. A read-out is expected by July 2026.

What’s the problem?

Mr Canaveri says the standard-of-care magnetic resonance imaging (MRI) scans work quite well for the initial assessment of brain metastases.

The trouble is, 70% of patients need treatment by way of stereotactic radiosurgery (radiation beams).

Post treatment, some tissue becomes necrotic – dead – and the MRI no longer can distinguish between the deceased area and the tumour. The company believes its treatment can negate these problems.

Canevari says there are about 300,000 new brain cancer patients in the US every year – a similar-sized market to prostate cancer and representing a US$1.25 billion-a-year addressable market.

On the competitive front, Italy’s Bracco Imaging is in phase III studies using Axumin, a previous prostate cancer imaging tool, for brain cancer imaging. So, we guess RAD-101 just must be more effective – and management is confident it will be.

Pretty RAD agenda

Based on the lutetium 177 (Lu-177) isotope, Radiopharm’s RAD-204 program is for non-small cell lung cancers that express the PD-L1 target. A phase I therapeutic trial is enrolling 27 patients in multiple Australian locations and the company has ethics approval to expand the program to other tumours.

This program centres on genetically-engineered antibodies called nano-mabs (monoclonal antibodies), which derive from a specific breed of camel (dromedaries, we believe, but don’t get the hump if that’s wrong).

Also deploying Lu-177, RAD-202 is targeting HER-2, mainly for patients with breast or gastric cancer. In December, the company received ethics approval to kick-start a trial.

With pancreatic cancer, the company has FDA orphan device indication for Trivehexin, a peptide deployed with either the gallium-68 or Lu-177 isotopes. The imaging program, RAD-301, uses gallium-68 to target AVB6.

In December the company pointed to a write-up in the learned Frontiers for Nuclear Medicine, which dubbed RAD-301 a “safe and suitable agent” for pancreatic cancer imaging.

A therapeutic program, RAD-302 also targets AVB6, but with Lu-177. The next step is a phase I dose escalation trial, planned for late 2025.

RAD-302 has potential for other cancers including head and neck, lung and colorectal.

Don’t get caught in traffic

Given the half-life of isotopes can be short, logistics play a key role in the production and supply of nuclear agents. “You don’t want your products to be stuck in a traffic jam,” Canevari says.

He adds that with demand for isotopes soaring, it’s crucial to have a solid long-term supply contracts with the nuclear facilities producing the goodies. In Australia the Australian Nuclear Science and Technology (ANSTO) provides the isotopes, while Isotopia and Shine Technologies do the honours in the Europe and the US respectively.

Finances and performance

The original Lantheus investment was part of a $70 million capital raising, which also included a $62.5 million institutional placement struck at an 18% premium.

Chairman Hopper chipped in $3 million of his own readies in the placement.

The deal included options that would have enabled Lantheus to climb to 19.9% by way of $7.5 million of unlisted options and listed options on top of that, but the latest arrangement supplants that.

As of the end of September, Radiopharm had cash in the bank of $46.4 million, having burnt through $13.4 million in the quarter.

The latest funding deal means the company is well placed to fund its clinical programs, with the planned phase IIb brain cancer trial costed at around $5 million.

Since listing the shares have traded between 36 cents (late December 2021) and an early January 2025 low point of 2 cents.

The shares listed at 60 cents each but lost one-third of their value on the day and never traded above the issue price.

Dr Boreham’s diagnosis

While the ‘Telix glow’ is illuminating its ASX-listed peers Radiopharm and Clarity Pharmaceuticals, Radiopharm shareholders are yet to be truly rewarded share-price wise.

We stress that the company is well behind the $8.8 billion market cap Telix, which last week won European approval for its prostate cancer imaging agent Illucix.

Still, we’re yet to meet a junior biotech with ambitions that match their financial capacity – and they crave for the sort of big-ticket backing that Radiopharm has achieved.

Canevari described the Lantheus investment is a “solid endorsement” of Radiopharm’s potential – and Lantheus had plenty of other investment options.

As Great Aunt Dora used to say before receiving her yuletide gift of sherry: “You needn’t have!” before drinking it, anyway.

A key benefit of developing radio-imaging devices is that the proponents don’t need to show their tool is better than the standard-of-care, but just as good in terms of detecting false positives and negatives.

That should bode well for near-term commercialisation, but one must be a nuclear scientist to appreciate the relative merits of the various agents and isotopes.

For glioblastoma, Lodge Partners last year estimated an addressable US market of 265,000 patients and an initial penetration of 10%.

At an estimated treatment cost of US$4730 per dose, that equates to a handy US$125 million.

Of course, rule number one of drug and device development is that market approval usually takes longer than expected.

Rule number two is that achieving market penetration takes longer than anticipated. Rule number three is to be patient, in anticipation of rule number one and rule number two.