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Published to the market and investors on 28^th September 2018 @ 7.17am (London time).

 

Actinium Pharmaceuticals Inc (ATNM-US): Improving access to CAR-T
Recommendation: OUTPERFORM
Target Price: USD$4.00
Current Price: USD$0.76 (COB on 27^th September 2018)

KEY TAKEAWAY

With its molecular-targeted radio-therapy Iomab-B showing promise and in a pivotal Phase III for bone marrow transplant, Actinium has initiated a programme to use lower dose (Iomab-ACT) to boost safety and efficacy of the much-vaunted CAR-T therapy in blood cancers. While the tens of billions USD spent on CAR-T assets highlight the potential, the extreme cost and safety concerns surrounding CAR-T have so far held back uptake of the two marketed products Kymriah (Novartis) and Yescarta (Kite Pharma / Gilead). Based on previous data, Actinium believes that replacing the current toxic pre-CAR-T conditioning regimen with targeted radiotherapy could improve patient outcomes, potentially reducing barriers to reimbursement and expanding patient access. Although the true scale of the CAR-T Iomab-ACT opportunity is unclear at this early stage, Actinium's new initiative further highlights the potential of its molecular-targeted radiotherapy in blood and immune diseases. We maintain and reiterate both our OUTPERFORM recommendation and TP of $4.00 / share as detailed in our initiation report of April 2018.

Benefits of Iomab-ACT over chemo - Successful CAR-T therapy requires depletion of patient lymphocytes prior to treatment. Iomab-ACT therapy promises to provide specific targeting of lymphocytes, including cancer cells, provided by one dose in an out-patient setting. Current fludaribine / cyclophosphamide ("Flu-Cy") leads to non-specific blood cell depletion as well as other toxicity and requires multiple infusions over a number of days. Iomab-ACT has the potential for better efficacy, safety and convenience.

CAR-T benefits come at a cost - The benefits of the already marketed products Kymriah and Yescarta in helping otherwise hopeless patients beat treatment refractory blood cancers including acute lymphoblastic leukaemia ("ALL"), diffuse large cell lymphoma ("DLCL") are well known. However, the enormous cost of manufacturing and supplying these personalised therapies (treatment costs approaching $500k) presents a significant barrier to reimbursement.

Improved outcomes could facilitate reimbursement - Given the sky-high cost, payers increasing looking towards outcome-based reimbursement schemes for CAR-T based therapies. The improved safety and efficacy promised by Iomab-ACT compared to existing chemotherapeutic Flu-Cy regimens could facilitate such an outcome-based approach.

Documented safety and efficacy of Iomab - Low dose Iomab has already been shown to deplete lymphocytes and is safe at much greater doses as documented in over 500 patients undergoing pre-bone marrow transplant conditioning. While Actinium has yet to disclose details, a relatively simple dosing trial of Iomab-ACT in combination with CAR-T is in planning by its clinical collaborators.

Providing CAR-T players with freedom to operate - Flu-Cy lymphocyte depletion regimens for CAR-T is covered by a patent filed by Kite Pharma (owned by Gilead). An effective alternative conditioning pathway patented by Actinium could provide other CAR-T players freedom to operate.

Significant upside - The prospect of significant clinical news flow from Actimab in H2/2018E and pivotal readout on Iomab-B suggests significant upside from current levels. As detailed in our initiation report of April 2018, our valuation suggests that Actinium still remains fundamentally undervalued at current levels. Our analysis indicates a current fair value of $2.60 per share rising to $5.00 per share on the back of positive phase 2 data in H2/2018E. We maintain and reiterate both our OUTPERFORM recommendation and target price of $4.00 per share.

Kind regards,

Chris Redhead | Analyst

goetzpartners Healthcare Research Team | Research Team

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