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Big pharmaceutical companies are betting billions of dollars on an emerging cancer treatment that some on Wall Street are calling a “huge opportunity.”
This is called targeted radiopharmaceutical therapy. It essentially delivers radiation directly into tumors by attaching radioactive particles to targeting molecules.
RBC Capital Markets sees a $25 billion market opportunity in this area.
“We believe TRT development is still in its early stages and that next-generation technologies that can improve treatment efficacy and address a broader range of cancer targets have the potential to drive value creation in the field,” analyst Gregory Renza, MD, wrote in a February note. middle.
Just in the past few months, four acquisitions have been announced in this space. The latest is by Novartis, There are two types of targeted radiation therapy on the market. Pluvicto treats a certain type of advanced prostate cancer, while Lutathera targets neuroendocrine tumors.
Pluvicto faces some now-resolved supply constraints in 2023 and is now approaching blockbuster status, with sales reaching $980 million by 2023. income.
Novartis’ one-year performance
Market leader with “aggressive strategy”
Earlier this month, Novartis said it had reached an agreement Acquires Mariana Oncology for $1 billion. The preclinical-stage company is focused on developing radiopharmaceutical programs, also known as radioligand therapies, to treat breast, prostate and lung cancers. A drug candidate called MC-339 is being studied for small cell lung cancer.
Oppenheimer analyst Jeff Jones said: “They are clearly the market leader in this space, have adopted an aggressive strategy, successfully commercialized their products, expanded the market opportunity for those products, and have the pipeline behind them. “The acquisition of Marianna … gives them greater discovery capabilities. “
Shares are up about 1% so far this year. According to FactSet data, the average analyst rating is hold, which represents an 8% upside potential from the average analyst price target.
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Novartis’s success has ignited enthusiasm among rivals. Piper Sandler analyst Edward Tenthoff describes it as “FOMO,” the fear of missing out.
“I think that’s what’s happening, big pharma is accumulating capabilities in this new model,” he said.
Eli Lilly and Companythe company benefited from excitement in the GLP-1 space with diabetes drug Mounjaro and weight loss treatment Zepbound, Completed acquisition of US$1.4 billion In December, radiopharmaceutical company Point Biopharma was established.
Just before the deal closed, Point Biopharma’s targeted radiopharmaceutical PNT2002 met its primary endpoint in a Phase 3 trial in metastatic castration-resistant prostate cancer.
Additionally, earlier this week Eli Lilly and Company announced that it would $60 million paid to Actis Oncology Utilizes its novel miniaturized protein technology platform to produce anti-cancer radiopharmaceuticals.
According to FactSet data, Eli Lilly’s average analyst rating is “overweight,” which is 8.3% higher than the average analyst price target. Shares are up nearly 38% so far in 2024.
“I think, obviously, investors are very focused on obesity right now, but we think they definitely have opportunities on the supply side through acquisitions, which is one of the challenges for radiopharmaceutical companies,” said portfolio manager Dan Lyons. Research Analyst at Janus Henderson Investors.
Bristol-Myers Squibb has also joined the fray, completing its $4.1 billion acquisition of RayzeBio in February. The company now has RayzeBio’s pipeline, which includes RYZ101, a late-stage targeted radiopharmaceutical therapy for the treatment of gastroenteropancreatic neuroendocrine tumors. It is also in phase 1 trials in small cell lung cancer.
The deal was announced in December shortly after Bristol-Myers Squibb said it would buy schizophrenia drug developer Karuna Therapeutics for $14 billion. At the time, William Blair analyst Matt Phipps said the deals showed Bristol urgently needed to bring in more products as some of its older treatments were set to become obsolete later this decade. Sometimes patent protection is lost.
Shares of the big pharma company have been falling, down more than 18% so far this year. Analysts have an average rating of hold, according to FactSet.
Finally, in March, AstraZeneca declare Plan to buy clinical stage biopharmaceutical company Fusion Pharmaceuticals $2.4 billion. Fusion is currently conducting a Phase 2 clinical trial of a potential new therapy, called FPI-2265, for the treatment of patients with metastatic castration-resistant prostate cancer.
AstraZeneca’s one-year results
According to FactSet data, AstraZeneca stock has an average analyst rating of overweight and is nearly 6% higher than the average analyst price target.
“All of these companies have manufacturing operations that are either built or under construction and will be operational at commercial scale soon,” said Jefferies analyst Andrew Tsai. “They That’s locked in, and I think that’s partly what the big pharma companies want.”
There are also smaller, publicly traded biopharmaceutical companies still standing, albeit not in large numbers.
Additionally, there are several private companies in this space that have attracted private investors, especially recently. GlobalData’s Pharmaceutical Intelligence Center deal database shows that innovative radiopharmaceuticals received $518 million in venture financing last year, a 722% increase from $63 million in 2017.
Janus Henderson’s Lyons said these public and private companies may be ripe for acquisition at some point.
“There are several large pharmaceutical companies that do not yet have radiopharmaceutical programs that may be interested in this area,” he said. “In addition, I think some players who already have projects will be interested in looking for additional targets and pipeline projects to expand their portfolios.”
‘Huge opportunity’
Everyone, including Big Pharma, is working on improving existing treatments or looking to expand them to attack different cancer tumors.
For example, Novartis’ Lutathera received FDA approval for use in pediatric patients in April. The company also said last month it would apply to expand Pluvicto’s label in early-stage prostate cancer.
“Novartis has a clear path and strategy to expand the market opportunity for these two products,” Jones said.
Several other companies are developing therapies targeting these same targets. Some companies, such as Bristol-based RayzeBio, are switching to alpha emitters such as actinium, rather than the beta emitter lutetium used by Pluvicto and Lutathera.
“These alpha (emitters) have a much stronger impact and are very localized, literally within the length of the cell,” said Piper Sandler’s Tenthoff.
Bristol-Myers Squibb’s one-year results
Radiopharmaceuticals are also being considered for use in combination with other treatments, such as immunotherapy.
Depending on the results of current and future clinical trials, the therapy could eventually also be used to treat any cancer, including ovarian, breast or brain cancer, he said.
“Anywhere where radiation therapy is used, but not necessarily in a targeted approach, it makes sense because these are radiosensitive tumors,” Tenthoff said.
Companies can also use the decades of research they’ve done in the field to identify new opportunities, Jones said.
“You can really use all the work we’ve done in cancer over the past 30 to 40 years to identify targets that are not expressed on cancer cells, or that are expressed more highly on cancer cells compared to normal cells – actually Any of these are opportunities for targeted radiotherapy,” he said.
“I see a huge opportunity for targeted radiotherapy,” he added. “We have two products, two targets today, and basically the entire field of cancer research and cancer targeting.”
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