ALPMY - Actinium: Overview Of A Promising Innovator

Summary

• Riding two powerful franchises (Iomab and Actimab), Actinium Pharmaceuticals is brewing a deep pipeline of therapeutics for multiple indications.
• There is also AWE Technology that is developed in collaboration with other biotech innovators.
• The best time to consider picking up companies like Actinium is during the bear market. After all, you can buy the same company at a deep bargain.

In the business world, the rearview mirror is always clearer than the windshield. - Warren Buffett

Author's Note : This article is an abridged version of an article originally published for members of the Integrated BioSci Investing marketplace on October 27, 2022.

In biotech investing, most investors do not like to learn about the stock fundamentals because it can be quite boring. Nevertheless, the more you know about the business, the better you'd be able to anticipate what would occur to your investment. For a biotech company, you want to focus on the underlying technology and drugs. More importantly, make sure you keep tabs on upcoming clinical trial data releases that can greatly move the needles of your stock.

Fundamentals aside, the best time for you to do more research to consider building additional positions is during the bear market. After all, you can pick up the same company at a fraction of its intrinsic value. Amid the market decline, I want to feature a fundamental analysis of Actinium Pharmaceuticals ( ATNM ) while giving you an overview of the company's development. That way, you can decide if this company is worth a diversification play.

Figure 1: Actinium chart

About The Company

As usual, I'll present a brief corporate overview for new investors. If you're familiar with the firm, I suggest that you skip to the next section. Operating out of New York, Actinium is a clinical-stage company that is focusing on the innovation and commercialization of novel targeted radiotherapies to fulfill the unmet needs in cancer treatments.

The company's technology is designed to attack various cancer targets and certain immune cells. That way, they can either "deplete or condition" such cells prior to cellular therapy or bone marrow transplants. The ultimate result is an increase in treatment success. From the figure below, you can appreciate that Actinium's two's lead franchises (Iomab-B and Actimab) have tremendous applications across many different cancer indications. Then, there's also the earliest development relating to the AWE Technology platform.

Figure 2: Therapeutic pipeline

Partnerships: Multiple Partners

Shifting gears, let us walk through the various fundamental development of Actinium. On this front, the first aspect that I'd like to assess is the partnership. Notably, it's a great sign to see that Actinium recently inked a favorable commercialization partnership with Immedica for Iomab in Europe, the Middle East, and North Africa (i.e., the EMENA) region.

Under the deal terms, Actinium will receive the $35M upfront payment with the potential to receive up to $417M in milestones payment. On top of that, Actinium would receive the mid-twenty percentage sales royalties. I noted in the prior article ,

As you can appreciate, a partnership provides several functions for a small/young biotech company. First and foremost, the partner would help absorb the costs associated with the capital-intensive therapeutic development process. Second, they can either take over the future launch or co-launch the drug with the smaller operator. Third, they provide their development expertise as well as their relationship with the FDA. Fourth, they instill confidence in investors.

Though Immedica is an excellent partnership, you want to see additional collaborations in the most lucrative market (i.e., the USA). Moreover, the larger the partner, the better. After all, their resources would be greater.

Market Opportunity & Innovation: Novel Radiotherapies For Cancer Treatment With Iomab, Actimab, and AWE Technology

As you can see, assessing the market opportunity is very important. After all, it lets you know whether the development drug/technology would have a good chance of becoming a market success (i.e., blockbuster). Here, the market for Actinium's crown jewel drug (i.e., Iomab) is the bone marrow transplant market (i.e., BMT), CAR-T, and Genes therapy. Even with immunosuppressive therapy, the current setback for BMT is that the body's immune system would attack the transplanted cells. As such, it reduces efficacy while increasing toxicity.

Actinium delivered stellar solutions with its Iomab/Actimab technology. The drug can be loaded with a radioactive payload that is guided to their specific target immune cells -- those that would lead to the attacking/rejecting of the BMT -- with an antibody. Its drugs are like smart missiles that clean out the body of cells that can cause the BMT to be rejected or CAR-T/GeneTx to experience toxicity.

With versatility, Actinium's antibody can hit multiple targets, including CD45, CD33, CD38, CD47, HER2, and HER3. Moreover, they can be fused with different payloads like Actinium-225, Iodine-131, and Lutetium-177. Furthermore, it's great that Actinium has over 195 patents as well as clinical experience in roughly 600 patients.

Figure 3: BMT markets for Iomab

As you know, Iomab has applications beyond BMT. The use of Iomab in CAR-T/Gene-Tx is quite promising because it can alleviate their utility-limiting adverse effects. They include cytokine-release syndrome (i.e., CRS) and neurotoxicity. By attacking CD45 as illustrated below, Iomab can prevent the aforesaid side effects.

Figure 4: CAR-T and Gene-Tx market for Iomab

Asides from Iomab, Actinium is tinkering with its AWE Technology platform. Here, Actinium is collaborating with interesting companies, namely Astellas ( ALPMY ), AVEO Oncology ( AVEO ), and EpicenRx. As you can see, AWE Technology is quite early in its development. As such, you should focus on the latest advancement. After all, the most advanced franchise tends to move the needle of your stock the most.

Figure 5: AWE platform opportunities

Important Catalysts: Upcoming Iomab-B SIERRA Trial Data Release

As you can appreciate, big catalysts like an advanced data release are most crucial to the success/survival of a young/small biotech like Actinium. Therefore, you should look into their development. Viewing the figure below, you can see that the Phase 3 (SIERRA) trial assesses the safety/efficacy of Iomab-B in patients who are afflicted by relapse/refractory acute myeloid leukemia (i.e., AML) and are undergoing a BMT.

You want to pay attention to the primary endpoint (6-month complete response rate, i.e., CR) and secondary endpoint (overall survival, i.e., OS). Another point to consider is that the FDA is more focused on OS nowadays. As such, clearing the secondary endpoint is just as important as the primary. Hence, you want to make sure that Iomab would generate positive data for both endpoints.

Figure 6: SIERRA trial

On September 21, Actinium reaffirmed that the company is on track to report data by yearend. As shown below, Actinium already accomplished several data milestones for both Iomab and Actimab franchises. Now, the biggest upcoming data release that would define Actinium is the SIERRA study. If the results turn out positive, the stock is usually but not always going to rally. Nevertheless, if negative, you can bet that the shares would tumble precipitously. Looking at SIERRA's design, I believe that it's much tougher to clear the OS than CR. We'll know soon enough by yearend.

Figure 7: Various catalysts

Financial Analysis

Just as you would get an annual physical for your well-being, it's important to check the financial health of your stock. For instance, your health is affected by "blood flow" as your stock's viability is dependent on the "cash flow." With that in mind, you should assess the 2Q2022 earnings report for the period that ended on June 30.

Like most developmental-stage biotech, Actinium has yet to generate any meaningful revenue. As such, let us check up on other more meaningful metrics. Accordingly, the research and development (R&D) registered at $4.6M compared to $3.6M for the same period a year prior. I viewed the 27.7% R&D increase positively because the money invested today can turn into blockbuster profits tomorrow. After all, you have to plant a tree to enjoy its fruits.

Additionally, there were $7.7M ($0.33 per share) net losses compared to $5.0M ($0.25 per share) net declines for the same comparison. The 32.0% bottom line depreciation made sense because Actinium is investing more capital into R&D.

Figure 8: Key financial metrics

About the balance sheet, there were $116.3M in cash and equivalents. There is also the $35M upfront payment from Immedica. Against the $7.8M quarterly OpEx, there should be adequate capital to fund operations into 4Q2025. Simply put, the cash position is robust relative to the burn rate.

Potential Risks

Since investment research is an imperfect science, there are always risks associated with your stock regardless of its fundamental strengths. More importantly, the risks are "growth-cycle dependent." At this point in its life cycle, the main concern for Actinium is whether Iomab would clear Sierra in the next two months. In case of a negative data report, you can expect Actinium shares to lose over 50% of their market value and vice versa. The other risk is that Actinium might not be able to secure a marketing partner in the USA. Furthermore, there were some investor concerns relating to the management.

Conclusion

In all, I recommend Actinium Pharmaceuticals as a highly speculative buy that deserves more research analysis. Riding two highly promising franchises (Iomab and Actimab) and an early-stage technology platform dubbed AWE, Actinium is showing excellent clinical progress. Despite some investors' concerns about management, it seems like Actinium is making progress. As you're heading into yearend, the data release for SIERRA could substantially galvanize the share price higher. If Actinium fails to pass the said trial, it's quite likely that this company will lose most of its market capitalization.

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