Actinium Pharmaceuticals Inc (NYSE:ATNM)
If you think that I wrote a presumptuous Actinium Pharmaceuticals headline to simply grab your attention, you are mistaken. After extensive analysis of the company, I hold a firm belief that ATNM has the potential to mimic the dramatic rise of Celator, which saw its market cap increase from roughly $50 million dollars in 2016 to $1.5 BILLION dollars, the price at which Jazz Pharmaceuticals paid to acquire the company. For Celator shareholders, this windfall came after the company provided clinical trial results that proved an increase in the survival rates of patients with AML by approximately three months. Celator stock went from around $1.60 in March of 2016 to over $30.00 by the end of May.
Celator did a great job extending patient survival, and additional survival time offers the potential to find a cure and ultimately create higher overall survival rates. Thus, the spike for Celator was merited. At the time, Celator focused on building upon the technology for combination therapy, utilizing older chemotherapy drugs in new directions, via liposomal nanoparticles that were intended to more efficiently target the delivery of the chemotherapeutic agents to the tumors.
While ATNM is not tracking the same scientific pathway as Celator, the results being demonstrated by the ATNM medical team may be equally impressive in many respects. To that end, Actinium Pharmaceuticals deserves a closer look by investors, as the potential for a Celator type spike is not out of the question. At the very least, the Celator deal defined the enormous value being given to leaders in the AML space, a market of which the company sits at the very core.
ATNM may very well be a victim of the decoupling that can occur between share price and a realistic and encompassing valuation. Most vulnerable are the companies like Actinium Pharmaceuticals, who have built an extraordinary clinical data set, but are unfortunately annihilated by investors that are nagged by the constant fear of a continued plan of stock dilution and convertible debt funding.
If current and potential ATNM investors are being spooked by either of those two specters, its time to exorcise those demons and come to the realization that the company is both financially and clinically sound. The $10 million cash raise in October and the lack of convertible debt provisions on the balance sheet should extinguish those investor concerns.
Actinium's Clinical Advantage
Before getting to the Actinium Pharmaceuticals company fundamentals, the main interest of many short term investors, there needs to be a greater focus in vetting the company's clinical and strategic progress, as well as evaluating the overall strategy and current clinical programs at the company. From that vantage point, ATNM investors should clearly be able to sight the overall leadership position in at least two advanced clinical stage programs that hold enormous potential in treating AML, in addition to a host of other targeted indications.
As a quick overview, ATNM currently has two clinical stage trials, Iomab-B (CD45) and Actimab-A (CD33), and in addition to this, the company is also strategically positioned to capitalize on its Proprietary Alpha Particle Immunotherapy (APIT) platform. The APIT platform is generating reliable data that is demonstrating its potential to deliver multiple cancer drugs and treatments, several that may have blockbuster potential. In addition to APIT, the company has also staked out a leadership position in linking alpha particles to antibody drug conjugates that are intended to generate new therapies for both liquid and solid tumors.
To accentuate the potential of the two clinical trials, Iomab-B is demonstrating the strength to position the company as a leading franchise in the field of bone marrow transplants (BMT), having the advantage of an expert team of professionals that possess both the vision and knowledge to advance the studies with the intent of creating innovative new therapies and enhancing shareholder value.
For its part, Actimab-A has the potential to become a best-in-class solution in CD33 applications. CD33 is a transmembrane receptor expressed on cells of myeloid lineage, a key component within ATNM trial design, with an emerging data set that may bring forward both partnership and strategic opportunities for the company.
While the previous and quick introduction includes a host of scientific acronyms and jargon that even savvy biotech investors may find difficult to follow, the following spelled-out explanation of what these ATNM compounds and trials are doing should be much easier to comprehend.
Iomab-B
CD45 is a molecule that is expressed on leukemia cells, bone marrow cells, and stem cells, and is active in targeting CD45. Iomab-B works to deliver a powerful radiation shock to the DNA of these CD45 cells, eradicating the leukemic cell and enabling a patient to proceed with a bone marrow transplant. In simplest terms, Iomab-B is the starting point intended to increase survival rates, but there is much scientific research that has built up the therapy.
The significant and driving force behind Iomab-B is that is used as an induction and conditioning agent to enable patients with relapsed or refractory acute myeloid leukemia to receive a bone marrow transplant. Iomab-B has become a possible life saving therapy, bringing potential for a BMT where one did not exist before.
Iomab-B is not a new therapy option. The drug was first developed at the Fred Hutchinson Cancer Research Center, a recognized and Nobel prize winning leader in the field of bone marrow transplants. Iomab-B has been studied in roughly 300 patients in several phase I and phase II clinical trials in cancer centers throughout the United States, targeting various forms of leukemia and lymphoma in physician sponsored trials. These trials are on-going and have demonstrated meaningful and impressive data in the fight against different forms of leukemia.
When targeted to CD45 expressing cells, Iomab B has resulted in effective induction and conditioning of the cell in preparation for a BMT, while being well tolerated and showing minimal patient reported side effects. In comparison to chemotherapy and/or radiation, the option may become a clear choice for patients, with potential to become a first line standard of care based on Iomab-B's safety and tolerability profile compared to existing methods of BMT preparation.
Iomab-B Is A Pathway Toward Health
The best way to look at Iomab-B, from layman's terms, is that it is the most efficient and well tolerated therapy to prepare a patient for a potential life saving BMT procedure. By targeting the "bad" CD45 cells in the bone marrow, its radioisotope payload works to deliver a knockout blow to the cells in the marrow, essentially eradicating all of the cells in the bone marrow and clearing a space for the newly transplanted cells.
Current methods of treatment that include repetitive rounds of chemotherapy come with a host of complications, as well as costs. The conditioning regimen in the chemotherapy process can take as long as 42 days to prepare a patient for transplant, at a cost approaching one million dollars. Unfortunately, due to the severe toxicity, complications, and side effects, not all patients will survive the regimen, and despite the arduous regimen, many of the patients will not have responded well enough to the treatment to prepare them to accept a BMT transplant.
In contrast, Iomab-B is showing tremendous efficacy results, with 100% of patients responding to the therapy. Additionally, 100% of the patients responded to cell engraftment by the 28th day of treatment. This important and differentiating factor is further demonstrated by the overall survival rate of patients, with only a 10% overall rate of survival for chemo patients compared to upwards of 30% survival in data taken from the Fred Hutchinson Cancer Research Center for Iomab-B phase I/II trials.
The supporting data from both FHCRC and the internally generated company trial data have allowed ATNM to progress to its Pivotal Phase III SIERRA Trial.
ATNM SIERRA Trial
The SIERRA trial is a study of Iomab-B in elderly relapsed refractory AML. As mutually agreed with the FDA, the trial design is a single pivotal study, with dependence on trial results to indicate direction, and is enrolling patients 55 years of age or older with relapsed or refractory AML. The study will have a control arm of the physicians choice, using conventional standards of care with curative intent. The primary endpoint is a durable and complete response after six months (180 days).
The trial is designed to efficiently provide distinguishable data sets, with 150 patients being randomly assigned into either the Iomab-B arm or the control arm of the trial. Between day 28-42 of the trial, there may be a crossover, whereby patients that have not enjoyed a complete response in the control arm may be subsequently treated with Iomab-B. All patients, irrespective of group, will be followed through to the 180 day evaluation period for final efficacy data and response measurement.
Because the control arm is being addressed with curative intent, the comparative analysis will be useful in determining the distinguishing affects of Iomab-B over current forms of treatment. The evaluation period will also extend 180 days from the start date, and evaluate safety, tolerability, efficacy, and other modalities and observations.
Taking Iomab-B Commercial
Assuming the data is convincing, ATNM then has to define its market. By all indications, the commercial market for Iomab-B is compelling. With a highly concentrated BMT market, whereby the top 30 centers perform over 50% of the AML BMT procedures in the United States, Actinium can position themselves to benefit from the current Prospective Payment System, whose exempt cancer centers perform over 20% of all AML BMT procedures. These PPS centers could be reimbursed immediately if Iomab-B is approved, increasing the likelihood of its use.
Furthermore, with the reimbursement issue affably addressed, ATNM will also be in a position to benefit commercially from marketing Iomab-B independently and will retain full economic rights, enabling ATNM to entertain other strategic opportunities.
The potential financial benefit to Actinium Pharmaceuticals for an approved Iomab-B could be extremely lucrative. Transplant activity in the U.S. alone is estimated to exceed $4 billion by the year 2020, and with Iomab-B being studied in several phase II/III trials, inclusive of the SIERRA trial, the opportunities are broad, especially when additional therapeutic focus can be made toward MDS, ALL, NHL/HL and MM, different forms of leukemia that Iomab-B may be able to effectively treat.
Iomab-B has shown every indication of being a winner in treating and conditioning patients for a BMT. The market is craving an alternative to current standards of care, and the early data certainly supports the likelihood for a continued profile that exhibits strong safety and efficacy data. Investors can also anticipate an update from several near term data and value drivers expected from clinical programs and strategic initiatives. These drivers include Phase III trial investigator meeting updates, EU Orphan Designation updates, the completion of patient enrollment by the end of 2017, periodic data publication, and, importantly to investors, interim trial updates throughout 2017 and full top line data expected in the first half of 2018.
Identifying the potential in Iomab-B, inherent with its clinical successes and near term catalysts, offers less than half the story to be told by ATNM. And, therein lay the safety net for lofty investor prognostications.
Actimab-A, ATNM's second clinical trial, holds just as much promise, and similar to Iomab-B, does not appear to be even remotely reflected in the share price.
Actimab-A And CD33
Actimab-A is a treatment for elderly patients that have been newly diagnosed with AML, and is a second and equally compelling reason behind the probable near and long term success for ATNM. Developed at the Memorial Sloan Kettering Cancer Center, Actimab-A is a second generation therapy from Actinium Pharmaceuticals' HuM195-alpha program that has been studied in almost 90 patients in four clinical trials.
Actimab-A targets CD33, a molecule that is expressed on 90% of AML cells. Actinium-225, the radioisotope used in Actimab-A has strong cytotoxicity, which has been pointed out by somepundits as a point of vulnerability in its use. However, ATNM has been keen to demonstrate in explicit terms that even though there is cytotoxins present, they travel only a very small distance, and has demonstrated the toxicity profile to be benign.
This second generation therapy was born through Bismab-A, a therapy that showed a clear anti-leukemic effect, and was able to clearly demonstrate increased survival rates among patients. However, the isotope bismuth 213 was not a commercially viable product due to various reasons. But, the reason that the term "practicing medicine" is used to describe the profession is that the facilitators of both procedure and science are always in practice, receptive to learning the answers to questions that constantly present themselves.
Therefore, when Bismab-A proved itself to not be a commercially viable option, the evolution of the therapy developed into Actimab-A by utilizing the commercially viable isotope 225, which has not only shown a clear anti-leukemic effect, but also supports an excellent safety and tolerability profile. As for CD33, it has become a validated target in treating AML, and has earned strong interest from major pharmaceutical companies. This interest places ATNM in an enviable position to capitalize on their own clinical studies, as Actimab-A is one of the most advanced programs addressing CD33, and has the potential to be best in class in terms of therapeutic value.
While being best in class is a milestone, in and of itself, ATNM made a strategic addition to the management team by hiring Dr. Mark Berger as Chief Medical Officer, and plans to leverage upon his expertise to enhance the clinical development capabilities at the company. Dr. Berger brings to Actinium Pharmaceuticals over 20 years of drug development experience, highlighted by the FDA approvals of Mylotarg for AML, the only drug approved in AML in almost forty years, and Tykerb for breast cancer.
Dr. Berger's skill and experience are a tremendous asset for the company, as they now have a key team member in place that can build a robust clinical development program to execute on the clinical progress of Iomab-B, Actimab-A, and future clinical programs.
CD33 Interest Invigorated
There is typically little argument when presented with the fact that ATNM is among the leaders in targeting CD33. While Pfizer (NYSE:PFE) at one time had a drug on the market, Mylotarg, it was so plagued with debilitating issues that it was withdrawn from the market in 2010. Although Pfizer pulled the drug due to issues unrelated to CD33 targeting, the issues that arose that demonstrated a link to cytotoxic agents, response rates of less than 30% in patients over the age of 60 years old, and serious side effects and tolerability issues reported by patients.
Actimab-A, on the other hand, is also a CD33 targeting radiomuunotherapy, addressing ADC- alpha emitters. The product is labeled with alpha emitting Actinium-225, offers a higher dose of energy and a focused range of therapeutic value. Unlike Pfizer's failed product, Actinium's next generation Actimab-A has shown significantly less toxicity and a far less degree of adverse side effect in patients. ATNM commenced its phase II trial in September of 2016.
Actimab-A, in its own right, is far more deserving of investor respect and value than it is currently realizing, especially when compared to other pharmaceutical companies in the CD33 target space. ATNM has a valuation that is dwarfed by its competitors, irregardless of the fact that ATNM is equal to the task of advancing through its phase II and III trials in relative short order.
Immunogen, for instance, has a market cap of roughly $206 million dollars, significantly higher than the current valuation of $75 million dollars for ATNM. While not necessarily an apples to apples comparison, the stark difference in valuation is questionable, as Actinium Pharmaceuticals is further ahead in clinical trials than IMGN, is targeting New AML, and is utilizing the same ADC-alpha emitters. But, markets are rarely efficient when it comes to valuing small and emerging companies. While this is a detriment to ATNM now, it may play in favor of early adopting investors who can clearly see the value drivers behind the company's platforms.
Actimab-A Phase II
The current phase II trial for Actimab-A has treated 18 patients to date, with patient age being 60 years or older. Where the phase I trial treated patients with relapsed/refractory conditions, the phase II trial is targeting newly diagnosed patients. The phase II trial is a dose escalating trial, using a fractionated dosing regimen, compared to the single dose treatment used in the phase I trial.
Safety and tolerability showed compelling and positive results, with no severe or unexpected reports of unfavorable effects. In addition to having a favorable safety and tolerability profile, much was learned from the phase I trial, which has led to a refined and more responsive approach in the phase II data.
The phase II data is showing that the fractionalized dosing of patients led to the hypothesis that peripheral blast burden can have a material impact on patient response. The data showed that fractionalized dosing led to corrections in peripheral blasts, which have led to higher patient response rates. Additionally, these response rates appear to be independent of patient population or severity of disease.
While the preliminary data from the phase II trial is encouraging, there is still work to be done. The phase II trial, which was initiated in September of 2016, will enroll a total of 53 patients. The FDA has agreed to allow the removal of LDAC (low dose cytrabine), which is expected to generate a more straight forward trial protocol. Additionally, ATNM will incorporate PB burden thresholds as part of the inclusion criteria, with a stipulation that hydroxyurea control of PB is allowed. To facilitate the trail in an expeditious and efficient manner, ATNM has planned on doubling the number of trial centers, and to expand the clinical development team. If the trials prove efficacious, there is potential to move into a pivotal trial based on reporting positive data to the FDA. Of further and welcome interest for investors, the open label trail design will allow for one or more interim data analyses and updates.
Drivers For 2017
While the science is often difficult to understand, the main questions that investors typically sift down to are related to the near term value drivers for a company. For ATNM investors, quite a few can be expected.
On the Iomab-B front, investors can expect updates and analyses from the phase III SIERRA trial, as well as information generated from the phase III SIERRA trial investigator meeting. Orphan Designation from the EMA was announced in 2016 , to compliment the already announced Orphan Designation from the FDA, and the company should be providing regular updates related to continuing enrollment and reports from the Data Monitoring Committee. Investors can expect top line data to be released in the second half of 2018, which will highlight data from the expected 150 patients enrolled in the trial.
Information from the Actimab-A trial is also expected to provide some key insight as to progress of that study. Investors can expect interim data in mid 2017 from the recently announced phase II trial, as well as to be informed of the developmental pathway for Actimab-A after the meeting with the FDA.
ATNM has a host of opportunities to leverage from, which is expected to lead to additional therapeutic indications and may also target additional clinical programs in 2017 and 2018, with ambitious plans to host four simultaneous clinical programs. Based on the position of the current trials, ATNM may be in a strong position to attract both partnership and licensing opportunities, as well as collaborative and strategic opportunities.
As of October 2016, ATNM had roughly 55.7 million shares outstanding, and approximately $25 million in cash. Liabilities totaled to roughly $3 million dollars, with some of that liability related to derivative liabilities.Actinium In 2017
Investors that have been watching ATNM stock during the prior year may have not liked what they have seen from a valuation standpoint. But, from a clinical perspective, they should be excited for the future. In an investment world driven by short term motive and quick gains, investors too often get caught up in a current headline and forget the value in maintaining a disciplined and thought out investment strategy.
A company like ATNM deserves time to develop, as does any company that is working on developing best in class therapeutic treatments. Companies like ATNM are setting the bar for others to follow, and while it may take slightly longer than expected, once that bar is set it will be tough for competitors to clear. ATNM is well funded for the near and intermediate term and is well into the later stages of its clinical trials. With the stock trading at a paltry $75 million market cap, it is unjustly undervalued in relation to its peers.
Just several months ago, ATNM traded almost three times higher in price with data that was less compelling than what is being demonstrated today. While markets remain inefficient, they do ultimately correct, and it is likely that the share price may soon catch up with the fundamentals at ATNM.
With a full plate of data expected to be released in 2017 and 2018, exclusive of the anticipated additional trials planned by ATNM, the current share price may offer a compelling case for investors to take an early position and hold confidence that management will execute on its strategic mission. While no stock goes straight up, there does come a point when valuations for companies that are demonstrating proof of concept, coupled with a strong balance sheet, border on becoming ridiculously mispriced. Based on all of the action at ATNM, supported by strong data and concurrent phase II and phase III trials, calling the current pps "ridiculously low" is an understatement.
Finally, while it may be premature to call ATNM a potential "30 bagger", as was the case for Celator, it is not unreasonable to project the potential for ATNM to enjoy a transformational rise in share price as they begin to release more robust data in the next several months. In the meantime, it may be fair to also infer that just about no value has been given to either Iomab-B or Actimab-A, two clinical trials that clearly deserve far more respect and consideration than they are getting.
Disclosure: This article reflects my own opinions and unique articulation. This article is not intended to offer investing advice, guarantee 100% accurate predictions or to be interpreted as providing a personal recommendation. What I can guarantee, though, is accurate research, thoughtful analysis and an enthusiasm about any stock that I cover.
Additional Disclosure: I have no position in any stock mentioned, but may initiate a long position in ATNM within the next 72 hours.
[This article was originally featured on CNA Finance]