Actinium Pharmaceuticals $ATNM: A Hidden Gem in the Biotech Sector

06.07.2016

Celator Pharmaceuticals Inc. (NASDAQ: CPXX) has been one of the biggest gainers in the biotech sector this year. Year-to-date, CPXX has gained more than 1600%. Some of the gains have come recentlypaymentdatasystems-650x535 after the company agreed to be acquired by Jazz Pharmaceuticals (NASDAQ: JAZZ). But even before the acquisition news came, CPXX had logged in substantial gains. The reason behind the rally in CPXX has been positive top-line results from its Phase 3 clinical trial evaluating its lead product candidate VYXEOS(TM) in patients with high-risk (secondary) acute myeloid leukemia (AML) compared to the standard of care. The question is whether there is any other opportunity like CPXX in the market right now.

The sharp pullback in the biotechnology sector since July last year has certainly created some excellent opportunities. For example, Geron Corporation (NASDAQ: GERN), which traded at around $5 at the end of last year, is now down to $3. Even if the stock just recovers to the levels of late December, it would see an upside of more than 60%. If the potential of GERN’s lead product candidate is taken into account then the upside could be even higher. There are several opportunities in the biotech sector right now like GERN. However, very few stocks offer the potential reward that Actinium Pharmaceuticals Inc. (NYSEMKT: ATNM) offers. In fact, given the sharp pullback in ATNM in the current biotech sell-off, it has very little downside risk.

Actinium’s pipeline includes two promising products; Iomab-B and Actimab-A. Iomab-B is designed to be used, on approval, in preparing patients for hematopoietic stem cell transplant, commonly referred to as bone marrow transplant. The Company plans to conduct a single, pivotal, multicenter Phase 3 clinical study of Iomab-B in refractory and relapsed AML patients over the age of 55 with a primary endpoint of durable complete remission. The Phase 3 trial could start shortly according to the guidance given by ATNM. Indeed, that is one of the near-term catalysts for ATNM that could provide a boost to the stock price.

ATNM’s Actimab-A is its most advanced alpha particle immunotherapy (APIT) program. It is being developed as a first-line therapy for patients over the age of 60 that have been diagnosed with AML. Recently ATNM announced positive safety and efficacy results from the Phase 1 Actimab-A trial. The company also provided guidance on plans for a Phase 2 study.

The median age of the patients in the Phase 1 trial was 77 years. Of the patients enrolled in the trial, around two-thirds had intermediate-risk cytogenetics while the remaining patients enrolled in the trial had unfavorable cytogenetics. The most important thing to come from the trial was that in patients with low peripheral blast (PB) burden, the Complete Response Rate or CRR at the dose level which ATNM plans to progress into Phase 2 was 50%.

ATNM now plans to proceed with a Phase 2 trial with Actimab-A at 2 µCi/kg/fractionated dose, the highest dose level from the Phase 1 trial. The Phase 2 trial will see some modifications, which have already been approved by the FDA. The modifications along with the mandatory use of hydroxyurea to remove PB burden will accelerate patient enrollment and also improve outcomes.

Both Actimab-A and Iomab-B have an Orphan Drug status in the U.S., which provides ATNM with seven-year exclusivity. It also means that ATNM will be able to have higher price for both the treatments.

The commercial opportunity for both Actimab-A and Iomab-B is significant. According to biotechnology analyst Jason Napodano, Iomab-B is targeting a $1 billion peak opportunity, while Actimab-A is targeting a $750 million peak opportunity.

FBR & Co. currently has a price target of $12 for ATNM, which implies an upside of more than 500% from current levels. The downside risk, meanwhile, is minimum given the recent pullback in ATNM. There is no near-term dilution risk with ATNM. In its research note, FBR & Co. said that ATNM has funds to cover operations at least until the end of this year.

ATNM’s pipeline is in advanced stages. The company’s Iomab-B is about to enter Phase 3 trial, while Actimab-A is about to enter Phase 2 trial. With two product candidates, ATNM has multiple shots on goal. Both of ATNM’s product candidates have significant potential. Given their potential, ATNM’s current price levels are not justified. However, that could change quickly. ATNM currently offers CPXX-like upside potential but has minimum downside risk. Indeed, ATNM has one of the most favorable risk/reward profiles in the biotech space right now.

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