Radiopharm Theranostics Ltd (ASX:RAD) is a suitable investment for institutional and high-risk-tolerant retail investors given the unique high risk-reward opportunity, according to Diamond Equity Research.
Diamond has valued Radiopharm at 84 cents contingent on the successful development of Radiopharm’s diversified portfolio of radiation targeted cancer therapies.
Radiopharm’s therapies have significant market potential, with the radiopharmaceutical market valued at US$4.86 billion in 2018 and projected to grow at a CAGR of 9.2% to reach a market value of US$9.67 billion by 2026.
The following is an extract from Diamond’s initiation report on Radiopharm:
Investment Highlights
Diversified Radiopharmaceutical Therapy Pipeline - Radiopharm has licensed a diversified pipeline of Radiopharmaceutical Therapies (RPTs) spanning from peptides, humanized monoclonal antibodies, and small molecules addressing roughly 75% of the causes of death from cancer. The therapies will be tested as both diagnostic and therapeutic treatments, while the company’s advanced pipeline of RPTs currently includes its diagnostic research and clinical trial currently in phase 1/2. The cancer targets range from brain metastases, mRCC, breast cancer, glioma to pancreatic ductal adenocarcinoma (PDAC). The diversified pipeline in our view considerably lowers risk from competition within the RPT market. Published data from the phase 1 and preclinical trials for various therapies under development have demonstrated robust safety and potential efficacy profiles of RPTs as a diagnostic and therapeutic treatment.
Experienced Management Team - Radiopharm Theranostics was founded by Paul Hopper who is also the current Executive Chairman of the company. With twenty-five years of experience within the biotechnology, healthcare, and the life sciences sectors, he has been successful identifying and leveraging emerging technologies within the sector. Paul has served as Executive Chairman, Non-Executive Director, and/or CEO for various biotech companies in the U.S. and Australia and was instrumental in the success of Viralytics which was acquired by Merck for roughly $400 million. The Managing Director and CEO Riccardo Canevari previously served as Chief Commercial Officer (CCO) of Novartis company Advanced Accelerator Applications, one of the leading nuclear medicine companies globally. He has extensive experience within oncology and radiopharmaceuticals more specifically. Radiopharm has been further supported by the scientific team with profound knowledge and experience in the development of RPTs.
Expanding RPT Market - The radiopharmaceutical market was valued at $4.86 billion in 2018 and is projected to grow at a CAGR of 9.2% to reach a market value of $9.67 billion by 2026. With the advancement in technology, there has been an increasing number of potential radioisotopes and increased demand for radiopharmaceutical therapies (RPT). The future growth of radiopharmaceuticals is expected to be supported by the continued discovery of more-specific targets, improvements in radiochemistry, and the increased and low-cost availability of radionuclides. The current pipeline of RPTs under development by Radiopharm target various cancers, few of which like prostate cancer are researched by other companies, while others including breast cancer and kidney cancer are currently not extensively researched. Even with more competitors entering the market, we believe that the company’s diversified portfolio and strong team considerably reduces any competitive risk.
Valuation – We have valued Radiopharm Theranostics based on seven indications currently under development. We have assumed a 10-15% probability of success depending on the clinical phase. Based on our assumptions, we have valued at A$0.84 contingent on successful execution by the company. We view RAD as a suitable investment for institutional and high-risk-tolerant retail investors given the unique high risk-reward opportunity.