Radiopharm Theranostics Ltd (ASX:RAD) recently signed an exclusive licensing agreement with the University of California Los Angeles (UCLA) for the university’s promising LRRC15-targeting antibody dubbed 'DUNP19'.
The licensing agreement allows Radiopharm to develop DUNP19 as an antibody-drug conjugate for radiotherapy as part of its clinical development pipeline.
Diamond Equity Research updated its valuation for Radiopharm following the deal, yielding a per-share equity value of $0.87 or ~$222 million, contingent on successful execution by the company (current share price: $0.22).
The New York City-based global equity research firm views Radiopharm as a suitable investment for institutional and high-risk tolerant retail investors given the unique high-risk-reward opportunity.
The following is an extract from Diamond’s research update:
Licensing of LRRC15 antibody “DUNP19” - Radiopharm Theranostics recently made a significant addition to its diversified pipeline of RPTs. The company licensed a Dual Action LRRC15 targeting monoclonal antibody from the University of California Los Angeles Technology Development Group (UCLA-TDG). The radionuclide carrying LRRC15-targeting antibody DUNP19 holds the potential to be a first-in-class dual-action therapy, targeting both the cancer cells and the tumor microenvironment (TME). The company will initially study the therapy with osteosarcoma, as it has one of the highest expressions of LRRC15. The preclinical studies displayed encouraging results in osteosarcoma in vivo models under both single dose and multiple doses. Subjects who were administered with a single dose demonstrated considerably slower uptake in tumor volume than those who were not administered. While subjects administered with multiple doses demonstrated minuscule changes in tumor volume at 60 and 90 days.
Progressing clinical and pre-clinical studies - The company has 4 unique assets targeting 8 disease areas under multiple clinical trials. The company is expected to engage in one trial readout (Pivalate BrainMets Dx - phase 2a) and four new trials initiations. The company has planned for eight therapies (diagnostic & therapeutic) to be in clinical trials by the end of 2022. RAD has also announced a Letter of Intent (LOI) with GenesisCare, a global oncology provider to start its first Phase 1 trial in Australia. The therapeutic trial involves the company’s Nano-mAb platform, developed to target PD-L1 expression in non-small cell lung cancer. The trial is expected to begin in the second quarter of CY2022.
Burn rate below our expectations - The company recently announced its half-year ended 31 December 2021 financial results. RAD reported an operating cash outflow of $4.8 million, which was approximately 48% below our estimated figures. The company has successfully managed to adopt a zero structural and low-personnel cost model, limiting the cash burn rate. In line with the recent financial results, we have adjusted our estimates for both general & administrative expenses and R&D expenses. Progress in the current pipeline and the launch of new preclinical and clinical trials will likely lead to an increase in operating cash burn, but the company has thus far managed expenses very well in our view.
Valuation - We have adjusted our financial model, incorporating the changes in the company comparable valuations, changes in the discount rate, operating expenses estimates, and shares outstanding. Updating our valuation approach yielded a per-share equity value of $0.87 or approximately $222 million, contingent on successful execution by the company. We view RAD as a suitable investment for institutional and high-risktolerant retail investors given the unique high-risk-reward opportunity.