Radiopharmaceuticals are leading the way in how oncology patients are being diagnosed and treated. In this episode of Biotech Breakthroughs, Tim Lugo is joined by equity analysts Andy Hsieh and Alex Ramsey to examine why radioisotope innovation may revolutionize treatment for millions of people in the coming years.
You are listening to Biotech Breakthroughs, a new podcast series from William Blair’s Equity Research Group that explores the news and trends shaping the biotech industry. I'm Tim Lugo, head of the Biotech Research Group at William Blair. And I'm joined by Alex Ramsey and Andy Hsieh to talk about radiopharma. It's a field which is really transforming oncology as we speak. And it's my pleasure to have two experts in the field with us. They recently hosted a virtual conference with key opinion leaders and a range of companies in the space.
And with that, Andy, maybe we just get some of your key takeaways from this event and can you catch us up on some of the current trends in the industry, specifically, radiopharma is transforming a lot of tumors we see of in front of our eyes. I'd like you to maybe give us a bit of background on what has led to this point.
1:00 – 5:27
Yeah, sure. Thanks for having me, Tim. So I'll start with maybe some background on the role of radiation and tumors first and then kind of talk about the event that we pulled together a lot earlier this month. I would say this is not something new. Radiation has been a cornerstone of cancer therapy for over 100 years.
I would say it's earlier than chemotherapy, obviously, and earlier than targeted therapy. So this is nothing new. It's just the confluence of different factors that led us to see this renaissance of radiopharmaceuticals in, I would say, maybe the past two to three years. And so we spent some time in 2022. Basically, biotech was treating poorly and there was a lot of time for us to go and think more longer-term things.
So basically, Alex and I got to sit down and we wanted to identify a sector that is underappreciated but has a lot of potential down the road. And there's a lot of different candidates. But we basically boil it down to radiopharmaceuticals. It has a lot of validation. Like we said, it's been a cornerstone of cancer therapy for over a century.
And there are things kind of brewing in the background that led us to gravitate towards the field. I would highlight probably three factors that really led us to identify radiopharmaceuticals as kind of a “must-own” subsector within biotech and one is really data. I think for biotech it is really important to have good data.
And the vision data, so this is basically a targeted radioligand therapy specifically for a cell surface biomarker called PSMA prostate cancer. And so that study basically showed just tremendous benefit to patients for really, late line prostate cancer patients. And that put really this modality on the map before it's kind of viewed as a niche market in very select populations.
But prostate cancer is like the second most common cancer in men. So that really puts that modality on the market. And now looking back, we also have commercial validation. If you look at the sales of these drugs, they are tracking blockbuster status. And this is just the first of many trials that we expect to see in the next couple of years.
So this is probably just the first two innings, I would say, for the radiopharmaceutical renaissance. And secondly, we basically look at the direction of cell gene therapy. They basically handle this just in time, manufacturing and complex logistics. And that gave investors a lot of confidence that despite that, you could actually have success. And number three is kind of the collaboration with government agencies and also private enterprises in terms of procuring these medically relevant isotopes.
So, you just need to have the starting material, these payload, if you will, available so you can actually have drugs down the road. That led us to our interest in the field and we've done a lot in terms of putting out white papers, organizing conferences like the one last week. And yes, so going back to your first part of the question, which is like the conference takeaways.
Yeah, I would say couple of things, right? There's a lot of interest in radiopharmaceuticals and really the power of that, the plug and play nature of this modality. And what I mean by that is you can plug in a radioisotope that is relevant for imaging, for imaging purposes. On the other hand, you can plug in something that is more potent and has tumor cell killing activity, and you can position that, reposition that for the therapeutic purposes.
So there's a lot of versatility with this modality and that is something that is kind of the uniqueness of radiopharmaceuticals, is you can actually track where the drug is. The other takeaways or selection of targets which radioisotopes are out there. So those are all questions that we've been getting for years now that hopefully in the near term we might see some answers to those.
05:28 - 05:57
And Alex, can you maybe dig in a bit? When I was listening to the presentations: lead, lutetium, actinium, gallium. It's kind of getting a lot of PTSD from my chemistry days and physics days, but can you maybe rank order how these are differentiated, why one isotope is better for one area versus another? Can you give us a little bit of background there?
05:58 – 09:55
Yeah, absolutely. Happy to help, Tim. So, there are really a couple of different groups of medically relevant radioisotopes. There's those are used for diagnostics and those are used for therapeutics, which Andy alluded to. So, starting with the diagnostics, there are a number of different isotopes that are being used for this purpose. But I would say that the two most common are gallium and fluorine, and these are used for imaging with positron emission tomography or PET imaging.
And fluorine might have some advantages in terms of higher production volume and in some areas of the country one isotope is more accessible than the other. But what we've really heard from key opinion leaders in the field is that in the clinic both isotopes perform very similarly in terms of the image quality that they produce. And so there really isn't a major preference for one isotope over the other.
Now turning to therapeutics, which is where the majority of investigation is kind of taking place and really where we see the field growing, there are again, a number of relevant isotopes, but I would say that the three most common are lutetium, actinium, and lead, as you mentioned. So, lutetium is what is used in the two currently approved radiopharmaceuticals.
It emits what we call it beta particles, while actinium and lead are what we call alpha particles. So beta particles, they’re longer range, but they're less powerful compared to alpha particles that are shorter range. They don't penetrate as far into the tumor, but they're much more powerful. They might be better at killing the cancer cells. And there's been sort of a recent shift in the field towards exploring the potential therapeutic power of these alpha particles.
Since there’s that belief that that extra power will be more effective. So focusing on actinium and lead in a little bit more detail, there's sort of a battle in the field between which one is a better isotope to use for this purpose. And there's lots of different differences of being kind of boil it down to two main items. So there's the half-life, which is really a measure of how quickly the isotope decays and how quickly it emits their radiation.
And then there's also the decay chain, which really describes where the physical process of the decay and what is released in the process. So when we look at Actinium, the half-life or how quickly it decays is relatively long. It takes about 10 days for the material to decay into half the starting amount. If we think about that same property for lead, it's on the order of about 11 hours.
So we're talking about days versus hours and that can have a pretty big impact. Now, biologically, the shorter half-life of lead could be beneficial because it can deliver radiation to the tumor on a quicker timescale. But if we think about the manufacturing, it makes it much more complicated because you have an isotope that's decaying over the order of hours, you have to find a way to make the isotope and get it to the patient while it's still actually a viable therapy.
If we turn to the decay chain or the physical side of the decay, Actinium releases four of these alpha particles and that could be beneficial from the perspective of it's releasing these four very powerful particles that could all work together to kill on the cancer cells. However, there is potential for these subsequent alpha particles to travel to other parts of the body and potentially impact healthy tissues.
There could be some unwanted side effects. Now lead, on the other hand, only has one alpha particle, so this could mean fewer safety concerns since it would hopefully be localized just to the cancer. But the potency of that one alpha particle might not match that of the four that are released from Actinium. Now, this is all very theoretical at this point, so there's not really a lot of robust data out there to point to and say, okay, this one isotope is definitely better than the other.
And we believe that it isn't necessarily sort of a one-winner-takes-all scenario. There might be situations where alpha is better versus where Actinium is better, but we'll really need more data to kind of see how that plays out.
09:56 - 10:09
And with these short half-life particles, does that lead to manufacturing difficulties? And I mean, does the manufacturing have to be almost onsite or extremely close?
10:10 - 10:42
Yes, exactly. So for the short half-life isotopes, the manufacturing needs to be very close to the treatment center. You can imagine that you would need lots of manufacturing sites kind of scattered across the country in order to serve patients. Now if you have a longer-lived isotopes or maybe something like actinium, then you might be able to have more of a centralized manufacturing facility that can ship the isotope out to different parts of the country rather than being right at the site.
So it does definitely impact the manufacturing.
10:43 - 10:57
Okay. So I see the analogies to some of the cell therapy hurdles that they had to navigate through or are navigating through that kind of is safe to say. It's a lot of supply chain in focus for all of these companies.
10:58 - 11:12
Yeah, definitely. And we keep seeing as it progresses that more and more companies are bringing parts of the manufacturing in-house, surely have more control over the supply chain and kind of help alleviate some supply chain issues that we've seen in the industry.
11:13 - 11:41
Okay. Can we dig into where these are being applied? You know, I guess similar to cell therapy, where just seemed like BCMA. There's 20 companies with BCMA therapies in development and it looks very similar as I dig into this space where we see a lot of SSTRs, obviously neuroendocrine tumors and then PSMA is discussed like you just talked about. Where are these kind of initial therapies finding roles?
11:42 - 12:56
So we do definitely see a high concentration of companies focusing on some specific targets. So PSMA that you mentioned and SSTR and as high concentration as probably because the two approved, we have pharmaceuticals that target SSTR and PSMA, so there's a lot of both clinical and commercial validation for these targets. And these are what we usually refer to as sort of these wave one targets.
I mean, a lot of the emerging companies are recognizing that in order to push the field forward, we really need to move into more wave to targets that are more novel in the field or we're just going to be stuck with the same targets. So a lot of companies are making sure to really work on the new targets.
And there's a lot of different considerations in choosing a target. And we don't really have a sort of secret recipe for what the next wave of targets will look like. But a lot of companies are focusing on targets that maybe have some sort of clinical validation. Maybe they've been tested in a different modality, but they're still neutral radiopharmaceuticals.
So this is how we would describe generally these wave two targets. And then over time, the companies are hoping to go into entirely new targets that may not even yet be explored by other modalities.
12:57 - 13:08
And so what makes a good target? Are we seeing any of the older targets like CD20 or BRCA? I mean, I guess what makes a great radiopharma target?
13:09 - 14:07
Yeah, so it's still an area of active investigation. We don't know for sure what attributes would make a target perfect, but some of the things that companies are looking at are the number of these target molecules are the surface of tumor cells and if this changes as the tumor progresses, there's a notion that in the radiopharmaceutical industry you don't need as high of a number on the surface of tumor cells as you do with other modalities.
So that's one area where the radiopharmaceutical modality could really add a lot of impact. And then another is looking at if the therapy actually goes inside of the tumor cell, once the therapy binds to the target, and then finally is looking at the number of the target not only on tumor cells but also on healthy cells, and that there are a lot of the target expressed on healthy cells.
You could get some unwanted side effects. So those are kind of the three things that companies are really considering.
14:07 - 14:23
And when we start thinking about the (total addressable market) TAM for these therapies, we talk about NET, we talk about prostate cancer, but is every solid tumor eventually going to have a radiopharma kind of modality?
14:24 – 15:17
Yes, I think it really depends on some of these factors as we figure out what really makes a good target for this modality in which tumor types have those targets. We really see radiopharmaceuticals as kind of threading the needle between what we know for other modalities like antibody-drug conjugates, which are one of the modalities that require those higher levels of target expression on the surface of cells.
And then something like gene therapy where you really only need one contact point the therapy for the immune system to come in and kill the cancer. So we believe that this is sort of this void between these two modalities, especially in terms of the level of targets that you need it, that could be filled by radiopharmaceuticals. And so exactly how far into oncology this can penetrate in which tumors are applicable to this modality is really something that is unfolding as we kind of better define which targets and tumor types fall into this void area.
15:18 - 15:42
And how about outside oncology? I know cell therapy is starting to explore autoimmune disorders, and this is a plug for Sami Corwin who I believe just did a very deep dive into the topic. So as we look, is there going to be a role for radio pharma beyond oncology? Is this something that's even been explored yet, or are we still so early in treating solid tumors that maybe we stick with solid tumors first?
15:43 – 16:30
Yeah. So right now the focus has really been in oncology and what we know for the modality is that if you get the therapy to the target, then it'll kill the cells. So right now, we're focused on oncology, since the goal of therapy is to remove cancer cells. Now where else that can be applied is really yet to be seen like you mentioned, its a very early field.
We are still trying to kind of get our hands wet with how best to deal with this for solid tumors, where the solid tumors can go. So outside of oncology is still a little bit early to say. Now, on the diagnostic side, there are some applications of imaging with radioisotopes beyond oncology. So, for example, diagnosing and tracking sees progression of Alzheimer's disease, an example of where diagnostics has been applied outside of oncology. But for therapeutics, it's still a little bit early to tell.
16:31 - 16:49
Interesting. Andy, can you talk about the dosing complexities that are kind of associated with these therapies? I assume there's special handling which must occur during the supply chain. So can you just dig into maybe the complexities around dosing and then also just handling of the samples?
16:50 - 19:57
Yeah. So, so the dosing, I think it's actually very therapy dependent. So for the somatostatin analogs or during the disease, there is a special protocol basically requiring amino acid infusion before the real drug is infused just to protect a kidney from the damage of these radioligands I think that's really therapy specific. Now, I think the field is moving towards more and more like what you would expect that say from an antibody infusion or like a targeted therapy infusion.
So I think the gap is closing, even though there's dosing considerations that would require special protocol around it, especially with the disposal protocol as well. And how do you know, for these like long lived radioisotopes with seven or 10 days, how do you dispose that? And the quick answer is usually we have, you know, special locations where you basically wait 10 half-lives.
So seven days you're probably looking at a little bit over two months, 10 days, probably looking at a couple of months before you can safely dispose them. So there's definitely very well thought out, well-controlled protocols for disposal. And in terms of handling samples, there are different categories of radiation. Basically, that's determined by when you ship drug products inside kind of a lead shielded box.
How much of the radiation can you detect outside of the box? There's three different levels for the highest radiation level. There are very select few vendors that can transport that. But the hope is most of the production you're looking at category two and category three, and those can be handled pretty well by, you know, just your commercial shippers.
In terms of the handling and the shipments is also very well controlled and thought out. Most companies have already determined that. And again, just to make sure that the gap between traditional modality and radiopharmaceutical modality or as close as possible. And one thing about dosing, which is I would say more akin to chemotherapy compared to what we typically see is that these are kind of fixed doses.
So basically you either get four or six doses and the good thing for the patient is, is you're done. I think that is a huge relief. You know, psychologically, they're telling a patient, hey, we're going to treat you until either the therapy doesn't work anymore or the tolerability is just so bad that you have to look for other alternatives, is that you have a fixed duration and you have a goal basically, hey, once you're done, you're done.
So I think that is one thing that maybe is really attractive, especially for patients who are living with cancer.
19:57 - 20:13
And I think the KOL might have mentioned this during his presentation, but is there maybe a perception that there could be underdosing right now? Can you just talk into that or is that is that kind of product specific? And what is going on with the appropriate dosing for each product?
20:14 - 22:13
Yeah, there are a lot of different ways of thinking about it, and it's kind of a testament to how just novel the field is. We're still trying to figure out a lot of different things, so he's thinking maybe from a disease resistance perspective that if you don't dose high enough, you actually encourage the development of resistance. So very akin to why your doctors, if you have that, say, strep throat or your doctor would say ensure you take all the doses either for seven days or 10 days to ensure that all the bacteria is killed off because you don't want to leave anything, they'll grow back.
So it's basically the same idea. You don't want to select for those cells that might have, you know, mechanisms by which it can have resistance. And it most likely it's not resistance to the radiation because there's no known mechanism for that. There’s like a drug pump that basically you put these drugs out, things like that.
So he's thinking about from that perspective. There's also another one, which is a lot of these exposure limits were established back in the day of external beam radiation. So basically, these are radiation rays from the outside. And there's really not a lot of precision regarding that. Basically, they kind of look at where the tumor is and they just blast radiation or kill off anything that's close to that proximity.
And basically the exposure is extrapolated from that mode. And it's not a perfect apples-to-apples extrapolation, if you will. So whether the maximum dose for each of the organ system is applicable, it remains to be seen. But the challenge he also mentioned is how do you generate data to figure out the maximum exposure? That's a hard scientific question to ask.
And what kind of experiments do you have to design to answer that question. So again, that remains to be seen for this really complex topic.
22:14 - 22:42
And for the amount of investment which I see flowing into the field, there aren't that many approved therapies in radiopharmaceuticals, one prostate cancer, one NET therapy. What is the largest hurdle for bringing more therapies into the field? Is it logistic extended source material or is this something where we're just at the very early stages and five years from now we're going to have 20 approvals?
22:42 - 23:55
Yeah, I agree with your last point, which is we do see a lot of investments, right? So so far this year we're seeing about 800 million infusion into the field. So yeah, I think that's basically what we're seeing despite the macro environment. And then we also saw like an M&A, which is 1.4 billion in total considerations.
So there's a lot of activity going on and I foresee that that will continue to be the case and that will drive basically R&D development and also build up that manufacturing facility. Right? So Alex, you had talked about that. That's a major investment that's completely different from all the other modalities out there, having that physical location to make these really specialized types of drugs.
So those are things that maybe upfront the capital investment required would be maybe kind of a barrier to entry, but once those are figured out, I think we might see more and more as more targeted validation comes in as more and more something like wave one, these like me too drugs, if you will, go on the market serving as viable alternatives to what's approved out there. You know, we'll see of course therapies.
23:56 - 24:28
And I really like how you include a manufacturer during your Radiolabeled Therapies Day, during the Radiopharma Day. That was one of the more interesting presentations. Can you just talk maybe, Alex, you can dig into this around the supply constraints. I've heard that that's kind of this continuing theme with the approved therapies, is that there is some supply constraints, which is, which is always a good sign for a kind of a healthy market.
And strong uptake is when there are supply constraints. But, you know, this is obviously a little bit little bit more unique than a typical small molecule.
24:29 - 25:54
Yeah, for sure. So as you mentioned, there's definitely been some supply constraints for some of the approved radiopharmaceuticals. The first one came last year around May and then this second, another one came in January of this year. It's definitely been a little bit of a trend. And generally when these constraints have happened,supply has been limited but not completely gone.
So if a patient has started treatment, they could continue their treatment. But new patients couldn't start treatment with approved biopharmaceuticals, and the exact cause for the supply shortages was reported as a quality issue. Exactly what that means, we're not entirely sure. There's a lot of speculation that it was probably due to the supply of the isotope, which in this case is lutetium given that there are difficulties in producing the isotope.
So Andy mentioned some of these, but one of them is like the starting material itself can be very hard to get. Once you get it, then you can get a lot of side products during the actual manufacturing process. These can cause concerns for when you actually administer the therapy. And then there are also a lot of these methods require these really big nuclear reactors for producing lutetium in these nuclear reactors. They have a finite lifetime and they're already getting pre-dated. So there is concern about sort of a longer term supply might be harder to supply. And that's also another reason why there's some interest in other isotopes so that there's sort of a broader scope of what patients have access to.
25:55 - 26:13
Sure. In one of these nuclear medicine conferences, I heard from a company out of Australia where there is a lot of the supply being produced. As of now they're building cyclotrons for this purpose. Is that occurring in the States as well? And I guess how much investment needs to occur to support this new treatment modality?
26:13 - 28:47
Yeah, so there's definitely a big upfront cost. There's really three pieces to developing radiopharmaceuticals. So, the first part, which is arguably the most challenging expense, this context is actually producing the isotope so lead, actinium, lutecium, then you have to actually make the therapy. This is basically connecting the isotope to one of those targeting components like we talked about earlier.
And then finally is the shipping to the patients. So the first and the last steps that producing the isotope and the distribution, those are arguably the biggest hurdle components of the process. And we talked about the distribution a little bit earlier and how that really depends on the half-life of the isotope in question. But sort of focusing on the production of the isotope, this is really where a lot of the supply constraints come into play.
So these isotopes are very rare versions of elements that they can't be mined directly, they have to be produced from other isotopes. And just like with lutecium, it can be difficult to get that starting material. It can also be difficult for many of these other isotopes as well to get that straight material. Once you get that isotope, you still need to use a lot of extensive equipment.
So things like nuclear reactors, particle accelerators, those require a large footprint. They require a lot of expertise to run. They’re very high cost. They require a lot of energy. They're not sort of your run-of-the-mill manufacturing devices. And also, because radiation is involved, it also means there's a lot of different sorts of safety regulations that need to be built in.
It's really hard for someone to just get up one day and say, all right, I'm going to start producing these medically relevant radioisotopes. They just require a lot of both knowledge and money really to make. And I think because of that, it's really difficult to just sort of step in and start this production. And even once you do have a facility going, a lot of times facilities might need to be shut down for routine maintenance since they do require so much energy and are so big and they can even be subject to unscheduled shutdowns which would disrupt supply.
So those are some of the factors with manufacturing that make it so complicated and why it does take a lot of investment. And in some cases these isotopes are being made at facilities that are already built. So, a lot of universities have some of these big accelerators or reactors or they're already in place for other purposes. There also are a lot of new ones that are being built because that's where the profile of these isotopes that you need for the radiopharmaceuticals can be very different than for, say, some kind of purpose, like a university where it's more exploratory.
28:47 - 29:06
Interesting. And Andy, we're probably approaching time so can you just give us an idea of what are the next big events coming in Radiopharma, What should investors be looking out for the next one or two years? And ultimately, physicians and patients who will benefit the most from these therapies?
29:07 - 29:37
Yeah. Of course. And maybe I'll add to the manufacturing point, the recent M&A in the field I think it's basically a prime example of the importance of the manufacturing element. You know, like Alex said, there's a lot of know-how a lot of money that's involved in the time leading up from starting to build your facility all the way to when you can actually produce…that takes years.
So already having that in-house is a big competitive moat.
29:38 - 29:47
Before you jump over to that, I always think there's never going to be a generic in terms of radiopharma world. The tail-end value of these is probably very interesting.
29:48 - 29:52
Yeah, it's basically kind of the lure is really the long market exclusivity.
29:54 – 29:58
So in the next one or two years, what should we be looking for coming out of the space?
29:58 - 31:23
So, basically two scientific questions. So one is really can we you know, in terms of the binders, can we design similar binders and expect largely in-line clinical profile? So we should be able to see that there are two trials looking at prostate cancer in the pre-chemotherapy setting, basically very similar binders, same radioisotope leticum-177.
Can they produce relatively in line profiles. So that will be answered all before the end of this year with the one phase three trial that will be available at this conference later this month. And then looking out to 2025 and we're talking about all late-stage trials and this is basically asking the scientific question, can you, one, use alpha-emitting particles to help patients who no longer respond to beta-emitting particles?
That's question number one. And also, can you actually generate better efficacy from alpha-generating particles compared to beta? And that's why we expect some initial late-stage results in late 2025 or early 2026. So it'll take a while to get some, you know, relevant data. But those are two important questions for the field in the next one or two years.
31:24 - 31:30
And with that, thank you so much, Alex and Andy for joining us to talk radio pharma on this latest episode of Biotech Breakthroughs.
Yeah, thank you.
Thanks for having this.