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Actinium Pharmaceuticals Inc (ATNM-US): Resurgent radiation on the turn
Recommendation OUTPERFORM
Target Price: $4.00
Current Price: $0.39 (cob on 3^rd April 2018)

KEY TAKEAWAY

Multi-billion dollar acquisitions and healthy valuations herald the resurgence of interest in radiopharmaceuticals. Recently financed and with a largely new executive team, Actinium has a valuation that does not yet appear to reflect it's prospects. Historically dragged down by manufacturing and supply chain delays, the company now looks back on track. Lead product Iomab-B in pivotal clinical trials looks to feed the growing hunger for stem cell transplantation. A pipeline of next generation radiopharmaceuticals promises efficacy in hard to treat blood cancers without the some times fatal consequences of the current toxin loaded products. Valued as little as one eighth of some its European peers, Actinium looks an attractive entry point for investors seeking a stake in this resurgent therapy. We initiate with an OUTPERFORM recommendation and a target price of $4.00 / share.

Localised mass destruction - Too targeted or too toxic, many precision medicines have not lived up to expectations. Like laser guided munitions, molecular targeted radiation can bring localised mass destruction to cells which comprise tumours, or other target tissues, without damage to more distant non-target tissues.

Opening the door to a cure - One of a few potentially curative cancer therapies, human stem cell transplant currently requires harsh patient conditioning which can itself be deadly to the frail or the elderly. Actinium's Iomab-B radiotherapy offers effective conditioning with reduced collateral damage. Iomab-B approval should open the door to more HSCT based 'cures'.

A safer take on an effective target - While effective for a range of blood cancers, toxin-loaded CD33-targeted therapies are dogged by toxicity. With established proof-of-concept for safer therapy, phase II studies on Actinium's Actimab positron radiopharmaceutical should read out in H2/2018E; a potential basis for large pharma partnering.

Leveraging positron platform - Actinium are seeking to leverage their proprietary Actinium Warhead Enabling Technology by teaming up with big pharma. A first deal with Astellas was secured in March 2018.

Significant upside - The prospect of significant clinical news flow from Actimab in H2/2018E and pivotal readout on Iomab-B suggests significant upside from current levels. While warrants attached to the recent $15m rights issue could be dilutive, our DCF and comparative valuation suggests that Actinium is fundamentally undervalued at current levels. Our analysis indicates a current fair value of $2.6 share rising to $5.0 / share on the back of positive phase 2 data in H2/2018E. We initiate with an OUTPERFORM recommendation and a target price of $4.0 /share.

Kind regards,

Dr. Chris Redhead | Analyst
goetzpartners Healthcare Research Team | Research Team

goetzpartners securities Limited

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