Radiopharm Theranostics Ltd (ASX:RAD) has been initiated coverage by Jones Research with a buy rating and a price target of A$0.75.
Jones Research notes that Radiopharm has a carefully curated radiopharmaceutical portfolio with a leading imaging agent.
The A$0.75 price target is based on risk-adjusted discounted cash flow (DCF) valuation with cash flows forecasted through 2032, along with a 12.5% discount rate and a 4% terminal growth rate.
Jones Research assumes a probability of success/market penetration of 35%/30% for F18-pivalate for imaging brain metastases in lung cancer, 35%/45% for F18-pivalate for imaging brain metastases in melanoma, 35%/20% for F18-pivalate for imaging brain metastases in colorectal cancer, and 35%/40% for F18-pivalate for imaging brain metastases in breast cancer.
The following is an extract from the research report:
Summary: We are initiating coverage of Radiopharm Theranostics (Radiopharm Theranostics Ltd (ASX:RAD)) with a Buy rating and A$0.75 price target. Radiopharm is a clinical stage biotech company that has accumulated a diverse set of radiopharmaceutical platform programs that it believes have best-in-class and/or first-in-class potential. This includes two positron emission tomography (PET) imaging assets and five therapeutic assets. The company is diversified in both its selection of radioisotope (assets in the pipeline make use of fluorine-18 [F18; PET imaging], gallium-68 [Ga68; PET imaging], lutetium-177 (Lu-177; beta therapy), actinium-225 (Ac-225; alpha therapy), and terbium-161 [Tb161; beta therapy]) and targeting modality (assets make use of small molecules, peptides, single domain monoclonal antibodies [nano-mAbs], and mAbs). In the near term, the company has prioritized F18-pivalate (RAD101) for imaging brain metastases, Ga68-trivehexin (RAD301) for imaging pancreatic cancer, and Lu177-PD-L1 Sd mAb (RAD204) for treating non-small cell lung cancer (NSCLC). Lead asset F18-pivalate had a positive Phase IIa readout reported at the triple meeting in October 2022 wherein the imaging agent demonstrated high uptake in brain metastases in 17 scans of patients with or without prior stereotactic radiosurgery. Notably, this was true across indications tested (breast cancer, lung cancer, melanoma, and colorectal cancer [CRC]). Radiopharm is engaging the FDA on potential paths to approvability, which we believe are likely to include either an expansion trial followed by a pivotal trial or a direct path to a pivotal trial. With more clarity on the F18-pivalate development timeline expected soon and promising clinical data in hand, we base our valuation on our estimates of the market potential of this asset alone. With respect to the rest of the pipeline, we believe that it could represent an important source of upside for investors as assets approach and enter the clinic. We are cautiously optimistic about the potential for F18-pivalate to generate additional positive data and achieve rapid regulatory approval for imaging brain metastases across a breadth oncologic indications but highlight that if the data is less favorable the company has multiple promising candidates that could benefit from a reallocation of resources.