ERVC Insight：The next opportunity of alpha radioligand therapeutics in China - October 8, 2023

Eight Roads Venture China and F-Prime Capital

 

Although radiation therapies have been widely used for nearly a century, treatment options have remained largely unchanged. However, there remains a significant unmet need—though these drugs are effective, there are serious systemic safety concerns.

 

In this spirit, over the last couple years, we’ve closely monitored the rapid growth of the global radiopharmaceutical space, and worked side by side with our sister fund F-Prime Capital to identify globally competitive technologies, companies, and assets to back. As we’ve met with entrepreneurs, scientists, and clinicians, we increasingly believe the radiopharmaceutical space in China has now reached a key inflection point and is ready for disruption.

 

Industry Overview: A new era in radiopharmaceuticals

 

Recent radiopharmaceutical therapies (RPTs) developed over the last few years are designed to leverage the potency of radiation in a more targeted and controlled manner. These drugs are known as radioligand therapeutics (RLTs).

 

If we think of antibody drug conjugates (ADCs) as targeted chemotherapy, RLTs can be thought of as targeted radiation therapy—much like ADCs, RLTs have a tumor-targeting molecule that is conjugated to a payload. The payload for RLTs, however, is a radioisotope instead of a cytotoxic agent. Since the radioisotope payload emits high energy particles in a confined radius, the therapeutic window of these drugs is greatly enhanced vs. traditional radiation therapies. Compared to traditional targeted therapies, RLTs also have the unique advantage of being able to use dosimetry studies to image the target prior to and during treatment, which can be highly informative for titrating the appropriate dose for patients.

 

From a market perspective, the US and European radiopharmaceutical market is estimated to be >$3B^[1] While the market has historically focused on radiopharmaceutical diagnostics (e.g., F-18, I-131), therapeutics—specifically RLTs—is likely to drive future growth. The recent shift toward therapeutics development is due to several related factors:

• Highly compelling clinical trial data for beta RLTs Lutathera (NETTER-1^[2]) and Pluvicto (VISION^[3]), which ultimately led to their FDA and EMA approvals and Breakthrough Therapy designation for Pluvicto
• Biopharma’s strong appetite for large radiopharmaceutical M&A deals, notably Bayer’s acquisition of Algeta for $2.9B, Novartis’ acquisition of Advanced Accelerator Applications (AAA) for $3.9B, and Novartis’ acquisition of Endocyte for $2.1B
• Strong revenue growth in radiopharmaceuticals (2022 sales of $471M for Lutathera and $271M for Pluvicto, the latter of which is projected to reach >$2B in sales)

 

These catalysts have driven significant dealmaking activity in the US and EU biotech sectors over the last year or so. On the VC side, we’ve seen several mega rounds (>$100M) in RLT companies despite the current financing environment. On the biopharma side, we’ve seen a number of billion-dollar licensing deals and R&D collaborations with RLT companies even at an early stage.

 

Alpha Radioligand Therapeutics: The next wave of innovation for biotech

 

Though the majority of RLT clinical experience has been in beta-emitting radioisotopes (e.g., Lu-177, the beta radioisotope in Pluvicto and Lutathera), beta-emitter RPT research productivity has stabilized over the last few years. On the other hand, there has been significant growth in alpha-emitter RPT publications (see figure 1 below). ^[4]

 

Figure 1

 

There are several reasons why alpha RLTs are thought to represent the next frontier in radiopharmaceuticals after beta RLTs:

• Higher potency (~400x higher linear energy transfer)
• Lower risk of tumor resistance due to different mechanism of action (i.e., double-strand DNA breaks instead of single-strand DNA breaks, which are more easily repaired by some cancers)
• Potentially better safety profile due to lower radiation activity / dose required to achieve similar tumor killing
• Less stringent shielding requirements due to lower radiation activity (100-1000x lower), enabling broader hospital and market access

 

This is substantiated by observational studies of patients treated with alpha RLTs targeting PSMA and SSTR (i.e., fast follow-ons to Pluvicto and Lutathera). ^[5]

 

However, the most popular alpha-emitting radioisotope being pursued in the U.S. and Europe, Ac-225, has limited global supply that cannot support commercialization at current levels. Although radioisotope suppliers are actively working to identify alternative production methods, the current supply shortage may not be solvable within the next three to five years. Removing this bottleneck is instrumental for alpha RLT development, as there is only enough Ac-225 globally for several hundred patient doses.

 

China's Radiopharmaceuticals Landscape: Challenges and opportunities

 

The radiopharmaceutical market in China represents a $2B opportunity^[6] that is rapidly growing. The market is early and has few approved RPTs generating investor interest. As a result, RLTs represent a significant market opportunity given the gap in available RPTs between China and the U.S. / Europe (30 vs. 60). While this gap has been largely due to historical nuclear medicine infrastructure, Chinese regulatory authorities have recently issued a series of supportive policies and guidelines on R&D, registration, manufacturing, and commercialization of radiopharmaceutical drugs to create more favorable conditions for domestic growth.

 

In 2021, the government published The Medium and Long-Term Development Plan (2021-2035) for Medical Isotopes, which for the first time in almost 30 years, established an overall development framework for the industry. This is a landmark policy for catalyzing domestic radiopharmaceutical innovation. Subsequently, in September 2022, the NMPA issued The Opinions on Reformation of the Review and Approval of Radiopharmaceuticals; a month later, the China Isotope and Radiation Industry Association issued The Standards for the Construction of Nuclear Medicine Department. The most recent regulation is The Guidelines for Clinical Development of Therapeutic Radioactive Drugs published by CDE in Feb 2023 and the Guidelines for Non-Clinical Development of Therapeutic Radioactive Drugs in June 2023 (draft).

 

We view these policies as critical for the development of this highly regulated field, as it takes an ecosystem to source the isotope raw materials, develop and manufacture radioactive drugs, distribute them, administer them in hospitals, and properly dispose radioactive byproducts.

 

Historically, China’s radiopharmaceutical sector has been dominated by a couple companies that have proprietary manufacturing, supply, and radiopharmacy networks. In recent years, however, encouraged by the overall development of nuclear medicine infrastructure and ecosystem, we have seen several local pharma companies who conventional drug portfolios start to build out their own RPT pipeline through in-licensing and internal R&D.

 

Given this positive momentum, Chinese biotechs have also moved toward developing RLTs. However, due to the lack of domestic supply and high importation / handling costs associated with Ac-225, emerging RPT companies in China have largely focused on beta RLTs (e.g., Lu-177). Thus, a company that is able to address the alpha radioisotope supply issue in China has a greenfield opportunity to catch this next wave in alpha RLT innovation.

 

Now is the best window of opportunity for innovative RLT companies to leverage these global R&D and local policy tailwinds. With more than 4 million newly diagnosed cancer cases per year, rapidly growing oncology drug spend (>$10B oncology drug spend in 2022^[7]), and few approved RPTs available, China has strong fundamentals to support this emerging modality.

 

Sector Insights: What’s next?

 

To win in the China radiopharmaceutical sector, start-ups will need to deftly navigate a host of multidisciplinary challenges—identify compelling R&D programs; work with existing radiopharmacy infrastructure to develop a viable go-to-market strategy and clinical supply network; navigate an evolving regulatory landscape; and work closely with local and global partners (e.g., MNCs, biotechs, CDMOs) to bring technologies into China and vice versa. This complexity requires diverse perspectives around the table, both locally and globally. Our experience as not only investors but also thought partners to our portfolio companies lends itself tremendously to this space.

 

As one of the earliest venture capital funds in China to invest in biotech, we at Eight Roads have witnessed a transformation of the sector over the last decade. Our unique position as a China-based fund with a global platform has enabled us to bring highly compelling drugs to the Chinese market, as well as support Chinese biotech companies with cross-border aspirations. We’re excited about the future of radiopharmaceuticals in China—particularly alpha RLTs—and eager to let you know more in the coming weeks.

 

Takeaways

• Radiopharma is a compelling modality for several mechanistic and clinical reasons, with clinically differentiated data that is meaningful for patient outcomes
• Global radiopharma market is growing, buoyed by M&A, VC financings, and industry collabs (e.g., in-licensing)
• Radiopharma market in China is closing the gap vs. Europe/US – now is the right time to make a bet
• We believe the market is heading toward alpha radiopharma, and those who can solve the current supply issue of alpha isotope will promise a leading position in this emerging field.
• We’ve thought a lot about this space with our sister fund F-Prime and bring significant early-stage investing / company building experience to the table

 

1. https://www.marketresearchfuture.com/reports/radio-pharmaceutical-market-1650 ↑

2. J. Strosberg et al, Phase 3 Trial of 177Lu-Dotatate for Midgut Neuroendocrine Tumors, N Engl J Med 2017; 376:125-135 ↑

3. O Sartor et al, Lutetium-177–PSMA-617 for Metastatic Castration-Resistant Prostate Cancer, N Engl J Med 2021; 385:1091-1103 ↑

4. Sgouros, G., Bodei, L., McDevitt, M.R. et al. Radiopharmaceutical therapy in cancer: clinical advances and challenges. Nat Rev Drug Discov 19, 589–608 (2020). ↑

5. Strosberg J,et al; NETTER-1 Trial; Phase 3 Trial of 177Lu-Dotatate for Midgut Neuroendocrine Tumors Yadav MP et.al. Efficacy and safety of ²²⁵Ac-PSMA-617 targeted alpha therapy in metastatic castration-resistant Prostate Cancer patients. Theranostics. 2020 Jul 23;10(20):9364-9377 ↑

6.https://news.cnstock.com/news,bwkx-202305-5066520.htm ↑

7.IQVIA - Global Oncology Trends 2023: Outlook to 2027 ↑