I’m always hunting for small-cap biotech stocks with under-appreciated drug pipelines or technology that target high unmet medical needs. Sure, I also invest in mid- and large-cap biotech stocks that have approved drugs and growing revenue. However, to make really big money in biotech one must take a gamble and try and pinpoint those small-cap companies which have the best chance of bringing a significant drug to market. For example, I suggested investors buy OvaScience stock at the end of 2013. I recently cashed in my position for a 500% gain. To make that type of profit, one must be willing to accept the volatility of small-cap biotech stocks and as long as the scientific premise and results stay consistent, hold on for the ride. I stumbled upon Actinium Pharmaceuticals Inc (NYSE MKT:ATNM) a couple months ago when I was reviewing new drug candidates for elderly acute myeloid leukemia (AML) which has no established standard of care.

As I detailed then, the company is extremely undervalued with an impressive pipeline of compounds in numerous indications and extremely impressive clinical trial data in AML. In fact, its lead compound Iomab-B, which is heading into Phase 3 studies, is the only drug on the market which can offer a cure for elderly AML patients. Furthermore, according to medical experts, the drug has the potential to reach beyond AML and completely transform the whole bone marrow transplantation paradigm in all hematologic malignancies. With hematopoietic stem cell transplants (HSCT) being the fastest growing hospital procedure in the US and no standard of care, Iomab-B could be a goldmine for investors. The company has the support of very influential key opinion leaders and one of the most impressive clinical advisory boards I’ve come across. Actinium is not a one-trick pony and has other drugs in its pipeline, such as Actimab-A which is entering Phase 2 trials and has shown significant clinical activity in AML. With numerous catalysts on the horizon, including a potential partnership for Actimab-A, strong medical key opinion leader support, a highly de-risked pipeline based on established science, strong balance sheet and hanging near its 52-week low with an extremely light market cap of only $85 million, I think Actinium Pharmaceuticals is a good candidate to triple your money.

Iomab-B Offers Potential Cure for Elderly AML Patients

Elderly AML is one of the hardest to treat Leukemias as most patients cannot withstand the typical regimen of chemotherapy and its associated side effects. In accordance, the older the patient the worse the prognosis, with the downward trend starting around 55 years old. Many of these patients will consider treatment with agents like hypomethylation compounds or enter clinical trials like the Pracinostat trial by MEI Pharma which has shown outstanding results to date in this cohort.

However, due to the poor prognosis in elderly patients, most will eventually relapse or be refractory to treatment. Once this occurs, the median overall survival is measured in weeks to months. The only potential curative treatment for these patients is to have a bone marrow transplant, which has cure rates of 25-50%. Unfortunately, most patients, especially those over 65 years old, cannot withstand the harsh conditioning needed to wipe out the leukemic cells prior to bone marrow transplantation and are ruled ineligible. This is where Iomab-B results reflect the enormous potential to revolutionize the bone marrow transplantation field.

Iomab-B is a guided missile targeting leukemic cells. It consists of a monoclonal antibody that targets the white blood cell antigen CD45 and contains the iodine-131 radioisotope, which will kill any cell that it binds to. By only targeting and killing the white blood cells and sparing healthy tissue and the toxic side effects of chemotherapy, more AML patients can make it to bone marrow transplantation. Importantly, AML is highly radiosensitive and by targeting only the white blood cells, Iomab-B is tolerable to the patient, with little off-target effects seen in other tissues. The safety profile of the drug has been illustrated in over 300 patients to date. Iomab-B is the perfect balance between efficiency and safety for bone marrow transplantation conditioning.

*Image from May 12th, 2015, Actinium Key Opinion Leader Presentation

The Phase 2 clinical trial results conducted at Fred Hutchinson Cancer Research Center in Seattle have the whole bone marrow transplant field in a buzz. Following treatment of 27 patients with relapsed/refractory AML over 50 years old with Iomab-B, there was a 100% complete response rate and engraftment rate. Mortality not due to relapse was ~20%, which compares very favorably to ~46% in patients with conventional myeloablative conditioning transplants. The potential for a cure is really observed in the survival data from the trial where 19% (5/27) of patients were still alive after 2 years compared to 0% of the 10 traditional bone marrow transplant treated patients and 0% of the 61 chemotherapy treated patients. These patients would reflect the current standard of care. The data was similar for the much harder to treat patient cohort with poor cytogenetics. Any survival after 2 years in this patient group is very impressive.

*Image from 2015 Actinium Corporate Presentation

Based on the Phase 2 Iomab-B results, Actinium management has engaged the FDA to design the Phase 3 clinical trial. The design is simple, 75 patients will be treated with Iomab-B and bone marrow transplant while the other 75 control patients will be treated with conventional care. The primary endpoint is durable complete remission rates. For ethical considerations, the FDA requested a cross-over aspect to the trial where if a complete response cannot be achieved for the standard of care arm, the patient will be allowed to crossover to the Iomab-B study arm.

*Image from May 12th, 2015, Actinium Key Opinion Leader Presentation

It is important to note, that the complete response rate for Iomab-B in Phase 2 was 100%. The Phase 3 trial is scheduled to begin by the end of 2015 with the full data read-out 24 months after initiation. Based on the Phase 3 endpoint and the data from the Phase 2 study, I’m very excited about the drug’s chances to succeed.

Iomab-B Has Blockbuster Potential

Not only is Iomab-B more effective and safer than current bone marrow transplantation conditioning, but it is also much faster. Iomab-B can prepare a patient for bone marrow transplantation in only 10 days, compared to the 6 weeks required with traditional chemotherapy care. This is extremely important when the survival in this disease is measured in weeks to months.

*Image from May 12th, 2015, Actinium Key Opinion Leader Presentation

In addition to the time saved and the hospital visits that chemotherapy side effects can result in, the cost of the inpatient chemotherapy treatment alone is $50-200K depending on how many cycles and choice of chemotherapy used. Considering Actinium is estimating the cost of Iomab-B treatment at $85K and there are ~7,000 elderly relapse/refractory AML cases per year, that would result in ~$600M in sales.

The potential numbers for Iomab-B sales get big very fast when you factor in all the different hematopoietic cancers in which bone marrow transplantation is used. The total addressable market is $4.1 Billion.

*Image from 2015 Actinium Corporate Presentation

Many of these clinical trials are already ongoing at academic sponsored sites. It is important for investors to realize that there is no competition in this market and none on the horizon. HSCT is the fastest growing hospital procedure in the US, so the potential revenue will likely be higher going forward.

*Image from May 12th, 2015, Actinium Key Opinion Leader Presentation

For Actinium to sell the product once approved should not be difficult. The bone marrow transplantation field is very incestuous. The top 15 centers, many of which will be exposed to Iomab-B in the Phase 3 trial, account for almost half of all AML transplants. Therefore, a very small sales force can cover the majority of the country.

Impressive Key Opinion Leader Support

One of the biggest selling points of Actinium is the support it has from the biggest medical experts in bone marrow transplantation and AML space. Routinely, directors of their respective medical institutions give talks praising Actinium’s drugs. For example, just a few days ago Dr. Lazarus, Professor of Medicine and Director of Cell Therapy at Case Western Reserve presented on the Iomab-B results and its potential to change the paradigm of treatment. I suggest investors glance at the clinical advisory board on Actinium’s website to see the impressive resumes. A lot of support is based on the solid results and science of Actinium’s drugs which were developed at Fred Hutchinson Cancer Center and Memorial Sloan Kettering. In fact, several clinical trials are ongoing at these sites for Actinium’s drugs and several members of these world-class cancer centers are on Actinium’s board. Importantly, Memorial Sloan Kettering owns ~15% of Actinium shares.

Not a One-Trick Pony

Although I’m not going to discuss in detail here, Actinium also has several other drugs in the pipeline. The most advanced is Actimab-A, which was recently granted Orphan Drug Status by the FDA and is an antibody that targets the myeloid leukemic antigen CD33 linked to an α-emitter radioisotope. Actimab-A is currently in a dose escalation Phase 1/2 trial for newly diagnosed elderly AML patients who are not eligible for chemotherapy. In the third dose cohort, two out of three Actimab-A treated patients achieved complete remission with different degrees of hematological recovery illustrating the drug’s efficacy. I thought the recent ASCO abstract based on the data generated to date did not explain the results well. In the abstract illustrated there were no complete remissions seen to date, but I confirmed with management that was because these patients had CRi which can’t be classically defined as a complete responder. Also, the progression free-survival data in the abstract was for all doses tested in the escalation phases so not too informative. It would be interesting to see the PFS numbers for the third cohort of patients. The fourth cohort was recently enrolled and began dosing. The company is also working on several other radiotherapy antibody directed treatments in solid tumors which will be announced in the near future. A big catalyst going forward will be large pharmaceutical and biotechnology partnerships. In the most recent 10-Q filed by the company it states that its goal is to carry the drug candidates through to Phase 2 trials and then enter into partnership agreements with large pharmaceutical or biotech companies.

Risks and Financials

All biotech investors know the risks associated with volatile small-cap stocks. Although Iomab-B has been studied in a large number of patients, Actimab-A trials have been fairly small which can skew data outcomes. If one of these drugs were to fail, investors could question the feasibility of the technology platform. Having just raised over $20 million in a recent offering at $4.5 the company should be in good shape to progress its candidates towards the next clinical milestone. There has been some concern regarding the ability of the company to secure enough radioisotopes to handle drug commercialization. Iomab-B is linked to Iodine-131 which is widely available. Although the radioisotope Actinium-225 is more limited and linked to some of the other drugs in the pipeline including Actimab-A, there are various methods available to produce the radioisotope when significant quantities are needed.


Actinium Pharmaceuticals’ Iomab-B can completely transform bone marrow transplantation, the fastest growing hospital procedure in the US. It offers the only potential cure for AML patients with a safety and efficacy profile superior to current procedures. Phase 2 trials show that the drug at least doubles the 2-year survival rate of current methods. The Phase 3 trial which will start this year has a strong chance of success and will open the drug up to numerous other indications. The excitement is evident by the long list of key opinion leader supporters. Other drugs in the pipeline have also shown impressive efficacy, including Actimab-A entering Phase 2, which Actinium plans to find a partner for. The stock has dropped near its 52-week low on no news. The average analyst price target implies an upside of ~600% from current levels. There appears to be a big disconnect between current price and the pipeline potential. I continue to accumulate shares as Actinium flies under the radar. I expect at least a triple from current levels.