Advanced Medical Isotope Corporation (OTC: ADMD), a late-stage radiation oncology-focused medical device company, has developed a real power play portfolio in the radiotherapy segment of the cancer treatment market, a niche set to hit $11.3 billion on its own by 2025 globally, growing at an estimated 6.7 percent CAGR. Brachytherapy, or placing radioactive implants directly on or into cancerous tissue, is a component of this sector; however, brachytherapy hasn’t seen the kind of traction historically that an innovator like ADMD stands poised to wrest out of it. The brachytherapy market ran about $705 million in 2015 and consisted of a 60/40 mix between HDR/LDR (high- and low-dose radiation) or pulsed therapies on the one hand, and microsphere brachytherapy on the other.
A Market Ripe for Disruption
Even with somewhat innovative developments like microspheres helping to drive growth estimates of some eight percent CAGR for the overall brachytherapy space, and projections of $2 billion by 2030, only ten or so companies currently dominate this heavily consolidated space. Most microsphere solutions pose migration risk, require pretreatment of the patient (which only somewhat mitigates the migration problem), and carry similar risks to other radiotherapies when it comes to the overall impact to surrounding healthy tissues. Microspheres are also typically quite limited in terms of what types of cancers/tissue systems they can effectively address, with liver cancer treatments like Australian company Sirtex’s (OTC: SXMDF) SIR-Spheres® being the obvious analogy.
This is where a company like ADMD really stands out from the competition with its Yttrium-90 (Y-90) based radiotherapy solutions, such as the Y-90 RadioGel™ device (ruled a medical device by the FDA in 2013) which is a highly localized direct delivery technology that is injected into the tumor. Y-90 RadioGel delivers an exceptional therapeutic ratio (high degree of dose delivered to cancer tissues, relative to impact on normal tissues) thanks to Y-90’s short-range, which effectively delimits radiation impact to surrounding tissues. RadioGel promises to offer a superior therapeutic profile compared to existing solutions in the brachytherapy segment, even innovations such as Y-90 microspheres that pose significant migration risks, and thus still carry the standard risk to normal surrounding tissues.
Unlike more expensive brachytherapy industry standard isotopes such as Cesium-131, Iodine-125, or Palladium-103 (which primarily emit auger x-rays of an infinite path length, use complex/costly delivery systems, and have a half-life ranging from 9.7 to 60 days), Yttrium-90 has a very short path length of only 4mm, a half-life of just 2.7 days, and is considerably less expensive/more accessible. This means Y-90 solutions are much safer to handle for healthcare professionals, treatment times are sizably reduced, and huge cost savings can find their way to the consumer. Perhaps most importantly though, is the earlier point about how Y-90 RadioGel is not limited to a handful of tumor/cancer types, as is the case with most microsphere or seed-based brachytherapy products.
Tech Portfolio Coverage Hints at Upper Limit Potential
Not content to rest on the laurels of a brachytherapy device like RadioGel, which obliterates the migration problem and has shown in studies that greater than 99 percent of the radiation stays in the tumor, the company has also developed a new approach to so-called permanent seed brachytherapy as well. ADMD’s Y-90 Fast-Resorbable Polymer Seeds (which contain RadioGel), unlike the industry standard glass or titanium seeds (which are packed with radioactive material and then injected to the tumor site), are fully resorbable/biodegradable and leave no casing behind.
The contrast couldn’t be more apparent between these proprietary polymer seeds containing RadioGel, and standard permanent seed therapy in the typical use scenario of prostate cancer. The RadioGel-containing polymer seeds are administered via a minimally invasive procedure that only requires small-gauge needles, whereas the standard permanent seed therapy uses up to 30 large needles, which inject seeds whose casings are left behind. Put yourself in the shoes of a patient for even five seconds and the contrast becomes glaringly obvious.
ADMD has even developed a Y-90 Polymer Topical Paste product engineered for direct application to tissues after a tumor resection, where it works hard to kill off any residual tumor cells that got missed during the surgery. This is an important product due to the constant fear of cancer recurrence, which has been a PR black-eye for the oncology community, and is indeed quite devastating to brave cancer survivors. Going through all the cost, suffering, and difficulties of cancer treatment, only to have the cancer come back, is a living nightmare that is all too common among cancer patients.
The short-range beta radiation emitted by Y-90 particles offers such high therapeutic index possibilities that the products ADMD has developed could even help to gradually reshape the standards of care within the broader cancer treatment market. And brachytherapy, one of the oldest known approaches to radiotherapy, could see a big, big resurgence. The company has exclusively licensed the Y-90 polymer composite tech (which was developed at Pacific Northwest National Laboratory) from the legendary Battelle Memorial Institute, one of the top government/commercial research institutes in the world.
ADMD is On the March, Pet Oncology is the Spear Tip
The company achieved an important milestone in late February 2017 with its fourth letter in a series of communications with the FDA, wherein the company identifies skin cancer (basal cell and squamous) as the primary indication via which RadioGel will be pushed towards FDA submittal and commercialization. An excellent choice given the laborious complexities of skin cancer surgeries and their post-op complications. These issues are particularly vexing for elderly patients, who have skin that is usually significantly thinner and much less robust.
With some 3.3 million or more skin cancer patients in the U.S. alone, many of whom have more than one tumor, it is reasonable to assert that the superior therapeutic profile of ADMD’s RadioGel could see the product rapidly become the indication of choice preferred by both patients and healthcare professionals alike. Looking at the technology portfolio here and the broad range of cancer types that can be treated using ADMD’s products, it should be tantalizing to investors just how much of the roughly $113 billion global cancer therapy market the company could eventually gobble up. Particularly when one considers the 7.4 percent CAGR projections for the industry as a whole through 2021. Post-commercialization, once the word about this technology really starts getting out to consumers, ADMD could be sitting on a gold mine.
The company also released a key letter to shareholders in February, mapping the new and streamlined path forward to FDA submission, which also contained a more formal introduction of new management appointed at the end of 2016. It included the appointment of a new CEO by the Board of Directors, Dr. Michael Korenko, and the appointment of Dr. Carlton Cadwell as Chairman. It’s a serious move by ADMD to show the FDA that they are not only listening, but taking guidance as gospel.
As a prominent indicator of just how aggressive the company really is about commercialization, one need only look at its emphasis on the veterinary oncology market. This is something of an open trade secret these days in biopharma: if you want to rapid-prototype your way into human use as a novel medical device developer, on-ramp via the pet market (if you are lucky enough to be able to).
Advanced Medical Isotope Corporation’s wholly-owned IsoPet Solutions subsidiary just announced late last year in October that the first animal, a cat, had received initial treatment with the pet version of the Y-90 RadioGel. This study will generate important data and help to advance the product towards commercialization in the veterinary market, paving the way for longer-term human use approval by the FDA. This is an exciting forward vector for the company, given the Trump administration’s vow in February to massively overhaul the FDA, with an emphasis on speeding up the pace at which new drugs come to market.
Looking at just the veterinary oncology market we have a winning proposition with ADMD’s Y-90 tech portfolio, given that roughly half of all dogs and around one third of all cats will be diagnosed with cancer in their lifetime. There are around 85.8 million cats and 77.8 million dogs in the country and we now live in an age where pets are essentially bonafide members of the family. The preceding statistic should color the likely much broader incident rate of undiagnosed cancers in cats and dogs, and throw light on the comparatively much cheaper/effective radiotherapy solutions ADMD is developing. Cancer is the leading cause of mortality in cats and dogs alike, with the average radiation treatment for dogs currently costing from around $5,000 to $7,000.
People love their pets but that is a hefty price tag for the average consumer. IsoPet Solutions could place effective pet cancer treatment for a broad range of caner types well within comfortable striking distance for millions of average consumer households. Ask around, comprehensive cancer treatment for pets is simply not doable for most people today, as the average pet owner simply cannot afford to shell out that kind of capital, even for a cherished pet whom they consider a genuine member of the family. The PR upside for ADMD on this subject alone basically writes itself. As an investor, one can just imagine the publicity boon from being able to make such a boast to pet owners, as having an effective/affordable cancer treatment to save the lives of their cats and dogs.
The proven efficacy of radioisotopes for melting cancer in a localized fashion, further hyper-localized and made safer by the company in terms of impact to surrounding tissues, is an easy sell. ADMD is a very interesting play in the oncology space with some serious potential due to broad spectrum applicability of the tech, and is currently trading near the bottom of the 52-week range ($0.07 to $1.00) at approximately $0.15/share.
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