Big pharma is betting billions on an emerging class of cancer treatments that some on Wall Street are calling a “massive opportunity.” This innovative therapy, known as targeted radiopharmaceuticals, involves delivering radiation directly into tumors by attaching a radioactive particle to a targeting molecule. RBC Capital Markets estimates a $25 billion market opportunity for this burgeoning field.

“We believe targeted radiopharmaceutical therapy (TRT) development is still in its early stages. Next-generation technologies that enhance therapeutic potency and target a broader range of cancers have the potential to drive significant value in this space,” noted Gregory Renza, M.D., an analyst at RBC Capital Markets, in a February report.

The field has seen a flurry of activity recently, with four acquisitions announced in the past few months. The latest acquisition involved Novartis, which already has two targeted radiotherapies on the market: Pluvicto, for a specific type of advanced prostate cancer, and Lutathera, for neuroendocrine tumors. Despite facing supply constraints last year, Pluvicto is nearing blockbuster status, generating $980 million in sales in 2023. By 2028, these two drugs combined are projected to bring in $5 billion in revenue, according to Renza.

Earlier this month, Novartis announced a $1 billion deal to acquire Mariana Oncology, a preclinical-stage company focused on developing radiopharmaceutical programs for breast, prostate, and lung cancers. One of Mariana’s candidates, MC-339, is being researched for small cell lung cancer. “Novartis is clearly the market leader in this space with an aggressive strategy, both in commercializing their products and expanding market opportunities,” said Jeff Jones, an analyst at Oppenheimer.

Eli Lilly has also been active, completing its $1.4 billion acquisition of radiopharmaceutical company Point Biopharma in December. Just before the deal closed, Point Biopharma’s targeted radiation drug, PNT2002, met its primary endpoint in a phase three trial for metastatic castration-resistant prostate cancer. Eli Lilly also announced it would pay Aktis Oncology $60 million to use its novel miniprotein technology platform to generate anticancer radiopharmaceuticals.

Bristol-Myers Squibb joined the fray with its $4.1 billion acquisition of RayzeBio in February. RayzeBio’s pipeline includes its late-stage targeted radiopharma therapy, RYZ101, for gastroenteropancreatic neuroendocrine tumors, and a phase one trial for small cell lung cancer. This acquisition came shortly after Bristol-Myers Squibb announced a $14 billion buyout of Karuna Therapeutics, a developer of schizophrenia drugs, underscoring Bristol’s urgency to bring in new products as some of its older therapies near the end of their patent protections.

In March, AstraZeneca revealed plans to acquire Fusion Pharmaceuticals for $2.4 billion. Fusion is conducting a phase two clinical trial for FPI-2265, a potential treatment for metastatic castration-resistant prostate cancer.

These acquisitions are part of a broader trend where big pharma companies are enhancing their capabilities in radiopharmaceuticals. “Many of these companies have or are building out commercial-scale manufacturing capabilities, which is critical for the success of radiopharmaceuticals,” noted Andrew Tsai, an analyst at Jefferies.

The targeted radiopharmaceuticals market is also seeing interest from smaller public and private companies. Venture financing for innovative radiopharmaceutical drugs surged to $518 million last year, a 722% increase from 2017, according to GlobalData’s Pharma Intelligence Center Deals Database. These smaller companies could become acquisition targets for larger pharma companies looking to expand their portfolios.

The potential of targeted radiopharmaceuticals extends beyond current applications. Companies are working on therapies that target new cancer types. For instance, Novartis received FDA approval in April to use Lutathera for pediatric patients and plans to seek label expansion for Pluvicto for earlier treatment of prostate cancer.

“There’s a clear strategy by Novartis to expand the market opportunity for these products,” said Jones. Other companies are developing therapies that use different types of radioactive particles, like alpha emitters, which are believed to have a more potent and localized effect compared to beta emitters.

Radiopharmaceuticals are also being explored for use in combination with other treatments, such as immunotherapy. Depending on clinical trial outcomes, these therapies could eventually treat a broader range of cancers, including ovarian, breast, and brain cancers.

The ongoing research in targeted radiopharmaceuticals leverages decades of cancer research to identify new opportunities. “You can leverage all the work done in cancer over the last 30 to 40 years to identify targets on cancer cells that are not expressed or are much more highly expressed on cancer cells compared to normal cells,” said Jones.

In conclusion, the potential for targeted radiopharmaceuticals is vast. The current products and ongoing research suggest that this field will continue to grow, offering new treatments for various cancers and driving significant value for big pharma and investors alike.