Aktis Oncology, Inc. (AKTS) Earnings Call Transcript & Summary

Thank you for day three here. Really pleased to have Matthew Roden from Aktis Oncology with us. I'm going to let Matt make some opening remarks and then we can jump into Q&A.

Awesome. Thank you, Matthew. Thank you to you and the entire Morgan Stanley team for hosting us here. We're excited to be here. And also thank you to everybody here in the audience for your interest in tracking our story. Aktis Oncology is a clinical stage oncology company focused on developing a novel set of radiopharmaceuticals or radioligand therapies. And we're very excited about this space. We think it's a large new category of anti-cancer medicines, and we're still in the relatively early stages, early era of the development of this category. We like radiopharmaceuticals in part because they're validated. We know how they work. We know why they work. We've seen that they've been successful clinically. We see that they've been successful commercially in terms of patient impact and launch ramp. But we also see that the space is, as of today, relatively early in terms of, it's really, there's only two approved, or I should say, approved products against two targets. And so the target space for radiopharmaceuticals is wide open. And so, Aktis exists to attempt to bring radiopharmaceuticals to a broad set of patient populations that have no radiopharmaceutical option. And the key unlock for that has been our mini protein radioconjugate platform technology, which enables us to hit a broad array of targets with a clinical or pharmacologic profile that is consistent with what has worked successfully in the radiopharmaceutical space. And so from that platform, we've advanced two lead programs into the clinic. First is AKY-1189, which is targeting Nectin-4. Obviously, Nectin-4 is a validated target through Padcev, which is an approved ADC. It is now projected to have consensus peak sales numbers of about $7 billion, all in bladder cancer. Our clinical development plan is not only in bladder cancer with now what is a different payload, of a radiopharmaceutical versus an ADC, but also to develop outside of bladder cancers into breast and potentially several other tumor types. So we think this is an important and large multi-tumor opportunity for us. And then our next program is AKY-2519, which is targeting B7H3, and that, like Nectin-4, we believe has the potential to be first in class among radiopharmaceuticals. And also has a multi-tumor large patient impact opportunity and obviously commercial launch opportunity. Behind that we have several other programs that are again leveraging the Mini Protein platform. We haven't disclosed anything beyond the fact that there are multiple programs in various stages of earlier development. But we have said that we are tracking towards two additional clinical candidate nominations in the first quarter of '27. So the platform continues to produce and we're excited about the multi-product, multi-tumor clinical development plans we have. From that we have, based on the platform technology. We do have a strategic collaboration with Eli Lilly that is worth a total value in excess of $1.2 billion. And this was really to explore or generate new mini protein radio conjugates against targets that Aktis is not working on. And so it just expands the impact potential of the platform technology. And of course Aktis retains 100% commercialization ownership of our entire pipeline including the lead programs. So beyond that, we've focused on the other critical component of the story is our supply chain. We are principally prioritizing Actinium-225 as the effector isotope. And in order to be in control of our own destiny, we have built a very robust supply chain that enables us to, we believe, ramp up to, in near term, hundreds of patient doses, and then of course deliver globally as we advance into later stage development and commercialization. So, really, it's everything under one roof that you would need to be a leader in the field, all the capabilities and components, and that's what we've been focused on because we're mostly keen to move the needle for patients. At the end of the day, if you can be valuable for patients, then you should be valuable for investors, too. So happy to dig in wherever you like.

Wonderful, wonderful. Thanks for that. So I thought maybe we could just start at a very high level on some of the components that make radiopharm attractive and how to sort of think about that. So at least in my mind, the way I've always thought about radiopharmaceuticals is the most attractive piece is you know that if you deliver an isotope to a tumor, it's going to kill the tumor, right? There's no question about that. There's not a question about resistance, et cetera, that you might see with some other drugs. However, you have to worry about accumulation in tissues or organs that could create enough toxicity that you can't dose high enough, et cetera. So, can you talk a little bit about, what you see as the benefits and sort of how you've designed your platform to be able to sort of meet that therapeutic window.

Yes, it's a great question. The field of radiopharmaceuticals really started, well it started with of course iodine for thyroid cancers, but targeted radiopharmaceuticals started in the early days with monoclonal antibodies like for example Bexar or Zevalin. And antibodies were a logical choice at the time for delivering radioisotopes, because we know we can generate antibodies against a wide array of targets, and we know you can localize antibodies wherever that target is, and so that would be an obvious way to deliver a radioisotope. Unfortunately, one liability of antibodies is that they're long-circulating. Now, that's often an attractive facet to an antibody because you want it to stick around you want area under the curve you want target coverage et cetera. But for radiopharmaceuticals, the problem is that now what you're doing is you're just you're keeping the radiation payload in the bloodstream for a long period of time. And so what has been observed over time with monoclonals is that you have an elevated level, perhaps unacceptable level of bone marrow heme tox. And so the field has largely moved, not entirely, but largely moved to small formats. And this is due to the success of like, let's say, Lutathera and Plavicto, both are very small, peptides effectively, that are fast clearing from the bloodstream. So in other words, yes, they can hit a target with affinity, but they also are renally cleared through the kidney. They're cleared out relatively quickly in a matter of hours. And so the field has largely moved to that small format, and we have as well, because we think it's a way to maximize the therapeutic index by protecting the bone marrow. So when we're starting the company, we effectively had a whiteboard of every permutation you can imagine of all the component parts you were talking about. And we wanted to optimize for what would be an expected patient outcome. At the same time, we wanted to optimize for, well, how do we hit these other targets? And can we use antibodies or antibody fragments or other sort of antibody-like things? And where we landed was with mini proteins. And we're inspired by the work of David Baker, who subsequently won the Nobel Prize on de novo protein design, specifically around mini proteins. So, mini proteins are the smallest polypeptides that can achieve a three-dimensional shape. And so that three-dimensional shape, and of course, the variability or diversity that comes with the polypeptide, was the enabler to hit a broad array of targets like an antibody could, but to have, because of its super small size, these are typically around 40, 50 amino acids, but then folded up into a very compact shape, they have the pharmacology of these very small formats like Pluvicto or Lutathera. So we felt like that was the Goldilocks scenario of having a binder, that could be bone marrow sparing, hopefully limit the normal tissue exposure, but also be able to achieve very high affinity and selective binding against a broad array of targets like an antibody could. So it was kind of the perfect mix of all the formats. On top of it, one of the really important things that makes this work is the diversity. So we're encoding in our libraries for over 6 billion variants of the mini proteins, and that's across 100 different scaffolds. And so that's important. And of course we're also doing generative design, which is now outside of the 6 billion. It's a new search space. It's billions of trillions of variants now that we're looking at through generative AI design. So that's been an accelerator to our innovation engine that we, when we make it, mentioned we have multiple programs following the lead to, we have multiple programs following the lead to. So that's been exciting. So the intent here was to deliver something that could really open up the target space, but also meet the needs for a patient in terms of maximizing clinical efficacy and safety. Now, on the part of efficacy, you know, there's a lot of debate about what's the right isotope, and, you know, it's our point of view that really any isotope that emits energy should kill tumors, right? So a wide array of things of isotopes should work with this kind of format. And our technology is isotope agnostic. We have used multiple isotopes in our experimental work and they all work fine, right? We did prioritize first, and it's not to say that we won't use other therapeutic payloads, but at least in our first iterations here, our first INDs were with Actinium-225. And Actinium-225 is a very powerful alpha-emitting isotope. It exerts, we think, the maximum amount of energy into the tumor if you can localize it there. And so the purpose there was to, #1, maximize the efficacy impact on patients because obviously efficacy is the unmet need in cancer. And #2, its 10-day half-life enables us to do a central manufacturing process that enables us to be, again, in control of our own destiny and supply chain, such that we can deliver at scale globally. So it was, you know, both were important components for us. It's not to say we couldn't use others later, but that's what the priority has been. So we think this is the right combination to maximize patient impact. It's not the only combination. We're sure there's other ways, other formats that can be successful. But this is a way for us to repeatedly, you know, generate as many different product candidates as we can with this kind of profile.

Just last question before we start talking about some of the programs. You talked about your choice of isotope and you talked about the supply chain there. Can you talk about from an investment standpoint where you think you are in terms of the investments that you need to make to have clinical supply through, say, a pivotal program?

Yeah, it's a great question. It's one that we're spending a lot of time on now. So what we'd like to say is at the moment, we're focused on two things principally. #1 is executing the plan we have, which we're going to talk about in a minute. And the other is planning ahead for scaling for the future, right? So we're planning for success. Right now we're utilizing multiple, multiple, we haven't disclosed the number but there are several commercial actinium supply agreements that we have. So we feel very good about where we are with actinium supply. But we've also been working with various contract manufacturers for the final step manufacturing that's a fee for service sort of thing right now. Working on opening our first GMP manufacturing facility at our 17 Dry Dock facility in Boston, and that will further verticalize our ownership of that supply chain. And as we achieve clinical proof of concept, we've already teed up various investments that we need to make. And we've looked at a combination. Would you build facilities? Would you buy facilities? Would you do some combination of both? And we've kind of mapped out what that looks like. There is investment that is required, but if you look at the precedents, it is achievable and it is not unduly burdensome in terms of the capital expense required to build out that kind of supply chain. The other part of the equation though is how many doses do you really need? And fortunately because our clinical development plans are focused on multiple large tumor types with global registration programs, we're going to need a lot of doses. We're going to need a lot of volume. And that's a good problem to have, but it's still a problem to have. And so we have focused a lot right now on sort of climbing that mountain of the capacity that we need to build. And so there's a lot of work going on. And as we go forward, we're going to stage those investments so that we can manage the cost of care capital as we build up this capacity.

Perfect. You know, we'll first talk about 1189, which is your Nectin-4 program, but maybe quickly before we do that, you know, development of radiopharmaceuticals looks a little bit different than maybe a classical oncology therapy so can you talk about sort of the value of some of the let's call it phase 0 work you can do with imaging and how you think that sets you up for a more traditional phase 1 program?

Yes, no, it's a really important question. One of the things that we and I think many investors like about radiopharmaceuticals is that you do get added information if you can do a phase 0 like, imaging analysis of your molecule in patients. So what we did here was we were able to take the binder, which is, you know, with Nectin-4 or B7H3-targeted cold conjugate. And you can either put actinium on it for treatment purposes or, in this case, use an imaging isotope like gallium or lutetium or Copper-64. And here you're not creating the harm to the tissues because it's not at a level of activity that would cause harm to tissues, but you can do a PET-CT or SPECT-CT imaging time course to get initial uptake in various different tissues and tumors, but then you can do a time course to see how it changes over time. Then you can do a dosimeter analysis of what's the absorbed dose of activity in each normal tissue and tumor that you can look at. And this is an advantage for us and others in the field because you can quantify, you can ask a question, is a drug doing what it was designed to do? And you can see, is it going to the tumor? And in the case of our molecules, we can say yes, we see very high initial tumor uptake. We also see really nice tumor retention in those analyses. It sticks around in the tumor for a long time. At the same time, even though you may get the drug is designed to perfuse everywhere. You want to be able to find the tumor wherever it lives. It does perfuse the entire body. You do see some backgrounds into early time points, first couple of hours. You see it in the liver, you see it in the kidneys, you see it in salivary glands and other places. But you also see in the time course that it washes out of those tissues relatively quickly. And you can quantify how much is in there and you can then go on to quantify is that within a safety range that we're to be acceptable. And so this is an advantage in development because you can feel good about your safety margins going into a real phase 1 with the therapeutic isotope like Actinium, and you engage investigators, you engage the agencies, the health authorities. And the health authorities, of course, look very closely at the normal tissue dosimetry and the absorbed dose profile. And when you see our and dose escalation schemas for both lead programs, those initial starting doses of 4 megabacks and 6 megabacks supported and aligned with the agency through the clinical imaging data that we're able to gather. So this is different than like a T cell engager or ADC where you're kind of walking into phase 1 blind and you're just doing, you know, let's call it empirical dose finding based on about clinical safety and efficacy. Now once we're past that stage gate, so the dosimetry data is really useful because it's hypothesis generating. It's also in my mind kind of a stage gate. If you see untoward activity in normal tissues, you can do a fast fail approach and then reiterate and maybe come up with a different molecule. It's really nice to be able to know that you can fail something quickly without running into a year-long or two-year-long dose escalation. So we are starting with just categorically more information about the molecules than you do with other modalities. That's really helpful to us and to our investors. So that's exciting. In phase 1B, we're in a more traditional oncology dose escalation schema, right? And so now, it's all about, you know, 28-day DLT observation periods and, you know, more traditional safety analyses, safety assessments in standard dose escalation. We're using a Bowen with backfill design. And so the backfill enables you to accelerate, if you will, the dose finding through the dose escalation. So that's been an exciting thing for us. But now we're into the phase where, at the end of the day, the advancement of these molecules from here, now that we're post the dose escalation, the advancement of the molecules from here are now gated on the clinical safety observations and of course response.

So, for Nectin-4 maybe just talk a little about what's the timing of that phase 1 data, you know, the range. Maybe talk about how you selected that range of doses from the imaging data and then importantly, you know, when we see that data, you know, especially given that you have PADSEV, but what's the right comparator? What's a good outcome from that study?

Yes. Yes, so let me just first start with a few words on the design of the dose escalation. So the design of the dose escalation, there's five dose levels starting at 4 megabecquerels going up to 12 megabecquerels administration. And then you would give those, every 28 days for six cycles. Eligible for the study are, of course, Nectin-4 positive patients as determined by initial imaging with a copper imaging agent. So you have to be uptake positive in the tumor to get into the study. And that will include post-PADSEV-PEMBRO urothelial carcinoma patients. So this is, think of it as second line metastatic plus. Second line plus metastatic. But also other patients with metastatic disease that are Nectin-4 positive are eligible for the study. So this includes things like triple negative breast cancer, ER or PR positive breast cancers, colorectal cancers, head and neck, and some others, lung cancers, non-small cell. And so, Nectin-4 positive patients writ large are allowed into the study. We do have a protected number of slots for the bladder cancer patients, but we'll be moving through different types of patients, dose levels here. And we did disclose at the time of our IPO early this year that we had cleared the first dose of all and we're enrolling and the second at the time. So in terms of what do we need to see, I mean the purpose of this part one dose escalation is to establish safety at a dose, right? That is the purpose. But of course we're tracking response as well, resist response. But the efficacy question is really, more properly assessed under an expansion cohort, which is part two of the study, designed and so that said we're cognizant of as you said benchmarks what are we looking for. So since there's a protected slot of bladder cancer patients and bladder there's de-risk for Nectin-4, let's talk about that for a minute. So what we know about post-pembro-PADS-EV, there's a handful of reports that have described the outcomes and how patients after the pembro-PADS-EV combo. But probably the most comprehensive is the post-EV302 follow-up that was reported by Tom Powles at ASCO. And so what that shows is that the most common treatment course post-PADS-EV in bladder is platinum-based chemotherapy. In the outcomes there are not robust. So he's reported round about a 20% response rate in relatively short PFS, three to four months and less than a year of OS, overall survival. So, this is a difficult, you know, this is I should say, this is a patient population with not a lot of good treatment options. It's really a huge unmet medical need in our view. And so that's the patient population that is obviously one of the areas of focus for the development of the program, and potentially one of the faster paths to registration. And so this is an area of focus for us and we're cognizant of that. I just wanna double click on that notion that in dose escalation, it's going to be a mix of tumor types, it's going to be a mix of doses, it's going to be varying degrees of duration of follow up. And so the first quarter preliminary data that we're going to describe is going to be a little bit like a work in progress because backfill will not be complete and we'll be continuing to enroll patients in backfill. And so it's going to be where we are at the time and what we know about dose at that stage. But nevertheless, we're excited about what we think the potential for the program is, and given the validation from PADSEV and what we know about Nectin-4 expression and other tumor types, we think it's a really important opportunity for patients.

Great. Thank you.

Why don't we turn, just given the time, why don't we turn to B7H3 and maybe just talk a little bit about how you think about that market opportunity relative to Nectin-4. Obviously, both are big.