Perspective Therapeutics, Inc. (CATX) Earnings Call Transcript & Summary

Great. Thanks, everyone, for joining us. My name is David Dai, one of the biotech analysts here at UBS. It's our great pleasure to have Perspective Therapeutics with us. Joining us, we have Joel Sendek, Chief Financial Officer; and Annie Cheng, Director of Investor Relations. Joel and Annie, thank you for joining us.

Thanks a lot, David. It's great to be here at the UBS Conference down here in Florida.

That's great. Yes. Today is a little bit colder. Interesting, before we start diving into the Q&A, I just want to have a quick kind of logistic check. Anybody who wants to ask a question to management team, please feel free to scan the QR code on the screen here. And then after that, you can type in your questions, and they will show up on my iPad, and I'll ask the question to the management team. So feel free to let me know if you have any questions on that. All right. With that out of the way, Joel, Annie, great to have you again. So to start things off, just tell us a little bit more about Perspective Therapeutics. What's your focus right now? And what are some of the key sort of like clinical programs you guys have right now?

Sure. So Perspective is a targeted radiopharmaceutical company, and we have a full slate of clinical programs, a full pipeline and a full array or ability to produce radioisotopes for our clinical programs and we're building out our manufacturing capability as well. So from drilling down a little bit from there, we have the capability of -- and radioisotopes aren't traditional cancer therapies, but we think they represent the next generation of a very compelling area of cancer therapy. And the reason is that you not only can target a particular cancer based on what you think you want to go after, but we can deliver a radioisotope, a payload to that target and deliver radiotherapy directly to the target lesion. That compares to, for example, external radiation where you're sending a beam that has to transit over and through tissue to get to wherever the cancer is, and that can have some undesired consequences. It's also different than regular antibody or small molecule therapy that is systemically delivered and sometimes can lead to off-target effects. And it's also kind of next generation to the ADCs, which also have a toxic payload. And in our instance, we're using alpha therapy, which is kind of next-generation targeted therapy using radio -- radiation because the range of the alpha particle is so tight that once again, and we can get into this a little bit later, might have a better safety profile than some first-generation therapies that emit beta particles.

Got it. Yes, that's really helpful. Just help us understand some of the -- maybe some of the programs you have. I understand you have an SSTR2 targeting a program for neuroendocrine tumors. You also have a drug test targeting melanoma. So maybe just help us understand some of the key clinical programs in development, and then we'll probably dive into each one of them specifically.

Yes. So you're right. We have 3 clinical programs and each of them has a different target. The most advanced one targets SSTR2. This is called VMT-alpha-NET, we call it alpha-NET for short. And this drug is radiopharmaceutical therapy like all the drugs. And it's specifically designed to target the SSTR2 receptor. And this receptor appears on many different tumors, but the one we've chosen to go for first is called the neuroendocrine tumors, which express a lot of the SSTR2. The second program we have is for melanoma. And this one is a little bit earlier in development as is our other -- but still in the clinic. And this -- the other one that we have is targeting FAP, which is fibroblast activation protein alpha. And that's one, once again, that is not specific to a particular tumor, but it actually appears on the stroma of a lot of the very prevalent tumors that are out there, and we're in Phase I with that program as well.

Got it. That's really helpful. Thanks for that overview, Joel. So diving into each program, let's first talk about the alpha-NET program here. So this program is targeting SSTR2 for the treatment of neuroendocrine tumors. Maybe just help us understand why do we need to use alpha in targeting alpha-based emitters for neuroendocrine tumors. How is this more beneficial than the current standard of care, LUTATHERA?

Yes. So LUTATHERA is -- let's just start with the fact that LUTATHERA is a great drug. It's on a run rate, you might know better than I do, that I think it's close to -- getting close to $1 billion a year or maybe $900 million range, and it uses lutetium. And obviously, it's a Novartis drug. It's -- they've done a great job there. But I think if you look at their response rate, it's in the teens, like 13%, that kind of range. So we think that we can achieve better outcomes for patients. And the way we think we will be able to do that is by using a different isotope, and the isotope that we're looking at is lead-212. And it's really important to think about how to potentially make a drug more efficacious while you don't have to balance that with a worse safety profile. And that's what we think we've been able to do with our drug, alpha-NET. We have a whole list of intellectual property issued patents as well as patent applications, for example, that cover our use of this isotope with a particular targeting molecule, a peptide, coupled with a proprietary chelator. And what the chelator is, is it's effectively a cage around the isotope that prevents off-target negative consequences. That chelator is linked to the targeting vector and all of this complete construct was discovered and made by our company. And we own the intellectual property behind it, and it was the brainchild of the founders of the company and the scientists that work in the company. It wasn't in-licensed. It was developed completely in-house. One of the key elements of differentiation beyond the fact that we came up with our own targeting molecules is the chelator itself. One of the things that people worry about when they think about target radiopharmaceutical therapy is if the molecule binds to the target on the cancer cell that somehow that radiation leaks out and/or it leaks out and finds its way to an area in the body it shouldn't be or it's just in the circulation and it winds up in the kidneys, you end up with kidney toxicity, the potential for kidney toxicity. So what our scientists did is they found a way to have the isotope be retained within that chelating agent and not leak out. It's actually a daughter isotope that creates that alpha emission called bismuth. And we've shown and demonstrated that the chelator, our proprietary chelator holds in more than 90% of the bismuth. And therefore, we anticipate that we won't get the kind of renal toxicity, toxicity to the kidneys, that other competitive drugs might see. And we can kind of talk later about the clinical data we have and have presented so far that kind of justify that thesis.

Yes. That's actually good. And let's talk about the data then. You recently presented at ESMO an interesting data from the alpha-NET program, especially in neuroendocrine tumors, where you showed data from a -- later data cut of the Cohort 2 patients. Maybe Joel, can you help us understand some of the data you've seen, give us a quick overview of -- high-level overview of what kind of efficacy, safety you've seen so far on that clinical data front?

Yes. So thanks for asking. So we presented this data most recently, we've had a couple of presentations at scientific meetings. So the most recent one was at ESMO in Berlin about 3 weeks ago. And it was an oral presentation, and we have -- I mean, just to put it in context, we had about half of our patients that we've currently enrolled where the data was mature enough for us to present. And that was a total of about 23 patients or so and -- but we had more than double that, that we were tracking for safety. So if we can talk about the safety and the efficacy. First, on the efficacy, we were really encouraged to see. If you look at the 16 patients that had -- that expressed the SSTR2 in all of the lesions we looked at, which is the most relevant population for this study, if you would look forward to how we would do a registration study, our response rate was 44%. So we had 7 patients out of 16 that had an objective response measured by the standard RECIST criteria, which we think is really competitive and certainly better than the LUTATHERA response rate, a currently approved drug. If you look at the safety, we get equally excited by that. And to my point earlier about how we created a construct, we were kind of solving for trying to have as little renal toxicity as possible. And in fact, that's exactly what we showed in the broader data of patients that were evaluable for safety in our data set. We had very low grade 1 and reversible increases in creatinine, which is the way you measure for kidney tox. And we also had -- if you look, there was a competitor that presented data in the same session that we did and for an experimental therapy also using lead. And their level of renal toxicity was more in the 37% range. They also had some other side effects such as dysphagia. And then if you look at -- which is a difficulty swallowing and esophagus-related side effect. And if you look at just standard side effects that you often see in cancer therapy like fatigue, nausea, those sorts of things, that appeared in 50% more patients in their study than ours. So if you look at it purely on a safety perspective, we were very happy with our results. And if you look at it on an efficacy standpoint, we're very proud of our response rate way higher than the current therapy. And given the fact that this was an interim review, and we can talk later about how we predict the next iteration to be, we think that our response rate is really, really good and could go higher.

Got it. Yes. On the SSTR2 selection, data you've shown, how important is this in terms of as a selection criteria for your future trials? Would you say that going forward, are you going to use SSTR2 as a selection criteria for all the tumors for your studies?

Yes. No, that's a really good question. When we designed the Phase I, we didn't really know what the result would be on the safety side or the efficacy or whatever. And we wanted to be able to enroll as quickly and as many patients as possible. So our criteria weren't as stringent as they would be in a registration trial where you're looking to answer a specific question, typically more of an efficacy question than a safety question. The data we're sitting on right now give us a whole lot of confidence on the safety side. And now obviously, the trial is not over, but we feel very confident that we have that box checked. As far as efficacy is concerned, now we want to be sure that we're giving every patient that gets this drug the best chance of a response. So the way you do that is when you contemplate as you're asking the next trial, for example, how do you make sure that those are the patients you get in your trial? And the idea there is you look at patients who -- where any lesion expresses SSTR2. So that way, you can't go wrong because you know your drug is going to end up on an SSTR2 positive lesion and give you a good chance of response. As an aside, we did get responses, in some cases, stable disease in the ongoing study with patients that didn't have SSTR2 on all lesions. So I don't want to say that, that didn't work. But in order to make sure that you get the best result you possibly can, you would want those patients -- all the patients you enroll to express SSTR2. The other thing I would point out is there's a kind of a subset of pancreatic NETs, that's a subset of neuroendocrine tumors. And those patients tend to respond a little bit better. And obviously, we're not in a registration trial now, but that's another avenue or another decision we could make in the future with regard to an enrichment strategy in order to enhance the response rate we could like to potentially get in a registration study. So all those avenues are available to us because we would want to obviously design the study and give us the best chance for success.

Got it. And then just on the SSTR2 front, since it's going to inform some of your choices of patient selection going forward, can you just give us some understanding of how many -- what percentage of the patients actually has SSTR2 expression in all their tumors?

Yes. So our best guess, we don't know the exact number, but our best guess is it's around 70%. Yes. So the majority. I mean, right now -- and your next question might be, what's the incidence and prevalence of neuroendocrine tumors. And it's mostly a prevalent population. Well, put it this way, the prevalent population is very large. It's -- we estimate it's around 170,000 that are out there. So obviously, we get questions from investors a lot of times about, oh, LUTATHERA is this big drug. Do they dominate and have the whole market? What else is out there? Or what kind of opportunity kind of TAM is there? We think that there's plenty of space for multiple players. And certainly, if our current response rate translates to a number like that in a registration study, we could see a lot of share gain for sure.

Got it. Got it. That's helpful. So to come back to the point about the safety that you mentioned versus the competitor. Maybe just help us understand and contextualize what's the difference between your drug versus competitor? What do you know from a preclinical standpoint or from a molecular construct standpoint, the key differences between yours versus theirs to really show that you have a better safety profile than theirs?

Yes. So I would say that, look, prior to us entering into our Phase I study, we didn't know that ours was going to be safer. And for the record, the study is not done yet either. But we have a lot of good data to go on right now. So as far as the dysphagia, when we saw the reports of dysphagia coming from the Orano Med drug, when it was the early days of our Phase I study, we said, "Oh, we better be looking for this in our study." And so we made sure that all of our investigators and our sites knew to look and ask the patient about any kind of swallowing issues or anything like that. So we are out there in front and looking for it. It's not like something that's going to pop up in the end just because we haven't -- hasn't been reported. Obviously, anything can happen. Our study is not done, but we're out there actively seeking any kind of signal along those lines. Given the fact that we haven't seen it at all, our best guess is even though our drug and the Orano Med drug, both target SSTR2, there must be a subtype of SSTR2 that our drug doesn't hit that resides or is expressed in the esophageal tissue. That's the only -- I mean, it could be a lot of things, but that's the answer that kind of pops out to us. As far as the kidney toxicity that they're seeing and we're not, once again, the caveat is our study is not completely over. But we look at any evidence of creatinine increase, creatinine level in the blood increasing, and we haven't seen it. Or if it has been there, it's low grade and in many cases, reversible. And if you think back as to why that's the case, well, that's an easy answer because it's the chelator that we constructed with the express intent of retaining the daughter isotope and preventing it from becoming the equivalent of a toxic downstream metabolite. Now our business is retained within the cage to over 90% level. It'd be great if it was 100%. That's not, but 90% is pretty good. So that's why you might see a little bit, but it's certain -- of creatinine increase, but it's certainly not anything like we're seeing from the competitive agent, which uses a generically available chelator that isn't optimized to the level that ours is.

That's really helpful. And then on the efficacy side of things, just I want to dive a little bit deeper on this one. So for the 7-patient data that you presented back at ASCO, we did see that some of those patients responded pretty late, around 40 to 48 weeks. And so then for this new data, new cut at ESMO, do you expect some of those additional patients to deepen over time -- especially to see the response deepen over time? And how are you thinking about sort of the optimal time to see a response in the new patients there?

Yes. So a couple of things to talk about there. That's a really great question, David, and astute for you to observe that because as an analyst that covers oncology, I know when I was doing it, pretty much when you had a response rate at a certain time point, that was your response rate and it was never going to get better. What I'm learning in this particular disease area and this particular type of drug, you have to kind of throw out that way to analyze and look at this type of drug, a targeted radiopharmaceutical in particular, in this type of an indication. And there are multiple reasons for that. The first is that we're applying a methodology to calculate response rate based on RECIST, which doesn't -- isn't quite the best match for this cancer and this therapy. And the reason for that is RECIST is a kind of a blunt instrument, and it's also a little bit arbitrary. Blunt in the sense of you're measuring the diameter of a tumor and you're measuring it again down the road and there's an arbitrary 30%. Obviously, I shouldn't say arbitrary. I mean people put a lot of thought in 30%, but whatever. But that's what we're dealing with. The way our drug works in any kind of lead-based therapy -- this type of therapy works, the mechanism works such that it causes tumor necrosis at the center of the lesion. So you might have a diameter that stays the same over time, but yet the tumor is dead on the inside that doesn't get reflected in the measurements until later when the cell attempts to divide, fails to divide and then kind of collapses in on itself. So that in and of itself causes what we think is responses that can occur later as opposed to earlier. And you've seen that if you look at some of the patients and some of our detailed data that was presented at ESMO, where you get a response well after we have 4 cycles of therapy, and you see multiple instances where the patient doesn't even achieve their objective response until days or weeks after that last dose. Your question is, okay, well, does that mean that when we see the next data set, we have the potential for patients transferring over from stable disease to a partial response or a complete response or whatever at our next data cut. And the answer to that is I don't know the data, but I'm certainly hopeful based on the trend lines that we've been seeing and the data we've already presented that, that can continue in a favorable way for us and our response rate could go up as a result. The other thing just to throw in here is that these patients do -- they're not end-stage cancer patients with days or weeks or a couple of months to live. They have a longer lifespan expectation, and therefore, they're alive and will be alive long enough to potentially show what you would call a late response. So that's why we're very confident -- not very confident, I would say, know that this isn't -- the 44% response rate that we printed in this SSTR2 all lesion population at ESMO isn't the final number.

Got it. And maybe share with us some of the physician feedback you're hearing from ESMO, knowing that, as you mentioned, Joel, that there was a competitor that also showed some data at ESMO around the same session where you showed about 44% ORR in SSTR2-positive lesions, where they showed about 60% ORR, but you are showing a little bit -- better safety, tolerability, whereas they're showing a little bit more safety around the dysphagia and other types of problems associated with it. So how are the physicians viewing those 2 data sets based on the feedback so far? And what constitutes the decision to adopt each or either one of them?

Yes. So I mean, look, I think what Orano Med is doing is good for patients. It's good for the field. It's good for the radioisotope area, everything else. Nothing negative for us to say about them. All I know is based on the data that we've seen that it looks like they have a slightly better response rate. Our response rate is, I would say, to be determined, whether it's 44 or a different number. And then as far as safety is concerned, that we have a very, very compelling safety profile. I don't know what the agency would -- how they would look at a data set that has dysphagia and things like that. But we're very comfortable that our safety holds up that we'd be very competitive. I would say as far as the physician feedback, I can't tell you what they're necessarily saying to Orano Med, but we know is that physicians when we ask them about our data, they find it very, very compelling risk reward as far as the efficacy that they're seeing and the type of safety profile. And we've had a lot of physicians tell us that since ESMO, that they're super excited to enroll patients and they want to be involved and they want to know more. And it's being a very nice vote of confidence that we've been seeing. And I would throw the question back to you and say, don't take our word for it because we're obviously biased. We're going to say that the drug is phenomenal. But maybe next time we talk, you've talked to some physicians and they've kind of told you the same thing. Then we'll definitely know that it's the word that's out there, but I would suggest that based on the feedback that we've gotten, there's a lot of enthusiasm about alpha-NET in the neuroendocrine tumor physician community right now.

Got it. Yes, that's really helpful. Will definitely do some additional work on that front as well. And then just help us understand a little bit more about some of the upcoming data catalyst for 2026, you're going to be showing some additional data from existing patients and new patients who has gone through enough follow-up in Cohort 2. But also at the same time, you're going to be showing some additional data from Cohort 3, higher dose levels. So maybe just help us understand some of the data expectation we should be expecting in 2026.

Yes. So I think you really kind of nailed it right there. I mean -- but let me give you some time frames because we think at this point, we have a lot of near-term catalysts and opportunities for us to reveal data that could be significantly stock moving, especially from the -- I don't think this stock is fully valued at all trading at a negative enterprise value right now. And what we see is, I would say, 3, maybe 4 potential data catalysts next year. The first is in alpha-NET. So we've presented data on -- efficacy data on 23 patients. So we will get to the point where -- and we have an additional 23 that were dosed and will have follow-up available for disclosure sometime in the early part of the first quarter of next year. It could be as early as early January, that might be tight, but possible. It could be February, but sometime in the early part of next year. And that would be efficacy. We would also update investors on safety, the same safety -- pretty much the same safety population that we had at ESMO just with more time gone by. So I think that's a huge catalyst. There are medical meetings in January. Also the AACR conference is in April. So it's possible that, that data could be either of those places. The other, we haven't really spent much time talking about that, but I do want to touch on it, is that we also have 8 patients enrolled at a higher dose at the 6 millicurie dose. Whereas our competition that kind of maxed out at MTD for the dose that they had presented at ESMO, we haven't reached MTD yet. So while we're very comfortable with the dose that we have at 5 millicuries, and we think that's a suitable dose with enough efficacy to move into a registration trial. If 6 millicuries works even better or as a signal to work better without much additional safety issue, then that's another avenue we could take to achieve an even better response for the patients that we're in. We think that data should be available around ASCO next year. So that's the second. And then the third is data from one of those 2 pipeline products I mentioned in melanoma or FAP, that's VMT359. And that data could be available with either of those drugs mid-2026. Is that right?

Mid and second half.

Yes. So all those things are -- if you look at it, we have a really nice trajectory of events, calendar of events for potential stock-moving catalysts in 2026, starting in the beginning of the year.

That's really helpful. Great. With just one -- we're almost out of time. I do want to touch just one quick question on the VMT01 program, which is a melanoma program here. So we're thinking about this -- the whole melanoma treatment landscape, how do you envision VMT01 will be to fit into the current melanoma treatment paradigm?

Yes. So I mean, it's early days there. And -- but I think it's -- this is different than NETs because the patients are a lot more sick. And we're just looking for a way to help the patients out any way we can. So that's why we're doing that study not only as a single agent, but in combination with Opdivo. So the idea is to try to find some avenue to address an unmet medical need. It's probably too early to say -- to answer your question directly to know exactly where it's going to slot in. But the idea is to find a way to get targeted radiotherapy into these patients and to make a difference.

Got it. And you're, of course, going to be doing this in combination with nivo, right? We did see recently news around Replimune, where their trial was in combination with nivo and FDA gave them a rejection. So -- and the reason behind that is because they weren't able to parse out the difference between the contribution of RP01 versus nivo. How are you thinking about parsing out the individual contribution of 01 versus the combo?

Yes. I mean, first of all, we're going to have to get responses in the combo and then we'll worry about that question. Yes, that -- it's obviously a good question.

But obviously, we'll have data on single agent as well as combination. So that will help us identify the contribution of components.

Yes. Thanks, Annie. For sure.

Okay. And I think with that, we are perfectly on time, and we can just wrap up here. Joel and Annie, thank you so much for joining us. It's a great pleasure to host you here at UBS conference.

Thanks a lot, David. That was great.

Thank you.

Take care, everyone.