Fusion Pharmaceuticals is a triple, says Raymond James

Precision oncology company Fusion Pharmaceuticals (Fusion Pharmaceuticals Stock Quote, Charts, News, Analysts, Financials NASDAQ:FUSN) received a positive review from Raymond James on Friday. Analyst Rahul Sarugaser initiated coverage with an “Outperform” rating and $13 price target, saying the stock is currently undervalued compared to its peers.

Based in Hamilton, Ontario, and Boston, Mass, Fusion Pharmaceuticals is developing next-generation radiopharmaceutical drugs, with a focus on targeted alpha therapies (TATs). Radiopharmaceuticals have radioactive atoms (radioisotopes) that emit energy as they decay and can be used either as a diagnostic or therapeutic or both. 

Fusion’s research involves a proprietary TAT platform which enables the connecting of alpha particle-emitting isotopes such as AC225 to a range of targeting molecules such as antibodies, small molecules and peptides to selectively deliver alpha particle payloads to tumours and their microenvironments. 

Sarugaser said radiopharma as a cancer therapeutic is about to step onto oncology’s main stage within the next two or three years. He pointed to a number of clinical and commercial wins already in the space, including Bayer’s Xofigo and Novartis’ Lutathera, both commercialized in the past ten years, and Novartis’ Pluvicto for metastatic prostate cancer, which he said is the highest-profile radiotherapeutic available today, with about $1 billion in sales expected in 2023, its first full year of sales and far exceeding the company’s initial estimates of demand.

Sarugaser said radiopharmaceuticals are on the verge of an inflection point in oncology, with the potential to become “a new pillar” of cancer treatment.

“We think radiopharma has serious legs, with the field capitalizing on decades of foundational and clinical research (including >100 years of external beam radiation experience), and is beginning to seize on opportunities to improve outcomes in potentially every type of cancer that expresses a differentiated target,” Sarguaser wrote.

Fusion currently has four drugs in active clinical development: a Phase 2 study of Ac225-PSMA in metastatic castration-resistant prostate cancer, a Phase 1 study of Ac225-IGF-1R in solid tumours, a Phase 1 Ac225-NTSR1 in solid tumours and a Phase 1 Ac225-EGFR-cMET in solid tumours. 

Sarugaser said the company’s lead and most advanced clinical program is PFI-2265, which entered Fusion’s pipeline by way of acquisition from RadioMedix in February 2023. Sarugaser said Fusion expects to report preliminary data for the first 20-30 patients, including safety and efficacy data, during the first quarter 2024.

As positives on Fusion, Sarugaser pointed to the company’s robust and consolidated supply chain for Ac225 and top quality drug manufacturing, along with its beneficial strategic collaboration with AstraZeneca to develop three novel TATs.

At the time of publication, the analyst’s $13.00 target price represented a projected one-year return of 200 per cent.

“We believe FUSN’s TATs can improve on the successes of currently available cancer therapies, including modern radioligands, and should find application across a very wide range of targets,” he said.