Although it may seem dangerous to be associated with "nuclear", nuclear drugs are an important method for cancer treatment in medicine, and the prosperity of the nuclear drug industry has been heating up recently under the pursuit of capital. At the end of 2023, multinational biopharmaceutical giant Bristol Myers Squibb announced a 100% premium of $4.1 billion to acquire the emerging nuclear drug company RayzeBio. After that, RayzeBio, which is listed on NASDAQ, surged by more than 100%, indicating the high attention of the capital market to the nuclear drug industry. In 2023, the financing amount in the domestic nuclear medicine industry has also nearly doubled. Listed companies that have already laid out their nuclear medicine industry may have themed trading opportunities in the future, which is worth paying attention to.

01 | What is nuclear medicine? Radiopharmaceuticals, also known as "nuclear drugs," refer to a special type of drug containing radioactive isotopes for medical diagnosis and treatment. According to the AnnalsofOncology review, the vast majority of radiopharmaceuticals use the basic structure of "ligand linker chelator radioactive isotopes", which utilizes principles of radiobiology to diagnose or treat tumors by radiating particles from the tumor site. Radiopharmaceuticals can be divided into diagnostic and therapeutic drugs, and are currently considered clinically effective anti-cancer methods. Compared with traditional cancer treatment methods, radiopharmaceuticals have the potential to address the challenges posed by tumor heterogeneity target expression through two approaches. In terms of diagnosis, radiopharmaceuticals enable doctors to effectively evaluate the differences in heterogeneous target expression between different lesions; In terms of treatment, radioactive drugs can produce cytotoxic bystander effects, giving tumors with minimal changes in target areas a significant advantage. There are over 100 types of radioactive isotopes applied in the field of nuclear medicine worldwide, of which more than 30 are used for the diagnosis and treatment of diseases. In the field of therapeutic nuclear drugs, the application of Lu177 is considered a revolutionary solution recognized by the medical community, expanding into multiple cancer types with great market potential. As approved by Novartis in 2022, Pluvicto is used for the treatment of metastatic castration resistant prostate cancer with prostate specific membrane antigen (PSMA) positivity, previous androgen receptor (AR) inhibitors, and paclitaxel chemotherapy

(mCRPC) Adult patients are hitting $1 billion in sales this year.

02 | Nuclear drugs have become the new favorite of multinational corporations. According to data, RayzeBio was founded in 2020 and is a clinical stage radioactive drug therapy company. On September 15, 2023, RayzeBio landed on NASDAQ with a financing amount of $311 million, making it the second largest IPO case in the biotechnology field of the US stock market in 2023. Meanwhile, the $4.1 billion olive branch of Bristol Myers Squibb made it the protagonist of the largest acquisition case in the nuclear medicine industry. From the perspective of research and development pipeline, RayzeBio is in an innovative leading position in the field of actinide (Ac) based radiopharmaceutical therapy. Currently, the company's pipeline projects focus on the treatment of solid tumors, including gastrointestinal pancreatic neuroendocrine tumors (GEP NETs), small cell lung cancer, hepatocellular carcinoma, and other cancers. Among them, RYZ101, which has made the fastest progress in research and development, aims to deliver the synthetic radioactive isotope actinium-225 to tumors. The evaluation of the drug's treatment process for GEP-NETs has entered phase III clinical trials. If the Phase III clinical trial of RYZ101 is successful, it is expected to become the world's first approved actinium-225 radiopharmaceutical therapy, which may be one of the reasons why it is highly favored by Bristol Myers Squibb.

03 | There are a total of 32 nuclear drugs under research in China, and 64 new radioactive drug varieties have been launched globally. The research and development pipeline for innovative radioactive drugs has reached 339, covering both diagnostic and therapeutic fields, with indications covering multiple disease fields. In addition to cancer, it also covers areas such as mental illness and autoimmune diseases. It is worth noting that 42 types of radioactive drugs have been approved for marketing in China, including 24 drugs for diagnosis only, 15 drugs for treatment only, 3 drugs for both diagnosis and treatment, and more than 20 drugs listed as Class B drugs in the 2022 medical insurance catalog, involving companies such as Atomic High Tech, Chengdu Xinke Pharmaceutical, and Tianjin Saide Biopharmaceutical. In addition, 32 radioactive drugs are in the clinical trial and market application stage, of which 24 are diagnostic radioactive drugs and 8 are therapeutic radioactive drugs. Unlike most marketed radioactive drugs that are generic drugs, most of the radioactive drugs under research are innovative products, and only 8 out of 32 radioactive drugs are generic drugs. Specifically, among the 24 diagnostic radiopharmaceuticals under study, 4 of them are RDC drugs, namely Gallium [68Ga] Isotriptide from Hengrui Pharmaceutical and TLX591 from Telix

CDx, Yuanda Pharmaceutical's Zirconium [89Zr] Girentuximab, and Redeo for SPECT/CT tumor imaging agent 99mTc-3PRGD2, among which 99mTc-3PRGD2 is China's first independently developed nuclear medicine class I innovative drug. Currently, phase III clinical trials for the diagnosis of benign and malignant lung tumors and lymph node metastasis have been completed. Among the 8 therapeutic radiopharmaceuticals under research, 4 are targeted for prostate cancer, including Novartis Pluvicto, which was approved by the FDA for use in the treatment of castration resistant prostate cancer in March 2022. In its first year of launch, global sales amounted to $270 million, and the drug is currently undergoing phase III clinical trials in China. At the same time, financing in the nuclear medicine sector is rising against the trend. According to the Blue Book, the financing amount for radioactive drugs in China has reached nearly 900 million yuan in 2022; In 2023, the E-round financing amount of Xiantong Pharmaceutical exceeded 1.1 billion yuan. The overall market performance is outstanding.

04 | The trend of "integration of medicine and machinery" Under the general trend of accelerating the layout of multinational pharmaceutical enterprises and broad market prospects, local innovative pharmaceutical enterprises are also unwilling to be outdone and catch up. According to the Drug Intelligence Data Global Drug Analysis System, there are over 50 nuclear drug research and development enterprises in China, such as China Tongfu Co., Ltd., Yuanda Pharmaceutical (China) Co., Ltd., Yantai Dongcheng Pharmaceutical Group Co., Ltd., Jiangsu Atomic Medicine Research Institute, Guangdong Ruidio Technology Co., Ltd., Suzhou Zhihe Biopharmaceutical Technology Co., Ltd., covering radioactive elements 18F, 177Lu, 99mTc, 68Ga, 89Zr, 131I, etc. At present, multiple traditional pharmaceutical companies such as Hengrui Pharmaceutical, Yaoming Borui, Yunnan Baiyao, and Xiantong Pharmaceutical have stepped down one after another, accelerating their layout. According to the Yaorong Cloud Database, in the field of nuclear medicine, Hengrui Pharmaceutical has approved clinical trials for four products, including Lutetium [177Lu] Oxotrexate Injection, Gallium [68Ga] Isotropide Injection, HRS-4357 Injection, and HRS-9815 Injection, since the beginning of this year. Diagnostic nuclear drugs are often used in combination with PET/CT or SPECT/CT equipment in clinical practice. If equipment is seen as a "gun", then nuclear medicine is a "bullet". The development of nuclear medicine relies on both equipment and drugs, and the combination of the two can achieve effective targeted diagnosis and treatment in nuclear medicine. Nuclear drugs and imaging equipment are inseparable, and drug innovation can also drive equipment innovation, thereby achieving more accurate application and judgment of nuclear drugs, and ultimately achieving continuous optimization of medical scenarios. This also means that strengthening the layout of the entire industry chain of "medicine and equipment integration" has become key.

According to Frost&Sullivan data, the Chinese market accounts for only 6% of the global market, while the North American market accounts for 40%. Compared with developed countries, the usage rate of radioactive drugs in China is still relatively low, and the market space is very promising. The "Medium - and Long Term Development Plan for Medical Isotopes 2021-2035" (hereinafter referred to as the "Plan") released by the eight national ministries and commissions clearly points out that "China's progress in the development of radioactive drugs is slow, and there is a lack of independently original radioactive drugs. Most of the radioactive drugs used in clinical practice are foreign generic drugs." Therefore, the national level requires strengthening the independent research and development of radioactive drugs and nuclear medicine equipment. Based on approximately 4.5 million newly diagnosed cancer patients in China in 2020, 18F-FDG

PET/CT was used for cancer diagnosis in less than one million cases in 2020, which does not meet the huge clinical demand. Meanwhile, with policy support, the industry scale will continue to expand. It is expected that the market size of nuclear drugs will reach 16.2 billion yuan in 2025, with an annual growth rate of 17% over the next five years; It is expected that the installed capacity of PET/CT and SPECT/CT will continue to grow with an annual growth rate of 12.0% in the next 10 years. Based on this, the advantages of innovative nuclear drugs in the field of innovative drugs are increasingly prominent. With the continuous optimization of the review and approval process, the scope of clinical application continues to expand, and the integration of nuclear drug diagnosis and treatment continues to advance, it is expected that the development of this discipline with great potential will significantly accelerate, ushering in its own "golden age".