Pharmaceutical companies place huge bets on the potential of precision radiation as the next major advancement in cancer treatment.

• Over the past year, pharmaceutical companies such as Bristol Myers Squibb, AstraZeneca, and Eli Lilly have collectively spent approximately $10 billion on radiopharmaceuticals acquisitions and partnerships.
• Novartis' success with Pluvicto and Lutathera is inspiring drugmakers to attempt replication.
• Some neuroendocrine tumors and prostate cancer currently have radiopharmaceuticals available, and they may potentially be utilized for various cancers in the future.

Radiation therapy is predicted to be the next major advancement in cancer treatment by drugmakers.

Radiopharmaceutical makers have attracted the attention of pharmaceutical companies such as , , and others, who have spent $10 billion on deals to acquire or work with them. These companies are interested in the technology of these smaller upstarts, which, although still in its early stages, has the potential to treat various cancers.

According to Guggenheim Securities analyst Michael Schmidt, any large company with a presence in oncology or a significant focus on this therapeutic category will likely require exposure in this area.

Novartis has already released two radiopharmaceuticals, and Schmidt estimates that around 50 more are in development. However, it is difficult to determine the total market opportunity due to the numerous types of cancer that these drugs could potentially treat.

If the technology is limited to treating a few types of cancer, Schmidt predicts that the category could generate a low end of $5 billion in revenue. However, if it proves effective in more cancers, it could potentially generate tens of billions in revenue.

Cancer drugs utilize a radioactive targeting molecule to locate and bind to specific markers on cancer cells, while sparing healthy cells from radiation damage. The key is identifying markers that are unique to cancer cells.

Recently, interest from large pharmaceutical companies in radiopharmaceuticals has increased, despite scientific and financial proof of their effectiveness taking time.

The manufacturing and logistics of drugs are complex, and the radioactive material used degrades quickly, necessitating prompt treatment within days.

Novartis demonstrated that the strategies used by pharmaceutical companies to manage complex, time-sensitive drugs like CAR-T for blood cancers or gene therapies for rare diseases can also be applied in radiopharmaceuticals.

In 2018, the Swiss pharmaceutical giant obtained approval for Lutathera, a radiopharmaceutical drug used to treat a rare type of cancer in the pancreas and gastrointestinal tract. In 2022, Novartis secured another approval for Pluvicto, a drug used to treat prostate cancer. According to consensus estimates from FactSet, the combined sales of these drugs are expected to reach about $4 billion by 2027.

Those successes sparked broader interest in radiopharmaceuticals.

Jacob Van Naarden, president of Eli Lilly's oncology business, stated, "After considering everything, we concluded that we must make deals here."

Lilly acquired Point Biopharma last year for about $1.4 billion and signed partnerships with companies developing treatments. During the initial search, Van Naarden emphasized the importance of companies being prepared to manufacture the drugs. Radiopharmaceuticals are difficult to produce, and Lilly wanted to ensure that any initial acquisition could produce the drugs in-house instead of outsourcing the work.

RayzeBio's acquisition by Bristol Myers Squibb was driven by manufacturing as a crucial element, according to Ben Hickey, RayzeBio's president. At the time of the acquisition, RayzeBio was close to completing a factory in Indiana and had secured its own radioactive material supply for developing experimental drugs in its pipeline.

Hickey stated that it was evident that one of the conditions was to ensure that our fate was in our control.

Novartis has demonstrated the importance of having enough doses of Pluvicto by investing over $300 million to establish and expand radiopharmaceutical manufacturing sites in the U.S. This allows the company to produce the drug and deliver it promptly to patients. Despite the initial struggles, the company is now able to fulfill demand for the treatment through meticulous planning and distribution.

Victor Bulto, president of Novartis' U.S. business, stated that each dose is equipped with a GPS tracker to ensure it reaches the intended patient at the correct time. Novartis minimizes the risk of disruptions from storms by delivering doses to destinations that are within nine hours from the factory.

Doctors and patients on the receiving end also feel the complexity.

To administer Lutathera and Pluvicto, Bassett Healthcare Network in upstate New York required an upgrade to its medical license to handle radioactive material, according to Dr. Timothy Korytko, Bassett's radiation oncologist-in-chief. These drugs are given intravenously and require the expertise of a certified specialist.

It takes up to six weeks from prescribing Pluvicto to administering it.

Once produced, radiopharmaceuticals undergo decay and have a limited lifespan of a few days.

Ronald Coy, a retired firefighter battling prostate cancer since 2015, drives over an hour through upstate New York to receive Pluvicto at Bassett. Although he hasn't had any issues so far, he worries that a snowstorm could disrupt one of his appointments between now and the end of January.

Coy expressed the hope that there would be no significant storms until after a week from now, or if one did occur, it would be before he departed.

After returning from treatment, Coy must take precautions to prevent his wife Sharon from being exposed to radiation. He drinks plenty of water to flush out any extra radiation from his body. Despite the minor inconveniences, he is willing to endure for a few days in order to battle his cancer.

Investing in infrastructure for producing and distributing radiopharmaceuticals for Pluvicto and Lutathera is worthwhile for Novartis, but it becomes even more attractive due to the potential to treat more cancers. Novartis is working on developing a drug for a marker found in 28 different tumors, including breast, lung, and pancreatic cancers.

If we can apply the knowledge we've gained from manufacturing distribution to benefit patients with lung and breast cancer, and demonstrate significant efficacy and tolerability, we could make a significant impact on cancer care and create a profitable business.

The potential of radiopharmaceuticals beyond their current cancer treatments is yet to be proven, according to executives, as the field is still in its early stages.

"Expanding the target and tumor type repertoire could lead to a significant class of medicines, according to Eli Lilly's Van Naarden. However, it is currently unclear if the class will be highly important or simply important."

Bristol Myers Squibb and AstraZeneca both see the potential of combining radiopharmaceuticals with existing cancer drugs like immunotherapy.

Fusion Pharmaceuticals was acquired by AstraZeneca for $2 billion earlier this year. Susan Galbraith, the company's executive vice president of oncology research and development, highlights the effectiveness of combining immunotherapy with radiation in existing regimens.

The size of AstraZeneca's radiopharmaceuticals portfolio will depend on its initial prostate cancer program and other undisclosed targets, according to Galbraith. However, she believes that the technology will play a significant role in cancer drugs in the next decade.

The true potential of the technology may not be fully realized for years, as many experimental drugs are still in the early stages of development. One concern is whether other radiopharmaceuticals, particularly those that use different types of radioactive material, are as safe and well-tolerated as Novartis' Pluvicto.

Pharmaceutical companies are eager to enter the race, inspired by stories like Coy's that demonstrate the potential for success.

Over nearly a decade, Coy has received various treatments for prostate cancer that has metastasized to his bones. Following a single Pluvicto treatment this year, his cancer levels significantly decreased as indicated by bloodwork.

Although not everyone responds well to Pluvicto, Coy is grateful that he is part of the group that does. Despite the drives and precautions required, he considers it worth it.

He expressed his gratitude daily for being part of the third where things are working well for him.

— CNBC's Leanne Miller contributed to this report.