Radiopharmaceutical company $TLX delivered their FY24 results today

In this straw, I’ll present their highlights, make a few remarks about the result, and then summarise some of the key information (at a high level) about 2025 and the road ahead to 2028, and conclude with my view on value.

Essentially, the SP uplift today was little to do with the FY24 financial result, which was largely as telegraphed – a small beat on revenue and a slight miss on the consensus for earnings (on my numbers).

Rather, in my view, it was all about the road ahead. Nothing, as far as I can see has fundamentally changed, so I sense more investors have piled onboard or increased their positions based on the confidence displayed by management on the call, as well as the realisation of the potential for revenue guidance upgrades during 2025, which I do not think had been widely understood before today. (I'll explain in detail.)

So, I’ll structure this straw as follows:

1.     The 2024 Highlights

2.     My Assessment of 2024 Result

3.     Progress in Building the Global Integrated Supply Chain and Partnership Relationships

4.     A new view of the strategic growth framework

5.     Key Milestones in 2025 for Precision Medicine

6.     Key Milestones in 2025 for Therapeutics

7.     Financial Guidance for 2025

8.     My conclusions including valuation and investment strategy

1. Their FY2024 highlights

Total revenue, driven primarily from sales of Illuccix® of $783.2 million, up by 56%1 from $502.5 million in 2023, beating full year guidance.

Second year of profitable growth, delivered in a period of investment, including:

• R&D investment of $194.6 million, in line with guidance, with a focus on late-stage assets.
• Expanded global supply chain and product delivery infrastructure, including acquisitions of ARTMS, Inc. and IsoTherapeutics Group, LLC, and expansion of Telix Manufacturing Solutions’ Brussels South facility, resulting in an incremental increase of $15.8 million in manufacturing and distribution investment.
• Adjusted EBITDA of $99.3 million, up by 70%, demonstrating strong underlying growth.

Telix continued to deliver on its growth strategy. The Company’s key achievements, aligned to its strategic pillars:

• Grow precision medicine: Prepared for launch of three new products TLX007-CDx (Gozellix®), TLX101-CDx (Pixclara®) and TLX250-CDx (Zircaix®)4 in 2025 while continuing to increase sales and market share for Illuccix®.
• Deliver late-stage therapeutics: Expanded ProstACT GLOBAL Phase 3 prostate cancer therapy trial recruitment in the U.S. and continued to advance therapeutic trials for the brain and kidney cancer programs.
• Build next generation pipeline: Delivered clinical proof-of-concept for first alpha therapy candidate in prostate cancer (TLX592) and added depth to urology franchise with acquisition of FAP5-targeting theranostic.
• Expand global delivery infrastructure: Completed acquisitions of ARTMS, IsoTherapeutics and RLS (USA), Inc. (RLS)6 and expanded Brussels South facility, in preparation to commence GMP7 production in 2025.

2. My Assessment of the 2024 Result

This is all about Illucix sales, which is essentially all about the US at the moment. Revenue has been well guided and was a small beat to consensus, and on my numbers at least, NPAT of $50m was a small miss to consensus – but that’s not really a relevant focus at this stage.

Figure 1 (below) gives a snapshot of of the P&L.

At this stage the cash generated from Illucix sales, essentially is fully employed in growing the business. 

Figure 1

On the balance sheet, $TLX is well-funded for growth, with the convertible bond of A$650m dwarfing the positive contribution from operating cash flows of $43m, leaving the business with closing cash of $710m (Figure 2_, of which it expects to invest $244m in R&D in 2025. More on that later.

Figure 2: Overview of Cash Flows

3) Building the Global Integrated Supply Chain and Partner Relationships

2024 saw several acquisitions that build out $TLX’s global supply chain. Their products decay in hours, so from final preparation of the isotopes in the delivery molecule to administration in the patient, the supply chain has to literally deliver within a small number of hours.

Key Developments:

• Acquisitions: Completed ARTMS, IsoTherapeutics, and RLS to strengthen production and distribution capabilities.
• Expansion of Brussels South Manufacturing Facility:
• Installed two new cyclotrons for radioisotope production.
• Preparing to commence GMP production in 2025.
• RLS (USA) Acquisition:
• Adds 31 nuclear pharmacies to the distribution network.
• Enhances last-mile delivery efficiency for radiopharmaceuticals in the U.S.
• Global Expansion Efforts:
• Continued partnerships in China, Japan, and Europe to establish a localized production model.
• Regulatory approvals progressing for Illuccix in multiple European countries.
• Strategy:
• Focus on proximal and just-in-time manufacturing for radiopharmaceuticals.
• Multi-distributor model to optimize U.S. commercial operations.
• Further investments planned to ensure cost-effective and scalable gallium and zirconium production.

Figure 3 provides an overview of the expanded global infrastructure which now exists through the recent acquisitions and key partnerships.

Figure 3

4) The Strategic Framework for Growth to 2028

CEO Chris Behrenbruch set out a new strategic growth framework (Figure 4), which I explain as follows.

Figure 4

Three-Phase Growth Plan:

2021 – 2024:

Transitioned from a single-product company (Illuccix) to a multi-product, global commercial company.

2025 – 2027:

• Diversification of revenue through new product launches and geographic expansion.
• Increased R&D investment to advance therapeutics pipeline (prostate, kidney, and brain cancer).
• Infrastructure expansion to support long-term delivery capabilities.

2028 and Beyond:

• Therapeutics pipeline becomes a major commercial driver.
• Higher revenue and profitability, leading to potential cash flow generation exceeding R&D spending.

Key Strategic Priorities:

• Grow Precision Medicine:
• Launch three new products: Gozellix (prostate imaging), Zircaix (kidney imaging), and Pixclara (glioma imaging).
• Continue to expand Illuccix into Europe, China, and Japan.
• Expand Therapeutics Pipeline:
• ProstACT GLOBAL Phase III for prostate cancer progressing.
• Advancing pivotal trials for kidney and brain cancer therapeutics.
• Invest in Next-Gen Radiopharma:
• Developing alpha-emitting radionuclides and new molecular targets.
• Recent acquisitions (e.g., ImaginAb) support pipeline expansion.

Chris finished by saying, “Anyone hanging out for a Telix dividend will need to wait until at least then. So frankly, the day that we start paying dividends will be the day that we signal to the market that we have run out of ideas to build shareholder value. There's just -- there's so much opportunity to invest in this field and so many problems to solve in oncology.”

As an investor, my clear focus is going to be on the progress of the business against the large number of important milestones for 2025, shown in Figure 5 below.

Figure 5

I’ll break this down separately by the Precision Medicine business (i.e., diagnostics focus) and the Therapeutics business.

The reason for doing this is that the hurdles to approval for diagnostics are much lower than for therapeutics. From a valuation perspective, the way I think about it, is that currently $TLX is probably pretty fully valued for the diagnostics components. The game changer is if any of the therapeutics achieve their approval milestones. That is the opportunity over the next 3 years for $TLX to easily grow another 2x or 3x. Equally, that is where the risk lies.

5) Key Milestones in 2025 for Precision Medicine

Upcoming Product Launches (Pending Regulatory Approvals)

• Gozellix (Prostate Imaging Agent) – PDUFA goal date: March 24, 2025.
• Zircaix (Kidney Imaging Agent) – BLA filed with PDUFA decision expected in H2 2025.
• Pixclara (Glioma Imaging Agent) – PDUFA goal date: April 26, 2025.

Global Expansion Plans:

• Europe: Illuccix launching in 19 countries, including the U.K..
• Asia-Pacific:
• China Phase III bridging study nearing completion.
• Regulatory pathways being explored in Japan.

Technology and Market Growth:

• AI Partnership: Working with AI tools to increase patient throughput in imaging centers.
• PSMA Market Expansion: Gozellix will establish a two-product strategy for prostate imaging, increasing patient access.

6) Key Milestones in 2025 for Therapeutics

Advancing Late-Stage Trials

• TLX591 (Prostate Cancer Therapy) – ProstACT GLOBAL Phase III:
• First-in-class radio-antibody drug conjugate targeting mCRPC patients.
• Interim readout expected in H1 2025.
• TLX250 (Kidney Cancer Therapy) – Moving to Pivotal Trial:
• FDA Pre-IND meeting held in February 2025.
• IND submission planned for later in 2025.
• Ongoing studies in combination with nivolumab (STARLITE trials).
• TLX101 (Brain Cancer Therapy – Glioblastoma):
• Finalizing IND for pivotal trial launch in H2 2025.
• IPAX-Linz study data expected in H1 2025.

Expanding Next-Generation Radiopharma Pipeline

• TLX592 (Prostate Cancer – Alpha Therapy) – First-in-human trial starting 2025.
• TLX090 (Bone Pain Therapy) – First-in-human trial planned.
• TLX102 (Neuro-oncology Therapy) – Alpha therapy pipeline progressing.
• Exploring Multi-Indication Therapies:
• TLX400 (FAP-Targeting Therapy) – Pan-tumor application.
• TLX252 (CA9-Targeting Therapy) – Expanding beyond renal cancer.

There are both late stage trials and very early stage clinical trials underway in 2025.

What makes $TLX attractive to me is the fact that there are multiple late stage therapeutic candidates. Almost certainly, that path forward will not be smooth. It is hard to imagine a scenario where all or most of the late stage candidates are successful. But $TLX only needs a small proportion to succeed to create material value.

And of course, the strategic health of the business is indicated by the number of candidates earlier in the process.

In summary, there is going to be a lot of news over the next year. No doubt, successes will see the SP advance and the inevitable failures will see pull backs. (with respective over- and under-reactions!)

It is going to be fascinating to see where we are in 12 months time!

7) Financial Guidance for 2025

Revenue Forecast:

• AU$1.18 billion to AU$1.23 billion (US$770 million to US$800 million).
• Includes:
• Sales of Illuccix (only in jurisdictions with marketing authorization).
• 11 months of revenue from RLS (excluding Illuccix-related sales).
• Does NOT include:
• Revenue from Gozellix, Zircaix, or Pixclara (pending regulatory approvals).
• Revenue from European markets that have not yet received national approvals.

R&D Investment:

• Expected increase of 20-25% compared to 2024, supporting therapeutics trials and next-gen pipeline.

What’s important here, is the “Does NOT include” items. Although overall EU and UK approvals for Illucix have been given, each jurisdiction now has to give its approval. Given the global shortage of solutions for PSMA diagnostics, I’d have thought there would be an imperative for regulatory authorities to do better than average. Timescales for country-level approvals can be anywhere from 6 months to 2 years, So, no doubt, as each country gives its green light, we’ll get some kind of update – with the potential to upgrade the 2025 revenue number.

I think this was a key driver of the SP response today. I think it dawned on the market that there is a lot of opportunity for revenue upgrades through the year, from Illucix alone, even before we talk about the other three Precision Medicine products, which also have the potential to contribute to revenue in the second half of the year. So, 2025 could be spicey, just driven by diagnostics, and we tasted some of that spice today.

MY KEY TAKEAWAYS

The investor presentation this morning was impressive, and I think the market reacted positively to the confidence Chris and his team were able to convey. (We had presentations from each of the Heads of the Precision Medicine and Therapeutics business, which I’ve not summarised here.) It is an impressive team.

Valuation

There are many reasons why I have not attempted a detailed valuation of $TLX.

First, there are a LOT of moving parts. Far too many with too much uncertainty for me to even attempt a DCF.

Second, the medium-term margin structure is very unclear to me, with a lot of the global integrated supply chain having been assembled this year, and I have no clue as to its fixed cost, and variable cost nor the limits of its scalability. So, a financial model would be based on generic guesses ... i.e., a complete waste of time.

So, thinking about this simplistically, at close today $TLX is a $10bn business.

Assuming Illucix hits sales of $1.2bn in 2025, and apply a 5x multiple, I can get to $6bn. But of course with growth potential in the US, then Europe and RoW, it probably warrants a higher sales multiple. So, let’s be generous and say 7x to give $8.4bn.

The next three diagnostics are much smaller TAMs. So, let’s assume $300m in total revenue in 5 years, at a P/S of 5x, discounted back 5 years to give $1bn of value.

That gets me to $9.4bn for the commercial and near-commercial precision medicine business.

Which means I only have to find $0.6bn of value in the entire Therapeutics pipeline. Sure, it could all be worth $0. But then again, it could be worth another $10-20bn.

So that’s how I am thinking about the $TLX opportunity at the moment. (The revenue multiples I have used are relatively conservative, so I think there is a decent factor of safety in there)

Investment Strategy

I’ve joined the $TLX party quite late in the day, and it is only a 4% RL position for me. And so my plan is to add opportunistically on significant pullbacks (as long as the source of the pullback is not material to the overall thesis), but otherwise to just let this one run, and let the progress of the development pipeline do its work.

In the success case, we have here on the ASX a business with the potential to be a global leader in radiopharmaceuticals in 5-10 years. (And, no, I won't say "the next $CSL" but the though enters my mind.)

Of course, we also have $CU6 - another exciting business at an earlier stage, with a very intereesting platform technology. Two very different models... $TLX very commercial and $CU6 using home-grown tech, as only one key difference.

Disc: Held in RL and SM (both $TLX and $CU6)