Pinned straw:
@Strawman I thought this was a really interesting discussion today.
I felt your frustration trying to clarify the manufacturing piece. I get the cyclotron and the 3rd party manufacuturing piece, but I wanted him to explain better how the targeting agent, the linker, and the chelating agent are synthesised, and then the 64Cu added to it, all to achieve a consistent product. I'd hoped he'd have stepped us through the manufacturing and supply chain in some more detail. To me, he made it sound like you just stand next to a cyclotron and mix it all up at room temperature and there you go. I get that the manufacturing is straighforward (relatively), not core to their capability. and outsourced. But it was a bit frustrating that we couldn't get any insights into that piece.
After all, $TLX have failed to get approval for Zircaix because of chemistry, manufacturing and controls ... so even if the science and efficacy is all good, the supply chain can stop you getting a product FDA-approved in this business.
For me , $CU6 is a simple idea, and Alan did a really great job of explaining this today.
The radiopharmaceutical industry in diagnosis of several forms of prostate cancer is established. It is already worth $2bn focused on the US with 3 products in the market. F-18 (Pylarify and Posluma) and Ga-68 (Illuccix/Gosellix ($TLX); and Locametz). These are well known to have high-specificity but low sensitivity.
Because of its longer half-life, "background" 64Cu can get flushed out of the system (and in particular the bladder which is adjacent to the prostate), leading to a higher contrast for the product that binds to lesions (with binding itself aided by the bivalent targeting agent ... two binding points instead of one in the competitors). At a simple, conceptual level, the $CU6 product is fundamentally superior. Or that's the $CU6 Story,... and it makes sense to me.
IF THIS IS PROVEN in the current parallel Phase III trials, which are set against the standard of care, then absent some adverse finding (which I am unable to foresee - not the same thing as saying it won't happen!), not only will $CU6's 64Cu product quickly become preferred to the 68Ga and 18F products, it will also likely be applicable to large portions of the total Prostate cancer market, that the incumbents don't work for. (This is Alan's $5bn TAM, that he gave examples of.)
Again, I had some frustration here with the lack of detail on supply chain from Alan. Afterall, with the short half-life $TLX have invested a lot in their fully integrated model. They have to, because they have less time to get the product into the patient. Equally, this appears to be giving them advantages over their current competitors who have had supply chain problems competing for the last supply chain assets - which Alan referred to.
But of course, Alan makes a great point. Are $TLX just talking up the advantge of their integrated strategy and making a competitive virtue of it, because they don't have a choice, given their half-life? I liked Alan's remark that do you really care about a few hours of inconvenience, given what's at stake?
Now to the investment case: what might happen, looking at newsflow out over the next 2 years, in the success case for $CU6?
64Cu-Sar-Bis-PSMA will be commercialised and over a 2-5 year period grow to be a multi-$-billion product. The share price of $CU6 will soar, because the platform will be proven and - even though not all follow-up products will succeed - they will be relatively de-risked, and there are enough "bullets in the chamber", that Alan will be able to fill the development pipeline quickly, given operating cashflows. (This was at the heart of your question about how many horses do they choose to back at one time. The approval of 64Cu-Sar-Bis-PSMA transforms that equation, not only because of the funding but also because of the de-risking of the science/efficacy.)
In short, in the success case, $CU6 will over the course of 2-3 years become what $TLX is today,... growing from the $1.2bn company to a c. $5bn company. The upside is 4x in 2-3 years.
And what of $TLX. Well, there's the rub,...If it can't pull through Zircaix and Pixclara, and if the therapeutics don't progress successfully, it's SP will be destroyed. It will go from a $4.6bn comany to a $1-2bn company or worse.
So, overall, I've decided the category of Radiopharma Cancer Diagnostics is going to be a winner, with therapy as the upside. I've also decided that some combination of $CU6 and $TLX will be in the mix of the long term winners, with reasonable confidence (>70%). Either one or the other or both.
The questions for me then are: a) how much capital to allocate overall to this play (Answer 5% max, cost base) and b) the allocation between $CU6 and $TLX, which is news dependent (and aided when the market does dumb things, which you discussed with Alan.) At the moment I am about 5:1 $TLX:$CU6, but I expect this to change as my view on the two business's prospects develop. At this stage I still see $CU6 as speculative, as there might not be a business here at all (although I give that only a 30% likelihood). However, that could change quite quickly and so I want to keep on top of this, for sure. Certainly, Alan has nearly all the chips riding on 64Cu-sar-bis-PSMA diagnostic imaging. He's close to All In on that, and I sense he is seeing a much higher chance of success. If I really believed him today, my weighting to $CU6 would be higher. But of course he is biased. He has to back his company because he doesn't get to play anyone else's hand.
So, I find this a really fascinating time. Of course, there is every indication that for $TLX Zircaix will come good, and maybe even Pixclara in time, which would decouple $TLX's success from $CU6 to some extent. But both products are now in an unwelcome, prolonged uncertainty. So the rest of the $TLX pipeline becomes even more important. Of course, my dream scenario is that both $TLX and $CU6 "win", but perhaps that's only a 50% likelihood.
Anyway, I'm rambling now. Lots of food for thought from today's meeting!