and FWIW UBS have released another first read update for TLX this morning

2Q Illuccix sales beat, FY24 guidance upgraded

2Q trading update: US Illuccix sales 11% ahead of consensus

2Q sales for Illuccix, Telix's prostate cancer diagnostic, in the US were AUD184m (USD121m), in line with our estimates and 11% ahead of consensus. FY24 revenue guidance has been upgraded to AUD745m - AUD776m (USD490m - USD510m) from AUD675m-AUD705m (USD445m - USD465m) a 10% increase at the mid point. Consensus sits at AUD715m (UBSe781m), or 6% below the new mid point, and we expect a positive share price response to today's news. Our estimate is close to the top end of the new guided range and implies sequential growth for Illuccix throughout the year, incorporating some seasonality (1Q is typically strongest), which we think is achievable given rapid expansion in the market for PSMA PET scans

Other updates largely already flagged

Telix has plenty of potential catalysts in the next 12months, and other updates to this future sequence of events are incremental (full results are due on 22nd August). The company notes that EU approval process for Illuccix (decentralised pathway with DE as the competent authority) continues to progress and that next steps in the UK are expected around the end of July. Our assumptions for the UK are fairly pessimistic given that the MHRA (UK regulator) had 1k+ pending filings for assessment in March this year and average times are well behind target, so if the UK approves in 2024, this is minor upside to our current assumptions. US Filing for Pixclara (brain cancer diagnostic) is now estimated in 3Q, (prior assumption 1H) which we assume slightly delays launch into 2025, although we already model no revenue until 2026

Disc: Held in RL & SM

FWIW (which to be fair might not be much) but another research house (CLSA) has released an update post the US CMS proposed changes to funding of radiopharmaceuticals

They've retained their Outperform rating but changed the target price from $13.90 to $22

The full report is 14 pages but here's some summary highlights

Pass the buck

CMS proposal removes pass through pricing risk; big win for sector

The US CMS proposed changes to funding of radiopharmaceuticals, which would separately pay for imaging agents such as Telix’s (TLX) Illuccix and Lantheus’ Pylarify following the ending of their pass through codes (as opposed to bundling with nuclear medicine tests). This provides certainty of funding, and removes risk of pricing headwinds for Illuccix given its pass through code was due to expire Jul- 25 (excl ‘Illuccix 2.0’). Under CLSAe, and assuming the rule is implemented, this adds c.A$4 to our Illuccix valuation and c.A$2 for other imaging agents (i.e. Zircaix etc). Along with other modelling changes such as bringing Zircaix (i.e. TLX250- CDx) into our forecasts, and updating our TLX591 pricing assumptions, our PT rises to A$22.00 (from A$13.90) and we retain our O-PF rating

CMS proposes improved payment for specialised radiopharma diagnostics

CMS proposes separate payment schedules in CY25 for specialised radiopharmaceutical diagnostics with a per day cost greater than US$630 such as Pylarify, Illuccix and Posluma. This means pricing would remain stable beyond pass- through code expiry. CMS also proposes ongoing indexation (CLSAe 2.5%) from CY26 onwards. Final ruling expected Nov-24, and if implemented, effective Jan-25

Unwinds Illuccix & Zircaix price-cliff but no 6mth+ price gap for TLX to leverage

This proposed change will void the Illuccix pricing-cliff from pass-through expiry (CLSAe -30% from 2HCY25), delivering a material pricing uplift. This is partially offset by the loss of an opportunity to potentially gain share via pass-through pricing gap between Pylarify (Jan-25 expiry) and Illuccix (Jul-25 expiry) while TLX also appears less exposed to the hospital outpatient setting i.e see less benefit to the upside. We also highlight material uplifts for Zircaix pricing

What’s to come: Zircaix FDA approval & launch, ProstACT Global updates

We maintain the view incrementally positive news flow is likely to continue over the medium-term. We anticipate FDA approval for Zircaix, and industry discussions suggest this product will be well received by the market, so a seamless early launch will be key to strong early revenue growth (pg3). We also await updates on progress of its ProstACT Global Ph3 trial, with an interim readout expected mid-CY25

Price target rises to A$22.00 (from A$13.90), O-PF rating retained

Along with updates to our Illuccix pricing, which had assumed a 30% drop in pricing from mid-CY25, we bring in our Zircaix estimates which are the key drivers of our earnings uplift (but drops out of our portfolio valuation). This sees our FY25/26CL rise 245/66%, but do stress the upgrades are a mix of newly incorporated revenues for Zircaix (and costs), alongside the CMS pricing uplift

DISC: Held in RL & SM