TLX plans to list on the NASDAQ, Level II ADS, no capital raise

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02868117-3A653350

Some may remember TLX previously announced an intention to do this early this year and then withdrew plans

UBS's quick take:

TLX plans to list an ADS in the US, AU primary listing retained. We are not surprised to see this revisited after a withdrawn IPO earlier in 2024 / funding subsequently achieved via convertible bonds. Timing for listing unknown, 20-F is filed

Two broker notes out for TLX in the past day

UBS: Buy 12m PT $31

3Q trading update looks like an in line result to us , guidance unch

Telix has reported 3Q sales of Illuccix in the US of AUD195m and total revenue of AUD201m. Illuccix sales grew 9% in constant currency terms (6% in AUD). There is no well-formed quarterly consensus for Illuccix sales but assuming a similar FX headwind in 4Q, VA consensus implies a similar growth rate in 4Q as in 3Q. 3Q tends to be the lowest growth quarter for products like Illuccix on a volume basis so if anything we think FY24 estimates are probably a little too low although we do not expect the shares to move much. FY24 revenue guidance is unchanged at USD490-510m / AUD745-776m (mid point was upgraded by 10% in USD at 2Q) and we sit slightly outside the top end

Pipeline developments

1) ProstACT GLOBAL (phase III trial for TLX591 in prostate cancer) is enrolling participants in the US. Part 1 of the trial (safety run in) is still recruiting. 2) The company continues to expect interim data from the phase II STARLITE-2 trial for TLX250 soon. 3) The BLA resubmission (US regulatory filing) for Zircaix is not yet complete but the 90 day approximate timeline set out by the company when the need to resubmit arose is not over yet anyway. 4) Illuccix will not be approved in the EU this year. Instead, a decision date in January is now on the cards. 5) UK and Brazil still have regulatory decisions pending for Illuccix. None of these impact our forecasts

Other developments

1) Director and co-founder Andreas Kluge is retiring from the board. Kluge owns c.6.8% of shares issued / out. 2) We note Sanofi has today announced an additional EUR300m equity investment in a radiopharma venture with Orano Med focussing on lead-212 (alpha emitter), initially set up earlier in 2024 in conjunction with RadioMedix

CLSA: Outperform 12m PT $22

Solid 3Q24 result, CLSAe FY24CL revenue slightly above guidance

Telix (TLX) released its 3QCY24 business update, with US Illuccix revenues of US$131m, a solid result given 3Q revenues are likely to be impacted by seasonality as growth rates mature. TLX’s revenue guidance remains unchanged at A$745m-A$776m. But we increase our FY24CL revenue estimate to A$783m (from A$770m), suggesting revenues above the upper end of guidance appear achievable on current trends. TLX also reiterated its FY24 R&D guidance of 40-50% growth YoY, with CLSAe at 47% YoY post update on progress in key trials. We continue to see positive news flow through 2H24 and into 1H25, with updates from CMS funding (here), progress on Zircaix FDA approval and its Ph3 ProstACT GLOBAL trial underpinning our positive rating. A$22.00 price target and O-PF retained

CLSAe Illuccix 21% US market share; 4Q24CL US sales US$145m

Illuccix 3QCY24 revenues of US$131m added US$10m QoQ. FX did appear a slight headwind in 3Q24 vs 2Q24, and on current FX rates, we estimate TLX would need to see 4Q24 US Illuccix sales of US$142m to be in-line with CLSAe FY24 revenue of A$783m, which appears achievable given its current growth profile, noting 4Q should also be seasonally stronger QoQ. Under CLSAe US US$2.47bn TAM (note here), TLX’s 3Q24 revenues suggest it has c.21% US market share (vs Pylarify 44% in 2QCY24). We do believe the strength of the TLX’s result will be clearer post Lantheus’ (LNTH) 3Q24 result, noting consensus expects LNTH Pylarify revenues to fall US$10m QoQ, which if this occurs would increase the quality of TLX’s result.

Catalysts to watch: Illuccix EU, 250CDx update, ProstACT progress

Near-term, we expect Illuccix EU approval (Jan-25), which while priced into CLSAe is favourable and likely to support positive sentiment. Zircaix re-submission is expected Nov-24, and we conservatively forecast US$6m revenues in 2H25 (here), with ramp-up in FY26. We maintain the view Zircaix will be positively received post launch, based on industry feedback. Into mid-CY25 TLX expects ProstACT GLOBAL interim results, with trial design updates to precede it. TLX’s co-founder Andrea Kluge has also retired, noting he currently holds ~6.8% of TLX’s shares.

Price target A$22.00 and O-PF rating retained

On updates to Illuccix FY24CL revenues, and R&D in FY24CL+, our NPAT moves +4%/-11% in FY24CL/FY25CL. We continue to see TLX benefitting from growth in Illuccix via increased number of scans, and the launch of Zircaix in 2H25. Therefore, with longer-term forecasts largely unchanged, noting most of TLX’s value is in the longer-term value of its assets earnings to FY26CL account for <10% of our valuation), we retain our A$22.00 price target and O-PF rating

DISC: Held in RL & SM

FWIW UBS has released an updated broker report and upgraded their 12m price target (from $29 to $31). The full report runs 29 pages (almost 10 pages of disclosures & disclaimers :)) - below the summary from the front page

Telix Pharmaceuticals - What if the pipeline works?

We revisit valuation and contemplate upside scenarios

As Telix approaches three potential new product approvals in 2025 (Pixclara, Zircaix, Illuccix 2) we refine our NPV SOTP to value the company by business area (Therapeutics, Precision Medicine (diagnostics) and Telix Manufacturing Solutions (TMS)), rather than by individual asset. We think investors will take the view that new products are revenue at high incremental margin, and re-weight our cost allocations to reflect this. Our new base case AUD31 PT (from AUD29) sees c.AUD8/share for Therapeutics, c.AUD22/share for PM, and c.AUD1/share for TMS, which includes the recently announced proposed acquisition of 31 US radiopharmacies from RLS. We see c.AUD12/share of plausible further upside from various product success scenarios in Therapeutics and c.AUD6/share in PM, based on information known at the moment (and probably beyond a strict 12 month view). Our PT rise comes from increased peak sales for Zircaix (AUD1b from AUD370m), higher assigned margins in Therapeutics and inclusion of RLS assets. These changes also drive single digit movements in our near term EPS forecasts

Therapeutic pipeline: Acknowledging higher margin set-up in valuation

Innovative therapeutics in the field of oncology sell for many times the cost of diagnostic agents. In Telix's case the assets in development are largely in similar areas to the diagnostics that will launch first and can use commercial infrastructure already in place. These features are conducive to higher margins than in PM and than if we treat the assets as standalone projects, and we now use gross margins in the 80%s for therapeutics we see coming to market (60%s prior). We think there are a number of scenarios for a first therapeutic product, but this aside, TLX591 makes up the biggest part of our Therapeutics valuation at AUD6/share

Precision Medicine: UBSe AUD2b revenue in FY27

We have reworked our forecast for Zircaix (pipeline, kidney cancer imaging) to make it less conservative and now see peak sales of AUD1b with a further AUD1.5b of upside via wider use, and better operating margin than prior as it will also leverage existing infrastructure if approved. Our Illuccix (prostate cancer imaging) assumptions are unchanged and we see AUD1b in sales in FY25, ahead of consensus, with longer term upside from more scans per patient. Our Pixclara (pipeline, brain cancer imaging) forecast is the smallest part of PM but like the other two assets it is near-term and derisked to a degree. Our overall PM estimates see 35% mid term sales growth CAGR

Valuation

We continue to value TLX shares using NPV SOTP but now divide the company by business area rather than by asset, as detailed above. WACC remains at 9.3%

DISC: Held in RL & SM

Detail of the Phase III study for TLX's CA9 targeting agent Zircaix, for diagnosis of ccRCC was just published in The Lancet Oncology

(alas I don't know enough about the technology or the science to meaningfully interpret the results but on the surface it sounds favourable)

DISC: Held in RL & SM

TLX was the stock of the day on The Call on Ausbiz today (double Hold if it matters) (fyi the link is to just the stock of the day part of the segment Youtube)

FWIW Some recent broker views

UBS: Buy 12m PT $29

KEY NUMBERS (AUD, YoY change)

1. Total revenue 364m +65%, and released in July

2. Operating expenses 197m, 8% more than both consensus and UBSe as AUD7.6m of one-off costs related to the company's withdrawn US IPO sit in the G&A line

3. NPAT 30m in line with UBSe and close to consensus on small numbers

UPCOMING CATALYSTS

1. Potential Illuccix approvals in EU, UK, BR

2. Resubmission of BLA for Zircaix

3. Phase II data for TLX250 in RCC

4. Start of clinical studies for TLX300

OUTLOOK / GUIDANCE

Unchanged. On 18 July, the company upgraded revenue guidance for FY24 to USD490m-510m / AUD745m-776m (previously USD445m-465m) and reaffirmed intended R&D spend (40-50% increase over FY23)

UBS COMMENT

Ex costs associated with the company's withdrawn US IPO of AUD7.6m, EBIT would have been c.AUD50m. Other opex components came in a touch higher than we and consensus envisaged. At NPAT level, tax helped. Net net we think this makes for an in line result and that the focus remains on pipeline developments and top line growth 

CLSA: Outperform 12m PT $22

Sound result, focus on catalysts

1H24 NPAT miss on US listing, GM part offsets higher operating Opex

Telix (TLX) 1H24 result delivered an NPAT miss of c.25% vs consensus, coming in at A$29.7m (cons A$39.7m). But the miss was likely driven in large part by costs associated with the withdrawn US listing (c.A$7.9m) plus related professional fees and M&A expenses (A$1.3m). Revenue was in line (pre-reported), but, encouragingly, GM was +267bps to 65.7%, +189bps versus consensus. TLX re-reiterated revenue guidance of A$745m-A$776m, along with R&D growth of 40- 50% YoY. Therefore, despite the NPAT miss, operationally, 1H24 delivered a satisfactory result. Despite nearer-term earnings adjustments, our longer-term estimates remain unchanged. We thus maintain our A$22.00 PT and O-PF rating, noting delivery on TLX’s large pipeline is required to support more material valuation uplifts, in our view

DISC: Held in RL & SM

A VERY brief "fast take" from UBS (who rate TLX as a Buy with a 12m PT of $28)

Headline

Read through from CAH (Illuccix distributor): CAH expects c.20%+ for radiopharma business in FY25 

Our Take 

CAH 4Q earnings specifically highlighted strong Illuccix demand. 20% growth in FY25 includes more support for NOVN's Pluvicto (and CAH has an offset year end), but VA consensus for FY25 US Illuccix sales growth is c.4% which we think is far too low

DISC: Held in RL & SM

In todays AFR

JPMorgan shops $226m delta placement block for Telix notes deal

Fund managers were being offered $US150 million ($226 million) worth of shares in cancer treatment hopeful Telix Pharmaceuticals after Tuesday’s close, as JPMorgan got going on the delta placement leg of a $600 million convertible notes deal in lieu of an abandoned Nasdaq listing.

Terms sent to potential investors show Telix shares were being offered under a variable price book build at $18.60 a share to $19.60. That represented a 3.5 per cent to 8.4 per cent discount to the last close. The book was due to shut at 7:30pm.

The five-year convertible notes would be due around end of July 2029, and pay a coupon of 2 per cent to 2.75 per annum. The notes would convert at a 30 per cent to 35 per cent premium to the level at which Tuesday’s delta placement clears. The investors also have a put option at the end of the third year.

Telix told shareholders it would use the notes’ proceeds to push ahead with key clinical development programs. It would also provide the company with dry powder to chase strategically significant M&A transactions.

The convertible notes deal comes after Telix, on June 14, abandoned a Nasdaq listing – which would have seen it raise $US200 million – after investors demanded heavy discounts.

In January, Telix chief executive Christian Behrenbruch spoke at JPMorgan’s healthcare conference in San Francisco. Behrenbruch told investors it had fielded strong interest from healthcare and biotech funds, but had decided to walk away from the US listing after refusing to cave on pricing.

It is capitalised at $6.6 billion on the ASX, after gaining 101.49 per cent year-to-date.

DISC: Held in RL & SM

From UBS (who have TLX as a Buy with a 12m PT of $26)

Potential long-term relief for US Illuccix pricing

Proposed changes to Medicare payment rules in the US were published yesterday, for 2025. The suggested changes are open for comments until September. The changes include removing the requirement for certain radiodiagnostics (those costing more than USD630 per day, encompassing Illuccix and all of its direct competitors) to be included in the existing bundle for radiodiagnostics once an initial c.2 year transitional pass through payment ends. This would potentially permanently remove the problem of a price cut in Medicare (which we estimate would affect 20% of Illuccix sales) in 2025, or possibly 2027 if Telix sees"Illuccix 2" approved (which we assume happens). Shares of US competitor Lantheus closed 37% higher last night. We have not changed our Telix estimates but the scenario where we remove a price cut in Medicare for Illuccix in our model adds AUD3 to our valuation, all else equal

Disc: Held in RL & SM

Telix pulls $300m Nasdaq IPO as investors demand deep discount

In todays AFR ... for those not behind the paywall ...

Cancer treatment hopeful Telix Pharmaceuticals has abruptly pulled plans to raise $US200 million ($300 million) and list on the Nasdaq after being forced to offer heavy discounts to find buyers among investors in the United States.

The company had announced its intention for a secondary listing in New York only last week, and shares listed on the ASX – where Telix has a market capitalisation of some $5.4 billion – had entered into a trading halt on Thursday ahead of the Nasdaq initial public offering.

The failure to list on the Nasdaq will be a blow for the company, which has repeatedly spruiked its growth to US investors. In January, Telix chief executive Christian Behrenbruch spoke at JPMorgan’s healthcare conference in San Francisco.

On Friday, Mr Behrenbruch told an investor call that Telix had “strong interest from prospective healthcare and specialty biotech funds that we would have been delighted to have on the shareholder register”.

“The feedback we received about the company was excellent, and there is a genuine recognition that we have built a unique and capable company in our field,” he said.

“This recognition was certainly reflected in healthy bid demand during our book build.

However, the sticking point in the process was pricing. I can tell you categorically, if we had made the decision to proceed, a decision we were free to make today, we would be a successfully dual listed company.

“However, we would have priced and traded on the basis of a discount to our ASX market capitalisation that was not palatable to management and would have reflected a lack of respect for our existing shareholders,” Mr Behrenbruch said.

Telix’s local market capitalisation has grown rapidly. It listed on the ASX in late 2017 with a $128 million valuation. Shares opened at $16.18 when they resumed trade on Friday, down 1.7 per cent, or 27¢. They have jumped 60 per cent this year.

Telix manufactures Illuccix, a pharmaceutical used in the detection and diagnosis of prostate cancer. The treatment was approved by the Therapeutic Goods Administration and the Food and Drug Administration in the United States in 2021.

According to documents filed with the US Securities and Exchange Commission ahead of the proposed Nasdaq listing, Telix has generated revenues of $824.3 million from the sale of Illuccix since its commerce launch in April 2022. The company said 98 per cent of those sales had been generated in the US.

Telix – which is chaired by former Macquarie chairman Kevin McCann and counts Caledonia Investments chairman Mark Nelson as a director – had told investors that some $US130 million of the proceeds from the float was to be used to develop therapies including Zircaix, a product for diagnosing kidney cancers.

DISC: Held in RL & SM

FWIW just out from UBS (Buy 12m PT $19.30)

Positive read across from LNTH results

LNTH (n/c) shares were up 16% yesterday after an 8% sales beat (VA) for Pylarify (competitor to Illuccix) which grew 32% yoy. The company called out a growing market, better same-shop sales and a 6% WAC price increase in January as drivers. Given that this also involved ceding some share by value to TLX (and given TLX took a lower price rise, we assume also by volume), this bodes well for performance with Illuccix in 1H24. LNTH's guide for mid 20%s Pylarify growth for FY25 implies c.USD1.05b sales, which in turn suggests continued sequential growth (with seasonality per commentary 1Q>4Q>2Q>3Q. We assume similar for TLX). We also read this positively for TLX

TLX expects data from the prostACT SELECT trial before end June

Data from the prostACT SELECT trial for TLX591 (prostate cancer therapeutic) is due in 1H. The key data point is median rPFS (and anything tox-wise) which should offer insight into the potential for a competitive readout from the phase III prostACT GLOBAL trial (est. interim 1Q25). Differences in patient populations (disease profile, prior lines) mean the GLOBAL PFS will likely be higher than SELECT. Our base case is a SELECT readout in line with expectations for heavily pre-treated populations /a high degree of patient variability at c.7 mo. Small patient cohorts like in SELECT usually create d/s as well as u/s risk and we expect the buyside to coalesce around an efficacy bar in the coming weeks

Two other potentially positive catalysts before TLX591 read

Regulatory submissions for TLX250-CDx (kidney cancer diagnostic, potentially more) and a successor product to Illuccix are due before the end of May. We expect that confirmation of these will be taken positively. We assume TLX250-CDx is successfully submitted but have not yet built in any impact from "Illuccix 2" (which would push out a price cut in the US by two years from mid 2025 to mid 2027 if it is approved on time)

More deal making in Radiopharma

We noted previously that the past few months have been busy for M&A in radiopharma. Yesterday Novartis (already has radiopharma platform) announced its intention to acquire Marina Oncology for USD1b upfront. This is an earlier stage deal (pre-clinical) than we have seen elsewhere and perhaps indicates willingness to go deeper into the industry pipeline. TLX itself closed the acquisition of QSAM (pipeline drug targeting applications in bone tissue) today. This is outside our estimates at the moment

DISC: Held in RL & SM

I think UBS is the only major investment bank covering Telix - FWIW the summary from the front page of their latest update

DISC: Held in RL & SM

Telix Plans U.S. Registered Public Offering and Listing

Melbourne (Australia) – 5 January 2024. Telix Pharmaceuticals Limited (ASX:TLX, “Telix” or the “Company”) today announces that it is considering an initial public offering (“IPO”) of American Depositary Shares (“ADSs”) representing its ordinary shares in the United States (“U.S.”) and listing on the Nasdaq Global Market (“Nasdaq”). Telix’s ordinary shares will remain listed on the Australian Securities Exchange

The number of ADSs that may be offered, the number of underlying ordinary shares that may be issued, the price for such instruments and the timing of the offering have not yet been finalized. A registration statement relating to Telix’s ADSs to be sold in the proposed offering is expected to be filed with the U.S. Securities and Exchange Commission (“SEC”), any securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective which is subject to a U.S. SEC review process, market conditions, investor demand and customary corporate approvals. No final decision has been made in respect of the offering or Nasdaq listing and there can be no assurance as to the occurrence, timing, pricing and/or completion of such an offering or listing

This disclosure does not constitute an offer to sell or the solicitation of an offer to buy any securities. Any offers, solicitations or offers to buy, or any sales of securities will be made in accordance with the registration requirements of the U.S. Securities Act of 1933, as amended (“Securities Act”). This announcement is being issued in accordance with Rule 135 under the Securities Act. 

DISC: Held in RL & SM

I couldn't see an ASX announcement or similar for this but ...

Telix strikes deal to distribute cancer imaging agent in the Nordics 

An Australian manufacturer of a prostate cancer imaging agent has struck a deal with Danish company Wiik Pharma to distribute the product across the Nordics. Melbourne-based Telix Pharmaceuticals announced the deal for the distribution of the product, named Illuccix, which will see Wiik Pharma as its sole trader across Denmark, Finland, Norway and Sweden for a period of three years from the national approval date in each country. In 2020, prostate cancer was one of the most frequently diagnosed forms of cancer in the Nordic region, with that year alone seeing approximately 27,000 new cases

Yacoub Amin, CEO of Wiik Pharma said, "This commercial partnership with Telix marks a major step towards achieving Wiik Pharma's vision to improve the diagnosis and treatment management of patients with difficult-to-detect and treatment-requiring diseases. "We have high expectations for the collaboration with Telix, not just for Illuccix but also for other upcoming diagnostics and therapeutics in their investigational pipeline." GlobalData's Medical Device Intelligence Centre shows that Telix currently has two other products in its pipeline in the indication of prostate cancer, with Illuccix itself currently marketed for tumour detection in five countries, including Australia. At the same time, a report from GlobalData's Pharmaceutical Intelligence Centre details how in 2018 the European market for prostate cancer stood at around $2bn, with that figure forecasted to grow to $4.3bn by the end of 2028. In August of this year, Telix dosed the first patient in China as part of its Phase III registration trial of Illuccix, and the firm said it is cooperating with regional partner Grand Pharmaceutical Group. Raphaël Ortiz, Telix CEO for Europe, the Middle East and Africa added: "We are pleased to team up with Wiik Pharma and look forward to bringing gallium-based PSMA-PET imaging to men in need in the Nordics, an important region for Telix" 

DISC: Held in RL & SM

FWIW UBS have published a short note on Telix Pharmaceuticals today

Potential further upside for Illuccix

12mo rPFS for Novartis's Pluvicto in PSMAfore could drive further Illuccix sales

The abstract for Novartis's Pluvicto in pre-taxane metastatic prostate cancer patients to be presented at ESMO has been released. Full data will be presented on 23rd October (LBA 13). In the phase III PSMAfore trial, Pluvicto delivered median rPFS of 12 months (HR 0.41, 95% confidence interval 0.29-0.56, p<0.0001), meeting the bar our physician feedback had suggested would be perceived as a good result, given chemo achieves 8-9mo (the trial is not head to head)

This matters for Telix because the company's prostate cancer diagnostic for PSMA+ disease, Illuccix, is labelled for selecting patients for Pluvicto use. Our existing estimates include some use for this, given it was already known that PSMAfore had read out positively and later line use (VISION trial setting) is becoming well established

Together with the other use cases, these existing estimates imply Illuccix is worth c.AUD12 per share. We have not changed anything for now, but we see the potential for some incremental further upside given what appears to be robust PFS. The full data presentation will matter - overall survival is confounded by crossover, so physician intention to use will help inform how we see this patient group's ability to drive revenue at Telix going forward. Telix's 4C is due later today AEDT

DISC: Held in RL & SM

USB First Read for TLX

No real updates at this stage...

1H23: No major surprises, progress continues

Key metrics (Illuccix revenue) pre-released, underlying operating expenses not far from expectations, major projects look to remain on course

We value Telix shares using an NPV SOTP and have not changed our estimates with this update (Buy, 12m PT $14)

Will see if UBS release a full update report with anything interesting in the next day

DISC: Held in RL & SM

UBS initiated coverage of TLX (on 22nd May 2023) as a Buy with a 12m price target of $14 - their full research report is 50 pages long - the following is some of their front page summary - I think UBS may be the first major investment bank to cover TLX

Initiation of coverage: Near-term assets not fully priced in. Buy.

Illuccix growing and TLX250-CDx remains underappreciated

We initiate coverage of Telix with an AUD14.00 Price Target and a Buy rating. Telix has launched its first major product - a radiodiagnostic, Illuccix, for prostate cancer, in the US and sales are annualising at c.AUD400m. There is competition but Telix is taking share in a market we think can reach USD2b. Our SOTP suggests the share price bakes in cAUD1.3b of global peak sales vs our forecast at c.AUD1.8b. Another diagnostic, TLX250-CDx for RCC (kidney cancer), should launch in 2024 and we see AUD240m peak sales, but it looks largely outside the share price. There are questions to resolve on the therapeutic pipeline but these are unlikely to drive the shares in 2023 in our view. Biotechs reaching profitability are fairly rare and we see positive EPS for Telix this year.

Bigger than expected market for Illuccix, warm reception for TLX250-CDx data

Radiolabelled agents targeting the PSMA protein (Illuccix, Lantheus' Pylarify and Novartis' Locametz) have been welcomed in the prostate cancer field - more patients are receiving more scans. Telix estimates USD1.5b total market size and we can see USD2b+ in time. We think robust volume expansion on the way to these markers can drive sustained revenue growth even with a likely large price cut in the US Medicare channel in 2025 (we forecast total list to net discount of -51% after the event vs -18% before). Physician feedback on TLX250-CDx's phase III ZIRCON data is positive and we think appreciation of this asset will grow as US submission becomes imminent in mid-2023.

Conviction in the therapeutic pipeline not needed to own the shares in 2023

Telix has a pipeline of therapeutic assets. If these turn out to be commercially meaningful, we think upside could be substantial given price differentials vs diagnostics and the company would look different from others in the radiopharma space. The most advanced projects are TLX591 (prostate cancer) and TLX250 (RCC). Both aim at competitive areas, so clinical niche matters and we think efficacy data at the chosen doses are needed for investors to assign value. The 2023 investment case lies elsewhere but we could see: 1) phase I data for TLX591 at the phase III dose from ProstACT SELECT and 2) clarity on the TLX250 strategy. We are aligned with the view that more information is required and include only placeholder sales for now in our valuation.

Valuation: NPV SOTP- derived Price Target of AUD14.00 per share

We forecast cash flows for each of the assets that we think can offer value (WACC 9.9%). Illuccix makes up 85% of our valuation, TLX250 makes up 10%, cash / early stage assets form the remainder. 

DISC: Small position held in RL & SM

In todays AFR is their Fast Global List Special Report (The Fast Global list ranks the Australian companies most quickly growing their revenue sourced from offshore)

Anyway TLX topped the list

https://www.afr.com/work-and-careers/management/why-this-ceo-thinks-454pc-growth-in-his-company-is-just-the-beginning-20230526-p5dbih

For those outside the paywall...

Telix Pharmaceuticals has topped the inaugural Financial Review Fast Global list, with international revenue growth at the Melbourne-based, cancer-fighting biotech soaring off the back of a drug approval in the US.

The Fast Global list, which is presented in association with Quadrant Private Equity, ranks the Australian companies most quickly growing their revenue sourced from offshore.

From $5.2 million of sales outside Australia in 2019-20 and $7.6 million in 2020-21, Telix suddenly shot up to $160 million of offshore sales in 2021-22, representing a 454 per cent compound annual growth rate over the past three financial years – the metric on which the Fast Global list is ranked.

Listed on the ASX with a market capitalisation approaching $4 billion as at June, Telix topped the list ahead of insurance technology conglomerate POP International Holdings, which grew offshore revenue to $12.5 million at a 268 per cent clip over the past three years. Third was Espresso Displays, a maker of portable screens for the work-from-home era, which took in $5 million in 2021-22, a 255 per cent increase on 2019-20.

The massive revenue surge at Telix was not the result of a major acquisition – which would disqualify it under list rules which stipulate the majority of revenue growth must be organic – but of winning approval from the US Food and Drug Administration for Illuccix, its screening tool for prostate cancer.

“Illuccix is changing the lives of about 2000 patients globally every week,” says Christian Behrenbruch, a biomedical engineer who co-founded Telix in 2015.

“You’d be surprised at how many letters we get telling us what our product has meant to them.”

Illuccix represents the first commercialisation of Telix’s core technology that develops molecules capable of carrying a radioactive particle, which can be infused intravenously and spread naturally throughout the body.

At lower dosages of radioactivity, these molecules can then be used to detect cancerous cells and at higher doses can be used to kill them. Another diagnostic product is imminent, this time detecting renal cancer, but Behrenbruch hopes Telix’s therapeutic products capable of destroying cancer are no more than two or three years away.

Telix’s technology has emerged as an alternative to other oncology drugs, which seek to target a particular cancer’s signalling pathway or shut it down biologically. They are also an alternative to standard radiation oncology, which involves patients lying down inside a linear accelerator machine – usually in the basement of a hospital -– and having X-ray beams shot at the known cancerous cells inside them.

“That has been working well for a century, but the main limitation of that approach is you can only treat what you can see or what you can localise, and it causes a fair bit of collateral damage,” Behrenbruch says.

“Our molecularly driven radiation is much more targeted and precise – no matter where in your body you have cancer cells, we’re going to hit them.”

‘Exquisite pictures’

For diagnostic products like Illuccix, its injectable molecules act as a radioactive beacon throughout the body, which under a standard scan from a positron emission tomography machine, will provide what Behrenbruch calls “exquisite pictures” of anywhere a particular cancer’s signature is present.

In the past, many prostate cancer patients have been put on to hormone therapy as a preventative measure, particularly if their levels of prostate-specific antigen are found to be rising after they’ve already had their prostate removed.

“Hormone therapy means you put on a tonne of weight, you have higher risk for all kinds of diseases and you lose your erectile function as well,” Behrenbruch says.

Illuccix, however, allows whatever “speck of disease” that escaped the prostatectomy to be found and dealt with – perhaps with localised radiation therapy – without the need for hormone therapy.

The potential benefits of applying Telix’s technology to renal cancer diagnostics are even more profound. Behrenbruch says 10,000 kidneys are removed unnecessarily every year in the US alone because of a failure to diagnose and stage the treatment of patients correctly.

Despite 80 per cent of Telix’s 300 staff now based outside Australia – most of them at its research hub in Indianapolis – and more than 90 per cent of its revenue also being garnered offshore, Behrenbruch says Telix will remain an Australian-domiciled company.

He cites several reasons for this, including Australia’s research and development tax incentive scheme and the country’s ready supply of the medical isotopes which Telix needs to make its products, thanks to the work of the Australian Nuclear Science and Technology Organisation.

“ANSTO are one of the reasons that molecular radiation took off around 2015 – the supply chain got a lot better, so conducting clinical trials got a whole lot easier,” Behrenbruch says.

Brisbane plant

If not for the pandemic, Telix would have manufactured Illuccix in Australia, however the inability of the FDA to inspect an overseas facility at the time made Indianapolis a more favourable option. However, the renal diagnosis tool, for which Telix has just completed phase 3 trials, will be made in Brisbane.

Apart from the favourable infrastructure, another swing factor for keeping Telix in Australia is its investor community familiarity with molecular radiation. Behrenbruch says early on Telix was far better understood here than in the US, thanks to the precedent set by ASX-listed Sirtex, which attacks liver cancer with tiny radioactive beads called microspheres.

Look out for Telix to remain a fixture of the Fast Global list for some years to come. Already a very rare biotech company that is cashflow positive, the market for Illuccix is set to further expand with approvals pending in China and Japan, but then the eventual addition of cancer therapies promises a step-change in growth.

Last week, it opened a $21 million nuclear medicine facility in Belgium, creating a springboard to crack the European market as it dashes for global growth.

Telix’s $50 million initial public offering in 2017 was the biggest for an Australian biotech since that of CSL and Behrenbruch dares to use the blood plasma giant with a $144 billion market cap as a benchmark for his aspirations.

“CSL is proof that the talent and the clinical resources we have access to here in Melbourne is phenomenal,” he says.

“CSL is obviously a rare company, but I think it’s possible to start another one”

DISCL: Held in SM & RL

Telix Pharmaceuticals has recorded $22.5 million in global sales for its Illucix cancer imaging and diagnosis product

Net cash outflows for the June quarter were $25.8 million and as at June 30 it had cash on hand of $122.6 million

FDA Extends New Drug Application Review Period for Illuccix

Melbourne (Australia) and Indianapolis, IN (U.S.A.) – 23 September 2021.

Telix Pharmaceuticals Limited (ASX: TLX, Telix, the Company) today announces that the U.S. Food and Drug Administration (‘FDA’, the ‘Agency’) has extended the review period for the Company’s New Drug Application (NDA) for its prostate cancer imaging investigational product Illuccix® (TLX591-CDx, kit for the preparation of 68Ga-PSMA-11 injection) by three months.

The revised target Prescription Drug User Fee Act (PDUFA) goal date of 23 December 2021 will allow the FDA to review and consider further manufacturing-related information submitted by the Company and conclude the label review. This is a standard review extension period.

Telix attended a late-cycle review meeting with the FDA on the 17 June 2021. During the meeting, the FDA indicated that there were no outstanding substantive manufacturing or clinical review issues with Telix’s submission. 1 However, the Company’s Pre-Authorisation Inspection (PAI) fell subsequent to the late-cycle review meeting and raised a well-defined set of manufacturing-related observations. The Company has fully responded to those observations and the FDA is currently reviewing.

Telix CEO Dr Christian Behrenbruch stated, “The timing of our PAI relative to the late-cycle review meeting meant that additional review time was needed to address manufacturing-related observations. This has pressured the FDA’s initial PDUFA review timeline and hence the Company has incurred this time extension. The final part of the NDA process is the label review, which we consider to be a straightforward matter, given the precedent of PSMA-PET imaging agents in the market and the clear adoption of PSMA PET in clinical practice guidelines. The FDA has not requested additional safety or clinical data. We look forward to being in a position to bring to patients in the US access to this flexible, highly specific and sensitive imaging tool for the detection of prostate cancer.”

DISC: Held in SM & RL