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 We are not surprised to see this revisited after a withdrawn IPO earlier in 2024 / funding subsequently achieved via convertible bonds.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

Article that might provide a little more detail for Telix followers about recent acquisition.

https://endpts.com/telix-buys-radiopharmacy-network-for-230m-up-front-to-expand-us-capacity/

Another significant step in $TLX's integrated strategy, this time acquiring the US network of RLS Group Ltd network of 31 licensed radiopharmacies covering 85% of the US population,

ASX Announcement

Deal comprises "upfront cash consideration of US$230 million before adjustments for cash and cash equivalents (net of restricted cash); debt and debt equivalents; transaction expenses; and working capital, and deferred cash consideration up to a maximum of US$20 million, contingent on achievement of certain milestones related to demonstration of accretive financial and operational performance during the four-quarters following closing. The acquisition and related transaction costs are expected to be funded from existing cash reserves."

RLS already distirbutes Illuccix and will continue to operate as an independent business unit, servong both $TLX and "select strategic commercial partners".

RLS is a significant business in its own right, earning 2023 revenues of $US158m in the rapidly emerging and increasingly material area of radiopharmaceuticals.

I have no way of fundamentally valuing this deal, however, it is consistent with $TLX strategy of ensuring it controls its own supply chain. Increasingly, however, i'ts looking like $TLX will be an important player in the supply chains of others, and it will be interesting to see if this attracts any regualtory interest. Perhaps not yet, but something to keep an eye on.

Disc: Held in RL and 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 quick out of the blocks following their results last week to announce they've filed the NDA for brain cancer imaging agent Pixclara with the FDA.

ASX Announcement

There are two key pairs of words in this release: "Orphan Status" means that this product meets a significant unmet need. If approved, $TLX should have an unhindered run at securing much of the TAM which they estimate to be $US100 - $470m. The initial approval - as I understand it - accesses the initial $100m of the TAM for imaging glioma. However, they believe the drug can be extended to image other relevant cancers that metastasize to the brain.

The second key word is "Fast Track" designation - which means the FDA approval timeline is 6 months vs. the normal 10 months. That's assuming there aren't any queries raised with the package, or issues (as recently found with Zircaix, causing what will likely in total be up to 12-months delay.)

So not major news, in the context of the scale of the existing product Illuccix, but a good step forward.

Disc: Held in RL and 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

Back Ground and Pre-amble explaining Strawman Trades today

I have today used a small portion of my $CSL proceeds to initiate a position in $TLX - an earlier stage pharmceutical company, focused on tthe development and commercialiation of diagnostic and therapuetic radiopharmaceuticals.

I have been sitting on the sidelines, paralysed as I have watched the potential of this firm explode over the last year. And I have been waiting all the while for a pullback, almost acting on the recent FDA setback for their renal imaging product in July. A setback which should be temporary, and which relates more to the control of manufacturing and supply chain, rather than the efficacy or safety of the product.

I want to start by explaining why I have made a number of Strawman trades to facilitate initiating the position. To be clear, I have not sold any of today's SM trades in RL. I had to sell down a little of several positions to make room in SM. That's because it is my policy only to hold higher risk investments on SM, and so I've never held $CSL on SM even though I have held it in RL for several years.

In Australia, we are blessed with biotech/pharmaceutical companies, and I aim to hold several that have the potential to become global platform leaders in their areas. $BOT, $NEU, $PNV, and now $TLX, all hold that promise, with everything that entails that for the long term, should any one of them succeed in the very long term (10-20 years).

As with other Strawman holdings, I am slow to the party here and should have paid more attention when @mmff @edgescape @Varmallama and @Remorhaz put this on the community radar screen. Although in fairness, over the last 6 months I have been my own worst enemy by trying to get a better entry point.

$TLX

On $TLX, ILLUCCIX appears to be off to the races, on track to deliver $A750m sales in CY2024 ($TLX reports FY=CY). This product is taking share so strongly in the prostate cancer diagnostic sphere, that peak sales of A$1.5bn over time are foreseeable.

Next is ZIRCAIX, which had its BLA filing rejected recently by the FDA around sterility assurance questions in the manufacutring and control packages. (As someone who early in their career was a pharmaceutical manufacturing plant manager, I can say that these are serious but fixable issues. In some respects, should $TLX be able to resolve these issues to the satisfaction of the FDA, that would be a positive flag for me, and an early and important test of their supply chain controls, given that they are building an integrated supply chain. While the company's communications sought to downplay the issue, I can say from direct experience that issues in sterility control in manufacturing can be problematic, and sometimes hard to fix to the level of assurance the FDA requires! So this is an important test for $TLX, in a similar way that $BOT was successfully tested by the labelling and patient instruction issues with SOFDRA.)

Anyway, I missed the full opportunity of the minor $TLX puilback to $17, but have decided to act today on a "better late than never" basis. Should the resubmitted ZIRCAIX package be accepted by the FDA we are likely to see the recent pullback quickly reversed, so I want to have at least one seat on the bus, should that occur.

Unlike ILLUCCIX, which faces several competitors, ZIRCAIX for imaging certain renal cancers is in a less competitive space, and should it be approved in 2025, there is the prospect it could grow over time to achieve A$500-1,000 annual sales over 5-7 years.

Importantly, ZIRCAIX and ILLUCIX have the same specialist customers, so would share the same salesforce/distirbutors.

The third of the core imaging daignostic products is PXICLARA, used for imaging certain brain cancers. Again, this also looks promising from clinical studies so far, with potential for approval also in 2025.

These three products represent the core of my investment thesis and valuation. However, the "blue sky" I am looking for, lies in the ongoing clinical studies to use the cancer-targeting technology to actually deliver the radioactive treatments. The slide below shows the overall portfolio. The treatment products will have a higher clinical bar to clear than the diagnostics products. The indications are for advanced metastatic cancers, and so CT endpoints will generally be based on survivability compared with standards of care, as well as side effects/quality of life.

Another factor that is distrinctive in $TLX is its commercial capability in licencing and acquiring both molecules and technologies, as well as the critical elements of the supply chain. The products require a globally distributed supply chain because they need to be deployed to the patient often within hours of manufacture, due to the radioactive decay. So building the integrated supply chain to allow manufacturing and deployment of these high value products will be a common and differentiating capability across the portfolio. With ILLUCCIX, $TLX has shown it can standup the supply chain, and now it is about scaling it and adding products to it.

In this initial, brief writeup, I've not even mentioned the recently acquired bone marrow conditioning product, which includes one development product and one commercial product. In truth, that because I haven't fully got my head around that part of the business - but my investment case doesn't need it, so it will keep.

Valuation

My imple intial valuation is based on the intiial three core diagnostic products achieveing 2029 revenues of $2,000bn.

Other key assumptions:

Operating margin of 35%

2029 PBIT = $700m

No debt and a tax rate of 25%

2029 NPAT of $525m.

Assuming growth in SOI from today's 335m to 360m

2029 EPS = $1.45.

BULL CASE ("Blue Sky")

Method 1

Assuming $TLX maintains a strong development portfolio and a P/E of 50 gives Value/Share (2029) = $72

Discounted back 5 years at 10% gives: $45/share

Method 2

M&A at 7.5 x "peak" sales in 2029 of 2bn = $15bn or $42/share

BASE CASE

Assuming valuation just on the core diagnostic portfolio, with broadening indications/molescules but no breakthrough into radio-therapies, resulting in a more modest 2029 P/E of 25 gives Value/Share (2029) = $36.

Discounted back 5 years at 10% gives: $22/share

Investment Strategy

Today I've taken an initial 2% RL position. Over time, I'll look to scale this up.

Next "buy" triggers will be 1) info coming out of 1H FY24 briefing and 2) Acceptance by FDA of the ZIRCAIX BLA package.

When I'd Sell

1. ILLUCAIX plateaus prematurely (e.g. either due to TAM or competitive issues emerging)
2. ZIRCAIX a) package BLA resubmission isn't accepted in 2024 or b) approval not granted in 2025

Post-Note

Yesterday, in writing about $CSL and why I have exited, I referred to the "tyranny of growth". To recap, with c. $14bn of annual sales today, $CSL must produce multiple blockbusters (a dated term showing my age, which used to mean product with peak sales of $1bn) every few years to justify its multiple. My critical examination of the $CSL portfolio over the last two years, together with their increasing focus on cost out and margin improvement in their blood products supply chain as well as cutting Vifor costs, pushed me over the edge to recycle capital from $CSL back into earlier stage, though hig-growth revenue-generating firms like $BOT, $NEU, $PNV and today $TLX.

$TLX is far and away the largest of these, but it is still 1-2 orders of magnitude smaller than $CSL and 1-2 decades earlier in its growth story. The tyranny of growth is some way off into the future for all my core biotech holdings, and the graphic below shows that for $TLX the story have several chapters to run.

In writing this, I have to highlight that these earlier stage companies have a much higher risk profile than $CSL. But all have - or are in immediate sight of - producing strong positive cash flows to drive them forward.

Disc: Held in RL and SM (trade submitted)

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

I probably should have sold CMM, not TLX

I still have lots to learn about (not) holding gold companies for too long.

Congratulations to Telix. Better than Pluvicto... just (8.8 vs 8.7 months)

I still have consolation prize CU6 which is still a long way

[not held]

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

TELIX CONTINUES TO ACQUIRE COMPLIMENTARY BUSSINESSES:

Executive Summary: ARTMS Inc. acquisition:

Significant advancement in our vertical integration of manufacturing and supply chain.

Four main areas of commercial synergy.

Improved reliability and greater control over supply chain of commercially useful cyclotron-produced diagnostic radionuclides such as 99mTc and 64Cu Development of “next generation” cyclotron targets to support the safe and high-yield production of therapeutic radionuclides Enhanced production capacity of Zirconium.

Support the roll-out of Zircaix® (TLX250-CDx) Enabling large-scale production of 68Ga to support demand for Illuccix® and next-generation product offering.

Commercial-stage radioisotope production technology firm, focus on radio-metals.

Spin-out from TRIUMF, a leading particle accelerated lab.

Deal terms1 : US$42.5m Telix shares (upfront) US$15.0m cash (upfront)

Up to US$24.5m in contingent future earn out payments (cash), subject to achievement of milestones.

Just like clockwork Telix falls on release of FY23 results

2023 highlights

• Total Group revenue of $502.5M, an increase of 214% from $160.1M in 2022 primarily driven by continued strong growth in sales of Illuccix® in the second year since commercial launch (April 2022)

• Delivered positive adjusted earnings before interest, tax, depreciation, and amortisation (adjusted EBITDA) of $58.4M an increase of $126.2M, compared to a loss of $67.8M in 2022

• Inaugural full year profit of $5.2M after tax. A substantial improvement on the net loss after tax of $104.1M in 2022

• Investment in research and development (R&D) and selling, general and administration (SG&A) reflects progress across the late-stage pipeline and scale-up of the commercial organisation

• Overall operating costs as a percentage of revenue have reduced to 52% from 105% in 2022

• Gross margin has improved to 63% (vs. 59% in 2022) reflecting distribution and manufacturing costs optimisation

• Positive operating cash inflow in line with commercial sales growth, demonstrated through customer receipts of $463.7M (vs. $124.1M in 2022), and

• Closing cash balance was $123.2M as at 31 December 2023and further differentiates Telix as a fully integrated global radiopharmaceutical company.”

Further details on the Company’s results can be found in the Appendix 4E, the accompanying investor presentation, and 

2023 Annual Report lodged with the ASX and also available on the Company’s website.

Guidance

Full year revenue for 2024 expected range of US$445M to US$465M ($675M to $705M at current exchange rates), representing an approximate 35-40% increase on 2023

Also no mention of Illucix approval for Brazil

Not sure what consensus was as I haven't been following Telix lately

Still get the feeling Telix is still running to stand still. Tempting to buy back what I sold.

(Not held)

Guess we will expect an ASX price query on Monday. Down 10% from 10.47

If there was bad news on any of these we should have halted:

* EU / UK approvals (still waiting than 15 months)

* Brazil approvals

* Progress on other trials

* Nuclear medicine supply chain issues ???

Apart from that, I didn't see anything from the brokers as well last night. Nothing really changed in the last 24 hours.

Behaving like a small cap right now rather than a safe biotech, except going the wrong way.

[held]

Recording of the Telix Prosact Expert Forum

ttps://event.choruscall.com/mediaframe/webcast.html?webcastid=9PnyQ7Vh

I suppose this was done to clear up confusion about the efficacy of TLX-591.

Some of the key differentiators highlighted versus other products:

1. Less or no side effects than other products such as dry-eye, back pain etc.
2. Less dosage required and shorter treatment duration
3. Better survival rates
4. Reduced radiation and costs

So while TLX-591 cancer reduction was less than Pluvicto, the lower dosage and radiation did translate to better quality of life overall for the patient.

[held]

ASX200 Biotechs just couldn't catch a break

Latest victim is Telix, Down 10% today (19-oct) and at one stage down 15%

I think expenses went up more than expected. Revenue was slightly less than my estimate.

Not sure if they will make the 500m target. Will be tough.

Would have been good buy down to 8.50 but maybe this could go lower?

Interesting that compatriot CU6 has held well through the volatility.

[held]

Telix sudden fall was due to downgrades across the board

I'm still doing my own figures

Anyone got ideas on how to covert Operating Cash from activities in the quarterly to Ebitda? Feel free to share.

[held]

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

Received this in my inbox from Ausbiz.

Doesn't look like director selling to me?

The Appenidix 3Y was for Performance rights, not a disposal. Someone not doing the fact checking properly at Ausbiz.

Instead I suspect the news on Blue Earth partnering with Siemens on their approved PSMA agent has finally caught up with Telix.

[held]

Only a Non exec director so not an insider and I don't consider significant,

But the on-market trade by Tiffany Olson was quite big.

[held]

Couple of Murdoch mastheads the Herald Sun / The Australian has been circulating that Telix did not meet analyst revenue forecasts which is misleading

https://www.heraldsun.com.au/business/telix-us-sales-soar-39pc-on-prostate-cancer-scan/news-story/169fa7c216df58f792787ae11e3b5dd1

https://www.theaustralian.com.au/business/telix-us-sales-soar-39pc-on-prostate-cancer-scan/news-story/169fa7c216df58f792787ae11e3b5dd1

Not sure if this was the cause of the falling share price.

I sent an email to the Herald Sun/The Australian about this to confirm their sources of the estimates (like which broker and the analyst name plus an interview). Haven't heard back obviously which is pretty bad journalism on their part not surprising.

This is the info from Factset confirming they met the rev forecasts (74.68 vs est 71.0)

Needless to say I won't be subscribing to "The Australian" any time soon...

[held]

Cash Receipts UP 720% from June Quarter - $5m to $44m

Revenue UP 168% from June Quarter - $21m to $55m

Operating cash flow negative by only $5m (was OCF negaitve by $25.8m in June Quarter)

The IMPORTANT operating cash flow/free cash flow POSITIVE inflection point may be hit in the December quarter

Share price is highly volatile - market has a hard time valuing the company because of the growth the company is seeing. And the market cap is roughyl $2b ... yes BILLION dollars, But the market values the company highly because of the potential and now realised rapid growth.

@edgescape it looks like a risky but potentially high reward tradeoff for Telix. From what I understand from the press release olaratumab does not work as a therapeutic/treatment agent in the trials it has been used so far. However it has high specificity for targeting certain types of cancers (they think). Telix is planning to use this specificity to diagnose soft tissue sarcomas and provide more targeted radiation as they apparently are more radiation sensitive. There may be the possibiltity of combining it as a part diagnostic and part therapeutic drug, but I imagine this is what the 'further development' part means.

My takeaway is this is very early stage pre-clinical theoretical research. I imagine they had to pay out a lot of money as if they succeed they will likely be able to charge a very large amount for their repurposed olaratumab. Rare cancer treatment is often hundreds of times more expensive than 'standard' therapy. So either they are very confident or over-confident, not sure which!

Full disclosure I own shares IRL but see it as a very risky investment and am hanging in for the long haul.

Looks like a large bunch of options got excised and dumped on the market, hence the large percentage drop.

Also some news came out of Novartis about FDA approval of a competing drug to treat prostate cancer called Pluvicto.. So this may have contributed although not sure given the price of the Novartis drug is $42500 a dose.

https://www.healthcaredive.com/news/novartis-fda-approval-pluvicto-prostate-cancer-endocyte/620984/

May need to revise the price targets as they may be more options hidden away.

Held

Telix and Kanazawa University Cleared to Commence Prostate Cancer Imaging Study in Japan

Melbourne (Australia) and Kyoto (Japan) – 22nd February 2021. Telix Pharmaceuticals Limited (ASX.TLX) (‘Telix’, the ‘Company') announces today its subsidiary, Telix Pharmaceuticals Japan KK (‘Telix Japan’), in collaboration with Kanazawa University, has received Clinical Trial Notification (CTN) clearance by the Japanese Pharmaceuticals and Medical Devices Agency (PMDA) to commence a Phase I trial of its prostate cancer imaging product TLX591-CDx (Kit for the preparation of 68Ga-PSMA-11 injection) in Japan.

In December 2020, Telix Japan commenced a clinical collaboration with Kanazawa University to conduct a Phase I trial of TLX591-CDx enrolling 10 patients with advanced prostate cancer. The purpose of the trial is to obtain preliminary clinical data in a suitable patient population, confirming that the targeting and pharmacology of TLX591-CDx is equivalent to non-Japanese patients. Such clinical data will support future planning discussions with the objective of PMDA product approval in Japan, aligning with the marketing authorisations that Telix has already submitted in the US, EU, Canada and Australia.

Prof. Seigo Kinuya, Professor of Nuclear Medicine at the Kanazawa University Hospital, Department of Nuclear Medicine, Chair of the Japanese Society of Nuclear Medicine, and Chair of the National Conference for Nuclear Medicine Theranostics stated, “ 68Ga-PSMA-11 has been studied widely and intensively across the globe outside of Japan. Clinical data have been accumulated and its diagnostic efficacy and clinical application have been well characterised in guidelines in nuclear medicine and urology, worldwide. This first clinical trial of 68Ga-PSMA-11 prostate imaging in Japan is a crucial milestone to pave the way to provide new diagnostics to Japanese prostate cancer patients.”

Telix Pharmaceuticals Japan K.K. President Dr. Shintaro Nishimura added, “This study is the first formal clinical trial in Japan of a gallium labeled PET imaging agent, which many Japanese nuclear medicine and urology physicians have been waiting for. We would like to express our appreciation to our pioneering colleagues at Kanazawa University's Departments of Nuclear Medicine and Urology, the Innovative Clinical Research Center of Kanazawa University Hospital, the Kanazawa Advanced Medical Center, ATOX Co. Ltd and IRE ELiT (Belgium) for their exceptional support and collaboration in this project.”

Czech Republic Grants National Authorisation for the Use of Telix’s Prostate Cancer Imaging Product

Melbourne (Australia) and Liège (Belgium) – 16th February 2021. Telix Pharmaceuticals Limited (ASX: TLX, ‘Telix’, the ‘Company’) announces today that the Ministry of Health of the Czech Republic is the first European health authority to grant a national authorisation allowing the use of TLX591- CDx (Kit for the preparation of 68Ga-PSMA-11), a radiopharmaceutical targeting Prostate-Specific Membrane Antigen (PSMA) for the imaging of prostate cancer using Positron Emission Tomography (PET). 

The national authorisation, which is specific to Telix’s prostate cancer imaging product, enables Czech physicians to use TLX591-CDx under a Specific Therapeutic Programme (STP), which allows medical products intended for the treatment, prevention or diagnosis of conditions severely affecting human health to be used prior to being granted a full European marketing authorisation.1 Telix is collaboratively pursuing such temporary approvals in a number of European countries, concurrent with marketing authorisation applications.

Under the STP authorisation, which is valid until 31st December 2022 TLX591-CDx is indicated for the diagnostic imaging of prostate cancer using PET/CT or PET/MRI for the purposes of:

        1. Primary staging of high-risk disease with a view to early identification of metastases

        2. Localisation of prostate cancer in patients with PSA progression following radical treatment2

        3. Identification of patients with extensive generalised prostate cancer for who radical life-saving treatment is not indicated

1   https://www.sukl.eu/pharmaceutical-industry/related-information

Disc: I have small holding

Telix and Heidelberg University Hospital to Develop Next Generation Theranostics

Melbourne (Australia) and Heidelberg (Germany) – 10th February 2021. Telix Pharmaceuticals Limited (ASX: TLX, ‘Telix’, the ‘Company’) today announces it has concluded a research cooperation agreement with Heidelberg University Hospital in Germany (UKHD) to develop next generation theranostic radiopharmaceuticals for urologic oncology.

Under the terms of the agreement, Telix and UKHD will co-develop new conjugates and constructs for diagnostic and therapeutic (‘theranostic’) use.

The goal of the collaboration is to identify candidates and generate sufficient data to proceed to first in human (FIH) trials, with all candidates being evaluated in a pre-clinical study (in vitro and in vivo analysis, toxicology, and manufacturing suitable for clinical translation).

DISC: I hold

Telix Pursues Direct Benelux Product Distribution

Telix Pharmaceuticals Limited (ASX: TLX, ‘Telix’, the ‘Company’) today announces it has elected to terminate its agreement with PI Medical Diagnostic Equipment B.V. (‘PI Medical’) for exclusive Netherlands distribution rights to TLX591-CDx (Kit for the preparation of 68Ga-PSMA-11 injection) for prostate cancer imaging, and non-exclusive rights in the Flemish region of Belgium. 1

Over the past twelve months, Telix has invested heavily in its European footprint, including the acquisition of a radiopharmaceuticals manufacturing facility in Seneffe (Belgium) in 2020.2 The Company’s clinical team has also been significantly expanded to deliver multiple clinical studies in Europe, including the ZIRCON3 and IPAX-14 studies. Telix now has a suitable network, production infrastructure and commercial team to distribute its own products in the Netherlands, including Illuccix® (TLX591-CDx), which is anticipated to receive an EU marketing authorisation this year, subject to regulatory approvals

1 ASX disclosure 2/07/19.

2 ASX disclosure 3/04/20.

3 A Ph III study of Telix’s renal cancer diagnostic product TLX250-CDx. ClinicalTrials.Gov Identifier: NCT03849118.

4 A Ph I/II study of Telix’s glioblastoma multiforme therapeutic product TLX101. ClinicalTrials.Gov Identifier: NCT03849105.

Disc: I hold

Activity Report and Appendix 4C for Q4 2020

Financial Summary

• The Company held cash reserves of $79.09 million on 31 December 2020.

• An up-front non-refundable prepayment of $33.81 million, plus an equity investment of $35.1 million were received during the quarter following completion of a strategic licence and commercial partnership with China Grand Pharmaceutical and Healthcare Holdings Limited (CGP) for Greater China. (*1)

• Operating expenditure during the quarter included $7.93 million for R&D and clinical trial costs, as well as regulatory filing costs for Telix’s first product Illuccix® (TLX591-CDx), for the Positron Emission Tomography (PET) imaging of prostate cancer.

• Telix has sufficient capital reserves to launch its first two products Illuccix® (TLX591- CDx) and TLX250-CDx for prostate and renal cancer imaging, respectively (*2 ), and to fund ongoing clinical development costs in 2021 and 2022.(*3)

(*1)  ASX disclosure 2/11/20.

(*2)  Subject to approvals in the relevant jurisdictions. None of Telix’s products have attained a marketing authorisation in any country.

(*3)  Subject to timely commencement of revenues from product launch of Illuccix® (TLX591-CDx) in the US/EU.