Radiopharma company $TLX announced its 3Q revenue numbers today, and upgraded FY Revenue guidance form US$770-$800m to US$800-$820m,

ASX Announcement

Their Highlights

• Q3 2025 unaudited group revenue of approximately $206 million, up 53% year-over-year.

• FY 2025 revenue guidance increased to $800 million to $820 million .

• Gozellix® now fully reimbursed by Centers for Medicare and Medicaid Services (CMS): Level II HCPCS code and Transitional Pass-Through (TPT) payment status effective 1 October 2025 .

• Illuccix® now approved in 19 European markets4 and the United Kingdom (UK); commercial launch has commenced in the UK, Germany, France, Finland, Sweden, Norway and Denmark.

• First patients dosed in the BiPASS™ trial of MRI + PSMA-PET5 for the diagnosis and detection of prostate cancer.

• ProstACT® Global Phase 3 trial – Part 2 open for enrollment in Australia, New Zealand and Canada and study approved to commence in China, Singapore, Türkiye and Japan. Part 1 preliminary readout of safety profile and dosimetry to follow completion of patient monitoring and data analysis.

My Assessment

I have commented earlier in the year that I considered the original guidance to be on the soft side, so today's upgrade was no a surprise to me. However, with the SP up 15% at time of writing, the market has clearly taken a different view. Fair enough, what do I know.

Although Illuccix is clearly maturing (see table above), changes across the board in radiopharmaceuticals for protate cancer diagnosis reimbursement and pricing pass-throughs appear to have been net neutral to $TLX (or perhaos mildly positive compared to some fears).

This result is afterall still dominated by US Illuccix sales, as Gosellix is early on the scene, and sales in other jurisdictions are still in their first year. (I wonder if management will be obliging and provide some futher breakout in the FY figures, when we get these early in the new year?)

Overall a positive report. (Oviously!)

Perhaps the SP recovery today is recognition by the market that the accumulated negative moves on Zircaix and Pixclara approval failures, and pricing/compeition uncertainty for Illuccix have just gone too far in the negative direction. That's the only reason I can see for the price action.

Anyway, it is of no concequence for me, as I am a Hold and retain my view on valuation significantly further north of today's corrected value.

Disc: Held in RL and SM

$TLX announce that they've agreed the resubmission package for Pixclara, rejected earlier this year, and that the FDA has indicated an expedited review is "likely".

ASX Announcement

My Assessment

Following a string of bad news, this is a mild positive for $TLX, and indicates that Pixclara still has a chance.

When NDA's fail at the final hurdle on efficacy grounds, only 1 in 3 to 1 in 4 go on to be ultimately approved (according to my BA), but the chances of success rise to around 50% is following a Type A meeting where there is agreeement between the proponent and the FDA on the resubmission package.

That the company plans to resubmit in Q4 indicates that they already have the required additional supporting data.

The market opportunity for Pixclara is not all that large, with the US market for glioma imaging estimated to be in the range $100-$140m, with imaging of broader brain oncology conditions US$475-665m (note: there would need to be further studies to support these indications, and I imagine $TLX won't contemplate these if they can't get the first approval over the line.)

I am actually more interested in what the path forward for Pixclara tells us about $TLX's ability to navigate the regulatory process. With Pixclara, they clearly submitted material that was not approved even though it appears they had "other options" available to them. While obviously, the rejection raises a question-mark over the product efficacy, it also raises in my mind a question about the capability of the $TLX team to submit an adequate package.

Learning from this will be vital for the much bigger potential imaging agent Zircaix, more recently rejected and for which the Type A meeting is yet to be announced. Of course, with the Zircaix rejection, this wasn't about efficacy, but instead about chemisty, manufacturing and controls. However, the point remains, does $TLX have a team that can respond effectively to $FDA feedback and put together a package than can be approved? We shall see.

Disc: Held in RL and SM

I set out here my more complete analysis of today's "Regulatory Update" on Zircaix.

TLDR: This is a significant setback, however, the SP fall of $3.43 (-19%) on what is arguably already a beaten up share price can be considered an over-reaction. My estimated valuation impact range is $0.15 to $1.40, depending on a wide range of assumptions set out at the bottom of this note.

The market's reaction is more in line with a belief that the drug will now never be approved. In fact, it is likely worse than that, given that the market opening share price was unlikely to have attributed fair, risked value to Zircaix (in my assessment).

--------------------------------------------

In this Straw I set out:

Part 1: What's Happened

Part 2: Insights from Today's Investor Call

Part 3: Valuation Impact Analysis

Part 1: What Has Happened

• Telix has received a Complete Response Letter (CRL) from the U.S. FDA for its Biologics License Application (BLA) for Zircaix.
• Zircaix is an investigational PET imaging agent for the diagnosis and characterization of renal masses as clear cell renal cell carcinoma (ccRCC).

Two groups of issues were raised:

• Chemistry, Manufacturing, and Controls (CMC): The FDA requested additional data to prove comparability between the product used in the ZIRCON Phase 3 trial and the scaled-up commercial process.
• Manufacturing issues: Notices of deficiency (Form 483) were issued to two third-party manufacturers/supply chain partners. These must be remediated before resubmission.

Telix Response

• The company believes the issues are readily addressable.
• Plans to request a Type A FDA meeting to clarify deficiencies and set a resubmission timeline.
• Zircaix retains Breakthrough Therapy designation and Priority Review, reflecting its clinical value and unmet medical need.

Part 2: The Investor Call

Here is a detailed analysis of the investor call (prepared by my BA, edited by me for important omissions)

Summary:

Telix views the Zircaix CRL as fixable, non-clinical, and not revenue-threatening. Management signaled confidence that remediation will not take a full year, with ongoing business momentum cushioning the impact. They framed the setback as an operational challenge, not a scientific one, and positioned Telix to emerge stronger in handling radiopharma regulatory complexity.

• The CRL does not affect Telix’s 2025 revenue guidance, as guidance excluded contributions from unapproved products.
• Patient access will continue via the FDA-approved Expanded Access Program (EAP), subject to FDA consultation.

Management’s View of the CRL

• Not catastrophic: Management repeatedly emphasized that the FDA’s concerns should be seen as a “speed bump” rather than a major setback. They stressed that this is not a material issue for the company and doesn’t derail the broader growth strategy.
• Nature of issues: While not detailed beyond what was in the ASX release, the transcript reinforced that the concerns relate to manufacturing comparability and supply chain quality, not clinical efficacy or the technology itself.
• Novel drug with complex supply chain: CB emphasised the novel nature of Zircaix, as well as the complexity of its manufacturing and supply chain. He indicated that these factors could be contributing to the “bumps in the road”. Without directly criticising the FDA, he expressed a view that this was the first time this division of the FDA were faced with having to approve a drug of this kind.

Timing and Delay Expectations

• No year-long delay: Analysts pressed management on timelines (Jefferies’ David Stanton suggested the possibility of a year). Management responded they “don’t see this as being a year delay,” and expect considerably less than that.
• Uncertainty acknowledged: Exact timing depends on resolving FDA questions and remediation of third-party manufacturing deficiencies. Management committed to pushing forward quickly once a Type A meeting is held.

Financial and R&D Implications

• R&D spend intact: The CRL is not expected to force changes to Telix’s R&D investment profile. Management said R&D spend will continue to grow with revenue, and Zircaix still has strong unmet-need driven commercial potential.
• Revenue guidance unaffected: They reiterated the CRL has no impact on FY25 revenue guidance, since unapproved products were excluded. The company highlighted other revenue drivers (Illuccix, Gozellix, European launches) to reinforce financial resilience.

Maintaining Launch Momentum

• Expanded Access Program (EAP): Telix hopes to keep momentum by continuing the EAP for Zircaix while working through FDA requests, though this will require FDA agreement.
• Broader context: Management pointed to ongoing launches (Illuccix in Europe, Gozellix in U.S. with reimbursement code from Oct 1) and new trials (e.g., bypass Phase 3 in PSMA) to show that the company has other growth engines reinforcing revenue while Zircaix approval is delayed.

CEO’s Closing Remarks

• Personal disappointment: Dr. Behrenbruch admitted being personally disappointed by the delay, as bringing Zircaix to market was a founding goal.
• Confidence in approvability: He stressed the CRL “doesn’t reflect the quality of the technology or the approvability of the product.”
• Learning opportunity: Management sees the process as a chance to strengthen Telix’s capabilities, acknowledging that handling such CRLs builds regulatory and operational resilience for future product launches.

Part 3: My Assessment

As I wrote earlier today in my reply to @lowway, there are a few key facts to focus on:

• There are no issues relating to safety and clinical efficacy in the CRL. This is good news, and points towards the ultimate approvability of this product.
• Historically, some 30% to 40% of NDAs/BLAs receive a CRL at first review, of which about half relate to CMC issues.
• Importantly, >80% of CMC-related CRLs are ultimately approved. Those with minor deficiencies typically face delays of 6-12 months. Those with major issues (including those requiring comparability studies) can face delays of 12-24 months or longer.
• Regarding the contractor (CMO) issues, timescales also vary with severity of finding. Minor issues can be typically resolved in 3-6 months; moderate severity in 6-12 months; and severe issues can also take 12-24 months or longer.

So, as CB stated today, it all really depends on what emerges from the follow-up “Type A” meeting, which should be held over the coming weeks. After that meeting, $TLX will be in a position to give more detail on the feedback, the remedial work required, and the future timelines.

In the spreadsheet below, I have analysed the impact of the approval delay (1-year and 2-year delays scenarios) for a range of peak sales and valuation multiples for Zircaix. At the bottom of the table, I have indicated the value impact if Zircaix is NEVER approved.

Today's SP fall of -19% of $3.43 is significantly more that 1 and 2 year delay scenarios across a range of product valuations which estimate the SP impact ranging from $0.15 - $1.43.

But how much of the full value was assumed in the opening share price today for $TLX? Of course that's impossible to answer. But given that the SP was only around $18, the implied value of Zircaix was likely more in the $1-4 range than the $4-8 range.

So, by almost any conceivable measure, the market has reacted as if there is a 0% change that Ziraix will ever be approved.

I don't claim to know the answer, but I am interested to hear the next update following the Type A meeting with the FDA.

My Investment Decision

My starting position at the open this morning was that $TLX is materially undervalued.

Given that, the $3.43 drop today more than wipes out any reasonable allocation to Zircaix success in today's opening share price.

The market is CERTAIN that Zircaix will fail altogether. (In fact, the SP drop implies that the market was attaching huge value to Zircaix.)

I strongly disagree. And I have therefore taken the opportuity to increase my RL $TLX holding by 15%.

And for the avoidance of doubt, I believe that this will prove to be a good decision, EVEN IT Zircaix ultimately fails, such is the scale of the SP over-reaction. (In fact, I might be back for another bite.)

Given the market's inefficiency at processing today's information, I think it likely to also misprice the next briefing which will likely be after the Type A meeting in a few weeks. So, I would like to have the opportunity to buy more at that time under the right circumstances. Information from that meeting can materially feed into my assessment of Zircaix risk, because now the BLA milestone has essentially been de-risked from a clinical perspective.

I usually lead results reports with company highlights, but with radiopharmaceutical group $TLX, I deviate. There are too many moving parts: therapy areas, clinical studies, and competitors. Unless you are prepared to dig into all of these, my only advice is: look elsewhere.

The results must be seen in the context of strategy.

Short-term profit metrics don’t capture the picture. The RLS acquisition lifted capital intensity, cut gross margin from 66% to 53%, and reduced profit. But that misses the point: manufacturing is critical where delivery is measured in hours, not days, and inventory can’t smooth over gaps. Infrastructure build-out has long been central to $TLX’s plan, and 1H FY25 marked a major step. Current capacity underpins Illuccix and Gozellix growth, and anticipated near-term approvals of Zircaix and Pixclara. It also positions TLX for potential “gamechanger” Therapeutics launches.

Key points:

• FY guidance on track (as per the quarterly).
• Illuccix is maturing in the US, facing pricing/reimbursement pressure, but volumes still rising. Label-expansion applications could be material.
• Major progress with international Illuccix approvals: modest FY25 revenue, stronger in FY26 (my view).
• Gozellix launched in the US with reimbursement from October. It will partly cannibalise Illuccix but at higher revenue and broader reach due to longer half-life.
• RLS builds global manufacturing footprint for ALL major markets. For now, most revenue is third-party “commodity” products, but capacity can be redirected to $TLX’s portfolio as needed.
• Pipeline momentum continues: first-in-human trials, more preclinical candidates, steady study progress. Expect strong news flow in next 6 months. Most candidates will fail, but the breadth of the pipeline increases the odds some succeed.

In the success case, $TLX could be Australia’s next $CSL in 10–15 years. In failure, it will burn capital and erode my portfolio returns - hence my most current position size. Outcomes will depend on: 1) science quality, 2) capital allocation discipline, 3) licensing skill. Manufacturing and supply chain assets secure supply and strengten the moat. TLX is evolving from a single-product story into a company with full global pharma capabilities, focused on diagnosing and treating cancer.

Bottom line: Results were in line with expectations, showing steady progress. Shares trade below my valuation, though outcome ranges remain wide. I hold for the long-term upside.

Finally, CEO Christian briefly addressed the SEC investigation: no wrongdoing has been alleged as yet by the SEC, no charges, and he has no knowledge of the complaint’s origin. The substance of the allegation does not affect the commercial portfolio. I’ll take him at his word unless proven otherwise.

Now to their detailed report ….

Their Highlights

Group performance: Reflects strategic investment for long-term value creation

• Revenue of $390.4 million, up by 63% and on track to meet full year guidance.

• Group gross profit margin of 53% reflects product mix change to include third-party RLS sales. Illuccix® margin remains stable.

• Adjusted EBITDA5 of $21.1 million, reflective of increased operating expenditure driven by strategic acquisitions, investment in commercial infrastructure, and research and development (R&D) investment.

• $81.6 million invested into R&D, a 47% increase year-over-year. Investment was primarily focused on late-stage assets in the therapeutics and precision medicine pipeline. Full year R&D investment guidance is maintained.

• Loss before tax of $4.8 million includes $12.4 million in non-cash finance costs associated with convertible bonds issued in July 2024 and increased amortization cost of $9.5 million (2024 $2.4 million) following RLS acquisition.

• Positive operating net cash flow of $17.7 million, cash balance $207.2 million following $241.8 million of strategic merger and acquisition (M&A) investment.

Telix Precision Medicine: Commercial business delivers profitable growth

• Precision Medicine segment revenue up by 30% compared to H1 2024, driven by continued increase in Illuccix dose volumes.

• Illuccix gross margin remains stable at 64%.

• Adjusted EBITDA up by 24% year-over-year to $104.6 million.

• Selling and marketing expenses of $40.9 million, reflecting incremental investment in commercial infrastructure for new product launches (Illuccix European launches and Gozellix®, Zircaix® and Pixclara®7 ).

Telix Manufacturing Solutions (TMS): Investment in infrastructure to scale operations and meet future demand 

• TMS segment includes RLS Radiopharmacies (RLS, U.S.8 ), IsoTherapeutics (TX, U.S.), and TMS facilities in Sacramento (CA, U.S.), Brussels South (Belgium), North Melbourne (Australia) and Yokohama (Japan), representing a significantly augmented global production and manufacturing footprint to support clinical and commercial operations.

• Operating expenses of $30.5 million for the segment include $14.9 million for RLS business and $15.6 million to support start-up and integration activities (ex-RLS).

• RLS – the core revenue driver in TMS – reported $109.5 million of revenue, which includes $79.0 million from third-party PET1 and SPECT2 product sales and distribution service fees, and $30.5 million inter-segment revenue. 

• RLS delivered an Adjusted EBITDA loss of $1.1 million. 

• RLS operating loss includes $6.3 million of depreciation and amortization. 

Telix Therapeutics: Reinvesting earnings to accelerate late-stage pipeline 

Of the total R&D investment, 54% ($43.9 million) was invested in the therapeutics pipeline. Milestones achieved include: 

• TLX591 (177Lu-rosopatamab tetraxetan): Completed target enrollment of 30 patients for Part 1 of the Phase 3 study in advanced metastatic castration resistant prostate cancer (mCRPC). The trial has received regulatory approval to proceed in Australia, China, Canada, New Zealand, Turkey and Japan. 

• TLX592 (225Ac-PSMA-RADmAb): Approval to commence a Phase 1, first-in-human therapeutic study of a targeted alpha therapy in advanced mCRPC.

• TLX101 (131I-iodofalan, or 131I-IPA): Approval to commence IPAX BrIGHT, an international pivotal trial, to commence at Australian sites initially. 

• TLX090 (153Sm-DOTMP): Investigational New Drug (IND) application approved for a Phase 1 bridging study for Telix’s therapeutic candidate for the palliation of bone pain in patients with osteoblastic metastatic disease to the bone. 

Disc: Held in RL and SM

Radiopharma company $TLX has taken a bit of a hammering today, after releasing Opex Guidance (exlcuding R&D) for 1H FY25 of 36% of revenue (together with restatement of FY23 and FY24 in USD, to support the FY25 currency reporting change).

SP at the time of writing down about 12% on the day, but it dipped much further this morning.

With R&D guidance of 20%-25% of Revenue for the FY having been given revently, that guides total Opex for the half at around 56% - 61% of Revenue, a significant increase from the PCP which was 54%.

The root cause is ascribed to the impact of the acquired RLS business.

My Assessment

$TLX's integrated business model means that it is building a global footprint of manufacturing and distribution assets, critical to getting its time-sensitive products to the facilities where patients are treated within hours of manufacturing.

The consequence of this is that the market - and potentially also $TLX (I'd argue), doesn't have a good grip on marginsin the medium to long term, as these assets are added and the business scales.

These assets involve significant fixed costs, and therefore at low utlisation (as might be expected in the early days of scaling) they represent a significant early drag on margins. However, I expect these high fixed costs to provide leverage, as volumes scale. Because of that, I am not unduly concerned with today's new information, although the market reaction is entirely predictable.

For example, consensus EBIT for 1H FY25 is $A86m (or about US$56m). However, with the Opex (-R&D) + R&D guidance issued, EBIT for the half is smashed to anywhere from $10m to $30m' so we'll see a slew of short term profit downgrades.

Proportionately, this look devastating. But I am not too concerned. $TLX is only just passing through the profitability inflection point. Therefore, large swings in near term margins have a de minimus impact on the overall value of the enterprise in the longer term, provided - of course - the margin slide isn'y and ongoing feature of the business!!

While I understand the market reaction, I think its an over-reaction, subject to the qualitfication that no-one really knows what the $TLX margin structure will look like in 3-4 years.

Another reason why the reaction is overblown in my view, is that the SP is already well and truly in the doldrums, despite continued good progress for Illucix and Gozellix, and rapid approvals in the EU/UK boding well for FY26, as well as the potential for new indicationsover time.

The Market Funk Since March This Year Continues

The combination of the failure to approve TLX101-CDx earlier this year (not that material in my view), cost pressures (in higher R&D and now opex, the latter pinned on RLS), and the uncertainty created by the SEC investigation (about which we know very little) have seen $TLX pull back from over $30 in early March to a low of just about $16,

None of this is materially fundamental to my thesis and valuation (albeit I'll trim a few $$ of my $30.00 valuation given that risks to margins in the medium and longer term cannot be ignored in light of new information). I was looking to add to my $TLX position once 1H FY25 was in, as well as the FDA decision on Zircaix (27 August, expected) as I am looking to build my $TLX position over time from its current modest size (4% RL).

So, I felt that this morning's opportunity was too good to pass up, and I have therefore added 0.8% to my RL position, taking it to 5%. (Also added a bit in SM)

Make no mistake, $TLX is a risky investment proposition, for a whole range of reasons, However, this business is generating positive operating cash flows, which should grow strongly over time. It has a strong balance sheet which is funding a diverse development portfolio in one of the exciting therapy areas of modern medicine. There's no guarantees that $TLX will be successful in the longer term, but the upside potential if even a small proportion of the development pipeline comes to fruition, if very significant indeed. I'm a BUY at today's price ... and I did.

Disc: Held in RL (4.8%)

Radiopharmaceutical firm $TLX announced its 2Q FY25 revenues after the market's close today.

ASX Announcement

Their Headlines

• Q2 2025 unaudited group revenue of approximately $204 million, up 63% year-over-year.

• FY 2025 revenue guidance of $770 million to $800 million is reaffirmed.

• Gozellix® launched in the U.S. and commercial dose deliveries commenced.

• Gozellix has been assigned a Level II HCPCS code1 (effective 1 October 2025), a prerequisite for receiving Transitional Pass-Through payment status.

• ProstACT™ Global Phase 3 trial milestone – all 30 patients consented for Part 1. Global expansion with regulatory approvals to expand the trial into China, Japan and Canada. 

My Assessment

Revenue Growth

This is an OK result, with the %PCP comparison being the highest percentage growth since they regularly started reporting quarterly revenues. However, it is important to note that Q1 and Q2 include significant contributions from the RLS acquisition. Fortuntely, they've been helpful in breaking out the Global Illuccix revenue, where %PCP growth continues to mature - standing now at +25% to pcp and only +2% q-o-q.

As Illucix matures in the US, we will hopefully start to see sales in the EU/UK kick in. Each month, new local approvals are being granted (following the EU-wide approval in Jan-25). Each local approval kick starts the process to negotiate reimbursements. Depending on the country, this process can take anything form 0-3 months at the short end (Germany, Scandinavia), 6-12 months (UK, Fr) right up to 16-20 months (Sp, Poland) and everywhere in between.

So, over the rest of 2025 and into 2026, we should start to see EU/UK sales supporting a maturing US. Then there are the other international markets after that (Brazil, China etc,).

Of course, if $TLX achieves any label expansions for Illucix (as are being pursued) then this could support further US growth.

Important to note that Gozellix is essentially a longer half-life version of Illucix, and while it will expand geographical reach beyond each radiopharmacy preparation site's 2-hour hinterland, this should be expected to cannibalise some Illucix demand. So, in future periods as Gozellix sales start to become significant, I'll be viewing Illucix/Gozellix as a pair - and perhaps they'll even report it that way.

With now $390m of revenue booked for FY25, and revenue still growing quarter by quarter, it would seem to me that FY revenue towards the upper end of guidance (or possibly even a minor "beat") is in prospect. This will in part depend on how much of the initial sales of Gozellix are incremental to Illucix, as well as whether there is any revenue progress in territories outside the US.

Sustained 2% quarterly revenue growth would see a result of $810m achieved.

Development Program

There appears to be steady progress across the large development pipeline.

Of course, the negative outcome for Pixclara was the key disappointment of the year, and $TLX report they had a "successful Type A" meeting with the FDA on resubmission of the NDA for this drug. It will be interesting to hear if any further detail on this if given in the HY Results presentation. Analysts will almost certainly be pressing for more insights in the Q&A, as "successful" does really tell us anything, other than the meeting happened and $TLX still believe there is a pathway to approval eventually.

The next key dates to mark in the diary (apart from HY results) is the scheduled PDUFA for the Zircaix BLA expected on 27 August, 2025.

SEC Investigation

$TLX have given a high level disclosure that they are under investigation in the US by the SEC "seeking various documents and information primarily relating to the Company’s disclosures regarding the development of the Company’s prostate cancer therapeutic candidates."

While not a routine thing, such investigations are not uncommon, nor should they be surprising. The complexity of information around drug development (particularly in treating complex conditions like cancer) and the volume and timing of newsflows, makes this an extremely tough process to manage, Anyone can tip of the SEC. A disgruntled employee, investor, a competitor or someone in a partner organisation.

Importantly, $TLX have stated that "the information requested does not extend to Telix’s commercial and late-stage precision medicine products including Illuccix, Gozellix, Zircaix, Pixclara and Scintimun®." That is a really important statement and I think it will mean we don't see a significant market reaction. (Or if we do, that could be a buying opportunity!!) 

One to keep an eye on,

My Key Takeaways

Basically, a solid and unsurprising update, from my perspective. Good to see confirmation of my earlier view that we could see a "beat" on FY revenue.

Disc: Held in RL (5.3%) and SM

No ASX Announcement, but $TLX has commenced patient enrolment for it's phase 3 trial for Illuccix in China together with its Chinese partner Grand Pharma. The story is covered on the $TLX website.

https://telixpharma.com/news-views/illuccix-china-phase-3-study-completes-enrolment/

You can understand why this doesn't warrant an ASX release. After all, the original Phase 3 vision trial commenced enrolment in March 2018 and gained FDA approval 3 years and 9 months later in Dec 2021.

However, this trial has been designed to bridge to the FDA submission, and so I imagine the endpoints and the timeframe required might not be as demanding as the original study. (I also need to go back and have a look at VISION to see if there were complications along the way.)

A second reason why this trail doesn't warrant an ASX-release comes back to our favourite top of the week. Yes, prices in China are a lot lower than the US and healthcare more generally is not as well developed.

To put it into context, the sizes of the US, EU, Japan and Chinese total pharmaceutical markets are US$634bn, US$480bn, c. US$80bn and c.US$80bn respectively.

So, the EU is likely to drive Illuccix growth in 2026-2028, and we might see some contributions from China and evenutally Japan towards the end of the decade.

Every little helps!

Disc: Held

FDA has not approved the NDA for Pixclara for imaging glioma.

Looks like grounds are efficacy. $TLX will try to arrange a meeting to understand the basis for the rejection.

Obviously bad news. But not a thesis breaker, as $TLX has many irons in the fire.

For any who need a reminder, these milestones are often binary events!

We’ll need to wait the readout from any FDA meeting, but given the timescales, even if they progress with gathering more evidence, the timeline is pushed out a year or two in the success case, as this is pretty fundamental.

Only 30-40% of drugs go on to receive approval after receiving a CRL rejection from the FDA.

TAM for Pixclara is quite small, so I’ll be keeping an eye out for any market over reaction.

Disc: Held in RL and SM

Radiopharmaceutical firm $TLX announced their 1Q results yesterday after market close.

ASX Announcements

(All figures below in USD)

Strong Q1 2025 revenue growth

• Q1 2025 unaudited revenue of approximately $186 million represents an increase of 62% over the prior year corresponding quarter (Q1 2024: $115M) and a quarter-over-quarter increase of 31% (Q4 2024: $142 million) and includes:

• $151 million from global sales of Illuccix®, up 35% over the prior year corresponding quarter (Q1 2024: $112 million) and a quarter-over-quarter increase of 9% (Q4 2024: $139 million).
• $33 million from RLS Radiopharmacies (RLS) since the acquisition completed on 27 January 2025.

FY 2025 guidance reaffirmed

• Telix confirms FY 2025 revenue guidance of $770 million to $800 million.

• Guidance reflects revenue from Illuccix® sales in jurisdictions with a marketing authorization, and 11 months of revenue from RLS1,3 .

• Revenue guidance is expected to be updated at the appropriate time, following and subject to reimbursement for Gozellix® in the United States (U.S.) and Illuccix® in ex-U.S. markets.

• Telix confirms research and development (R&D) expenditure guidance, expecting a year-overyear increased investment range for FY 2025 of 20% to 25% compared to FY 2024.

My Assessment

With clear guidance for the FY, the 1Q is unsurprising and off to a good start, with the headline Q-o-Q revenue number particularly strong, but flattered by M&A.

At the product level Illuccix is clearly maturing in the US at +35% to pcp, but the 1Q result at +9% is strong, given this context.

With rolling global approvals for Illuccix continuing, and the recent approval of Gozellix, I am expecting to see modest revenue upgrades around mid-year. Since the start of the year when Illuccix received enabling EU approval, the specific markets to have achieved local approval now include: UK and Brazil and within the EU - Denmark, Ireland, Luxemburg, Malta, the Netherlands, Norway and Sweden. We should expect to hear approvals in the key large markets of Germany and France as the year progresses.

But the release is a lot more that just an Illuccix story. Overall, the vast clinical development program appears on track. Importantly, we should hear about the PDUFA milestone for Pixclara (brain cancer imaging) before the end of this month, and PDUFA for kidney cancer imaging product Zircaix before the end of August.

From a quick read, the overall clinical development program appears to be on track, although I need to go through this in fine details against previous statements, to make sure there isn'y any "tweaking" of expectations.

Overall, a solid report. On track.

Disc: Held in RL and SM

Radiopharma company $TLX has announced FDA approval of its next generation Prostate Cancer imaging agent Gozellix (TLX007-CDx), addiing to its existing PSMA-PET imaging agent Illucix.

Gozellix is the first of two FDA decisions expected in 1H FY25 ($TLX reports over a Jan-Dec cycle).

With narrower indications than Illucix, Gozellix has the advantage of a 6 hours versus 4 hours shelf life, which means clinicians/patients further outside the current radiopharmacy footprint will have access to the product, and the second product will give the radiologists/oncologist more options. Over time, we'll also learn if the product offers any imaging/detection advantages and, there is always the potential for broadening indications over time.

As expected, the market response to this one is very modest (+ 0.2% to +1% at time of writing), as I imagine incremental sales will be modest, and $TLX have never (as far as I know) said anything about the incremental opportunity of Gozellix.

Overall, this marks a good start to the year for $TLX. To recap we've recently seen (and I'm ignoring the manufacturing/supply chain newsflow and acquisitions to broaden the development product portfolio ):

• EU Approval for Illucix (17-Jan)
• UK Approval for Illicix (12-Feb)
• FDA accepts BLA and grants priority review for Zircaix (26-Feb)
• Brazil Approval for Illucix (18-Mar)

In addition, I noticed on LinkedIn that the Netherlands has now approved Illucix, which is only 2-months after the overall EU approval. Netherlands tends to be one of the faster jurisdictions to approve after the overall EU approval is granted, however, this speed bodes well for Illucix sales getting going in Europe to give some impetus to what will be maturing sales growth in the US through 2025.

So, overall, $TLX making good progress on their 2025 milestones:

My c.2% RL position has now grown to 3.3%, and I am sitting here scatching my head wondering if I went too light on this one, coming late to the party, as I often do.

I am tempted to add, however, I will stick to my decision to wait for an opportunity closer to $26 than today's $28. Of course, there is always the risk that I am being too cute here. For example, we could soon see a positive decision on Pixclara, with the risk that SP get's over-excited (given the smaller TAM opened up by Pixclara). Equally, a failure or complication around Pixclara might see an outsized negative negative. Time to war game this using some decision trees! (FYI my valuation of $30 ($25 - $40) is not materially changed by today's announcement.

Bottom line: good to see $TLX becoming a multi-product company, and continuing to deliver positively on its 2025 milestones.

Disc: Held in RL and SM

Radiopharmaceutical company $TLX delivered their FY24 results today

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

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

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

So, I’ll structure this straw as follows:

1.     The 2024 Highlights

2.     My Assessment of 2024 Result

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

4.     A new view of the strategic growth framework

5.     Key Milestones in 2025 for Precision Medicine

6.     Key Milestones in 2025 for Therapeutics

7.     Financial Guidance for 2025

8.     My conclusions including valuation and investment strategy

1. Their FY2024 highlights

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

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

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

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

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

2. My Assessment of the 2024 Result

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

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

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

Figure 1

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

Figure 2: Overview of Cash Flows

3) Building the Global Integrated Supply Chain and Partner Relationships

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

Key Developments:

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

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

Figure 3

4) The Strategic Framework for Growth to 2028

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

Figure 4

Three-Phase Growth Plan:

2021 – 2024:

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

2025 – 2027:

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

2028 and Beyond:

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

Key Strategic Priorities:

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

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

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

Figure 5

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

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

5) Key Milestones in 2025 for Precision Medicine

Upcoming Product Launches (Pending Regulatory Approvals)

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

Global Expansion Plans:

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

Technology and Market Growth:

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

6) Key Milestones in 2025 for Therapeutics

Advancing Late-Stage Trials

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

Expanding Next-Generation Radiopharma Pipeline

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

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

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

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

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

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

7) Financial Guidance for 2025

Revenue Forecast:

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

R&D Investment:

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

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

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

MY KEY TAKEAWAYS

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

Valuation

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

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

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

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

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

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

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

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

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

Investment Strategy

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

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

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

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

Radiopharmaceutical company $TLX announced that it has received UK apporval for its lead diagnostic product, Illucix.

ASX Announcement

Not really a big deal compared with the EU approval announced a month ago. However, notable for me is the commentary about a current shortage in the EU/UK for PSMA-PET agents, of which Illucix is one. The shortage is leading to delays for men getting their scans, and the the quoted source believes the approval of Illucix should help alleviate the shortage. If true, this bodes well for strong growth from EU/UK, even as Illucix growth starts to mature in the US.

The market likes the news, having already run up since the EU announcement.

$TLX report their FY result next Friday.

Disc: Held in RL and SM

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

$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

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)