Telix Pharmaceuticals Limited (TLX) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Telix Pharmaceuticals Conference Call. [Operator Instructions] I would now like to hand the conference over to Chris Behrenbruch, Group CEO. Please go ahead.

Thank you very much. Good morning, colleagues and shareholders. Thanks for joining this briefing call on the back end of our announcement this morning. I know we have put out another announcement this morning about our progress in China, and I regret the timing and optics of this from a continuous disclosure perspective. Ordinarily, it would be good news to share. But however, today, I will only be addressing the EU withdrawal of Illuccix on this call. And I would appreciate it if any questions at the end are focused solely on this topic. To start with, the key information is straightforwardly and transparently outlined in our ASX disclosure this morning. Shareholders will be well aware that the process of our European submission has been challenging in terms of fielding the data requests from the EU member states listed in our submission. Indeed, we voluntarily incurred a 6-month delay in the process to specifically address the volume of information requests from regulators as previously disclosed. The approach we undertook for this submission, the so-called mixed application, which involves using a reference competent authority, in our case, the Danish Medicines Agency, to correspond with the other member states, is a complex and somewhat noisy process compared to a centralized submission. We chose this approach from the outset because it can be somewhat more flexible from a package perspective, and the DKMA has really good domain knowledge around radiopharmaceuticals. Since our first scientific consultation back in 2019, it's been a collaborative and effective process with the DKMA. Unfortunately, the nature of the submission approach means that regulator feedback from any countries in the submission can effectively influence the process. We had some directional changes in feedback in the final phase of the review process that resulted in additional data requests beyond what we had already fielded, and I might add significantly beyond what we have provided to other regulators. Every jurisdiction has its nuances. And in Europe, our product has some specific requirements that differ. Unfortunately, as we got to the end of the procedure, we couldn't reasonably field the additional requests in the remaining time available. This puts the company in a position where it has to contend with either a technical rejection, or as we have done, withdraw the application, remediate and resubmit. To be clear, our clinical package was deemed acceptable and does have positive risk benefit to patients, so we are confident that we have a viable path forward. But the additional dossier request from a manufacturing and CMC perspective have a practical time delivery requirement that cannot be met within the current process. It is this procedural reality that has triggered the decision to withdraw the application by the company. I do want to particularly stress that we don't see any reason why the package cannot ultimately succeed. Illuccix is an excellent product that addresses a clear unmet medical need. As stated in our public disclosure, we will be moving ahead without a pause. We are already generating the additional data and expect to resubmit an amended application shortly. The dossier has undergone a significant amount of refinement over the past months, and the information gaps have been clearly articulated by regulators. To be clear, I don't have guidance at this point on resubmission time lines or dates, but it is a high priority for the company, and I assure you we are not wasting any time moving ahead. We'll certainly keep shareholders closely informed of our progress and the resulting time lines. Before I open it up to questions, I want to specifically note that Telix is not a single product company, and our existing commercial activity is progressing very well. We see this outcome as disappointing as it is as a speed bump, not an endpoint, for the Illuccix program in Europe, and we remain committed to serving European patients as we have always done. We have contingency planned for this event, as we always do with regulator outcomes. And I wish to assure shareholders that the cost base of Telix's European commercial operations is not out of sync with the product approval process. Specifically, we have not yet scaled headcount for launch. I note that although we have not specifically given financial guidance for financial year 2023, the realistic time lines of national approvals and reimbursement processes practically meant a second half launch of next year. And so the financial impact to the company has been managed and is minimal. At this point in time, I will open up for questions.

[Operator Instructions] Your first question comes from David Stanton with Jefferies.

I've got 2. Just want to confirm, Chris, what you've said that you'll continue to sell into the EU on compassionate use grounds over the near to medium term now?

That's correct. To the extent that an individual country will continue to permit us to do so. And just to be clear, the outcome of this process doesn't impact that. But as long as there is the availability to sell a magisterial-use product in a country, we will continue to do that. So it's status quo from a commercial perspective.

Okay. And then second and final question for me. I know you said you didn't really want to, but I'm going to try anyway. Help us explain the time lines to approval from here. I mean, should we now expect probably 2 years from here before it's approved, so maybe this is an F '25 story?

I don't think it's that far out, but I think it's premature to give you guidance until we've agreed with regulators what the revised submission process will be. I think one of the things that's important to note, and we've -- we've mentioned it in our disclosure, is that the situation for Illuccix has moved on quite a bit from the original submission in terms of the landscape of submission options that we have. So I think that it's certainly -- we have a number of avenues that we can pursue to resubmit. And I think once we've finalized what the approach is that we're going to take, that will be the time that we will update shareholders. But I don't think 2025 is the reality. I don't think it's as draconian as that.

Your next question comes from Shane Storey with Wilsons.

Chris, I've only got 1 question. Are there any key differences in the manufacturing -- manufacturing setups in place to supply the Europe -- European and U.S. markets? I'm just trying to isolate, I guess, some of those specific requirements you referred to and maybe individual facilities that those data requests stem from? Just any differences between the dossiers that -- the 2 respective dossiers.

Look, so the product as manufactured is exactly the same for all markets. We've pursued a standardized manufacturing approach. The manufacturers that we use, use processes that are compliant with European Pharmacopoeia. So that's not the issue. It's a very technical discussion, but I do want to satisfy your curiosity, Shane. And I know that also you're a technical guy. So in essence, unlike the U.S. or other jurisdictions, European Pharmacopoeia uses a monograph system. And what that does is it pegs product performance to specific publications. And because we have the existence of the European monograph for synthesizer-produced gallium PSMA, and that's sort of fairly dogmatically adhered to as a kind of reference standard, where we run into challenges with European regulators is defining the differences between the cold kit approach, which is not using a synthesizer. It's not a customer manufactured process. It's an end product. The finished product is the cold kit. And where we got to in the end was really a desire to demonstrate a stronger comparability package to the monograph, if that makes sense. So it's a bit of a quirk, and it's unfortunate because our product is not a synthesizer-based product. It's a cold kit. And cold kits are not new in nuclear medicine. But I think that we had -- we incurred a fair bit of regulator headwind around, well, how does your product ultimately compare to the synthesizer-based monograph. And that's where a lot of the -- a lot of the question marks in our data package when we didn't specifically set out to benchmark it. We did submit bridging studies where we showed in patients the comparability of the approach, but that's not enough or that has proven not to be enough from a clinical perspective. They now want to see the data analytical comparison. And that's the additional data that we will be generating. So I'm probably going to leave it at that, but hopefully, I've given you enough color that this is -- this is not so much about the product itself, but more about how the product stacks up in the landscape of European Pharmacopoeia. And it is just different. None of the issues that we've been grappling with, with European regulators are issues, for example, that we would struggle to deal with another regulator. It's very EU nuanced.

Next question comes from John Hester with Bell Potter.

Christian, in terms of marketing and the potential leg up that you're going to give your competitors here, can you just discuss that? Because obviously, you've got the Novartis product, you've got the Lantheus product, presumably, both of which are available in Europe now. Unfortunately, this is going to give them a broader first-mover advantage. Can you talk about how that may affect you going forward and also the relationship with your distributors?

We won't comment on the relationship with our distributors because that's a commercially sensitive topic, and that's obviously an ongoing issue. We have an excellent relationship with our distributors. So they have worked with us very well along the process, and we don't expect that to continue. And obviously, we -- I mean, we've -- this year, I mean, I don't have the exact number off the top of my head, but probably by the end of the year, we're close to 20,000 patients in Europe that have had access to Illuccix and so -- under magisterial use. So we'll -- that dynamic of the relationship with our distributors will clearly continue. We will clearly continue to satisfy the demand from physician requests. So I think that's as far as I'll really talk about from a distributor perspective. But as I said, our relationship with our distributors is excellent, and by the way, multi-jurisdictional, right? So when we work with certain distributors in Europe, we also work with them in other territories on a strategic basis. So I think they kind of share our long-term view on the business. Regarding competitive dynamics, there isn't an approved PSMA agent in Europe yet. Curium is developing the PYLARIFY platform under license, and it just finished Phase III trials. The Novartis product is not yet approved in Europe. So at the moment, it's still an open competitive landscape. I think one of our strengths is that unlike our competition, we have a very solid user base in Europe. And these are relationships that have a long operating history with the product, understand it well, like what it does for their clinical workflow. And so I think that we'll obviously continue to supply product up until the point where we can resolve this. And so I don't think that the competitive landscape is as draconian as you imply. I mean, it's still an open opportunity. And I think we're still very much in play. I think the -- the advantage that we have going into this is we've had complete and exhaustive feedback on the dossier. And so I think that makes the review process that we'll have to go into going forward as streamlined as it possibly can be. We're not operating in any kind of nuanced gray areas. We've got clear regulatory feedback, and I think that's obviously helpful to the resubmission.

[Operator Instructions]

All right. Well, I'll take it on the basis that there doesn't seem to be any further questions coming through. Obviously, as we progress into a new procedure, we'll keep the market closely informed. I appreciate the -- oh, wait a second. We seem to have another question that has appeared from Dennis at Taylor Collison. Dennis, fire away.

Chris, can you give a little additional color about the changes to the landscape of submission options that you've referred to?

It's a little speculative at this point because I think before we really talk about that and set expectations, I think we'd want to pursue the follow-up regulator engagement that we have. So I think it's best if we defer that topic to a future time point. But I think suffice to say, the fact that we have approval of the product in other major jurisdictions helps to approach a submission anew. Also, because of the amount of clinical experience that we have with the product in Europe, I mean, again, to reiterate, we've -- we've dosed tens of thousands of patients in Europe. I mean, I think the most disappointing outcome for me, speaking personally for a moment, is the fact that we are so impactful with this product in Europe. And that's really an illustration of the unmet medical need that we deliver against. And I think it's just super disappointing for patients that we aren't able to go out with a marketing authorization and really enlarge the availability of this product. But what that also means is that because we have such an entrenched experience with the product in the European context, that there are some avenues that we can pursue around that experience as well. So I think that's about as much color, Dennis, as I want to give. I think it's very unlikely that we will pursue the approach that we have historically undertaken for this product. We don't, at this point in time, see the merits of doing that. But we'll certainly keep you updated once we finalize the revised approach, which, as I said, we're in the process of instigating that dialogue right now to make sure that we have the most streamlined pathway forward.

Your next question comes from John Hester with Bell Potter.

Christian, just 1 more question, just 1 more follow-up. In the absence of an approved PSMA, what is the dominant product for imaging of prostate cancer in Europe now?

Well, we operate under a variety of physician-supervised usage exemptions. We generally refer to it as magisterial use, or compassionate use is probably a more generalized term. Essentially, in the absence of an approved product, physicians are able to source their own solution. And in Europe, this takes really 2 forms. Our cold kit is obviously widely used. There is some physician-led adoption of other PSMA agents, and there's a variety of PSMA agents out there, as you're well aware from the literature. And then with reference to my earlier comment about the European monograph, the whole point of the establishment of a monograph is really -- it's a published standard around synthesized or produced gallium PSMA. In many countries, physicians have gone out and nuclear medicine departments have gone out and acquired synthesizers to essentially -- to be colloquial, to kind of homebrew their own. And they are able to do that so long as there isn't an approved product in the market. So a significant part of European PSMA usage is really that physician-supervised production of gallium PSMA against the monograph. And so I think, hopefully, that answers your question in terms of the landscape.

Yes, that's fine.

Yes. So just -- I mean, just to summarize, we are -- I mean, Europe today is solely a physician-supervised use of PSMA. I mean, clearly, PSMA -- PSMA imaging was pioneered in Europe, and it's widely used. But there is an absolute need for a standardized product. Our product has some unique advantages in terms of its accessibility and its throughput and its lack of requirements around manufacturing infrastructure. It's a preparation. It's a [ lye-off live ] cold kit, so it's very easy to use. And this is why we've seen strong adoption and use of the product in Europe because it is such an easily facilitated availability of PSMA imaging. But as of today, there is no approved product landscape in Europe. It's really physician-supervised use. Thanks, John. I'll open it up if there's any other further questions, maybe just give folks a minute.

[Operator Instructions]

Okay. Well, I think we'll wrap up there. I mean just to conclude -- all right, there's 1 more question that's appeared. I'll take it, from [ Adam Jagich. ]

Just want to hear your thoughts on ensuring that within the European jurisdictions, there's full patent protection of what Telix is planning to offer.

Well, I think an IP discussion's a bit outside of the scope of this conversation. The issues around our approval process don't relate to intellectual property. We have, of course, a company policy of filing intellectual property in all the major markets in which we operate. Our IP position around Illuccix is public domain. For example, it's captured in the FDA Orange Book. So yes, we do pursue a global -- at least a major markets IP protection approach on our products.

There are no further questions at this time. I'll now hand back to Chris Behrenbruch for any closing remarks.

Thank you very much. Well, look, I don't have anything really further to add. Obviously, it's a disappointing outcome for the company, but we do have a clear pathway forward. And we'll certainly make sure that as we progress our resubmission process, that we're keeping the market informed. And I thank you for your attendance to this call this morning.

That does conclude our conference for today. Thank you for participating. You may now disconnect.