Telix Pharmaceuticals Limited (TLX) Earnings Call Transcript & Summary

Good morning, everyone. My name is Seth Schwartz, and I lead JPMorgan's health care investment banking practice in Australia. Great honor and privilege this morning to welcome and introduce Chris Behrenbruch, CEO and Managing Director of Telix Pharmaceuticals.

Thanks very much, Seth, and it's a pleasure to be here to tell you about our very exciting company. I'm just going to get the slides up here. Great. So just skipping over the customary disclaimer. So just a bit of a high-level overview of Telix, so we're a therapeutics company but with a strong precision medicine or theranostics bent. We have a commercial stage portfolio in diagnostic imaging. And particularly, we just launched our first product in prostate cancer, and I'm going to be talking a little bit more about that. We also just had a readout, a very nice strong readout on our Phase III trial in renal cancer. And so those are our 2 sort of commercial stage assets. As a company, radiopharmaceuticals are a super challenging area from a supply chain and distribution perspective. So that's something that we've spent a lot of energy and invested a lot of capital in making sure that we can really deliver these products globally around the world. To be clear, we're not a diagnostic imaging company. We're a therapeutics company that -- where we believe in the role of precision medicine in delivering therapy. We have about 20 clinical trials, a mixture of company and investigator-led trials running around the globe, and it's a lot of clinical data underpinning our pipeline. We're a well-funded company. We're actually a cash flow neutral to positive company based on our last couple of quarters of financial performance, and we just actually put out our top line results for the last quarter of U.S. sales. We had a really strong launch in 2022 for the Illuccix product. That's the prostate cancer imaging product with about USD 100 million in sales. So we're doing about $200 million annualized sales for that product as of this time with a strong balance sheet. And we have about a AUD 2 billion market cap or [ 2 billion Aussie peso ], so that's about USD 1.4 billion market cap, so starting to get into the interesting part of the market. Just in terms of our company distribution, so we are an ASX-listed company. We're headquartered in Melbourne, Australia, but really 75% of our workforce is outside of Australia. We're predominantly headquartered -- our major operations are out in Indianapolis here in the U.S., although we have a pretty formidable manufacturing and R&D team in Europe. And then the remainder of the workforce in the APAC region is between Australia, and we have a small commercial team in Japan as well. Japan is actually the second largest homogeneous market for nuclear medicine in the world after the U.S., and so we see some opportunities near term there. I'm actually always amazed. These days, everybody understands what theranostics are, so this is probably not new information to you. But I can tell you 5 years ago, nobody knew what radiopharmaceuticals were particularly. So I think there's a couple of key take-home messages from this slide. So first of all, we're in the business of developing radioactive drugs, and you get a benefit from that in terms of ability to pick off a diagnostic signal from that sort of a platform. So you have some sort of targeting agent that's delivering a radioactive payload with a linker. It's a lot like a conventional drug conjugate except for it's radioactive. And sometimes you get a diagnostic application depending on your choice of isotope. Sometimes you get a therapeutic. Sometimes you get both on the same isotope. It really depends on what the radiation biology problem is that you're trying to solve. I think one thing I want to convey from this slide is we're targeting agent agnostic. So our team is capable of working with biologics, small molecules, peptides. We don't care. We focus on the pharmacology of the application that we're trying to solve. And we're also isotope agnostic. Depending on what sort of biological effect you're hoping to achieve, you're going to choose your isotope accordingly. And then we summarize and package this all up in the concept of see it and treat it. And I think that's what -- I think that's why the world's starting to realize that radiopharmaceuticals are just very exciting. You have the ability to look at the patient's disease from your toes to your nose with a PET scanner or a SPECT scanner and then use that staging information to make all kinds of important therapeutic decisions, including, by the way, the deployment of therapeutic radiopharmaceuticals. So our mission as a company is not just to be another pharmaceutical modality. And then I think sometimes in nuclear medicine, we forget that the whole rest of the world, the drug development is happening in parallel. But we do have a very specific agenda, which is to disrupt traditional radiation oncology. So external beam radiation, which is a standard workhorse modality in cancer, it's always going to be important. But the ability to interlink that with endo-radiotherapeutic approaches is going to make the practice of radiation oncology just so much more impactful because now we can treat radiation delivery truly as a systemic therapy, and that's just very, very exciting. That has impact in early-stage disease as an adjunct to surgery. It has impact in advanced metastatic disease where you might be using it in combination with immunotherapy or androgen deprivation depending on what sort of cancer or indication you're going after. So there's just a lot of synergies. And what we actually believe as a company is that, 10 years from now, we'll look at radiation oncology just as a substrate to immuno-oncology. There's just so much interplay between those modalities. Nothing primes the immune system better than low-dose radiation. So we've had a -- 2022 was really a transformative year for the company. We transitioned from a development stage company to a commercial stage company with all the joy and challenge that, that entails. I've mentioned our revenue and our positive renal cancer data, and we certainly are building a sustainable business. We also have a lot of new data points around our prostate cancer therapy program and our glioblastoma therapy program, so I'm going to convey some of that information a little bit later in the presentation. And just to give you -- from a U.S. perspective, to give you that quarter-on-quarter growth perspective, you can really see that we've built a very nice franchise in Illuccix, and we continue to see that market grow and expand both in terms of white space in the market, new indications, but also we're doing a pretty good job of taking market share from our competition as well. In terms of 2023, there's basically 4 jobs that we have to do in 2023 to have another outstanding year. The first thing is to continue to grow and develop our Illuccix prostate cancer imaging franchise. I'm going to talk a bit more about that in a second. The second is to submit our BLA for the renal cancer imaging product. This is a super exciting product that's going to have a big impact, we think, on the standard of care in renal cancer. We also have an NDA to file this year in our brain cancer imaging program. That's the companion diagnostic to our brain cancer therapy program, but it's quite far ahead in terms of clinical development. And then last of all, we have a Phase III trial TGA approved for prostate cancer therapy, and we'll be extending that trial to U.S. and European patients over the course of 2023, and that marks our latest stage therapeutic program. Just to give you a bit of a pipeline overview because I've mentioned some of these disease areas that we're working on, so our lead area of focus and our commercial focus areas in prostate cancer with the imaging agent, as I've said, commercialized and the therapy program in Phase III. And I will go into detail a bit more in a minute on that therapy program. As I said, we just finished our Phase III in renal cancer imaging. We have 2 Phase II trials running in therapy with that asset package in renal cancer in the first- and second-line setting in combination with immunotherapy. We have, as I've mentioned, our glioblastoma program. We're in the final stages of commercializing the imaging agent. And then we have a small molecule therapeutic, the companion to that imaging agent in Phase II. We also have a bone marrow conditioning program. I'm not going to spend a lot of time talking about that today. It's a relatively nascent program, except to note that the targeting agent that we have for that program is already commercialized with technetium as an infection imaging agent. We -- that's sold by Curium under license in some countries around the world. We do see opportunities to commercially expand that, but it's a relatively small part of our portfolio today. We also have a really rich research pipeline. These are some of the highlights, not all, but some of the highlights of our R&D pipeline. These are all clinical stage activities. You can see, in some cases, it's about repurposing some of our existing assets to work with different isotopes or different indications. We are also -- we did a couple of interesting deals last year, most notably with Eli Lilly around olaratumab, which is an opportunity in sarcoma. That's about taking a previously marketed drug and reengineering it into a radiopharmaceutical. We think that has great potential. And then I mentioned a little bit around Illuccix life cycle management. When we sell prostate cancer imaging in the main, we're selling that to the urologist. And the urologist is a surgeon, and I think we see the opportunity to expand on the platform of Illuccix to deliver other functionalities such as image guidance in the operating theater to the urologist. So to sort of bring that all and wrap it all up strategically, our growth strategy for the company over the next 3 years is essentially based on 4 pillars. The first is commercializing that diagnostics portfolio. By early '24, we think we can have -- including the licensed out program, we think we can have 4 commercial products generating revenue for the company with some very sizable markets behind that. We are starting to see the data creation that unlocks the value in our therapeutics pipeline. We don't think right now our market cap reflects that at all. I think our market cap is very focused on Illuccix commercialization and with the success of Illuccix and the follow-on success of our renal cancer program, we believe that investors will really understand then the overall potential in our pipeline. We continue to vertically integrate. So in Europe, for example, we're a fully integrated developer manufacturer. We have our own facility in -- just outside of Brussels, where we are supplying -- around by the middle of the year, we hope to have that as a qualified facility to provide our products for clinical trial and commercial use in Europe. So again, that's about thinking proactively about the role of supply chain. It's clearly a critical issue in radiopharma. And then as I've shown you, we've got just a really exciting pipeline of follow-on technologies that will define what does Telix look like in the 5- to 7-year horizon, so really thinking about the future. Okay. So quickly on Illuccix, I mean, I've sort of given you the key highlights from a financial perspective. I think in terms of execution, we've done a great job since April. We launched in April of last year. We got reimbursement first of July. So practically speaking, we've been in the market for 6 months. We launched with 117 nuclear pharmacies. We're at about 190 nuclear pharmacies today, and we just have total coverage of the U.S. market. And I think what's special about our product is we don't -- unlike our competitor that does cyclotron produced manufacturing, which is a sort of quasi-centralized manufacturing, they've got sort of 20 or so sites where they're making the product, we produce our product in a nuclear pharmacy. And we dispense the product under nuclear -- under practice of pharmacy. So it's a lyophilized preparation. You make it when you need it. Our nuclear pharmacies are close to our customers. We don't do flying or long-haul transport. Typical driving distance is 20 minutes to a customer. And so because we're in the backyard, we're just there. We're reliable. We're on demand. And our customers have a growing appreciation of what that means in terms of reliability of clinical service provision. And so that adoption rate that I've been able to show you is really reflective of the power of that distribution model, just very, very differentiated. Today, we have 2 indications in primary staging and biochemical reoccurrences are the standard indications. Our product is indicated as well on the package insert of Novartis for the Pluvicto product as an approved gallium PSMA agent, although that's not currently on our label. We do have an sNDA for that indication though with a PDUFA date of the third week of March. So we certainly hope to be able to be more comprehensive in our offering to customers very soon. And so those first 2 indications give us today, we think, a total addressable market of somewhere around 250,000 scans. There are some tailwinds to our market. With COVID, we have a backlog of surgical patients. There's about 450,000 men that are fairly proximal to biochemical reoccurrence that may also benefit from PSMA imaging, and there's certainly some referral patterns where there's additional imaging being done. So the market is certainly larger than just the incidence basis. But the thing that's going to really grow the market for PSMA imaging over long term is that longitudinal management of disease. So today, we think the addressable market on an incidence basis is about 1.2 scans per patient. But if we can make PSMA imaging a validated part of that patient management journey, there's probably 4 or 5 scans per patient possible. And so the additional clinical research to really build out that market is a key part of our focus and of course, of others as well. I think that's really summarized nicely in this graph. This is the sort of Telix view of prostate cancer. So that wiggly line, of course, we don't control that line. That's your PSA level from initial diagnosis out to end-of-life patient. But what we're really doing right now, with the indications that we have for PSMA, we're really treating that first bump, right? We're really diagnosing and managing that surgical staging process and that reoccurrence. And so that begs the natural question, well, where does imaging fit in the rest of that continuum. And the answer is that every time you have a PSA rise, you're going to want to know what is the optimal therapeutic strategy to undertake for that patient. There's just a ton of exciting clinical research there. But also our therapy programs for both our lutetium PSMA agent and also our research agent in actinium, they have clear roles along that patient continuum as well. So we're really taking, I think, to summarize, a very holistic view of this space. And that's reflected in our innovation strategy as well. So I mean we are committed, I think, more so than any other company in this space to a very long-term delivery of prostate cancer imaging. That's reflected in some of the label extensions that we're working on. It's reflected on our commitment to the surgical application of molecular imaging. And what we also believe is that imaging is so fundamental to therapy delivery that we have to make sure that it's available everywhere. And unfortunately, a large swath of the world doesn't have PET scanners. They have SPECT scanners, and so we also have a technetium variant of Illuccix that we are developing that's in late-stage development. That's for a wider market. And I was -- it's actually kind of -- I was sort of touched a little bit by the prior speakers talking about their Asia Pacific view of the world. I think sometimes companies have come out of our part of the world. We have an awareness of what's going on in our backyard. And there's major markets that can be serviced if we can deliver the basic health care that's required to provide that therapeutic modality globally. So yes, just some really exciting innovation activity. Okay. Talking about prostate cancer therapy. So just very quickly, our approach is based on a biologics approach. We think this is a very differentiated approach just because of the efficiency in which we can deliver radiation into a tumor. And we have multiple studies underway as I'll show you in a second, but just a very, very different approach to delivering PSMA radiotherapeutics. We see the landscape right now obviously being led by Novartis. We see some fairly undifferentiated and generic follow-on products coming in behind that. And I think the real question is how do you make a more patient-friendly dosing schedule. How do you deliver a better therapeutic outcome that better takes advantage of the index, the therapeutic index of lutetium? So we see some clear opportunities to optimize the space and frankly, to make PSMA therapeutics a bit more appealing to medical oncology. These are the 3 studies that we have active. The first 2 studies are recruiting and will produce data in this year. And the first one is the pharmacogenomic study to demonstrate that we can use gallium PSMA to select for a different targeting agent for lutetium. We also have a frontline therapy program with ProstACT TARGET and then as I've mentioned, our Phase III program, which will be extending to the U.S. and Europe this year. This is a quick snapshot. It's a very conventional second-line therapy Phase III trial. It's a combination study with standard of care against standard of care alone. It's going to be about 400 patients. We expect to have an interim readout from this study after about 120 patients, and we hope to have recruited that interim readout substantially by the end of this year. So this is a very fast go forward for this clinical trial, and I think it's fair to say, given the elevated visibility of this class of therapeutics, it's just a ton of investigator interest in this study. And this in a nutshell shows why lutetium -- antibody delivered lutetium is a good idea. It's just about the tumor retention. When we inject a patient, we get about 45% of the injected dose into the tumor, stays there, residualizes there. It has a really pervasive therapeutic effect. And we think that that's going to result in better dosing strategies and a better efficacy for patients, so yes, really exciting opportunity. Very quickly, renal cancer. So this is the TLX250 program. We just had the Phase III readout for the imaging program. The target is carbonic anhydrase IX. And in many respects, this is the PSMA of renal cancer. It's an almost ubiquitously expressed target in clear cell renal cancer, which is the variant of renal cancer that we're most interested in. And so yes, this has a super large market opportunity. But carbonic anhydrase IX is also interesting in a bunch of other cancers as well, and I may come back to that a bit later on. We had our Phase III trial in renal cancer imaging, clear cell renal cancer imaging readout just before Christmas. We met all the primary and secondary endpoints. In short, we have an asset that has a 93% positive predictive value for renal cancer -- for clear cell renal cancer. So effectively, we have a noninvasive diagnostic tool for renal cancer with exquisite sensitivity and specificity for small lesions. What we get out of this is 2 indications. We get an incidental renal mass indication and the surgical stage indication potentially. So it's a very high-impact trial in terms of what it gives us clinically and commercially. So as I said, those 2 indications, incidental renal findings and surgical staging, but we also see lots of potential future indications for this in the renal cancer space. There's a surveillance potential. There's also looking, much like in prostate cancer, longitudinal treatment management. So just a big opportunity. Just for those first 2 indications, if we're successful at getting those over the line, which we believe on the basis of the clinical data we will, it's an in excess of a USD 500 million market just for the U.S. alone. So this is the beautiful natural segue to Illuccix because it's the same call point. It's geo-oncology. Our sales force is already out there selling molecular imaging to urology, and now we have just a natural follow-on product for that investment in our sales force. And as I mentioned before, this potential -- this target has a lot of utility in other potential areas. So we've got a whole bunch of trials exploring the value of carbonic anhydrase IX. We think this is going to be a great substrate for immuno-oncology, so we've got some exciting IO trials going. We're also looking at combo DNA damage repair inhibitors with this asset as well. So I think beyond renal cancer, we see just a lot of opportunity. And lastly, just a quick snapshot of our neuro-oncology program, which actually doesn't get a lot of airplay, but it's probably the program that excites me the most. We've got some really encouraging data last year in our follow-up Phase I, sort of our overall survival cohort in relapsed glioblastoma. We saw clear signs of antitumor activity from imaging. We have a cohort of patients that showed good disease stabilization, and so we're encouraged to move into the front-line setting with this asset. We are continuing to recruit patients in investigator-led Phase II in the relapsed setting to continue to get more data. But we're now doing a repeat Phase I trial to verify the use of this product with standard of care in the frontline setting. And I'm hoping that by the end of this year, based on the recruitment of that study and verification of particularly drug interaction with temozolomide to ensure that, that safety signal is there that we'll then be able to move into more advanced development with this asset. We have a companion diagnostic. So like all Telix programs, imaging and therapy, so TLX101 targets LAT-1, which is the same transporter that we use for target therapy. This is a well-established use imaging agent. It's a well-understood imaging agent. It's been used in a lot of patients, but we see the opportunity to bring that product into certain key markets, including the U.S. as a commercial opportunity in its own right. And so we have a 505(b)2 under preparation at the moment, which is the same pathway we use for the Illuccix product, and we're in the process of finalizing the FDA, the submission strategy for that. So I've talked about the follow-on results, so I won't go into more detail on that. So just to summarize, 2023 -- 2022 was a huge year for the company. 2023 just has a lot of activity. As I mentioned before, those 4 key focus areas for the company continue to build out our strength in Illuccix and to continue to do what we're doing, which is to become a dominant player in the U.S. and global prostate cancer imaging market, get our BLA filed for renal cancer with an early '24 planned launch, our NDA filing for the glioblastoma agent, and really then supercharging that Phase III trial with U.S. and European and potentially a few other countries' patients as well. But beneath those 4 major catalysts, we just have a lot of other milestones this year. We've got great data readouts across all of our clinical trials. We've got our manufacturing validation and launch in Europe as a vertically integrated developer manufacturer. We are expecting to get approval for Illuccix in Brazil and South Korea fairly shortly. We've completed bridging studies in Japan and have a pathway with a PMDA to approval in Japan. We have approval of 2 Phase III trials in China with the NMPA for renal cancer and prostate cancer. So I could go on, but I guess there's a sort of summary there that you can look at, really just a lot to look forward to, a lot of data readouts this year and opportunities to engage the market. So thanks for your attention. Hope I could convey some of the excitement that we have for this company. And I think from a U.S. market perspective, to be changing the lives of 1,000 men a week in the U.S. right now and their family is just a huge privilege. So thanks for your time and attention.