Telix Pharmaceuticals Limited (TLX) Earnings Call Transcript & Summary

Well, good afternoon, everyone, and welcome. My name is Seth Schwartz, I lead JPMorgan's health care investment banking business in Australia. It's a great pleasure to welcome Telix to the JPMorgan conference again this year. And let me introduce Chris Behrenbruch, Managing Director and CEO, to take the presentation away.

Thanks very much, Seth, and thank you to the JPM team, as always, for the invite, and to those in the room and online, I appreciate the opportunity to present the company to you. So, kind of 3 parts to Telix as an overview, for those of you who may or may not know the company to a greater or lesser extent. First of all, we're a theranostic radiopharmaceutical company. That means that our core, we're a therapeutics company, but we believe in the importance of precision medicine and selecting patients for therapy, and I think that's something that regulators have fundamentally bought into as a critical requirement for this class of therapeutics. We are somewhat targeting agent agnostic. I'll talk a little bit more about that in a second. Although we do have a propensity for biologics, we see a lot of value in the intersection between the concept of ADCs and the utilization of radiopharmaceuticals, and there's certainly some unique therapeutic opportunities to be pursued there. And our latest stage therapeutic program, which in prostate cancer is currently in Phase 3. I'll talk a bit more about that program in a minute. We are also isotope agnostic to a large extent. We have programs that are developed with beta-emitters like lutetium, but we also have an active program in the alpha space as well, and I'll elucidate the pipeline in a bit more detail. But unusually, compared to our peer companies in this market cap, we are a commercial stage company. We're monetizing our portfolio of diagnostic radiopharmaceuticals, and we see this as highly strategic and aligned with our therapy business, but most importantly, today it gives us a revenue stream. So we've just reported our full year results for 2023. We did about 0.5 billion [ Australian pesos], which is USD 333 million in revenue for the year, which is a fantastic year and fantastic growth on our prior year. This is really our first full year of commercial sales. We've started a BLA -- a rolling BLA submission for our second product in renal cancer, which we're extremely pleased with the progress on, and we're subject to regulatory approvals. We hope to launch that commercially this year, as well as our third program in glioblastoma, Pixclara. This is a novel imaging agent for glioblastoma. Again, all of these imaging agents target the targets that we go after for therapy. So this is not about building a stand-alone diagnostic business. This is really about building a pathway for an integrated precision medicine strategy for our therapeutic pipeline. The net result of it is, because we are a commercial company, and we have earnings, we were able this year -- this past year to invest just over USD 100 million into R&D and scale up manufacturing, which is an amazing accomplishment, I think, for any company, especially one of our stage of development. And so we have a very vibrant R&D program. We're a highly acquisitive company. We've built the company through M&A. We continue to add and build our pipeline, and that also includes building capabilities around manufacturing and supply chain. So a really bright future for the company. Just to hammer-home the fact that we are commercial, this has been our quarter-on-quarter sales growth over the last 6 quarters basically since we launched Illuccix for imaging prostate cancer. These are -- that total number there is an unaudited result, but is a reasonably reliable number. So we did just shy of USD 100 million in revenue in the past quarter, and we expect to see this growth continue. Prostate cancer imaging is a huge market. There's a lot of indications to pursue. It's got plenty of expansion potential. And so we're extremely positive about what 2024 has to offer. We've been able in the last 12 months to essentially take about 33%, 34% market share in the U.S., and we expect to continue to take that -- to take our fair share of the market. I think one of the things that differentiates Telix, we didn't start the company with the view that we were going to go after a particular isotope or a particular targeting platform. We have a very deep understanding of radiobiology. And our view is that we should design products that use the appropriate pharmacophore and the appropriate isotope for the application that you're interested in. So asking the question, where do you want to get the radiation and why? And so as a consequence, as a business, we've built a capability for targeting agents based around biologics. We've also built a small molecule capability. And so that just gives us a lot of flexibility on how we develop our pipeline going forward. And I've just outlined there a few examples of why you might choose a particular radioisotope, one over another or why you might develop a particular type of pharmacophore that has maybe a certain excretion pathway or you may be trying to get something across the blood-brain barrier. And so one size fits all strategy doesn't really work. So I think what this means is that, when you look at Telix, you should see a really comprehensive portfolio of unmet medical needs that are able to be addressed through targeted radiation, but where we really thought about what is the targeting strategy and what is the right choice of isotope, whether it's a diagnostic isotope or a therapeutic one. So this is our pipeline. This is, I would say, the core pipeline of the company. We actually have a really nice early, early-stage R&D pipeline that includes some things that are just going into the clinic. But these are the ones without appearing to be too unfocused. These are the things that are -- where we're investing our core earnings into right now. So furthest along is our prostate cancer program, both diagnostically and therapeutically, as I've alluded. Illuccix is approved. And we -- by the way, we're expanding the markets and the opportunity for that product. Our therapy program, which is based on Lutetium-177 is currently in Phase III. And then we have an alpha program, which is currently in Phase 1 in early clinical development. And I'll give you a little bit more color on these programs. Our follow-on programs in renal cancer and brain cancer are roughly equal along. And as you can see, the imaging agents tend to be a phase ahead of the therapy programs just because the clinical trials are faster and more straightforward to run. So we've now completed the clinical development of our renal and brain cancer programs. And as I said before, they are the subject of further marketing authorization submissions and hopefully, approvals this year. We have 2 really early-stage clinical programs, one in soft tissue sarcoma. This is based on the Lartruvo asset that we in-licensed from Lilly. So this was a product that had a conditional approval and then failed to progress commercially with a confirmatory study. We have now repurposed that asset into a radiopharmaceutical. It has a ton of potential, both diagnostically and therapeutically. And then we have a program in bone marrow conditioning. We see as this whole field of cell and gene therapies evolves, that there's a big unmet need for safe bone marrow ablation. Typically, chemo ablative approaches are -- have a high morbidity associated with them. And we think that with radiopharmaceuticals approach, we can do this very safely and effectively. So all of these programs have a very clear rationale for why you would use targeted radiation, both diagnostically and therapeutically, and to reinforce the imaging is really there to support the patient selection and the dosing strategy for the therapeutics, but we get the added advantage that we can monetize those assets along the way. So I think just to kind of roll this all up, if you -- when you think about Telix, we have a very late-stage pipeline in major disease indications with some really fantastic data to -- clearly our survival data in prostate cancer is really impressive. We have a diagnostics business, which is currently funding the company as well as building the relationship with the key opinion leaders that are ultimately going to be using our therapeutics. We have an amazing pipeline of late -- of early-stage follow-on therapeutic radiopharmaceutical products with very novel targets in some cases. And we have a well-integrated supply chain and manufacturing capability. And this is kind of illustrated a little bit here. Unlike some of our contemporaries, we really are truly a global company. We have R&D capabilities -- bricks-and-mortar R&D capabilities here in the U.S., which we are expanding at the moment. We have 3 commercial manufacturing locations in Belgium, including a very substantial distribution hub for global distribution for radiopharmaceuticals. And then we have a hot lab and dosimetry footprint that we're currently building out in Melbourne. So these are substantial internal resources and assets where we have now been able to fully take control internally of our process development work. We can ship clinical trial doses out to the end of Phase 2, just about anywhere in the world, that are all internally produced. And then we have a scale-up manufacturing capability, including 9 GMP lines for global distribution. By the way, 2 of those GMP lines are on the back end of our alpha labs. So we actually have a dedicated research facility for alpha emitters within 2 GMP scale-up production facilities on the back end of it. So a really formidable in-house capability. I'm going to talk briefly about our prostate cancer program. Prostate cancer therapeutics are -- particularly PSMA therapeutics are very topical at the moment. Our program, TLX591, is in some ways the same and in some ways different. So the same is it's targeting PSMA and it's delivering lutetium, but that's pretty much where the similarity ends. So our drug candidate is based on an antibody against PSMA. It has a very different targeting in biodistribution. It's a lot more redolent of the ADC type approach where you're getting that selectivity -- that 10 to the 19th selectivity of an antibody. You're much better equipped to avoid endogenous targeting and -- expression of endogenous PSMA. So you end up with something that's really functionally specific for the tumor. And then like typical internalizing targets, you get excellent internalization and retention with an antibody. And that means, as a consequence, we can inject much less radioactivity into the patient and get a much more durable effect. These things are also hepatically cleared, so we don't have the latent nephrotoxicity risk associated with radiopharmaceuticals. We're really putting the radiation where it should be, and we're using the most resistant clearance organs to deliver that therapeutic effect. So this has just gone into a Phase III trial. We've treated to date about 250 patients. We've shown now safety data in an equivalent patient population to our competitor assets that shows that when we're not treating patients at the very end of their life, that these are extremely well-tolerated therapies. They have a similar toxicity profile. And so we really feel that on a safety and efficacy perspective, this is a highly differentiated product. And the most important thing to remember about PSMA is it really is a dose-dependent target. We know that when we deliver radiopharmaceuticals against PSMA, that the dose does matter. That's why, for example, on a comparative basis, some of the small molecule PSMA data that's come out recently has been affected by -- that PFS even has been affected by the delta and dosing levels. Our product has a very -- because it's antibody delivered, it has a very different internalization and retention profile. When we inject a patient with TLX591, we're getting 40% to 45% of the injected dose into the tumor. The consequence is we have a much more -- we believe -- subject to confirmation in the Phase 3 trial, we think we have a much more efficacious asset. And just to put that into perspective, our published Phase II data, which is based on really heavily pretreated patients. So these would be equivalent to patients or even a little bit further along when patients that were in the VISION trial. These are patients admittedly that are more heterogeneous in that study because they were acquired over a longer period of time. So I'm not trying to encourage a cross-trial comparison here. But I do note that our survival benefit was well over 40 months of overall survival. We've tracked those patients -- that entire cohort of patients out to that OS signal. So we have a very clear idea that the survival benefit is highly differentiated. As I mentioned before, we just recently published the results of a study where -- the goal is actually a radiogenomics study. It's to demonstrate that small molecule PSMA imaging agents can select patients with therapy and predict the disease burden for the therapeutic agent. This was something that we got feedback from regulators that they wanted to see before we filed. But it was an opportunity for us to get a safety signal in a much healthier patient population. And I guess the key take-home message here, when you look at our product side-by-side with small molecule agents in that second-line castrate-resistant prostate cancer setting, we have a very similar AE profile, about 25% Grade 3, Grade 4 cytopenias, anemia. These are all transient, reversible, extremely predictable. By extremely predictable I mean, 1 week after injection you're going to know whether at day 21 you're going to need to give a patient platelets. So these are not acutely managed patients. These are very predictable, reversible toxicities. And we think that's a reasonable trade-off against the efficacy that we see with these agents. You're going to get -- it's a much more aggressive treatment, 2 shots, 14 days apart. That's the entire course of therapy, but you are much more aggressively dosing this patient from a radiation perspective. And so, that's now moved on to a Phase III trial. It's already recruiting as a Phase III trial in Australia. We have a run-in study -- a Phase II run-in study with our new manufacturing package plant for the U.S. So that IND is just in final stages of preparation. And we expect to add U.S. and European and some Asian sites potentially later this year. This is a really, in my view, a very thoughtfully designed study where the standard of care that we are -- so it's a standard of care versus standard of care plus study. And the standard of care is really reflective of a real-world patient population. And we're seeing more and more use of taxanes in that second-line setting. And so we're giving the physician the choice, whether they want to use a taxane or a second-line androgen deprivation. I think some of the criticism of other studies that have been conducted in this second-line patient setting is just not indicative of real world. And frankly, if the end goal is overall survival, we'd have -- better have a realistic standard of care. So yes, really exciting trial, a lot of investigator interest. Study is off to a great start, and we hope that around the middle of the year that we will have a recruited cohort for an interim readout, which will hopefully happen at some stage in the first half of 2025. So yes, it's been a very tough study to get up and running and -- but we're -- certainly, from a supply chain and logistics perspective, we're well and truly there. And so just to summarize why we're excited, why we believe in this asset. First of all, really excellent and highly differentiated overall survival. That's the thing that we're shooting for. We think that the dosing schedule gives a ton of flexibility on how medical oncology will integrate this into standard of care. From a patient off-target AE perspective, this is a really superior asset because the antibody doesn't hit endogenous PSMA expression. We don't have these uncomfortable side effects like, for example, dry mouth and dry eye and back pain associated with -- that are typically associated with PSMA small molecules. And we have a very straightforward dosing regimen, 2 shots, 14 days apart, and we inject 1/12 of the amount of lutetium into a patient because we much more efficiently deliver radiation to the tumor. So, when you look at the cumulative differentiation of this asset, it's pretty profound, both from a patient and a care perspective. We're not content with just lutetium. Lutetium is really important. It's going to be a workhorse isotope for a long time. We don't see lutetium going away, particularly in bulky disease. Beta emitters have a really important role to play for the long term. I think sometimes in the nuclear medicine community, we get [indiscernible] up about the next isotope that comes along, but actually lutetium will have and does have a well-established supply chain and will have tremendous utility for -- I would say, for some decades to come. It's an extremely good radionuclide. But we are interested in the role of alpha emitters. We think that alpha emitters can not only perhaps deal with patients that are no longer responding to beta emitters, but may also have a more important role to play in early-stage disease where it's more localized and less disseminated. And so to tackle that, we love the properties of an antibody. We like that selectivity. We like that efficiency of internalization. But what we're looking for is something that targets and clears a bit more like a small molecule. And so to achieve that, we've engineered our favorite antibody 591 into a PK engineered and Fc engineered antibody. And this has the same hepatic clearance. It has the same selectivity for tumor expressed PSMA, but it has a very rapid blood clearance. It has a [ t-half alpha ] of about 12 hours in humans. We've now been able to validate that. We've done dose escalation and dosimetry studies in patients, and we're getting ready to pop actinium onto that and start to do therapeutic studies. And one of the challenges with Actinium is very hard to do conventional dosimetry. So we use -- in this particular instance in the development phase, we use copper-64 as a proxy. And what that does is it enables us over a couple of day period to see what the tumor accumulation looks like. So we've just about finished that study. We're looking forward to progressing the results. Although as a little teaser here, you can see this is a side-by-side comparison between same patient, roughly the same cross-section of the Pelvis where you can see an uptake with a small molecule. And you can see just really the beautiful internalization efficiency of this targeting agent, the bottom image being the proxy for the Actinium targeting agent. And we know that we're getting more than enough activity into the patient to have efficacy. So yes, very exciting. Obviously, from a development perspective, to really go into a therapeutic decision-making with Actinium with a good confidence that your very novel pharmacophore is going to work, you have to take a bit of an awkward development process, right, because you're going to have to subject patients to an imaging study and there isn't tons of benefit to the patient in doing that. So this study took us about 1 year to do, but now we have the data and we can now pivot to the therapeutic application. So that's a big event for the company in 2024. And so when you put this all together, when you look at Illuccix and Illuccix life cycle management, which is what we're heavily committed to being a long-term leader in prostate cancer imaging, and then you look at TLX591 and 592 therapy and you map that all out, what you can see is that we have a very comprehensive vision for how Telix is going to manage prostate cancer care to the benefit of patients. We're going to be there from the very beginning to the diagnosis and staging. We're going to be there through decision-making around systemic therapies. We're going to be there and perhaps in the early stage with alpha emitters. We're going to be there in later-stage systemic disease with beta emitters. And so we really believe that we can affect -- we can be there as a partner all the way along this cancer care continuum in prostate cancer. We also did announce just before Christmas, the acquisition of a company, a planned acquisition subject to completion, of a company called QSAM, and this will actually give us a palliative care agent at the end of life that has a very rapid path to commercialization. So we haven't talked too much about the market opportunity for that yet, but we now live in a post-Sackler Purdue world where opioids are not just random. We're not giving out like [ Tic Tacs ] anymore and the cost of home palliative care is very high. And now there's a need once again for nuclear medicine to play a role of that one shot, give you 3 or 4 months of pain relief for your osteoblastic bone metastases, and we think we can get a product very quickly to market there. So again, that commitment to being on the patient journey from the beginning to the end. Now we do have several other programs, and this is just a snapshot of all the clinical trials that we have running. We actually have 18 clinical trials running at the moment. Most of these trials will produce data points throughout the course of this year. So this year is a big year of catalyst for us, and it's going to be exciting to see a couple of years of pretty hard work start to pay off. I'm particularly excited to start talking about the results that we're getting in combo IO and kidney cancer. We have this hypothesis that you can use particularly a beta emitter to resensitize "cold tumors" to immuno-oncology checkpoint inhibitors. And we're starting to see clinical data that supports that hypothesis. So really between our renal prostate and our brain cancer program, just a lot coming out this year. So renal cancer therapy, I've already kind of alluded to, this is really about looking at the combination role of radiation and immuno-oncology agents in the first line. In the second-line setting we have 2 Phase 2 trials that are running to explore this. This is with Lutetium-177. We also do, by the way, have a second-generation product with Actinium, but it's in preclinical stage. So we haven't really put a lot of focus on it. Carbonic anhydrase 9 is the target in renal cancer, and I can't overemphasize how exciting this target is, not just because it has a genotype to phenotype relationship in kidney cancer. So you're dealing with essentially a guarantee that if you have clear cell renal cell carcinoma, the target is well expressed, but it's also an incredibly important target in a lot of late-stage cancers, a lot of late-stage solid tumors with poor prognostic outcomes. And so, particularly through our STARSTRUCK and STARBURST studies -- So STARBURST is an indication scouting study where we are using imaging to look at potential therapeutic indications with CA9, as well as the STARSTRUCK study, which is in combination with Merck KGaA, where we are looking at a combination of DNA damage repair and lutetium therapy. We're scouting what is the utility of targeting and treating CA9 on a multi-cancer basis. And the vision here is ultimately a kind of LOXO style basket study where your biomarker for patient selection is going to be imaging. That's to be clear, are hopefully soon to be approved imaging agent, and then you would select a patient with a solid tumor expressing carbonic anhydrase 9 and treat that patient. And we know that carbonic anhydrase 9 expression is really a biomarker of a depleted immune environment in the tumor microenvironment. And so we actually have a positive biomarker for patient selection, for patients that are not going to respond well to immunotherapies. And we will have this year a proof-of-concept showing that, that actually really does work in patients. So I think that's going to be a really profound catalyst for the company this year. Similarly, we have a brain cancer program. We have various Phase I and Phase II trials running. We started, as everybody does, in the recurrent setting. We saw a nice antitumor effect through a combination of imaging and also clinical symptoms. Most of the patients in the refractory setting after treatment didn't need steroids anymore, for example. We chose to undertake the initial clinical work in Europe where Avastin is not prescribed. And so you're not doing symptomatic management with bevacizumab. And so you get a really clean signal of treatment response. So we saw a really nice treatment response in recurrent patients and what we believe is an encouraging survival advantage. And on that basis, we then have now extended the program into Phase I in the frontline setting. The purpose of that study is to do a temozolomide combination drug safety study and then hopefully to move into a pivotal trial. We've dosed in total about 35 patients to date, and we think we have enough data to start to think about how we would design a pivotal trial once we finish that safety study in combination with TMZ. So yes. This is -- I mean, it's funny. This is a really exciting program. This is actually one of the programs that kind of got me excited about starting the company in the first place. And yet it tends to fall behind in attention between the prostate programs and Illuccix sales. And yet, if I could just maybe start another company from scratch, I would just do this one because it's actually a really exciting asset. And then just the last sort of 2 quick spotlights. We have a TLX300 program in soft tissue sarcoma. Many of you will know STS is one of those indications, is very successfully treated with the radiation even out to kind of Stage 3 disease. It's got some peculiarities from a radiation biology perspective which makes it quite tantalizing as a clinical target. This was an antibody that was developed, as I mentioned in my opening comments, by Lilly. It was branded as Lartruvo. We've now taken that naked antibody and reengineered it into a radiopharmaceutical and it's commencing clinical trials very shortly. And I think we think we've got a really winning -- this will be an alpha product. We haven't disclosed which alpha emitter yet. That's a little bit top secret, but we'll hopefully come out into the floor once we start -- obviously, once we start running clinical trials. So yes, really clear, strong rationale for this. Not only was there great clinical data supporting the use of this target, which is PDGF receptor alpha, but we also have a very clear understanding of what the commercial potential is of this asset. And we think that, given the safety package that we have for Lartruvo and the clear pathway and the huge unmet need -- I mean, there's been no meaningful new products in soft tissue sarcoma since Lartruvo. I think it gives us a nice compelling pathway to a potentially important product and a very clear clinical value proposition. And last of all, the last sort of part of our core pipeline is our TLX66 program. This is targeting CD66, which is a really interesting target, predominantly expressed in neutrophils. And essentially, we've demonstrated that this is very suitable for use as a bone marrow conditioning agent. So it's a really validated leukocyte target. We've dosed actually over 100 patients with this asset to date. And including children, we've been able to show that we have a very safe and well tolerable -- well-tolerated bone marrow conditioning agent. And so this is something that I think has a lot of commercial potential, and we are exploring its use in a subset of AML patients that are at high risk of failing existing conditioning mechanisms. So yes, again, great data in terms of overall survival and efficacy of that bone marrow transplantation. So just to wrap up, because I think I'm at the end of my time. But this year we will have 2 more agents that will be hopefully approved. So we've commenced the BLA filing process. It's a rolling BLA submission for our renal cancer program. We had great Phase 3 data. Our brain cancer imaging program also expected to have an NDA filed in the next couple of months. And again, a very compelling use case. This is already an agent that's well understood in Europe, and we're bringing it to the U.S., hopefully to make it widely available and bring the benefits to patients. And -- so just to wrap up, a really well integrated radio pharma company, a highly differentiated therapeutics portfolio. Our conviction around the importance of precision medicine means that we are delivering the right therapies for the right clinical indications. And of course, we can monetize those imaging applications early in the life of the company. So a very highly differentiated company, and I think noteworthy that we are obviously self-funding our R&D program out of earnings. So very unusual as a radio pharma company in this space. Thank you very much for your time, and I appreciate the interest in the company.