Telix Pharmaceuticals Limited (TLX) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Telix Pharmaceuticals Limited Investor Call. [Operator Instructions] I would now like to hand the conference over to Dr. Chris Behrenbruch, Managing Director and Group Chief Executive Officer. Please go ahead.

Thanks very much. Good morning, colleagues and shareholders. Thanks for joining the Telix management team on this investor call and for the opportunity to clarify the events in the last 24 hours, specifically the FDA's issuance of a refusal to file notice for the TLX250-CDx program, our renal cancer PET imaging agent. Whenever we experience a setback in our programs, we always believe it's important to be front-footed and transparent. Today is no exception. I'm joined on the call by Kyahn Williamson, SVP of Investor Relations; and Darren Smith, Group CFO, and they are available to help answer questions at the end of this call, if need be. Our goal for this call is to provide a little more color around what has happened and why it has impacted time lines, what remediation is involved and to assure shareholders and other key stakeholders that this is a relatively minor issue. However, it goes without saying we also share your frustration. Drug development is challenging, and these kinds of speed bumps are stressful and unfortunate for everyone. I'd like to start off by dispelling the usual rumors and conspiracy theories around the FDA. The FDA has been extremely positive and straightforward to work with around this program. We agreed on a rolling submission time line that Telix has strictly adhered to. The quality of the interaction and the questions that we received from the FDA through the formal 60-day administrative review process were rigorous and typical of a dossier review. As you know, this is not our first rodeo, including most recently the acceptance of the TLX007 NDA submission last week. Because of the breakthrough designation, the FDA has been particularly collaborative and open to discussion, and we have appreciated this throughout the process right up to the current circumstances. To be clear, all of that good work has not been lost. I'll talk a bit more about the breakthrough designation towards the end of my comments. For our public disclosure, at approximately 5:30 p.m. Eastern Time, which is 8:30 am Eastern Australian Time yesterday, we received a written notification from the FDA informing us that on the basis of review by the Office of Pharmaceutical Manufacturing Assessment, or OPMA, that there is an unacceptable defect in Telix' sterility assurance for the product, specifically in relation to a filter validation as part of the dispensing process of the radiolabeled drug product. To dispense the product, we use an automated piece of equipment that uses an in-line 0.22 micron filter to ensure that no bacteria is introduced into the fill/finish process. This is particularly important for the TLX250-CDx process because the targeting agent is an antibody which is a protein and therefore can notionally be food for bacteria. The FDA took the position, based on our submitted data, that the validation of the sterility-ensuring filter was insufficient despite the fact that all the manufacturing validation runs that we completed and submitted as part of BLA passed stringent sterility release criteria. As such, it was somewhat of a surprise that the FDA took this position. Unfortunately, OPMA takes a very dogmatic stance on sterility assurance. It is, after all, a fundamental requirement of safe drug manufacturing of sterile injectable and it's to ensure that there's no introduced risk of bacterial contamination that could impact patient health. Obviously, as a company, that's concern about patient safety, and we share this concern. I'll state that generally, this is a very technical and nuanced topic, but it's unfortunately landed us in this position. I wish to assure you that in all of the FDA's communication to the company in relation to the notification, there was only a single reason given for the rejection of the dossier: this specific filter validation issue. There are no other nonclinical or clinical issues with the dossier, and we do not have any concerns about the approvability of the product based on our clinical data. We know this because the FDA has told us so. So whereto from here? We've already booked hot lab time at one of our radiopharmacy partner sites to start technical remediation, and this will begin in about 2 weeks' time. Per our disclosure to the market yesterday, we expect the engineering investigation and revalidation to add about 1/4 of delay to the submission and approval process. This is our best estimate at this time considering that the issue is fairly well defined on the basis of the FDA response. During this period, we will also be holding a formal meeting with the FDA to review their response and to make sure that the remediation plan is clearly specified and acceptable and agreed in advance with the agency. We will, of course, accelerate this work as much as possible, but I note that we are dependent on third-party radiopharmacies for the work stream. Indeed, part of the challenge of this whole issue has been our dependency on third-party validation activity because of our use of contract manufacturing partners for the U.S. market. This adds some complexity, but we believe it's manageable. And I want to make it clear that this setback for TLX250-CDx has absolutely no causality or relation to Illuccix or any of Telix' other development programs. It is tied to the process for this specific asset only. I also want to assure everyone that this also has no impact on currently active expanded access program, or EAP, trials for this asset. The drug product that is used for the EAP program globally is produced using a different production method and does not use this automated dispensing unit, which is really for the commercial scale production post-BLA. Finally, I want to assure you that the breakthrough designation remains in place, and we remain eligible for priority review. We know this because the FDA has assured us of this. Therefore, we believe that the overall impact on the time lines to commercialization are actually very modest. For our public disclosure, there was no impact on forecasted revenue for 2024 because we don't give guidance for unapproved products, and therefore, it is not factored in. We don't see this delay having a material impact on consensus revenue for 2025 either because revenues from TLX007, Pixclara and Zircaix don't really seem to be baked in at this stage, which is sort of understandable given that they are not yet approved products. So to conclude, this is not the first manufacturing challenge that Telix has experienced. The cynical among you may take the view that perhaps this particular instance suggests we have not yet managed to mature as a business, but in fact, nothing could be further from the truth. TLX250-CDx is a complex, high-value product. Because it is a biologic, it is considerably more challenging than the small molecule programs such as our PSMA agent and Pixclara. The team has worked extremely hard to get to this point. And of course, we are as frustrated as you are. But we also know that the issue is relatively straightforward to resolve, and you can be confident that it will be remedied with alacrity. I will now open up to questions. Our preference at this time is to field questions specifically related to this matter. I'll open it up to the floor.

[Operator Instructions] Your first question comes from Laura Sutcliffe with UBS.

I'll keep it to the matter at hand. Could you describe for us in a little more detail what you actually have to do in order to be able to resubmit? So maybe just describe the process for us. Is it a question of just running the process that you already have and collecting a bit more data? Or do you need to add in some more steps, for example?

Basically, it's a bacterial retention study. So the process is that we take that membrane filter, we spike it with a known strain of bacteria, and then we see how much traverses across the filter. It's a relatively standard testing protocol. 0.22 micron filters are used all over the industry as part of sterility assurance. So it's a pretty standard process. The whole scope of work is a few weeks of effort. Clearly, once you've done a bacterial retention study, you have to then allow samples from the filter membrane to incubate and you have to grow out the bacteria, and that takes a couple of weeks. But basically, it's a very straightforward issue. Because of the way that this matter has been raised by the FDA, it is a quality assurance issue that we need to formally investigate and document and understand why the filter validation wasn't done effectively the first time around. That's just to be compliant with our quality system. So there will essentially be 3 steps to the process. There'll be an investigation as to why the filter validation wasn't concluded, and that's a current open quality issue in our quality system. The second stage will be to define the validation experiment that we want to run, and those will be presented and agreed with the FDA to make sure that when we do resubmit that we are entirely satisfying their needs. And then, of course, the third step will be to actually conduct the experiments and document them. So yes, I do want to reiterate this is really standard stuff. There's no rocket science or real technical complexity involved.

Your next question comes from Tara Bancroft with TD Cowen.

This is Nicholas on for Tara. Just a quick one for me and kind of a follow-up on that. But could this potentially get done faster than the 90 days that you have guided or potentially, I guess, longer than that if something else comes up with the meeting with the FDA?

Look, it's a single issue response. And I think the reason why the OPMA pushed back on it is because it's a bright-line topic, and it's just a gap. So I think it's a straightforward remediation. We elected to give guidance on a time line that we think covers all of the different scenarios that we realistically face. It would be extremely annoying for everybody for us to come back to the market and say, "Oh, it's going to take an extra month." So we try to give a time line that we think enables us to reasonably resubmit and still have that consultation with the FDA. So per the process of an RTF, we're entitled to request a meeting within 30 days. We expect that the meeting will be granted quickly because we've had good interaction with our program manager. It's a very live discourse. And our purpose for that meeting would be to have a single issue discussion. So the briefing package will be very straightforward and the meeting agenda would be very straightforward. So I don't see a confirmatory meeting with the FDA as slowing it down. The studies that need to be done themselves are not particularly drawn out. So I think that the guidance that we've given represents a realistic time line. And I hope that gives you a little bit more color around why we selected 90 days as kind of the illustrative time line.

I guess one follow-up would be, would this potentially now allow Pixclara to be approved first? Would this like change the time line of which one could potentially be approved first?

I still think there's much of a muchness. I mean Pixclara is going to get submitted in the next couple of weeks. That package is in really good shape. We've had a very successful pre-NDA meeting with the FDA to talk about the clinical package. So I think we feel confident about that package. Clearly, with an orphan designation and the indication that we're seeking, we would reasonably expect a priority review. So I mean I think in the grand scheme of things, we're talking about a month or 2 of noise either way, right? .

Your next question comes from Dennis Hulme with Taylor Collision.

I was just wanting to talk about the resubmission after you've done the work. The first question is, will you need to resubmit just a single module? Or will it be the entire BLA to be resubmitted? And secondly, after you resubmit, will it then undergo another 60-day administrative review?

So that's correct. So when you had a refusal to file, you're going back and resubmitting the entire BLA. But of course, we wouldn't be rewriting the entire BLA. We would only be updating the relevant CMC module. That administrative review period is a predefined period of time. But there's no reason why, in the review of the resubmission, that it can't be faster if the FDA chooses to. So it will come down to how speedily we put the updated package together and get it in. They've had ample opportunity to review all of the other modules and sections and because we don't intend to change them, I don't expect them to have to undergo additional review other than just the quality check and verification of the submission.