Telix Pharmaceuticals Limited (TLX) Earnings Call Transcript & Summary

Chris, can you just clarify the time line that you expect once you've resubmitted the application? Is your expectation that the review would be 6 months from the date that you resubmit the application?

Well, we don't know because we haven't agreed with the FDA what sort of priority or expedited review status we might be eligible for, given that we have a breakthrough therapy designation and given that we were granted priority review. Their willingness to review the dossier on a more streamlined basis may also depend on whether they're willing to look at just the changes that are relevant to the CRL or whether they will take a more holistic approach. So we'll get some guidelines around that potentially from the Type A meeting. And we'll certainly -- again, I really want to stress the next stage in the process is really to have that Type A meeting to understand where we've got sticking points that are going to have longer remediation times. And then we'll be in a position, I think, to really update the market on what the time lines look like.

The next question comes from Andrew Paine from CLSA.

Look, obviously, this is a second CRL you've had this year, both of which have come as a surprise, obviously, given the products you're putting forward. Just want to know if there's any additional challenges you're seeing at the FDA at the moment. Do you think there's additional pressures given the climate there or you're getting more scrutinized more thoroughly?

Look, I think it's an insightful question, and I can appreciate you asking it. I also appreciate the implication in your question that there may be more background to our track record than just Telix. The Pixclara and the Zircaix CRL should not be conflated with each other. They're very, very different submission processes. Pixclara, as you may recall, is a -- really a moving of the clinical goalpost for the submission. I'm not going to go into that particularly today. I think we've addressed that sufficiently in the public domain, and we'll be giving an update shortly on Pixclara per our public disclosures. I think on the Zircaix side of things, it really does come down to the fact that it's a super novel product. I mean it's the first ever biologic PET product. And so you've got different parts of the FDA that don't typically kind of co-review a product, are reviewing a product. And I think that's been interesting, that's been an interesting and frankly, educational experience given that we are one of the few companies developing radiolabeled biologics. So I am trying to be a little philosophical about the situation in the sense that whilst I'd prefer not to learn at shareholders' expense, we are definitely doing a new class of products that will take some learning curve from a regulatory perspective. And we're seeing that not, frankly, just with the FDA. We're seeing that with all regulators globally and not just for a drug product dossier, but -- or a drug approval submission, but also for clinical trials. I mean, getting clinical trials off the ground in this space, and we have many of them running, has been a very steep learning curve. So I think that's kind of my preferred take on answering your question. I think it's fairly generally known that the world has changed a lot since the start of the year. I think the FDA is certainly an organization that has been impacted by those changes. But I also do want to acknowledge that the folks that we've been dealing with in the agency have been very science-driven, have been, for the most part, procedurally responsive. And so it's on that basis that I'm pretty optimistic that there's a clear platform for us to remediate what are reasonably put forth issues with our submission package.

The next question comes from David Bailey from Morgan Stanley.

Just in relation to the 2 third-party manufacturer partners there. Is there scope to change to different suppliers? Will you stick with them? Will you look in-house? What's the solution in relation to starting that third-party manufacturing prior to resubmission?

That's a really good question. So actually, for one of the suppliers, we actually already have an alternative supplier that is not at least notionally related to the 483 that was raised. We haven't explored yet whether the FDA's concern is a more general concern or whether it's something super specific. And frankly, I don't have that level of detail in front of me at this point in time. But we have qualified, in that one case, alternative suppliers. Generally speaking, the suppliers that we've chosen are suppliers that we've built a pretty deep relationship with. And I think our preference, again, based on what we see as the solvable level of severity of these 483s, I think it's just easier for us at this point in time to kind of stick with the folks that we know and the folks that we've been working with. In the fullness of time, if you take a look at Illuccix, for example, when we launched -- when we got Illuccix approval, also admittedly with a small delay. But when we got Illuccix approved, we had pretty much sole suppliers for most parts of the supply chain. Now today, with Illuccix and Gozellix, we have duplicate suppliers for most parts of the -- or redundant suppliers for most parts of the supply chain. So I think that's something that will kind of necessarily evolve post BLA. I think the goal right now is to just manage the existing complexity that we have in the BLA, get through the FDA's major concerns and then focus on supply chain resilience kind of post approval.

Got it. And just a quick follow-up. Just in relation to the CMC, just confirming that it just relates to the scaling up of the manufacturing process only, nothing else outside of that?

Yes. I mean all of the 3 issues are all related to the manner and the implementation of the drug product for the commercial package. So there's been no issues raised around the clinical trial material that we used in the Phase III trial. And so this isn't like a fundamental product kind of integrity issue. This is really around what is the delta between the material we use in the clinical trial versus the material that we use for commercial scale up. And you can understandably imagine that there has to be sort of by definition, some differences in those products they use. They use different grades of radioisotope. They use different amounts of radioactivity because you've got to produce larger batches of material. And that does result in some product characterization differences. Now, our view as a company, is we submitted the dossier reasonably believing that we had characterized those differences and defended them and that they don't reflect a change in product quality attributes or a change in fundamental clinical attributes. The FDA wants to see a deeper determination of that assertion. And so that's really the focus of the submission. So I think it's really -- as you sort of implied, it's really about that commercial scale of material.

The next question comes from Andy Hsieh from William Blair.

Thanks for the additional information, Chris. So for us, it seems like there are 2 processes, right? So one for the Phase III ZIRCON study and one for the scale of manufacturing. And I'm curious if you can comment on the supply left for the old process, the process that you use to produce the Phase III. Do you have enough to potentially do a clinical-based comparability study? Or you need to go back and -- go back to the old process and produce more drug product to satisfy the FDA's request?

It's a typically solid question from you, Andy. So there's 2 things, I think, that I can say. We do have inventory for the old -- not the old, but the clinical material. So I don't see that as a problem. And that's an active CMC process. So when we manufacture doses in some jurisdictions, we use that process still today just because it's a very convenient scale of manufacturing for like clinical trial use. So yes, the short answer is we do have inventory. I also want to reiterate a statement that I made earlier. We do have a clinical comparability study, not part of the original BLA submission. We did this study, frankly, because we wanted to be prepared for dossier submission in other jurisdictions. We have a centralized European submission planned, and we're negotiating a date for submission for that as part of our -- as you would expect, our global rollout of Zircaix. And so drug development, as you know, doesn't stop the day you file your BLA. There's a continuous data gathering process, and we felt that there was merit in running additional studies, which we have done. So the FDA will have to opine on whether that additional clinical study that we have is something that's adequate. We think it is. If not, if we need to throw a few more patients into it or we need to do a slightly expanded study, we can, a, do that very quickly. We have open comparability study protocol today running. We have an expanded access program that's running today, although the FDA will certainly opine in our Type A meeting whether or not that's something they'd want to keep going -- want us to keep going on. They were very comfortable with us continuing the expanded access program with Pixclara. We'll have to see what they say about Zircaix. But I don't see any difficulty in getting additional patient data on top of the current patient comparability data that we already have. So yes, this is a really great question, but that's not going to be a rate-limiting issue for us.

The next question comes from John Hester from Bell Potter.

I was going to ask a question about the EAP, but you've just answered that, so thank you for that. Any downstream effect on the rest of the business, Chris, in terms of your R&D program? I mean this was hopefully going to generate a fair bit of cash in the next 1 to 2 years. Do you see any reason why you would need to pull back any other programs as a result of this outcome today?

Well, again, I don't want to be misleading, but I don't think we're talking about really material time delays. I mean, obviously, we'd all like to be -- I think all of our shareholders would love us to be seeing -- to be making more revenue streams. We have had a super intense year this year. I think it's fair to say -- and that comes from -- obviously, we're doing a product launch right now. Our HCPCS code for Gozellix comes into effect 1st of October. So we're really gearing up for that. We've just announced our BiPASS Phase III trial that's launching. That's going to double the size of the market opportunity for PSMA. We've got European, I think, 20 -- nearly 20 European approvals or 19 European approvals. So we've got market launches going on there. So there's a fair bit of activity that can reinforce those revenue streams already. And so I think it's not a catastrophic speed bump. From an R&D investment perspective, we're always looking at the sustainability of our R&D strategy. We'd ideally like to self-fund it as much as we can. But again, I don't think this is a -- this isn't a material issue for the company. Dave Stanton in his question kind of throughout the number of a year, I don't see this as being a year delay. I see it considerably less than that. But again, we won't really know until we finalize the issues that the FDA has raised. But it's onward and upward. We're financed to take on ProstACT Global and the major clinical activities that are currently activated, and I'm pretty comfortable with that. I'll take one more question, and I think we're going to have to wrap it up because I actually need to catch an airplane, so I apologize for that. So fire away.

The last question comes from David Stanton from Jefferies.

I'll be very fast. I mean bottom line is, Chris, does this affect R&D spend for F '26? You probably answered it in the previous answer. I just want to check.

Yes. I mean we're trying to -- I think what we've said very consistently along the way is that our R&D spend will grow with our revenue stream. And we haven't forecasted yet what the impact of Zircaix is. Obviously, there's some fairly good models out there, including yours about where the product will go. So there's always a launch ramp-up time. We see the unmet need for Zircaix is really there. We'd ideally like to keep the momentum up for launch by maintaining the expanded access program. Again, we'll have to have a conversation with the FDA about that. But I think really, this needs to be taken as a speed bump rather than a catastrophic event from an R&D investment perspective. Look, unfortunately, we'll have to wrap it up there, but I appreciate the questions and the candor of the questions. Just as a final parting comment, I started the company to take this product to market, and I'm personally disappointed in this delay. That said, it really doesn't reflect the quality of the technology or the approvability of the product, and the team is really committed to getting it done. I also think that it is important to understand this isn't going to be the last product like this that we commercialize and the lessons learned are valuable. So these CRLs, whilst they're frustrating, they certainly help us to become a better company, and we're learning a lot of things that are super relevant to the development of the whole portfolio. So I know that's not much of -- not much of a consolation, but the patience is appreciated. And thank you for your time today. I'll wrap it up there.