Telix Pharmaceuticals Limited (TLX) Earnings Call Transcript & Summary

Welcome to our next fireside chat. I'm Robert Burns, Managing Director and Senior Biotech Analyst, H.C. Wainwright. And I am joined today by Christian Behrenbruch, the CEO of Telix Pharmaceuticals. Christian, thank you for joining us today.

Yes. Thanks for the opportunity.

So one of the things that I first wanted to start off with was obviously, Telix has experienced rapid growth and transformation over the years. So can you share some of the key factors that have contributed to the success?

Well, I think the company is just really passionate about radiopharmaceuticals. I think one of the unique aspects about the company is we don't really believe in isotope platforms, right? We think that when you develop a radiopharmaceutical, you should look at the clinical application that you want to solve. You should think about what pharmacophore achieves your biological objectives best. And then you should choose the right isotope for the job. And so one of the things that I think is really special about the company, and it's reflected in the infrastructure that we've built over the last -- almost -- company is almost 10 years old, 8 years as a public company is that agnosticism. We want a -- we're very -- we're a pure-play radio pharma company. We believe that precision medicine is really important. That's kind of something that isn't particularly endorsed. It's not a pharma kind of concept. As a concept, we get compared -- as a consequence, we get compared a lot to other companies like Lantheus, where we're not a medical imaging company. We're a therapeutics company that does precision medicine.

Yes. You sort of fit in this sort of dual space because either you're like Marietta Oncology, where it's purely therapeutics or Actis, which is purely therapeutics or medical imaging. But you're actually neither -- you're a blend between the 2. And I think that, that's what's contributed to your success.

That's right. Well, in the business model was notwithstanding the odd CRL and the odd speed bump in our development programs. I mean, this year was an ambitious year, 3 drug approvals planned. But the regulatory and go-to-market pathway for the imaging products is relatively straightforward. And so -- I mean, at least conceptually. And so as a consequence, we had the opportunity with Illuccix and Gozellix, which we got approval for earlier in the year to generate meaningful revenue streams to self-finance our therapeutics. And so we don't just think that it's important for patients. We think it's an important -- like it's a business concept. And the one thing I'll point out with radiopharma, like I have to tell you, I do not understand radiopharma companies that just do therapeutics. Like the one defining aspect of a radiopharmaceutical is that it emits radiation, you can detect it. So you can take your drug and you can put it into the body and you can see everywhere from your toes to your nose where the drug goes. And why wouldn't you use that information to the full benefit of patients, right? So for every target that we develop, we develop an imaging agent and a therapeutic, and we think that, that's commercially and clinically the right thing to do.

Yes. Obviously, there's been -- you have a significant revenue stream from your PSMA imaging agents. Talk to us a little bit about how you plan to potentially expand the market size for Illuccix and Gozellix?

Yes. And so we were second to market behind Lantheus. We actually filed our NDA a month before Lantheus did. But because our product is a lyophilized vial, it's not a radioactive fill-finished product. It's a different part of the FDA that inspects. And in fact, during COVID, we wouldn't have gotten an inspection at all of our manufacturing site if they weren't a vaccine site also. So it was like kind of -- we were even just lucky to get an inspection. So we ended up coming out late. We had a PDUFA delay of a quarter, waiting for a site inspection and then we missed the CMS entry window for pass-through. So we ended up coming to market second, but we've been really focused on, all right, how do we really command our market share? So the first thing that we did was there isn't a single market for PSMA imaging. It's a highly segmented market. Lantheus mostly chose to focus on the academic centers. It was a large volume, kind of low-hanging fruit, receptive user. When we came out, our product is a nuclear pharmacy produced product. So it's got a much more distributed manufacturing infrastructure and that was better aligned with the IDTF market, private radiology, private imaging center market. So we went for that, and that's how we got our foothold. And so we have, in some regards, a somewhat complementary customer base, and there's overlap, obviously. But -- and so when we look at market expansion, it's really about building on that segmental analysis. And there's 3 ways that we're doing that. The first is we have just gotten the HCPCS code. We're expecting pass-through shortly for Gozellix, which is a second-generation product. It's much more similar in some respects to an F-18 based product, which is a -- you can make large quantities in a single delivery of product, academic centers like that. They don't like continuous deliveries during the day. I'd like to know that their chunk of material is sitting there waiting to use and we can do that with Gozellix. And so that gives us an opportunity to really offer something compelling to the large HOPS accounts. Obviously, having a new reimbursed product will be helpful to that as well. So there's a market access strategy that's kind of overlaid on that. The second way that we're going to expand market is Gozellix has a long shelf life, long stability when it's produced out of a nuclear pharmacy, which means that we can transport a dose further. We think there's about 400 Pet scanners in the U.S. that have never tasted PSMA. It's about 15% of patients. So there's a bit of white space there to pick up that in the past, the trains, planes and automobiles to get there have sort of got there. And then the third is we've just announced that we started a Phase III trial called the BiPASS study. This is a -- this is not intended to replace biopsy, but it's supposed to direct biopsy towards the most beneficial patients. And I think we all know there's well over 1 million biopsies are done in the U.S. every year, and 80% of them are not of value to the patient. And so we think that if we can use imaging to triage that process, that can add another 750,000, 800,000 scans to the TAM. It is a market doubling event.

How difficult do you think it will be to change that standard of care that leads the patient down this therapeutic path? Like how much of an unmet need is there? Because I remember during your Investor Day that one physician with that tool, it doesn't sound very nice. But how hard do you think it will be to change that treatment path?

There's already academic center starting to think about it. If you look at the practice guidelines around high-risk men being imaged with PSMA already, there's already quite a bit of elasticity in the definition of high risk. So when we take a patient and we look at their radiological profile from MRI, it's really starting to become clear. If you can overlay PET on top of that, you can have a cascading triage. You can either say this patient has a PET scan and they're done. There's nothing to see or they have a PET scan, so one and done or one and you have a focal biopsy where you're minimizing the number of insertions of a needle. And you're really sampling the tissue where you should be optimally sampling the tissue. And then the third sort of cascade is, yes, this is a patient that needs a template biopsy based on the combination, and that should be the minority of patients. So it was a long journey, frankly, with the FDA to get that protocol in place. It took us about a year of backwards and forwards because the truth is like people want tissue and tissue is important, and histology is the ground truth. But I think that for a significant majority of men, we can avoid the discomfort and morbidity and cost. And I mean biopsy is a relatively expensive and invasive process.

Yes. When we think about your imaging portfolio more broadly, obviously, you have Zircaix as well, you did receive a CRL. But you recently announced literally yesterday, I believe, that you have the plan for resubmission. So talk to investors a little bit about this because obviously, it was something that none of us were expecting. But now it seems like you have a path forward.

Yes, we've been really unlucky, and I really do believe it's kind of not luck. I mean luck is -- you sort of make your own luck, but it's -- these products are also incredibly novel. And that proposed -- that has some regulatory challenges. So we got a CRL for Pixclara based on a disagreement around clinical data. We thought we had buttoned that up in the pre-NDA submissions with the FDA. But I really feel like that some realignment was required from the review process. I think we have that realignment right now. We've had the Type A meeting. We have plenty of data. We're not going to have to run another clinical trial. So we see within the time frame of the year-end that we should be able to resubmit that data and satisfy the FDA. So Pixclara was a pure clinical statistical analysis issue, not a CMC issue, the CMC package for that product is very robust. Zircaix was the exact opposite. We did a confirmatory pivotal Phase III trial. We have no clinical issues from the BLA review process. The issue is mostly around comparability between clinical grade, clinical scale material and commercial scale material. Again, we've obviously received a lot of unhappy feedback about that, but we, of course, consulted with the agency prior to submission. We thought we had agreed on analytical comparability as the basis for approval. And it turned out really in the review process. I think that the product was reviewed a lot more like an antibody drug conjugate than it was the PET tracer. And so we've got a bit of extra work to do. Again, I think the data that is required to satisfy the agency is data we have. We have a briefing package being prepared now that will go in, in a couple of weeks' time. But I think Zircaix really tripped us on the novelty. It's the first time a PET biologic has ever been put out there. And I felt like we were both reviewing it at the same time.

And it seems like the resubmission you plan to complete that resubmission in the fourth quarter of this year, correct?

That we're aiming to. We do have 2 483s on manufacturing sites that need to be -- these are not product 483s, they're sites 483s. And they do need to be remediated. So that's the main, I think, rate-limiting step, but we're obviously working towards getting that. I mean we -- like our shareholders, we want to see the revenue streams materialize as quickly as we can.

Yes. Now that we've spent a good amount of time on the imaging portfolio, let's move over to the therapeutic side.

I'd appreciate it.

Not a problem. Obviously, you have a very robust therapeutic pipeline. So maybe provide -- first, just to frame everything for investors, what does that therapeutic portfolio include? Because there's quite a bit of stuff under the hood there?

Yes, there is. We have sort of 3 concentration areas. So we have a strong focus in urologic oncology, and that really mirrors our imaging activities. So we ultimately aspire to have a portfolio in prostate, renal and bladder cancer, bladder, potentially being met by both CA9 and FAP as the relevant targets. Prostate programs in Phase III, we just finished the bridging or the run-in study for the 591 program. Part 2, which is the randomized part of that has now started ex U.S., and we've got approval in, I don't know, like 7 or 8 countries to move patients into that study. So that's recruiting. And it will -- the Part 1 is really heavy on dosimetry and it's like very demanding on patients. So the recruitment was quite slow. But the randomized piece should move along very quickly, I think, now. So that's the urologic piece then we've got a neuro-oncology franchise. The glioblastoma IPAX BrIGHT study is just getting started. It's a pivotal trial in recurrent GBM. And we've gotten nice data. We've shown disease stabilization, antitumor effect we believe, based on single-arm data prolongation of life. In that patient population, of course, we have to do more work. That's what the purpose of that study is. So that really represents our second asset going into late-stage clinical development. Again, Pixclara is the companion imaging agent to that. So it hits the same LA1 target. And we use Pixclara very much as an integrated tool in the patient selection for that study. And then the third area is kind of a broadly kind of a musculoskeletal, it's stuff around sarcoma. We've got a couple of opportunities in sarcoma, which is an incredibly heterogeneous disease, where you really do need to use a precision medicine approach. You need to make sure that you're selecting patients for your therapy. There's a lot of subtypes but it's a really interesting opportunity. So we have an antibody asset that we in-licensed from Lilly in that portfolio as well as, again, potentially FAP, where we think we have the best FAP hands down. There's a lot of FAP out there. We have the best FAP.

Okay. I look forward to your FAP. So focusing on your lead agent TLX591, it's a PSMA-targeted agent that incorporates 177-lutetium. When we think about that landscape more broadly, obviously, there are a few different assets that are in play there that are already FDA approved. And then we obviously, we have a few next-generation assets. So give us a little -- I want to get your taste as to where you see differentiation for 591. And then let's talk a little bit about your next-generation PSMA agent as well because I think that, that -- obviously, there's been a focus on differences in radionuclide. So we'll get there after.

Well, so 591 -- the way that -- so there's only one approved agent, which is obviously Novartis' product. This is -- we're very lucky as a medical community to have this first product for it to have been successful and to really pave the way for the field. We all -- everyone in the nuclear medicine community stands on the sideline and cheers for Novartis, right? Because it's a tough sell, right, going out and selling radioactive drugs to oncologists is a tough sell. And if you look historically at nuclear medicine products, they faltered commercially because medical oncology doesn't typically want to hand over a patient to nuclear medicine. And so getting that balance right commercially and getting that positioning right is super important. And we've finally seen some breakthrough with that PSMA. That said, our view is that a small molecule is a really inefficient way to deliver a therapeutic radionuclide. 90% of the injected dose is excreted and essentially in first pass renal clearance. And so using a biologic means that we can use much less injected dose. Typically, our entire course of therapy is about 1/10 of the injected radiation dose and has really profound impact in the way in which you manage a patient in the outpatient setting. And the use of a PSMA targeting antibody engages with PSMA completely differently than a small molecule. It internalizes differently. The radiometal is charged, trapped in the cytoplasm of the cell where it decays, it stays there. If you take a small molecule PSMA agent, and you scan a patient 3 days later, there's nothing there. If you take 591 and you scan a patient 3 weeks later, it's a decay-corrected scan of kind of day 1 or day 3 because the antibody has a circulation time. So the whole radio biology of 591 is completely different. And the dosing is different. So 591 is 2 shots, 14 days apart. That's the end of study, end of treatment. And that's really important from a patient compliance perspective. It's not all up, including follow-ups and observations, it's not 40 weeks of therapy, 2 weeks of therapy. So it's a short detour into nuclear medicine, then the patient goes back and continues their RPs and their PARPs or their taxanes or whatever else they're going to ultimately get in combination with a radiotherapy. And we think that makes the therapy much more amenable to prescription from a [indiscernible]. From a patient perspective, we don't have acute nausea and radioactive urine and radioactive vomit during the infusion process. We have patients that turn up to get infused, they cycle there to get their infusion and then they cycle home afterwards. That's not the hallmark typically of getting a competitor product infusion, right? And then because it's a biologic, it's a macro molecule that doesn't penetrate basement membranes and tie junctions the same way that a small molecule does, we don't get some of the off-target effects. And we do get cytopenias because it's an antibody. But this is a clinical AE. This is not a patient AE, right? This is something that you -- no one goes home and says, "my neutropenia is acting up today", right? So it's a clinical AE that medoncs, by the way, are used to managing. And it's not an acute. It's a predictive very well, very -- at day 7, you can tell at day 21, whether you're going to need to 15% of patients or so are going to need a platelet infusion. So this is a very transient, reversible self-limiting. And so we don't see it as problematic, but what we do get is a benefit is we don't get the salivary gland uptake, the lacrimal dry eye, dry mouth, patients just feel a little less banged up. And so we think that through the combination of the infusion protocol, the patient-centric kind of nature of the product, we hope -- I mean, efficacy being all things equal, that it would be -- it will just be an easier product to use.

Yes. No, I definitely like -- it seems to be more palatable for patients, which is definitely more convenient, especially also from a dosing schedule perspective as well. And when we think about the competitive landscape, obviously, I think about the Convergent compound, right, which is the exact same targeting moiety, correct, except using Actinium, but you are also advancing TLX592, which is a modified version of the J591 antibody to enhance clearance. I think there's better biodistribution as well and you're using actinium as well. So it seems like you're making another leap forward on that front.

We know a lot about 591. I mean, Convergent does too, it's Neil Bender's company. We had the opportunity once upon a time to put actinium on 591. And we just don't -- we think that when you have an alpha -- and one of the consequences of an antibody is you're perfusing all your organs for a prolonged period of time. That is not the ideal carrier for an alpha emitter. So we think -- so the good thing about putting actinium on 591 is that it's hepatically excreted. So you're parking -- you're not parking the alpha in your kidneys. My personal view, and I know there's a lot of disagreement about this, but alphas have no business being on small molecules because alpha decays in your kidneys are very challenging to recover from. And we see a lot of latent nephrotoxicity. So I think parking excess radiation in your liver, which is the hallmark of an IgG is a good thing. 592 is a PK engineered, Fc engineered antibody that has a much more rapid blood clearance. We've done clinical work. We've shown that the antibody clears faster, and so what that means is just less alpha decay events in circulation, and that's less likely to have issues for the patient. And the challenging thing with alpha is because of the path length of alpha decay, I don't think people really believe that alpha therapeutics are going to be great in bulky disease. I think the thing about alpha is really in the low burden of disease. And that means that when we do inject an alpha-emitting radiopharmaceutical into upstream patients, we need to be confident that they're not going to have long-term consequences to it. So the alpha space, whilst it's exciting, it's got a super long ways to go.

Yes. I think one of the places where alpha sort of where it has its potential is in the post-beta emitter portion as well just because of the nature of alpha emission. You could also use it concurrently with a beta emitter, too.

Yes, there's been some evidence that, that works.

Yes. Why don't we shift gears a little bit now because there are a few things...

Do we have time.

Yes, we still have roughly 7 more minutes.

Okay, sorry. I...

So when we take a broader view, there's obviously been a debate around targeted radionuclide therapy as to whether it could be as large as the ADC field has been. Obviously, we've seen great success in ADCs. And it seems like a lot of targets from the ADC fields can be used within the radiopharma space. So I wanted to get your thoughts as to how you view the target landscape broadly from a radiopharma perspective?

Yes. We have a lot of pretty heated conversations about this internally. I think it would be a miss for radiopharma to go after just the same old target that ADC world goes after. That said, the radiobiology of -- radiobiology is different than an ADC. And the whole mechanism of action is different. People just think of radiation sometimes as another cytotoxic payload, but it isn't. There are multiple mechanisms of action involved in radiating the tumor microenvironment. And that's -- and the key word in that is micro environment. So I think that actually there's a lot of scope for ADCs and radiopharmaceuticals even against the same target to work in concert with each other. Certainly, the imaging portion will have also value to the ADC part as well. So I think that it's not an either/or. I would like to see, and we are spending time and energy on looking at more and more targets that we think are and substrates that we think are uniquely beneficial to radiation. And there are targets that would be kind of much better suited to radiopharmaceuticals than in ADC.

Yes. So last question for me. So obviously, Telix has built and acquired a broad portfolio of radiopharmaceuticals assets the manufacturing, distribution and research spectrum. So you've been very active on the BD front. So moving forward, could you give us a sense as to what types of technologies you're most interested in acquiring?

Yes. Well, we're actually just -- for early next year, we're going to be putting out -- our business development team is actually going to be putting out a kind of a manifesto that says, "this is what we are interested in, this is what we're not interested in", because we've actually grown to the point now where we are viewed by many companies, smaller companies as a potential go-to-market partners, possibly not if we have too many more CRLs. But if you're not -- at least if you're getting CRLs, you're like trying, right? So I suppose that's something. But I guess from our perspective, we really actually have -- we've built 3 pillars of assets in the company now. We've got a great R&D portfolio, and it's about 14 molecules, diagnostic and therapeutic there enough, frankly, to keep us going for a long time. And then the second asset that we're building is really that vertical integration of manufacturing and supply chain, which by the way, also lowers CRL risks as well because you're really in charge of your manufacturing CMC, and we think that's vital. Like we think that going forward, you just -- you won't get into a Phase III program as a radiopharma company unless you really can command some of that infrastructure. And then the last pillar of our business that we're building is really the commercial team. And it's a bit unusual, but we do sell our own products. And not a small indication, prostate cancer, it's not a small indication. And we do that because we really think that these products are unique. So when I think about what are we interested inorganically, I mean, frankly, we're digesting a lot at the moment. I mean we've done $0.5 billion worth of acquisitions in the last couple of years, which probably for the big pharma guys doesn't sound like a lot, but for the smaller -- for a small company, we're only about 1,200 people, it's a lot. But when we think about what would be the growth engines, it's really very, very novel early-stage preclinical stuff. That's the pipeline of 5 to 7 years from now. We are still interested in isotope platforms. So we have a Lead-212 generator in development. We are doing actinium production in-house. So we are doing these things. And then obviously, also the commercial team is something that we continue to invest in. So those are sort of the 3 buckets of kind of go-forward investment for the company.

Okay. That's really all the questions I had. Christian, thank you so much for joining us today.

I appreciate the audience. Thank you very much.