Twists And Turns Of Telix And Australian Biotech

Small Caps | Jul 10 2024

This story features TELIX PHARMACEUTICALS LIMITED, and other companies. For more info SHARE ANALYSIS: TLX

In the wake of Telix Pharmaceuticals’ non-IPO on the Nasdaq, FNArena shines a light on the company’s fortunes and that of Australian biotech and cancer research generally.

-Telix Pharmaceuticals unexpectedly called off Nasdaq IPO
-Company has asked FDA for priority review of second product, Zircaix
-Australia is recognised as a world leader in cancer research
-Increased collaboration between the US and Australia could create over US$10bn in exports and generate 34,000 jobs

By Ed Kennedy

In mid-June Telix Pharmaceuticals ((TLX)) announced it had withdrawn its intention to list on the Nasdaq. Market conditions, in tandem with other considerations, were cited as the reasons.

According to a SEC filing, the company had aspirations to obtain up to US$232m (approximately A$344m) from the IPO, and the surprise move was notable news for a company that has enjoyed substantial forward momentum in recent years.

Per the statement Telix released following its withdrawal, “Given the proposed Nasdaq listing was not predicated on the need to raise capital, Telix’s management and Board of Directors have decided not to move forward with the transaction at the terms provided under current market conditions”, and in turn, “The Company did not feel that the proposed discounts were aligned with its duty to its existing shareholders.”

Just as recent history has a tale to tell regarding Telix and its progress towards an IPO in the USA, so too is the contemporary state of cancer treatment and Australia’s biotech sector worthwhile to understand as part of the broader context.

Telix’s Offerings: Just What the Doctor Ordered?

Since listing on the ASX in November 2017 -and being available in that month for less than $1 a share- Telix has thereafter enjoyed a remarkable ascent, its shares trading north of $18.00 in the closing days of last month.

Telix specialises in providing therapeutic and diagnostic radiopharmaceuticals. In addition to its Australian premises -and headquarters in Melbourne- Telix has offices in the US, Japan and Europe.

The value of Telix’s therapeutic radiopharmaceuticals is explained in its 2023 Annual Report, “Many existing therapies for cancer and rare diseases are non-selective and as a result can act against healthy tissue and vital organs while treating disease”, however, “Our radiopharmaceuticals are designed to deliver focused doses of radiation with precision targeting via an injection, regardless of where the cancer or disease is in the body.”

Illuccix serves as a key offering from Telix’s diagnostic wing. Utilised in tandem with a positron emission tomography scan, the imaging agent aids in the diagnosis of prostate cancer. In addition to already being available in Australia -having first been administered at Austin Health in Melbourne- it has been approved by the United States Food and Drug Administration (FDA) and Health Canada.

Also in Telix’s stable is Zircaix, utilised for clear cell renal cell carcinoma, a type of kidney cancer. In early June, Telix announced it had completed its Biologics License Application submission to the FDA.

The rolling submission first commenced in December of 2023; it has seen Telix request a Priority Review. As Telix notes, if approval is granted, it means Zircaix “will be the first targeted radiopharmaceutical imaging agent specifically for kidney cancer to be commercially available in the U.S.”

Before returning to the story of recent events, it’s useful to first touch on the contemporary state of cancer rates and then the state of biotech in Australia.

Cancer in Context

While improvements in quality of life, coupled with advances in medicine, have led to the eradication of other diseases in recent history -with Australia commencing routine vaccinations against polio in 1956 and being declared free of it in 2000 serving as a leading example of such progress- cancer rates remain high in Australia.

The story of cancer in the country is ultimately one of many contrasts. The World Cancer Research Fund has previously declared Australia to have the highest cancer rates in the world, at 462.5 people per 100,000. Yet, a 2019 report from the International Agency for Cancer Research declared Australia led the world in cancer survival rates. The nation is also recognised as a world leader in cancer research, but faces a confronting march toward the end of the decade.

As detailed by the Australian government’s Australian Cancer Plan, “Cancer is responsible for Australia’s largest disease burden and is a leading cause of death”. In turn, “the Australian population is expected to increase by 15% between 2021 and 2031 and cancer cases are estimated to increase by around 22% during this time.”

It’s of course the case the term cancer’ is often used as a catch-all to describe many diseases. Thus, the quest to cure’ cancer en masse can be regarded as a far more complicated ambition than the more straightforward task of pursuing a treatment for a single disease.

In turn, in roughly the same period of time that polio was eradicated in Australia, and in the decades of the 21st century since, commendable progress has been made globally in diminishing the impact of many cancers. Prevention methods have risen -public campaigns and other endeavours to reduce the use of cigarettes is among the most renowned of these- and so too have increases in 5-year survival rates been seen, such as among some childhood cancers like leukaemias and lymphomas.

Statistics showing overall cancer rates are rising is unwelcome news. It’s also the case the anticipated growth in cancer rates is informing surging demand for investments in firms looking to address this issue, and in the broader Australian biotech sector.

The Long Consultation

In 2022, the Australian government released Biotechnology in Australia: Strategic plan for health and medicine. It detailed numerous key challenges facing the national sector, as identified by extensive consultation within it.

Limitations that exist due to access to capital, the gaps in commercialisation and translation, the need for a greater coordination of incentives and support, and the need to nurture scientific and commercialisation skills, were cited as key issues.

Additionally, the need for strategising to build Australia’s sovereign capability in this space was also cited as essential. The report’s production and release in the midst and latter days of the covid-19 pandemic underscored the value of sovereign capability in this regard.

Yet, just as it’s widely recognised -though it was a century between the outbreak of the Spanish flu pandemic and covid-19- that the next global pandemic will not take a century to arrive again, Australia’s long-term potential to be a leading provider in the years and decades ahead of medical products and services throughout the rapidly growing Asian region warrants further discussion.

The 21st century has seen outbound medical tourism make waves with a decrease in cost of plane travel -as Australians catch a flight to capitals in Asia for dental makeovers and other cosmetic treatments at a far lower cost than what’s on offer in Australia- but growth in the other direction has also been seen, especially when it comes to the high tech medical offerings available domestically.

For its part, Canberra has entertained dialogue on the idea of boosting Australia’s capacity in this regard, with a submission to the Inquiry into the Development of Northern Australia in 2012 discussing the prospect of increasing the medical capabilities of the nation’s northern reaches to play host to medical tourists. 

But, overall, it could be said the more effective engagement with and enticement of medical tourists from Asia to Australia at present remains on the drawing board’ of national priorities.

The Initial Dose

Telix has successfully caught and surfed the wave amidst greater interest and investment in cancer treatments, methods, and technologies in recent years. But it’s certainly not the only player in this arena, in Australia or globally.

In addition to Telix, Australia plays host to the headquarters of AdvanCell and Clarity Pharmaceuticals ((CU6)). More widely, the operations of AstraZeneca -who notably made news in March with an agreement to buy Fusion Pharmaceuticals for US$2.4bn- as well as firms like Sweden’s Elekta, illustrates the robust global competition for attention and investments in the sector.

This said, international competition notwithstanding, there is undoubtedly an immense opportunity in this era for Australian biotech firms. According to A Prosperous Future: Biotech, a report co-produced by KPMG Australia and the American Chamber of Commerce of Australia, increased collaboration between the US and Australia could create over US$10bn in exports for the latter, and generate 34,000 jobs.

The Treatment Plan

Obviously, the road ahead for any business in a sector like Telix’s industry is one beset with potential pitfalls. The paths to obtaining success from clinical trials and approval from regulators can generate headaches a-plenty, in addition to the problems that can arise on the long path from initial idea to final output. The competition can also be anticipated to grow far more intense as we shift into the second half of this decade.

This said, Telix appears well-placed with its present offerings. What’s more, its enviable record of progress in recent years continues to inform its current standing. Thus, the surprise twist with its IPO notwithstanding, Telix remains a great organisation to watch closely given the dynamism it has shown thus far, and the foundation it has built for the future.

Find out why FNArena subscribers like the service so much: “Your Feedback (Thank You)” – Warning this story contains unashamedly positive feedback on the service provided.

FNArena is proud about its track record and past achievements: Ten Years On

Share on FacebookTweet about this on TwitterShare on LinkedIn

Click to view our Glossary of Financial Terms