Australia | 10:00 AM
As Telix Pharmaceuticals turns the page on 2025, its annus horribilis, analysts remain optimistic around a potential valuation re-rating.
- 2025 provided a perfect storm of adverse news for Telix shareholders
- 4Q update confirms PSMA pricing strategy is working
- Analysts await more details at the upcoming 2025 result in February
- Valuation re-rating possible with potential positive results on PSMA agents
- Success in the therapeutics pipeline offers blue sky valuation
By Danielle Ecuyer
Reasons for the 2025 valuation compression
The current Australian share market environment has not been conducive to rewarding quality growth companies post the August 2025 reporting season.
Telix Pharmaceuticals ((TLX)), previously a share market darling, has not escaped the big switch out of almost every sector ex-resources, with few exceptions. High valuations have been punished in favour of the commodity reflation rotation trade.
The biotech’s share price equally received multiple setbacks that bruised sentiment in the second half of 2025, compounding the valuation compression.
Complete response letters from the FDA around Zircaix and Pixclara drugs in October, the expiration of transitional pass-through pricing (TPT) status for Illuccix in October, as well as US competitor Lantheus’ quarterly update indicating market share loss for Telix in US PSMA scanning agents, all weighed on sentiment.
US tariff threats and management’s announcement to re-invest profits back into the business also impacted sentiment.
While FNArena's consensus target price has barely shifted from around the $27 level since October, the share price has more than halved, which begs the question whether the perceived negatives are now overly discounted in the momentum switch to resources and valuation de-rating?
Can management deliver on its strategies in 2026?
Fourth quarter update reveals some welcome good news
Commentary on the December quarter trading update has been far from harsh, but --clearly-- reaching the lower end of upgraded expectations was not enough to boost investor sentiment yet, with analysts seeking more insights at the upcoming 2025 results, including management's guidance for 2026 on February 20.
As highlighted in the updates, signs of improving metrics around PSMA pricing and volumes have emerged.
Telix’s Q4 revenue came in at US$208m, US$804m for the full year, which met consensus expectations according to Citi. For other brokers like Morgan Stanley and UBS the revenue slightly missed.
The result included Precision Medicine PSMA franchise (Illuccix and Gozellix) revenue of US$161m, a rise of 16% y/y or 4% growth on the prior quarter.
Separating volume versus pricing, Canaccord Genuity notes volumes grew 3% with 1% growth in the net average selling price, which indicated the use of Gozellix primarily in outpatient hospitals, which are referred to as HOPPS.
UBS estimates these represent around 50% of US PET scan volumes and are typically more price sensitive, which favours transitional pass-through (TPT) status.
Transitional pass through pricing opens market share opportunities
Taking a deeper look into the significance of this, Canaccord points to the advantages around the speed and “quantum” of reimbursement offered by Gozellix’s TPT status, where hospitals are paid an average selling price-plus rate on around US$7k per dose when scanning traditional CMS (Centers for Medicare and Medicaid Services) beneficiaries, such as Medicaid and Medicare.
Canaccord estimates outpatient hospitals at around 40% of PSMA utilisation by volume, which is open for the taking in 2026, with Telix as the only PSMA agent with TPT status over the next three quarters of 2026.
This provides a substantial competitive advantage, with Canaccord proferring the opportunity for large outpatient hospitals to switch from the major competitor Lantheus, where Pylarify is waiting for FDA approval on its second PSMA agent (PYL2 in March) and for its second stage of transitional pass-through pricing from October 2026, opening a 12-month window for Gozellix to pick up market share.
The analyst emphasises transitional pass-through pricing alone is not sufficient to convert market share, as exemplified by Blue Earth Diagnostics’ underwhelming experience with TPT exclusivity.
Other features such as scale and service capabilities are important, features of which Telix is consistently good at achieving. UBS believes Telix’s high quality customer service makes the Illuccix and Gozellix offering more “sticky”.
This broker’s channel checks indicate radiologists like the Telix customer experience and are reluctant to switch back to competitors Pylarify and Posluma (Blue Earth Diagnostics) due to the less favourable experience.
If outpatient hospital market share is picked up by Gozellix in 2026, there does not appear to be straightforward reasons, according to Canaccord, for a switch back to PYL2. Moreover, Telix’s fluorinated option may be available in 2028, subject to approval, which could offer a third phase of TPT for the PSMA franchise.
Comparing the 4Q updates, Morgan Stanley notes PSMA imaging revenue in 3Q saw revenue growth of 1%, comprised of volume growth of 3% and a price decline of -2%. The analyst views the US launch of Gozellix in June 2025 as supporting price rises in 4Q, with UBS noting the price premium on Gozellix as well as its TPT status.
Citi believes the result points to the successful commercialisation of Gozellix and does not envisage any reason for major consensus revisions to PSMA agent sales for 2026 at this stage.
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