there was an original UBS report but i cant seem to find it now ?
https://login.wilsonsadvisory.com.au/rsearch/Healthcare%20-%207%20December%202021.pdf
As a holiday send-off we list the top six stocksin our coverage that excite us about coming back from the break. Those stocksare: Immutep, Aroa Biosurgery, CSL, ImpediMed, Telix Pharmaceuticals andSilk Laser Clinics. In every case, we see 2022 as the year when theproof of apivotal concept, clinical asset or business model unlocks a material componentofvaluation. Aroa and Immutep are already constituents of Wilsons’ ConvictionInsights.Alongside this publication we note material price target upgrades forCSL, Telix and SilkLaser. ImpediMed’s inclusion follows the pre-publication ofits pivotal PREVENT trial which proved that subclinical lymphoedema afterbreast cancer therapy is avoidable
Telix Pharmaceuticals (TLX)
2022 sees Telix become a commercial entity withfirst approved product in ILLUCCIX. Their ability to enter the urologydiagnostics market with ILLUCCIX and test their decentralised distributionapproach is keenly awaited. ZIRCON trial completion and readout in renal cellcarcinoma another supportive program in establishing urology channel dominance.Launch dynamics will dominate the foreground in CY22 whilst clinical programs(TLX591, 101, 66, 592) advance in the background supporting Telix’s longer termgrowth strategy.
Telix Pharmaceuticals (TLX) OVERWEIGHT
PT: $10.35 per share
The commercial organisation lets the numbers do the talking
ILLUCCIX launch dynamics in 2022 can re-rate the stock beyond DCF. Telixrecently updated its ILLUCCIX USA TAM estimate to US$725M (from US$575M) andhas aspirations to capture 40% of that within three years from commercial
launch. Our peak sales forecast of US$200M may be conservative but makesallowance for modest ASP decline and competitor launches including Lantheus,Novartis and Blue Earth (Bracco). We remain comfortable with our FY22e forecast of A$77M which is effectively a 9-month contribution with full marketaccess expected from April. At $6.60 per share Telix trades on 24x FY22e butjust 12x FY23e (EV/revenue, with revenue doubling to A$146M in FY23e). Oursense is that the valuation can remain north of 20x EV/revenue on the basis ofILLUCCIX sales execution and that implies share price growth towards $10.35 pershare (noting our un-risked TLX valuation is $14/share).
TLX591 parked safely within the ProstACT Phase III campaign. The startof the ProstACT trial series is a positive for valuation in that it will settledesign controversies and sideline the efficacy versus toxicity debate for theduration of the pivotal 591 study. As a reminder, ProstACT will test standardof care (SOC) ± a fractionated dose of TLX591 (2 injections of 45 mCi/m2 each,14 days apart). The most recent trial update confirms that the SOC definitionincludes at least one prior line of taxane chemotherapy. There is no cross-overin the trial so the availability of an active SOC should help preserve theprimary endpoint. The selected dose was associated with median survival of 42.3months (n = 17) in Phase I/II. As a comparator, Novartis reported 15.3 monthsfor 177Lu-PSMA-617 in the VISION Phase III. At 2x45 mCi/m2 TLX591 53% ofpatients required platelet transfusion to manage haematologic toxicities.Expert opion suggests TLX591 would need a ≥50% efficacy advantage over177Lu-PSMA-617 to win favour with prescribing medical oncologists.
TLX592 takes the lead in the prostate cancer therapy narrative. TLX592combines an optimised monoclonal antibody targeting moiety with analpha-emitter (225Ac). It extends the reach of PSMA-directed radiotherapy inboth directions, relative to TLX591 whose beta-omitting activity is best suitedto the metastatic patient failing AR pathway inhibitors, taxane chemotherapy orboth. In the earlier stage patient we see neoadjuvant opportunities – usingTLX592 in patients undergoing radical prostatectomy or pelvic lymph nodedissection. In the later stage patient progressing after TLX591 and/or177LuPSMA-617, TLX592 may serve as a targeted salvage therapy, which (unlikeBayer’s XOFIGO) may address both bone - resident and visceral metastases.
ZIRCON Phase III – synergies in urology with optionality on the CAIX target.TLX250-CDx has FDA Breakthrough Device Designation because it looks likely tobecome the first and only non-invasive modality for assessing renal cancerbiology. If approved the product will obviate tens of thousands of uneccessarynephrectomies and change patient management decisions in treating clear cellrenal cell carcinoma. Our peak sales estimate of US$120M may be conservativegiven Telix’s estimate of US$300-400M. The underlying target for thisdiagnostic (carbonic anyhdrase-9 or CAIX) potentially has an immediate, thirdadjacency in urology (urothelial cancer). We have covered potential as a markerof resistance to immune checkpoint inhibitors in previous research.
TLX101 and TLX66 – largest upside from modest investments. TLX101’sresults in IPAX-1 support the progression of that asset into a registrationtrial in the second line setting (combination with external beam radiationtherapy or EBRT). That
interventional asset has potential corporate appeal for EBRT manufacturers.TLX66 (90Y-besolisomab) also delivered
promising data. We like the leverage of that asset if developed and approved asa bone marrow conditioning agent. That utlity is broadly applicable across avast range of cllinical situations where haematopoeitic stem cell transplant isindicated
(haematologic malignancies, autoimmune indications, hereditary diseases).
Valuation. New price target of $10.35 per share equates to 20xFY23e revenue (WILSe: A$145M). Obvious caveats include major marketapprovals for ILLUCCIX which is the sole current source of revenue in ourmodel. Our unrisked PT stands at $14.00 per share. Pipeline assets (TLX250,TLX66, TLX101) account for 11% of our risked SOTP valuation.
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