Understanding Telix, page-10

C50's initial set of points is a pretty good starter, I think. An equivalent would have been useful for me a few years ago as I was trying to wrap my head around the company.

Here are a few random thoughts for where I see the company going.

It's a therapy company.

Well that's what the CEO says, and if we judge the company on that basis we're still in the middle-game. There's one therapy trial in Ph III, all the rest are Ph I or Ph II. My take on this is: management will make decisions on the basis of expediting the therapy program, and they will want to (and should ) be judged on that basis.

Expenses are rising (though income is faster)

Up to Q2 2021, total expenses were well under A$20m. The final two quarters were in the early $20ms. In 2022 so far the expenses per quarter were: $39m, $57m, $52m. I expect expenses to keep tracking in the $50-60m, though that's the centre of my gaussian- they could go lower, they could go higher. Somewhere in one of the earnings calls, CB made a comment which I interpreted as: our spending will depend on what we earn. My guess is that they will aim to keep a cash balance of A$100m. However, unless income increases so fast that they can't sensibly spend it, I'm expecting TLX to be stay slightly above breakeven, but not much, for the next few quarters. Again, expediting the therapy program is the main game, not paying dividends (yet).

It's not yet clear what the star of the show is (or if it ends up being an ensemble cast)

I'll be honest, I was a bit surprised that the Ph III results for ZIRCON didn't set the charts alight. If it's really the case that investors had already baked in a positive result, then that's really saying something. My guess is that the market doesn't understand (or doesn't yet believe) that in a few years TLX is likely to have another major income stream.

But there are so many threads of research that surprises could come from anywhere. After all, there's supposed to be not one but two NDAs being submitted in the near future. There are trials in bladder and breast cancer already progressing, and if you look at the presentation from the ZIRCON top-line data, it's clear the company has clear plans to expand their indications even further with the STARBURST trial. You'll note that this isn't a hand-waving hypothetical: the ann said "IND submitted." So expect that to kick off next year.

If all goes well, prostate cancer will be "first of many" in both diagnosis and treatment.

Maybe we're only half way there.

Telix was listed on the ASX in November 2017. I know it existed as before then, but in terms of when ordinary punters could buy shares that was the date that mattered. So in five years, the company has an FDA approved product that is pulling in good money. Now, I still think it's three years before a therapy product hits the market, and if we look at some of these other trials that are still in Ph II (like STARLITE) it may be even longer. So I would guess that in five years time, the company will be the same situation with therapy as it is with imaging now: one or two in the bag with more in the pipeline.