Telix boss Christian Behrenbruch rules out capital raising as shares soar after strong quarterly earnings

Christian Behrenbruch says Telix will fund its $100m research and development program entirely from its earnings rather than a capital raising, sending its shares soaring 8.6 per cent.

Telix Pharmaceuticals chief executive Christian Behrenbruch has ruled out a capital raising to accelerate the group’s next stage of growth, declaring its $100m research and development program will be funded entirely from its earnings.

The company – Australia’s second-biggest biotech with a market value of $2.24bn – delivered a 41 per cent surge in revenue to $78.2m in the three months to December, thanks to sales of its prostate cancer screening agent, Illuccix, in the US.

The result pushed Telix to be $1.6m cash flow positive for the quarter – a $6.9m turnaround on the previous three months – and sent the company’s shares surging 8.6 per cent to $7.07 on Wednesday against a flat broader share market.

Dr Behrenbruch said Telix was now generating more than $300m in annualised revenue, which would underwrite about $100m in research and development it has slated for this year.

“There’s a lot of speculation out in the market – I don’t know why – that we’re out to raise capital. We have no intention of doing that,” he said.

“We had a little sticker shock in the middle of the year because we were heavily focused on our top line and commercial launch. I think people were unaware of what our R&D expenditure creep was.

“Now we’ve had two quarters where it’s been a consistent and very level expenditure. We expect to see that increase slightly or increase moderately but there are not going to be any great surprises. To reiterate, the important thing about that is that our investment in R&D is coming strictly from our earnings … it’s not going to be financed by shareholder capital or new shareholder capital.”

Telix Pharmaceuticals will fund its $100m research and development program entirely from its earnings rather than a capital raising, sending its shares soaring.

Dr Behrenbruch said the company was focused on differentiating itself from its competitors, including Novartis, which Wilsons analyst Shane Storey wrote in a note to investors last month would “develop a leading market share within hospitals in conjunction with Pluvicto” – after Novartis became the first FDA-approved targeted radioligand therapy.

“We are not a diagnostic imaging company. We are a therapeutics company, really unlike our competition. We have a really solid strategy for capturing our fair share of the prostate cancer market from a therapeutic perspective,” he said.

“(There is) the approval and success of Pluvicto, the Novartis product in the market but what we see is the follow-on competition to that product is really undifferentiated. In fact, it may even be not only clinically undifferentiated, but clinically beneficial to the patient.

“So we’re really focused on demonstrating over the next 18 months where does this asset lie in the landscape of prostate cancer therapy both in the wider context but specifically with respect to radioligand therapy.”

As announced last week, The Melbourne-based company generated $76.8m in revenue for Illuccix in the three months to December 31 – a 39 per cent uplift on the previous quarter – in the US. This takes total sales of Illuccix since its launch in the US last April to $149.7m.

It comes as Telix is preparing a clinical trial this year, combining Illuccix with California-based RefleXion Medical’s biology-guided radiotherapy platform.

The two companies signed a co-development and commercialisation agreement last June to expand the use of Illuccix and the BgRT platform, which is the first and only cancer treatment designed to integrate positron-emission tomography technology as part of radiotherapy delivery.

It uses PET tracers as biological guides to signal the location of the cancer, and guide the delivery of radiotherapy to tumours in real-time. The companies said this approach may “facilitate treatment of later stage cancers than is currently practical for hospitals or tolerable by patients”.

Dr Behrenbruch said if approved, it could potentially open a broad new market opportunity for Illuccix as a therapy guidance agent, considering more than 60,000 men undergo external-beam radiotherapy for prostate cancer every year in the US.