Telix Pharmaceuticals Limited

TLX Details

Priority Review Status From TGA: Telix Pharmaceuticals Limited (ASX: TLX) is engaged in the development and commercialisation of molecularly-targeted radiation products for the treatment of cancer. The market capitalisation of the company stood at ~$1.05 billion as on 8^th December 2020. Recently, the company announced that it has received Priority Review status for its prostate cancer imaging product TLX591-CDx from Therapeutic Goods Administration (TGA). As a result of this, the company has been granted a significantly accelerated timeframe of 150 working days for product dossier review and approval. On 3^rd December 2020, the company notified that it has reached a partnership agreement with DuChemBio Co, Ltd for its prostate cancer imaging product TLX591-CDx. Both the parties would cooperate to achieve a marketing authorisation for the product from the Korean Ministry of Food and Drug Safety.

Financial Highlights: For the quarter ended 30^th September 2020, the company reported an operating expenditure of $9.2 million as compared to $6.9 million in the previous quarter. The increase in operating expenses was due to finalisation and lodgement of NDA for the TLX591-CDx with the U.S. FDA and the execution of Enterprise Resource Planning (ERP), Customer Relationship Management (CRM) and Electronic Quality Management Systems (EQMS) in preparation for 2021 product launch. During 1H FY20, the company recorded revenues from continuing operations of $1.6 million against $1.8 million in 1H FY19. Loss for the half-year amounted to $18.30 million as compared to $10.36 million in 1H FY19.

Key Financials (Source: Company Reports)

Outlook: The strategy of the company revolves around the management of product life cycle in order to maintain category leadership, new clinical application areas and expansion of current products.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

EV/Sales Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: The company closed the September 2020 quarter with a cash balance of $25.70 million. The 52-week low-high range for the stock stands at $0.755 - $4.330, respectively. In the last one month, the stock of TLX has provided a return of 59.57%. On a technical front, the stock has a support level of ~$1.229 and resistance level of ~$4.343. We have valued the stock using an EV/Sales multiple based illustrative relative valuation method and arrived at a target price, which is offering an upside of low double-digit (in percentage terms). For the purpose, we have taken peers such as Resmed Inc (ASX: RMD), Immutep Ltd (ASX: IMM), and Polynovo Ltd (ASX: PNV). Hence, considering the recent priority review status from TGA, decent returns in the past months and current trading levels, we give a “Hold” rating on the stock at the current market price of $3.750 per share, down by 2.089% on 8^th December 2020.

TLX Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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