Bell Potter bumps Telix’s target price as prostate cancer product demand to grow into 2031

A new research note from Bell Potter reveals the broker is bullish on the demand for prostate cancer imaging products into 2031.

In this context, the broker expects ASX-listed Telix Pharmaceuticals’ (ASX:TLX) radiopharmaceutical imaging product, Illucix, to increase revenues to the Oz healthcare stock for years to come. 

Bell Potter forecasts Telix’s FY23 revenues will lift by 16% in its latest note, retaining a “Buy” recommendation. 

• The broker has issued an upgraded “Buy” on Telix, giving the company a target price of $9.00.

• Shares are currently worth $7.01 at the time of writing (1440 AEST Thursday 19 January 2023), reflecting a total expected return of 27.2%.

Maiden quarter of positive cash flow 

Telix today reported its 4Q22 cash flow statement with cash receipts up 62% Quarter-on-Quarter (QoQ). 

That marks Telix’s first quarter of net cash of $1.6m. 

But that’s not the only thing on the rise. 

“Revenues from the sale of Illuccix continued to increase each month and management believes the US market for prostate cancer imaging agents is likely to be in excess of 300,000 scans annually,” the broker argued. 

Imaging fluid explainer 

Telix’s Illucix product is an injectable fluid that allows X-ray imaging machines and similar devices to visually identify cancerous growths in patients presenting with Metastatic Castration-Resistant Prostate Cancer (mCRPC).

Most cancer imaging technologies require a radiofluorescent liquid to be injected for cancerous growths to be differentiated from non-affected parts of the body. Brain imaging works in the same way. 

“Industry heavyweight Lantheus recently reported that on an industry basis there are more than 240 PET radiopharmaceuticals diagnostic assets in development, in addition to a further 94 radiopharmaceutical therapies in development,” the broker added. 

Lantheus sees potential revenues sector-wide of US$1.6bn, based on an assumed 350,000 prostate cancer imaging scans to take place this year. 

Lantheus previously predicted 250,000 scans taking place, for which it assumed sector-wide revenues of US$1.1bn (note, this includes every company operating in the space, not just Telix or Lantheus). 

Competition risks revealed in February 

Bell Potter’s revised revenue predictions rely on the assumption that the market for mCRPC products will continue to expand, as per Lantheus’s research. 

The broker notes a key catalyst for Telix will include the performance of Illuccix as it competes with similar products from both Lantheus and Novartis. 

Data highlighting how that performance ranks will be released in early February. 

Potter also highlighted Telix did not provide FY23 revenue guidance of its own.

Food for thought. 

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