The Telix Pharmaceuticals Ltd (ASX: TLX) share price is now up 157% over 2019 from 65 cents at the turn of the year to a record high of $1.67 today and there could be more to come if the oncology researcher ever manages to commercialise any of its treatments for renal cancer, brain cancer, or metastatic prostate cancer.
Today the company has fired up its supporters further by announcing that it had a "positive" meeting with the FDA the U.S. healthcare regulator over its plans to include "American patients into the ZIRCON Phase III study" for treating renal cancer.
According to Telix, the FDA indicated that if its final Phase III study meets its scientific endpoint in demonstrating clinical efficacy under its proposed settings then this would be "supportive of a marketing authorisation" in the United States.
Of course investors need to be aware that just because the FDA suggests the design of a trial is suitable for approval purposes does not mean the trial itself will be a success.
In fact the local share market is littered with biotech businesses that have swallowed huge amounts of capital conducting expensive clinical trials into their products, without ever getting FDA or commercial approval elsewhere around the world.
This is a nice Segway onto the final point that Telix also requested a trading halt today ahead of a capital raising that the Australian Financial Review is reporting will see it ask investors to tip in another $40 million at a discounted $1.30 per share.
As at March 31 2019 the company had $17.68 million cash on hand and posted an operating cash loss of $7.4 million on product sales of just $0.7 million for the March quarter.
We can see then why the company is seeking a cash injection as bank debt is unlikely to be an option as bankers won't lend to cash sucking businesses unless they are all but certain they'll get their cash back with interest.
The company has 150.9 million shares currently listed on the ASX with another 67.4 million subject to escrow until November 15, 2019. So based on 218.3 million shares outstanding it has a market value of $364 million with another $40 million about to be tipped in.
Investors then are effectively betting that it will have some commercial success with its clinical stage trials. Whether or not it does is tough to know unless you have a professional expertise in oncology research and for this reasons among others I'm not a buyer of shares.
Other speculative biotechs investing heavily in research include Mesoblast Limited (ASX: MSB) and newly-listed Invex Therapeutics Ltd (ASX: IXC).
