Why is the Telix Pharmaceuticals (ASX:TLX) share price plummeting 13% today?

This biotech company is having a shocker to start the trading week.

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A man in a white coat holds a laptop in one hand and his head in the other, it's bad news.

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Key points

  • The Telix Pharmaceuticals share price is down 13% on Monday
  • The company’s December quarterly report revealed a 51% fall in cash reserves
  • It is also conducting a $175 million capital raise

The Telix Pharmaceuticals (ASX: TLX) share price is tumbling today amid the release of the company’s December quarter results and a capital raise update.

The biotechnology company’s shares are currently trading at $7.05, plunging 12.86% from the open.

Let’s take a look at what might be weighing on investors minds today.

Why is the company’s share price falling?

Telix provided results for its December quarter. The highlights include:

  • Cash reserves of $22.04 million, down 51.93% from $45.85 million in the previous quarter
  • Net operating outflows of $20.97 million with total operating outflows of $21.96 million, as forecasted
  • The company invested $6.96 million in research and clinical development
  • Cash inflows of $0.99 million

The company highlighted it had received regulatory approval from the US FDA for its lead prostate cancer imaging product Illuccix. This product also has regulatory approval in Australia. Telix is also working on distribution agreements in Europe.

Telix’s capital raise announcement

Investors may also be reacting to the company’s capital raise announcement.

Telix has successfully completed a $175 million institutional placement at $7.70 per new share. The company will also conduct a share purchase plan to raise a further $25 million.

The funds are being raised to help the company advance its products towards commercialisation. This includes its prostate cancer therapy clinical program and Targeted Alpha Therapy. The company is also launching its first commercial product Illuccix following US Food and Drug Agency approval.

Speaking on the announcement, CEO Dr Christian Behrenbruch said:

We are delighted with the level of support for the placement from new and existing investors.

Funds raised under the placement and SPP will provide the company with the financial resources to execute on the next phase of Telix’s growth strategy.

We are particularly pleased to attract high quality, specialist investors to the register and would
like to welcome our new investors and thank our existing shareholders for their outstanding
support.

Telix cofounders Behrenbruch and Dr Andreas Kluge will also sell 2 million shares to coincide with the placement. This represents 8.1% of their total shares in the company. Both have pledged to the board they will not sell any further shares in the next 12 months.

Telix Pharmaceuticals share price recap

The Telix Pharmaceuticals share price has rocketed 55.9% in the past year. However, it has slipped 11% in the past month, down more than 18% in the past week alone.

Meanwhile, the broader S&P/ASX 200 Index (ASX: XJO) has returned roughly 5% over the past 12 months.

The company has a market capitalisation of around $2 billion based on its current share price.

Should you invest $1,000 in Telix right now?

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The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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