Telix Pharmaceuticals share price sinks 12% despite rocketing revenue

Positive cash flows, growing revenue, improving cash balance. Why are investors still displeased?

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The Telix Pharmaceuticals Ltd (ASX: TLX) share price is getting punished today as investors respond to quarterly results and trial findings.

In afternoon trade, shares in the radiopharmaceuticals company are positioned 11.7% lower at $9.04 apiece. The disappointing performance is undoubtedly funnelling into the healthcare sector, being among the worst-performing areas of the market today.

Telix released its third-quarter results after the market closed yesterday. Hence, part of today's reaction could relate to information shared on Wednesday.

Good times keep on rolling

While the Telix Pharmaceuticals share price portrays a gloomy story, the company's third-quarter results were hardly disheartening.

For three months ended 30 September, Telix achieved another quarter of growth led by its Illuccix injection. According to the report, dose volumes continue to increase, with US sales increasing 13% from the previous quarter to A$130.6 million.

The injection, used as a radioactive diagnostics indicator for PET scans for prostate cancer, saw new customer acquisition alongside retention and growth from existing accounts.

Notably, the company saw a mix-shift to a 26% government/74% commercial weighting from a 19% government/81% commercial in the prior corresponding period.

Furthermore, total revenue came in at A$133.6 million, representing a drastic 134% increase from Q3 last year. Speaking on the accomplishment, Telix managing director and CEO Dr Christian Behrenbruch said:

We have posted another quarter of double-digit revenue growth for Illuccix in the US with average daily demand for doses continuing to grow month-on-month.

Just as importantly we have a number of near term value drivers on the horizon, being the commencement of the ProstACT GLOBAL study and advancing the US regulatory filing and commercial launch preparations for our renal (kidney) and brain cancer imaging agents.

The continued expansion of dose volume in the third quarter was conducted while maintaining positive cash flow — marking the fourth consecutive quarter of doing so. An achievement one might suspect would be met with a higher Telix Pharmaceuticals share price.

Net operating cash flows arrived at $21.4 million, doubling from the second quarter. In turn, the company finished the period with a cash balance of $137.4 million.

Why is the Telix Pharmaceuticals share price dropping?

In light of the mostly positive Q3 result, investors might be wondering why the shares are falling.

It is difficult to conclusively say what is driving the Telix Pharmaceuticals share price down today. However, part of the pessimism may stem from the company's preliminary results of its phase I PrastACT SELECT study.

The release states the study 'achieved its primary objectives', showing evidence of safety and tolerability for two doses of TLX591 two weeks apart. Additionally, the study showed meaningful prostate-specific antigen reduction.

Still, the findings noted grade 3 and 4 hematologic events. For reference, grade 3 is categorised as severe or medically significant but not immediately life-threatening. Whereas grade 4 is described as life-threatening, requiring urgent intervention.

However, Telix stated that hematologic events were 'transient and reversible'.

This might explain the pressure on the Telix Pharmaceuticals share price today.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Telix Pharmaceuticals. The Motley Fool Australia has recommended Telix Pharmaceuticals. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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