Broker UBS has just significantly upgraded its share price target for Telix Pharmaceuticals Ltd (ASX: TLX) after the company announced some positive news this week.
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Good news out of the US
Telix said earlier this week that it had been granted fast-track designation by the US Food and Drug Administration for its BiPASS program, which is evaluating a new compound to be used in prostate cancer detection.
BiPASS (Biopsy of the Prostate Avoidance Stratification Study) is evaluating the use of gallium-68 PSMA-PET imaging in combination with MRI for the detection of prostate cancer prior to taking a biopsy.
The company said this week that there was a large clinical need to develop a method to detect the cancer without a biopsy.
Telix said:
Fast Track is a process designed to facilitate the development and expedite the review of drugs to treat serious conditions and fill an unmet medical need, potentially accelerating patient access if approved. More than three million prostate biopsies are performed globally each year, yet up to 75% produce a negative result. Biopsy can be stressful and painful for patients and may provide no meaningful diagnostic benefit, highlighting the importance of improved diagnostic tools earlier in the patient journey.
Broker says the market could be large
UBS said if the BiPASS study is successful, it could expand the total addressable market for Telix's PSMA compounds by almost 100%.
They said:
Success would establish Telix as first to market in a large new diagnostic indication, a potentially transformative opportunity. We believe the market underappreciates both the commercial upside and probability of success of the BiPASS study.
UBS said its confidence was supported by data from two previous studies and feedback highlighting that there was a strong unmet need and a high likelihood of adoption.
They added:
We believe the FDA New Drug Application pathway and Transitional Pass Through payments could accelerate commercialisation and support higher peak sales than current expectations. We forecast a 10% FY26-FY35 CAGR for Telix's PSMA-PET franchise versus 6% implied by consensus. If BiPASS is successful, we expect meaningful uptake from FY29, with FDA approval partially de-risked and the recent Fast Track designation encouraging.
UBS said Telix was a rare biotechnology company in that it had a broad, advanced pipeline funded by its established precision medicine business.
They said the company also had a deep therapeutic pipeline supported by the recently announced acquisition of ITM.
UBS raised its price target on Telix shares from $22 to $26, compared with $16.19 at the time of writing.
This would constitute a 60.6% increase if achieved. Telix is valued at $5.24 billion.
