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While it’s generally a true maxim that for ASX-listed healthcare companies US FDA approvals tend to be a major upside catalyst, this week we’ve seen largecap Telix Pharma (ASX: TLX) break that rule.
At least, that’s the case for its shares on the ASX – its depositary shares on Wall Street’s NASDAQ index are faring better, up +9.4% over the last month. Compare that to its shares on the ASX, where MoM gains sit at just +0.6%.
The FDA approval boasted by the company on Monday was for that of its brain cancer imaging agent Pixclara, which is marketed as a superior product for the imaging of glioma, a type of brain cancer.
According to Telix, this agent can better differentiate between the first instance of the cancer forming, and, that of a recurring cancer exposed to prior treatment.
Designed for use in PET scans, the FDA win on Monday also helps to lock in a win for a company that was last year struggling to submit things to the FDA correctly.
While that FDA knockback related to an agent for imaging kidney cancers and not brain cancers, it was still a radioactive imaging agent designed for use in PET scans.
So perhaps the company will need to see a few more agents approved before investors reward management with a return to prices approaching A$30/sh which we saw last year – before two FDA knockbacks started to hurt sentiment.
Of course, in the US, investors appear more ebullient – but given the size. difference between Wall Street and the ASX, as well as the underlying finance culture, perhaps that isn’t surprising.
But Australian investors on the HotCopper forums and elsewhere have been asking this week why, exactly, Telix’s share price hasn’t popped in response to Monday’s FDA win. It’s a bad time for markets right now to be sure, so that needs to be considered.
But a skeptical observer might suggest Telix needs to prove it can engage with the FDA correctly the first time it makes major submissions for approvals, given the timeliness of the process – and impatience of biotech investors once things start going wrong.
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