The Telix Pharmaceuticals Ltd (ASX: TLX) share price is down 6% after the company announced a major acquisition.
Telix says it’s a commercial-stage global radiopharmaceutical company, advancing targeted theranostics to improve outcomes for people with cancer across the patient journey. Theranostics pairs a precision diagnostic with a targeted therapy to both diagnose and treat diseases.
ITM acquisition
The ASX biotech share has announced a transformational merger which reinforces Telix’s long-term growth strategy as a vertically integrated radiopharmaceutical company with enhanced capabilities across development, isotype production and global manufacturing, underpinned by “commercial excellence and the industry’s most extensive therapeutic pipeline”.
ITM is the world’s leading supplier of therapeutic radioisotopes, with broad capabilities spanning lutetium-177 (Lu), actinium-225 (Ac) and terbium-161 (Tb) production.
Telix Pharmaceutical said ITM is the only producer of globally scaled commercial-grade Lu and serves as a key supplier for both commercially available and future therapeutic radiopharmaceuticals.
The ASX share said that ITM’s commercial-scale and profitable isotype production business significantly contributes to cash generation while deepening Telix’s supply chain for isotypes required for its therapeutic pipeline.
Telix said that ITM’s complementary pipeline includes ITM-11, a novel therapeutic candidate for the treatment of gastroenteropancreatic neuroendocrine tumors (GEP-NETs), which has successfully completed phase 3 development, potentially accelerating Telix’s entry into a validated commercial market for targeted radionuclide therapy (TRT).
The transaction is subject to Telix shareholder approval and other customary closing conditions.
What is the cost of the deal?
Telix Pharmaceuticals revealed that the upfront consideration is US$1.65 billion on a cash-free and debt-free basis – the enterprise value.
After adjustments, ITM shareholders are expected to be paid approximately is US$1.25 billion in Telix shares at US$11.84 per share, released as Nasdaq ADRs after the respective escrow periods.
An additional contingent consideration of up to US$700 million after achievement of future regulatory approvals and commercial sales milestones for ITM-11.
Final thought on the Telix Pharmaceutical share price
The market is clearly not excited by the deal, so it’ll be interesting to see if this huge deal is transformative for Telix in the years ahead.
