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Why Wilsons is tipping 24% upside for the Telix Pharmaceuticals share price


Two researchers discussing results of a study with each other.

Image source: Getty Images

The Telix Pharmaceuticals Ltd (ASX: TLX) share price is having a volatile day.

The biopharmaceutical company’s shares were pushing higher in early trade but have now dropped into the red.

At the time of writing, the Telix share price is down 4% to $6.53.

What’s going on with the Telix share price?

The company’s shares are falling on Monday despite the announcement of a proposed acquisition.

According to the release, Telix has entered into an agreement with Sacramento-based Northern California PET Imaging Center to acquire Optimal Tracers.

Optimal Tracers is a radiochemistry development business providing radiochemistry process development services and research tracers for use in clinical trials.

Management highlights that the acquisition will bolster Telix’s in-house radiochemistry development capability, by adding a highly skilled team and establishing a U.S. based laboratory and production footprint for clinical trial doses.

Furthermore, it notes that the acquisition includes a facility with a radiation and pharmaceutical manufacturing licence that will be sufficient to cover the company’s key diagnostic and therapeutic isotope requirements for pre-clinical and clinical research purposes.

Telix will fund the acquisition from operational cash flow, with the purchase price “non-material”.

Should you buy the dip?

The team at Wilsons is likely to see the weakness in the Telix share price as a buying opportunity.

As we covered here earlier, its analysts see plenty of upside ahead for the company’s shares. Prior to today’s news, the broker had a buy rating and $8.15 price target on them, which implies potential upside of 24% for investors over the next 12 months.

Wilsons is positive on Telix due to its belief that its products offer better diagnosis and treatment opportunities. It commented:

Better diagnosis and treatment: Telix’s pipeline of products is based on molecularly-targeted radiation (MTR) employing the use of radioisotopes attached to targeting agents, which specifically bind to cancer cells. Using this technology, numerous forms of cancer are able to be precisely imaged and treated, potentially offering better-informed treatment decisions and more personalised cancer therapy.

Finally, another reason it is positive is the company’s significant market opportunity. It adds:

The company’s core prostate cancer imaging product, ILLUCIX, has an estimated Total Addressable Market (TAM) of US$1b. Our analysts estimate TLX can attain a 28% share of the PSMA-directed PET/CT market. After its first full quarter, ILLUCIX’s early commercial performance in the US has exceeded market expectations. Meanwhile, the TLX250-CDx agent (Phase III trial) has an estimated TAM of US$500m in the US.



Read More: Why Wilsons is tipping 24% upside for the Telix Pharmaceuticals share price

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