Aussie cancer diagnosis firm expands with $3.3b merger

An Australian company that manufactures radioactive drugs that help treat and diagnose diseases will acquire a German isotope maker in a transaction worth up to $3.3 billion.

ASX-listed Telix Pharmaceuticals will pay at least $US1.65 billion ($2.3 billion) in scrip upfront for ITM Isotope Technologies Munich, a private radioisotope manufacturer with a global distribution network that spans more than 65 countries.

"Today's news is a transformative step for Telix and ITM," Telix managing director and chief executive Dr Christian Behrenbruch told analysts on a conference call on Monday.

"This transaction brings together the two best-in-class companies that have really shaped the radiopharmaceutical industry over the past two decades, each with deep expertise, differentiated capabilities and a shared commitment to innovation for the benefit of patients."

Telix described the transaction as a merger but its shareholders will own about 76.3 per cent of the combined group, with ITM shareholders owning 23.7 per cent.

Telix's flagship products are two radiopharmaceutical agents that aid in the diagnosis of prostate cancer by making tumours light up during PET scans.

The US Food and Drug Administration last week approved Telix's Pixclara, another imaging agent that highlights gliomas, the most common form of malignant brain cancer.

The acquisition positions Telix as a vertically integrated radiopharmaceutical company with a greater control of its isotope supply, Dr Behrenbruch said.

The radioisotope market is forecast to grow by 30 per cent annually through 2035, and ITM has very large stockpiles of three key isotopes, lutetium-177, actinium-225 and terbium-161, used in cancer therapies.

ITM suffered a $US12 million half-year loss on revenue of $US156 million, and delivered US$273 million in revenue in 2026.

It is a key supplier to Novartis, the Swiss health care giant that currently dominates the radiopharmaceutical space.

ITM supplies the lutetium-177 that powers Novartis' blockbuster prostate cancer therapy Pluvicto, which Novartis says is on track for $US5 billion in annual sales by 2030.

But ITM's lead drug candidate suffered a setback in August when the US Food and Drug Administration denied its application over issues with the drug's manufacturing process, citing issues at a third-party commercial facility.

That drug candidate, ITM-11, also contains lutetium-177 and is aimed at treating patients with a rare cancer of the stomach lining and the pancreas, known as gastroenteropancreatic neuroendocrine tumours (GEP-NETs).