Clarity Pharmaceuticals (ASX:CU6) has surged over 600% in the last year to be a $2bn company! Is it the next Telix?

Clarity Pharmaceuticals (ASX:CU6) is now a multi-billion dollar company, less than 3 years after an IPO that valued the company at $350m.

Clarity Pharmaceuticals (ASX:CU6) share price chart, log scale (Source: TradingView)

How did Clarity achieve this feat? And is there more growth to come – is it the next Telix Pharmaceuticals, or could it go even better? Well, to answer the latter question, that will all depend on whether or not it can get regulatory approval. But the regulatory signs have been so far so good.

Introduction to Clarity Pharmaceuticals (ASX:CU6)

Clarity Pharmaceuticals is in the radiopharmaceutical space, where cancer therapies are radiation-based. So-called radiopharmaceuticals deliver treatment directly to the cells rather than the outside. This is the type of therapy employed by Telix, but also by Clarity.

Clarity’s technology is Targeted Copper Theranostics (TCT). Its technology platform has a bifunctional chelator (cage) at its heart that can bind and retain the copper isotopes used (in other words, stop them leaking into the body before reaching the cancer cells and causing damage to healthy cells).

The cage is linked to targeting a molecule which finds and binds tumour specific receptors on cancer cells. Unlike Telix, which focuses on multiple radioisotopes, Clarity has just two: Copper-64 and Copper 67.

Everyone knows the damage cancer does, but also that treatments such as chemotherapy can cause. The sad thing is that there has been little to no innovation in cancer treatments over the last few decades, even in spite of all the research done. But companies like Clarity provide hope.

Why have shares gained in the last 12 months?

Clarity’s products have shown impressive results. The most most advanced asset is Clarify which is in a pivotal Phase 3 trial that is expected to support an FDA application for approval of the drug in pre-prostatectomy patients (i.e. patients with prostate cancer about to undergo a prostatectomy procedure). The second is Cobra which unveiled data in February 2024 which showed that the drug was safe and effective in detecting PC lesions, supporting the company’s ambitions to undertake a Phase 3 trial there. And the third is Secure which is in a trial in metastic castrate-resistant prostate cancer. Again, there has been promising clinical data, and although Phase III is a while off, the trial was approved to advance to a new cohort with a higher dose level.

Also exciting investors have been multiple blockbuster M&A deals in the radiopharmaceutical space and consequent speculation Clarity Pharmaceuticals could be next. AstraZeneca bought Fusion for US$2.4bn, Eli Lilly bought Point Biopharma for US$1.4bn and Bristol Myers Squibb bought Rayze Bio for US$4.1bn. And all of these were when the target companies were where Clarity was – at the clinic. With few other radiopharmaceutical companies out there, and a cash balance of A$153.2m, you’d imagine a premium would need to be paid by any would-be buyer.

It is true that Telix was not bought out. But Telix went at it alone and has never looked back, consistently recording 9-figure sales each quarter (i.e. over US$100m). No doubt, it could be similar for Clarity. This is not just because there is a need for treatments, that consumers (either directly or indirectly via Medicare) would pay a premium for. But also because this treatment could get to market fast. Copper-64 and Copper-67 can be supplied and produced faster and easier other competing radionuclides. Copper-67 for instance costs US$15m to supply and <18 months to scale. Lutetium-177, meanwhile, costs >US$1bn to scale and 10 years to supply, because they are produced by nuclear reactors.

Conclusion

When you add it all up, Clarity Pharmaceuticals is in a great position, with clinical stage assets that have showed compelling data. Although the company still has some way to go to reach commercialisation, there is potential for further shareholder value to be created either through an M&A deal or through the company taking the treatments to market in its own right.

Consider that Telix has taken the latter route and is currently capped at more than triple Clarity – at A$6.6bn. If Clarity can have the success Telix has, we think the gap could shrink.

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