Telix Pharmaceuticals - Earnings Call - H2 2024

Transcript

Operator (participant)

I would now like to hand the conference over to Ms. Kyahn Williamson, SVP of Investor Relations and Corporate Communications. Please go ahead.

Kyahn Williamson (SVP of Investor Relations and Corporate Communications)

Thank you, Ashley, and thank you, everybody, for joining us this morning, Australian time. We're pleased to share with you our full-year results for 2024, which we lodged with the ASX yesterday afternoon, Australian time, after market close. Just looking through our standard disclaimer, I am joined today by Chris Behrenbruch, our Managing Director and Group CEO, Darren Smith, our Group CFO, Kevin Richardson, our CEO of the Telix Precision Medicine business, and Richard Valeix, the CEO of Telix Therapeutics. Together, we will be taking you through our performance, financial results, and focus for 2025. If we could move to slide five, please. Just by way of some introductory remarks, 2024 has once again been an extraordinary year for Telix.

We are delivering against all aspects of our growth strategy, and some of these operational highlights include the continued strong commercial performance driven by sales of Illuccix and the creation of a platform for further growth as we prepare to launch three new products in the U.S. next year and roll out Illuccix globally into Europe and the U.K. specifically. We're making great progress across our therapeutic pipeline, notably in the late-stage assets being brain, kidney, and, of course, our prostate cancer program, which is now in phase three. And we've had some really exciting developments across the next-generation pipeline, including the delivery of a clinical proof of concept for our prostate cancer alpha candidate. It's been a year of many acquisitions, and these are supporting the strategic expansion of our pipeline and the build-out of our global product delivery or manufacturing infrastructure.

So, in short, the business looks very different to what it did a year ago, and at the end of 2025, it will look very different again as a result of this great progress. If we could move to slide six, please. This is also reflected in the financial performance, which Darren will take you through today. Our commercial performance has underpinned delivery of our second consecutive year of profit and growth in a year that saw us increase our investment in R&D, and this, which we expect, will translate into near-term value creation for shareholders and strategic transactions that have assisted in the transformation of Telix and set us up for ongoing leadership in this rapidly growing market. Today's presentation outlines these key developments and the step change in our operations as a result of the acquisitions we've made.

With that, I'd like to hand over to Chris to talk further about the strategy and our performance over the past year.

Chris Behrenbruch (Managing Director and Group CEO)

Thanks very much, Ky, and good morning, everybody. If we could move to slide eight, please. Although Ky has somewhat introduced the strategy outline in a prior slide, this is a nutshell summary of how we see the Telix growth strategy over the next three to five years or so. It's focused on four priority areas of business activity. Firstly, our R&D investment, which will be well covered in this presentation, both financially and operationally. It's really about delivering long-term shareholder value and patient outcomes through our therapeutics pipeline. At the end of the day, that's what the core mission of Telix is, and as I'll show you in a minute, represents a step change for the company when we achieve it. Richard Valeix, who leads this business unit, will go through the details shortly.

Within this effort, we are building the strongest portfolio in the industry of next-generation radiopharma products with a focus on novel targets and alpha-emitting radionuclides. We've made several transactions and licensing deals that support this, and in some respects, it represents a pivot towards a more internally sourced innovation model, and this is reflected in our R&D growth. The engine room of the business today is our precision medicine business, led by Kevin Richardson, which encompasses our diagnostic imaging products but also has the mandate to ensure that we have well-thought-out patient selection strategies for our therapeutics program and strategically designed clinical trials that have a high degree of certainty of success because we're utilizing the whole theranostic power of radiopharma. That's why we call that business unit precision medicine and not diagnostic imaging, and lastly, infrastructure.

This has been a big focus for Telix over the last couple of years with some significant investments such as our state-of-the-art European manufacturing footprint in Belgium and the acquisition of ARTMS and RLS, among others. We have also been steadily adding important R&D infrastructure that really enables the other pieces of this strategy puzzle. We can move to slide nine, please. Our M&A activity maps very well onto this strategy, and while I'm not going to go through this diagram deal by deal, you can read about that in our annual report. Our M&A supports our strategy through building the fundamental delivery vehicles of our business, new platform technologies, and the expansion of our product pipeline.

This pipeline expansion consists of both new molecules but also other relevant assets that enable us to obtain new indications or clinical use cases for our products, such as software, AI, and medical devices. Nuclear medicine's a bit unique like that. As you can see, last year, we really enriched the scope of our business activities while remaining pretty disciplined around the disease-focused areas that we think are going to be the most important for the future. We've been busy. Slide 10, please. So clearly, a strategy is not temporally static, and with specific reference to our 2024 financial results, I'd like to impress upon you that we are moving into the next epoch of the company's growth and development, empowered by both our M&A activity and our product development success.

Since becoming a commercial-stage biopharma company in 2021, we've ramped up quickly to build all the key components of a commercialization company in key markets. The remarkable success of Illuccix, particularly in the U.S., has really enabled this transformation from the typically hypothetical and aspirational baby biotech to a fully-fledged commercial organization. As we roll into 2025, this is essentially a new phase in the company's journey. We transitioned from a single product, mostly a single-market company, to a diversified product company. This year, we will, subject to regulatory approvals, launch three new and innovative products in the United States for a total of five approved products in the U.S. and Europe. We will add about 20 commercial territories to our international coverage. It's a big diversification of our revenues, and we expect to see commensurate growth in our top line.

We've given guidance for financial year 2025 well north of AUD 1 billion, but this figure excludes our new product launches in territories that have not yet received national approvals. So you have to put that forecast into perspective. This exciting product revenue growth, in turn, enables us to largely self-finance the major R&D activity required to achieve that next inflection point, which is becoming a therapeutics company. This is not far away. Our pre-commercial launch year as a therapeutics company is 2027. That is now less than two years away. So between now and the end of 2027, our goal is to put as much firepower as possible into our R&D activity and, of course, the delivery capabilities in the key markets we serve. That's why we've been investing so heavily in infrastructure.

To be clear, our R&D spend will grow commensurately with our revenue in the next few years. All of our R&D spend is discretionary, and so we can essentially achieve whatever level of earnings we wish. But clearly, the priority is to go hard and to unlock the value of the pipeline, and we are going to maximally invest to achieve this goal while, of course, maintaining sensible cash reserves and financial optionality. But from the end of 2027, as this diagram shows, things change. That's when we'll expect to see a step change in our profitability and for cash generation to start to really exceed our immediate planned R&D needs. I'm sure Richard and Kevin, whom you'll hear from in a minute, will continue to find exciting things to invest in.

Radiopharma is such a nascent opportunity, and it's got a very bright future, but it is the transition point where things will start to accelerate financially. Anyone hanging out for a Telix dividend will need to wait until at least then, so frankly, the day that we start paying dividends will be the day that we signal to the market that we have run out of ideas to build shareholder value. There's so much opportunity to invest in this field and so many problems to solve in oncology, so I hope this perspective, it's a little bit of a different diagram. We haven't really talked about the company in this way before, but I hope this perspective is useful. I'd like to now hand over to Darren Smith, our Group CFO, to explain how, as we launch into this next phase of the company's growth, how the numbers stack up.

2024 was a really great year, and he has a lot to talk about. So Darren, over to you.

Darren Smith (CFO)

Thanks, Chris, and hello, everyone. Today gives me great pleasure to talk about Telix's strong financial achievements and progress during 2024. Let's now turn to slide 12 and Telix's key financial metrics. It's been an excellent year for Telix, with all six of these metrics improving dramatically compared to the prior year. Just listen to the headline numbers. Revenue improved 56%, beating guidance. Adjusted EBITDA improved 70% to AUD 99 million. Operating cash inflow improved 80%. Profit after tax improved 860%. At the end of the year, cash position finished at a solid AUD 710 million on the back of a convertible bond placement. I will now go into some detail on these metrics on the following slides. Let's now turn to slide 17 and review the group's operating profit.

As can be seen in the simplified P&L on the slide, operating profit and similar metrics all improved significantly year on year. The headline drivers of the results were, firstly, that we achieved excellent commercial growth by Illuccix in the U.S., accounting for 97% of our revenue. Kevin Richardson, our CEO of Precision Medicine, will talk later in the presentation on how this has been achieved. Secondly, we improved gross margins through efficiencies and stable pricing across key market segments. And thirdly, we are effectively managing expenditure as a percentage of revenue. Now turning to slide 14 and the group's adjusted EBITDA. As can be seen on the bubble on the right side of the slide, the adjusted EBITDA improved 70% on the prior year, and this is a testament to the strong underlying performance of the Telix business model.

The graph on the slide shows the bridge from operating profit to the AUD 99 million adjusted EBITDA, highlighting the impact of the main non-recurring corporate initiatives that have impacted operating profit in 2024. These can be classified into two main categories. There's AUD 9 million associated with the listing on the Nasdaq and AUD 8 million associated with Telix's strategic M&A activities. Now let's turn to slide 15 and an overview of our research and development investment. In line with guidance, we invested AUD 195 million into R&D, as it continues to be a key component of our growth strategy. It is growing our industry-leading precision medicine business, with R&D focused on the regulatory filings for Pixclara, Zircaix, and Gozellix, and the scale-up of inventory and preparation for their commercial launches. This accounted for approximately half of the investment in 2024, with these assets expected to generate revenue in 2025.

It also is delivering our therapeutic pipeline. As we build momentum in our Telix clinical activity, the R&D investment is increasing, and it is concentrated on progressing our late-stage assets for prostate, kidney, and brain cancer therapies. Now let's turn to slide 16. Our precision medicine business is currently the commercial engine house of Telix, focused on growing our industry-leading precision medicine products. As noted already, it delivered revenue growth of 55% for sales of Illuccix. Gross margin improved 3%-65%, reflecting a higher realized average price due to improved market mix and steady cost of goods, and we also continued to invest into selling and marketing to drive further growth of Illuccix in the U.S. and launch in Europe in 2025. We are also progressing the U.S. market for the launch of three new imaging agents.

As a result, the precision medicine business grew its adjusted EBITDA by 79%. This funded not only its own R&D but also the rest of the business. Now let's turn to slide 17 and our therapeutic business segment. This segment of Telix is focused on delivering our late-stage therapeutic pipeline and building the clinical products and services of the future, leveraging our research platform to develop the next generation of radiopharmaceuticals. During 2024, Telix increased its investment by 74% into the therapeutic pipeline to AUD 82 million, and over time, this is becoming a larger proportion of our R&D investment. The majority of the investment in 2024 was focused on commencing the phase III prostate global clinical trial, including production of clinical doses to support the ramp-up of recruitment. Richard Valeix, our CEO of Therapeutics, will shortly present the details regarding progress in our 2025 plans for our therapeutic pipeline.

Now let's turn to slide 18 and Telix's manufacturing solutions. Operations scaled up this year as a result of the acquisition of ARTMS and IsoTherapeutics Group, as well as the expansion of our facility in Brussels South. This site expansion included the installation of two new cyclotrons and the preparation of commencement of GMP production in 2025. The expansion of operations has resulted in an incremental increase of AUD 19 million in operating expenses for TMS. This will continue to involve as in January we completed the acquisition of RLS, which included the footprint of 31 pharmacies across the United States. The results of RLS, which is immediately accretive, will be included in the TMS results from 2025 onwards. Now let's turn to my last slide, 19, which highlights the cash position and performance.

Telix finished the year with a very respectable AUD 710 million on the balance sheet, mainly bolstered by the AUD 650 million convertible bond placement that we undertook in July 2024. This enabled us to continue to pursue our strategic M&A opportunities, such as the RLS acquisition, as well as providing the resources to provide further acceleration to the investment in our late-stage clinical programs. Net cash used in investing activities in 2024 totaled AUD 135 million. This included AUD 31 million in expanding our global production infrastructure, AUD 20 million to expand our portfolio of intangible assets, AUD 14 million for risk mitigation by the strategic acquisition of crucial raw materials, and AUD 50 million was placed in a security deposit.

Turning to operating cash, as previously discussed, Telix invested AUD 195 million of its operating cash into R&D for our therapeutics and precision medicine business, plus funded the AUD 36 million contingent consideration payment to our former ANMI shareholders. After netting off these payments, Telix still improved its net operating cash flow over the last year by 80% to AUD 43 million. This clearly illustrates the sustainability of the Telix business. I'll now hand you over to Kevin Richardson, our CEO of Precision Medicine.

Kevin Richardson (CEO)

Thank you, Darren. Slide 21, please. To help define the precision medicine business, please see the slide on our expanding commercial portfolio. We will go over in more detail our prostate imaging asset, as well as our kidney and brain over the next few slides. But I did want to make note of a recent announcement that we intend to bring into our precision medicine business unit and further develop Scintimun as a companion patient selection and safety assessment tool for TLX66, its therapeutic bone marrow conditioning candidate. The plan is to increase sales for its current indication by improving product availability worldwide with commercial consistency. Slide 22. Telix continues to strengthen its position in the PSMA market with Illuccix, our first commercial product, driving revenue growth for the 10th consecutive quarter since launching in April of 2022.

Q4 2024 saw a 55% increase over Q4 2023, while achieving over AUD 500 million in U.S. sales for full year 2024, reflecting our strong market momentum. Our commitment to clinical accuracy, reliable delivery, and exceptional customer service attracts and retains our customers. What we mean by that is that our Illuccix product has the highest inter-reader agreement of the currently marketed PSMAs, delivering an accurate diagnosis, while our 245 points of distribution puts our PSMA within minutes of our customer at dispensing. We are your friendly neighborhood pharmacy. We like to say it's locally from the scanner, and our customers say that our multifunctional approach to the customer experience lets the customer hit the Telix easy button when they begin using our products. Our performance is driven by executing our commercial strategy with consistency, expanding our market reach, and capturing more share.

With CMS reform providing a tailwind, Illuccix retains pass-through status through June 30th, 2025. With CMS reform as a backdrop and the impending launch of Gozellix, we look ahead to our two-product strategy as Telix establishes itself as a leader in prostate cancer imaging, enabling continued innovation and reimbursement for new products in the years to come. Slide 23. Global expansion of Telix's industry-leading precision medicine portfolio is a key driver of our growth strategy. In the U.S., our commercial portfolio will continue to expand with the launches of our urology products, Gozellix and Zircaix, followed by Pixclara for our neuro franchise. Gozellix is an innovative new PSMA candidate that is designed to increase availability and efficiencies in large urban areas and extend our product reach to distant PET/CT scanners that are in areas where patients can't access PSMA because they are out of reach for current technologies.

Once approved, we expect to apply for transitional pass-through payment with the Centers for Medicare and Medicaid Services. Once approved, Telix will be the only company with two PSMA agents in the market, allowing us to satisfy the needs of both HOPS accounts and non-HOPS accounts. Zircaix is our first-in-class renal imaging agent designed to diagnose patients with ccRCC, with undiagnosed renal masses. This is a new diagnostic area for PET imaging, and Telix will leverage our success with the urologic physician and imaging centers who have a growing confidence in PSMA imaging. Finally, our Pixclara agent will bring to neurology customers a technology that will quickly identify treatment-related inflammation from tumor progression or pseudoprogression and determine the best treatment pathway for the patient.

Looking ahead toward our precision medicine pipeline, we will drive sustained growth through active product lifecycle management and introduce novel products that align with our therapeutic focus. We plan to expand patient reach through label expansion, advancing studies in prostate, kidney, and brain, with a particular focus on metastatic disease for our kidney and brain products. Our global growth strategy includes expanding our footprint across Europe and the U.K., while simultaneously preparing for regulatory pathways into China and Japan in the Asia-Pacific region. These efforts will ensure broader access to our precision medicine solutions, reinforcing Telix's leadership in targeted medicines worldwide. We plan to leverage our commercial success in the U.S. across products, indications, and geographies, protecting and growing our share through strategic account management and a two-product PSMA strategy, strengthening our relationships with leading cancer institutions worldwide.

You may note our recent announcement on our AI partnership that is designed to bring technology together with Illuccix or Gozellix to increase patient throughput in an imaging center, allowing them to treat more patients and reduce the wait time to get this lifesaving PSMA scan. Utilizing the success we've experienced in the U.S., we plan to take that commercial playbook and strengthen the global brand into new markets around the globe. Slide 24, please. Turning towards 2025, we've already talked about the potential to launch three new products this year, which are subject to regulatory approval. Our launch planning is well underway. We've built out the commercial infrastructure, we've trained our customer-facing teams, and we're currently delivering disease awareness education to the customer base through multiple channels. This investment is reflected in the financial results.

Gozellix, our second PSMA agent, has a PDUFA goal date of March the 24th, 2025, and is a key for Telix and rounds out our two-product strategy in the U.S.. The global expansion of Illuccix is a priority for Telix. Following the positive opinion from the German regulatory body, we are set to launch in 19 countries, including the U.K.. As approvals are finalized, we will begin implementing our country commercialization plans beginning in the first half of 2025. Additionally, we are nearing the completion of China phase III bridging study as we progress our Asia-Pacific rollout strategy. In the U.S., Zircaix has filed a BLA in December of 2024, and we are expecting a PDUFA date after the U.S. summer in 2025.

With an expanded access program already in place across the U.S. and globally, physicians are already using our innovative kidney agent around the world on their patients, and it is included in the EAU guidelines as an emerging technology. Moving to our neurology platform, Pixclara has an NDA with a PDUFA date of April the 26th, 2025, also with an ongoing expanded access program in the U.S. Our neurology franchise will target global regulatory filings based on market opportunities as we gain momentum around the globe. All the hard work our teams put in in 2024 has set 2025 to be an exciting year as we transition to a multi-product, multinational commercial company, diversifying our revenue streams through multiple products across geographies. Thank you. On to Richard Valeix, CEO of Therapeutics.

Richard Valeix (CEO)

Thank you, Kevin. Hello. I'm pleased to be able to speak to you today about the strategy of Telix Therapeutic business. Telix has built a pipeline of highly differentiated therapeutic candidates based on validated targets and clinical data. Our focus is twofold. First, in the short term, our priority is on the delivery of three main late-stage assets for prostate, kidney, and brain cancer. Our lead asset, TLX591, is already in phase III, and our goal this year is to advance the kidney and brain cancer therapies to pivotal trials. I will talk more to that shortly. The second part of our strategy is building our pipeline of next-generation assets. Telix has one of the deepest alpha pipelines in the industry. Now we are transitioning these programs, which have been stage-gated through our internal R&D and based on excellent preclinical data, into clinic.

The TLX592 and TLX102 compounds are the natural evolutions of our portfolio lifecycle management, with alpha radioisotopes in order to expand indication. While TLX090, the bone-seeking assets we acquired last year from QSAM, is being developed initially for treatment of pain from bone metastases. That gives us the potential to treat prostate cancer patients right across their disease journey. This is also building on our strong urology footprint established with precision medicine. Finally, we have a unique opportunity to explore multi-indication or pan-cancer asset strategy. Let me explain. The CAIX and FAP are both validated as pan-tumor targets. Pursuing this strategy can add value to these assets, generating first-in-human data in multiple indications in a limited time frame. Next slide, please. In the next two slides, you can see our pipeline.

The first slide is presenting our late-stage assets with our pivotal trial ProstACT Global that supports TLX591 compound data generation, and our two additional late-stage compounds, TLX250 and TLX101, that will move in pivotal trials by the end of the year 2025. Next slide, please. The second pipeline slide illustrates the early-stage compounds that will enter in clinics, mainly first-in-human, with several of these being alpha therapies. Next slide, please. Moving to 591, our lead therapeutic candidate. It is a highly differentiated asset. It's an antibody versus the classical peptide PSMA available. It's a big opportunity. Key to the differentiation is the safety or side effect profile and the short-dosing regimen.

Indeed, when you have the privilege to meet patients who have been treated with Telix therapy, either on a clinical trial or via some compassionate access program, they will often mention that they have experienced very little in the way of side effects. We can deliver this therapy as a short two-week course. This is appealing to patients and physicians and may enable TLX591 to be more easily added to existing standard of care hormone therapy regimens. During 2025 2024, we released data from our study ProstACT Select, which reinforced the safety profile in earlier patient population. The hematology toxicity was reversible, less severe, and manageable. The patient case on the right part of the slide is from the Select study and illustrates a stable disease with radiographic progression-free survival for almost nine months, in line with the positive study results.

As mentioned, this asset is now being studied in a ProstACT Global phase III trial. ProstACT Global is the first trial to combine the synergistic effects of PSMA radioactive antibody-drug conjugate with androgen receptor pathway inhibition and the well-known docetaxel. It is generating a lot of KOL interest. This study is recruiting well, including ramping up in the U.S.. We are on track to deliver interim readout in H1. As a reminder, the interim readout will be focusing on the part one of the study with the first 30 patients, which is looking at safety and dosimetry of TLX591 in combination with the standard of care administered in the study. Next slide, please. TLX250 is our CAIX targeting asset being developed initially in renal cell cancer. This target is well validated in clear cell renal cell carcinoma with our ZIRCON study, the registrational trial for Zircaix.

phase I and II studies have demonstrated the safety profile and efficacy potential. The images on the right part of the slide represent a ccRCC patient case with PET scan before and after treatment. It clearly reinforces our confidence and interest in this compound. We have been running a number of studies concurrently on this asset, exploring it in combination with immunotherapies and DNA damage repair inhibitors in renal and other cancers. In 2025, we will advance the pivotal phase III trial as a monotherapy in late-stage metastatic setting, building on the early phase I and II data. We had a pre-IND meeting this month in February with the FDA to consult on the trial design, and based on the positive feedback, we are working towards submission of an IND this year. We will continue with the combination studies.

The STARLITE studies have been run as investigator-led studies, giving us the flexibility to explore the optimum dose sequence. STARLITE 2 is a groundbreaking study. The first time, the combination of lutetium girentuximab and nivolumab has been investigated, with positive preliminary safety data presented in the recent ASCO GU conference. Finally, the STARSTRUCK study, which is ongoing, is the first foray of the pan-tumor approach. The study will authorize to deliver data for several indications expressing the CAIX target and will generate data for the first time regarding a radioactive ADC compound and a DDRI association. Next slide, please. The 101. TLX101 is our investigational therapy in brain cancer and has obtained orphan drug designation for glioblastoma. This is a severe disease with very poor survival outcomes. Published data from the IPAX-1 study in recurrent setting demonstrated promising efficacy signals with a median OS of 23 months from initial diagnosis.

We have now completed the IPAX-Linz study, which is the combination of external beam radiation therapy and TLX101 at low dose. We expect data later this half. Late last year, we had another pre-IND meeting with the FDA on a pivotal trial design. We are preparing the IND submission for pivotal trial planned for the second half of this year. We all feel very driven to move this program forward. The image on the right part of the slide illustrates why. You can see a patient case from a compassionate use program in Europe presented at the EANM Congress in 2024. It presents two PET scans performed with our Pixclara product, which will be our companion diagnostic agent, before and after treatment. We can clearly see the changes in tumor activity presented by the color changes. This case represents a stable disease response, an amazing compound.

Next slide, please. These slides summarize our next-generation pipeline strategy. As mentioned previously, we are aiming to move three of our alpha assets into first-in-human trial in 2025, commencing with the TLX592 for prostate cancer. I noted earlier that we are adding to our urology portfolio the two recent acquisitions, TLX090 and TLX400. And finally, we are reinforcing our R&D capabilities with the recent ImaginAb platform acquisition in order to create a new portfolio of next-generation diagnostic product optimized for radiopharmaceutical drug delivery. All the deliverables in 2024 were paving the way for the disruptive year 2025 for the Telix therapeutic portfolio, with three pivotal trials, multiple first-in-human alpha therapies, and innovative pan-tumor development approach with validated targets. Thank you.

Chris Behrenbruch (Managing Director and Group CEO)

Thanks very much, Richard. Great summary. And just to reiterate, we'll have three programs in pivotal studies by the end of this year, which I think is a really good testament to Richard's team and the great effort that's underpinned our R&D this year. I'm going to talk now a little bit about our manufacturing solutions activity. Darren Patti, our Chief Operating Officer, is on the road at the moment, but I'm going to step in and give a little bit of an update here. If you can move to slide 34. So this is a summary slide of really why we think this is so important. Radiopharma is about, whether it's a diagnostic or a therapeutic product, is really about proximal manufacturing and just-in-time manufacturing. As Kevin noted for the Illuccix product, we're distributing that product now out of about 240 points of distribution in the United States.

To deliver these products globally, you need to have infrastructure to really be able to go that last mile and make the product available with a high degree of confidence for patients. So we've been focusing on building that infrastructure, scaling it to meet the demand both today and the expected demand for our products. And this is really a two-part model for success. We are heavily dependent on key partnerships. Our goal is not to go at the task of manufacturing alone. And in almost every market we operate in, we have key supply chain manufacturing, distribution, and even sales and marketing partnerships. But we also have a certain amount of facilitative infrastructure ourselves. And the wheel diagram on the right-hand side shows how the acquisitions that we've made over the last few years map onto that, or the investments that we've made really map onto that activity.

This is, of course, a bit of a simplification of how we do radiopharmaceutical development. But you can see now we've got a really complete capability from early clinical development and dose production. For example, we produce most of the doses for our clinical trials internally for phase I and phase II trials. We've got an amazing radiochemistry team and bioconjugation capabilities, including GMP conjugation. We are active in isotope production, not because we want to be in the isotope business, but because we want to have the ability to innovate and generate efficiencies in the way that isotopes are produced. And then, of course, with the acquisition of RLS in tandem with key commercial partners, really focus on that last mile of patient delivery. Next slide, slide 35, please. For the U.S. market, this is what it looks like.

In the left-hand map there, you can see the outline of our very important and key partnerships in the United States. This is a multi-distributor model to really take advantage of all the nuances of local commercial markets in the United States. We have also built our own network of capability through both the acquisition of RLS and the combination of the ARTMS technology. What this means is that we can do very high production-level isotope production for zirconium, gallium, and other potential key radionuclides in the future and build a very efficient distribution capability out of a very small number of nuclear pharmacies. This is not to supplant our U.S. distribution model, but rather to augment it, to make sure that we've got backup for our key partners, to make sure that we are providing radionuclide efficiencies.

In particular, over the next 18-24 months, we've got a big focus on how do we provide very cost-effective large-scale gallium and zirconium production to our pharmacy partners. That's going to have a pretty big impact on our production efficiency and eventually our cost of goods as well. Next slide, please. Globally, the story repeats itself. We've got a significant investment in infrastructure in Europe, particularly with the Brussels South or the Seneffe facility. We are also building some distribution and hot lab capability in Australia to support regional clinical trials. But like the U.S., we are also very much partner-driven with our, for example, collaboration with China Grand Pharma for the greater China market and also our manufacturing joint venture with R2PHARMA in Brazil. And so what you can really see is that we're committed to that localized production in the major markets that we serve.

This is really about guaranteeing supply and patient access for our products. Of course, there's no doubt that by achieving some degree of verticality, that we also have the opportunity for margin improvement as these businesses scale. Slide 37, please. Just to wrap up our presentation and get ready to go into Q&A, we put out a summary of our guidance. Our top-line number is about AUD 1.2 billion, or $770 million-$800 million. This is our 2025 revenue guidance. This is revenue from the sales of Illuccix and only the jurisdictions that we have a marketing authorization at this point in time. It also includes about 11 months of RLS revenue as well. What it does not include is Gozellix, Pixclara, and Zircaix. Those products have not yet achieved a marketing authorization. Once we achieve a marketing authorization, then we will update our guidance.

Similarly, although we have received BfArM, which is the German regulator's positive opinion on European approval, we have not yet received national phase approvals for any other countries other than Denmark. Of course, they're coming. That's an administrative process. But we have not included European countries that have not achieved national approval in our guidance. And we will update our guidance when we achieve those, particularly for the major European markets. On the R&D side of things, we expect our R&D to increase 20%-25% over 2024 numbers. Slide 39, please. So just to wrap up, 2025 will be an incredible year for the company and really builds on the foundation that we've laid in 2024 from a delivery and commercial execution perspective.

I'm particularly excited about our ex-U.S. expansion this year, but clearly, our U.S. and Canadian colleagues are going to be super busy with product launches in North America and indication expansions as well. The pipeline development, as Richard has outlined, is extremely expansive. We've got a lot of clinical data readouts this year, a lot of news flow to report on, so that's super exciting, and of course, the name of the game there is about demonstrating the patient benefit of our extremely deep therapeutics pipeline, and then last of all, making sure that every day when we get out of bed and aspire to deliver outcomes to patients, that we do so with a high degree of confidence and capability and not just doing it in the U.S., but really expanding that capability globally.

Of course, that's through partially internal investment and partially through continuing to double down and invest in our very valued commercial partnerships around the globe. Now moving to the last slide, slide 40. I'm not going to go through the individual bubbles in here. This is by no means exhaustive, but it does certainly highlight, with a bit of a focus on the first half of this year, the just very large number of catalysts that we are expecting clinically, commercially, and in terms of the expansion of the business. So just a lot to look forward to this year and a lot of milestones to achieve for the company as we progress the business forward. With that, I will wrap up the presentation and hand it back to you, Ky.

Kyahn Williamson (SVP of Investor Relations and Corporate Communications)

Thank you. We will now move into question and answer. So Ashley, you can take questions from the phone, please.

Operator (participant)

Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. If you wish to ask a question via the webcast, please type your question into the ask a question box. Your first question comes from David Stanton with Jefferies. Please go ahead.

David Stanton (Head of Healthcare Equity Research)

Good morning, team, and thanks very much for taking my questions. If we could start with the revenue guidance, please. You've talked to 11 months of RLS Radiopharma. I note that in 2023, when you bought it, you noted that they did AUD 158 million worth of revenue. What should we be broad brush, what should we be thinking about revenue growth for 2025 in that division and/or a number for that division, please? That's my first question.

Chris Behrenbruch (Managing Director and Group CEO)

Yeah, that number we put out was an all-inclusive number. We obviously don't double count the Illuccix revenue in that number going forward. And generally, across the U.S. business inclusive of Illuccix and RLS, we'd be looking at high single-digit, low double-digit growth. And our viewpoint, and we've outlined it, if you have a look at my CEO letter in the annual report, we think that this guidance is a reflection of a continuing growth in our business, continuing expansion of opportunity for PSMA. But it also considers some of the headwinds that we have this year in terms of uncertainties in the U.S. healthcare system. Obviously, we're facing a government environment, perhaps with more challenging resourcing from an FDA and a CMS perspective. And so we think that that sort of guidance is a good balance of the risk and opportunities that we see in the market this year.

Obviously, David, we haven't yet included substantive European revenues in that forecast. So you should think of that as primarily a U.S.-centric forecast. Is that useful?

David Stanton (Head of Healthcare Equity Research)

Understood. Very useful. So on that basis, then, second question, just for the market in general, would you be able to sort of help us understand what you think market growth might be for U.S. Illuccix sales in 2025? Will it slow from, frankly, very good growth in 2024?

Chris Behrenbruch (Managing Director and Group CEO)

I'll start, and maybe I'll ask Kevin to chime in since he's a little more cold-faced on that. But I think we continue to see the expansion of the PSMA opportunity. It's one of those things where new indications and new opportunities still have the potential to cause step change in growth in the market. We also think that as we start to roll out Gozellix, which you have to remember, it has a PDUFA goal date next month, but that means that the CMS reimbursement will be sort of more around mid-year. So the impact of Gozellix will start to really come in in the second half of the year. We see that as also expanding our reach and our percentage of the market in an accelerating fashion. So the second half of the year can certainly see good acceleration.

I think one of the things that we're dealing with right now, and maybe I'll get Kevin to expand on it, is just all the changes in the reimbursement landscape have made the kind of near-term customer interaction pretty complicated. There's a lot for customers to digest. There's obviously differing commercial behaviors in the marketplace. We have succeeded against that backdrop of very stable pricing. We've continued to take market share. So we feel that our commercial team is doing a good job. But I don't know, Kevin, if you want to add anything to that.

Kevin Richardson (CEO)

Yeah, I would just answer specifically on the market in general and all the changes and things that are happening right now that may affect the customer that we sell to, doesn't really affect the patients that we scan.

So we still see good growth in the scanning side of that and the patients that are still coming in to get scanned, the growing confidence in PSMA scans by urology physicians, and really continuing to utilize it at a same rate. So we don't see that trajectory changing.

Chris Behrenbruch (Managing Director and Group CEO)

Yeah, that's right. Yeah.

David Stanton (Head of Healthcare Equity Research)

And final one for me. Thank you. That was very clear. Final one from me. In terms of the PDUFA dates, we have noted that some other pharma companies who had a PDUFA date in February have had theirs delayed. I note that you've got your PDUFA date, as you say, coming up reasonably soon for a number of different products. Given the change in regulatory environment in the U.S., what would you say is the risk around those dates being delayed or postponed? Thank you.

Chris Behrenbruch (Managing Director and Group CEO)

So we have contemplated that risk management in our guidance. And clearly, we haven't got Illuccix, Gozellix, and Pixclara yet in our guidance for the year. So I suppose that somewhat disintermediates it. I would say, without sounding overconfident about something that I don't personally control, I think that Gozellix is in fine shape to meet its go-live date. We have not had any guidance from the FDA on change in PDUFA date for Pixclara. And we've had clinical site inspections and stuff like that scheduled on time. So we're feeling very good about that. We've already got clinical site inspections happening for Zircaix as well. So the FDA appears to be highly engaged. I think not all divisions of the FDA are going to be impacted equally.

But there's no doubt, I would say, not making a Telix-specific concern, but as an industry-wide phenomenon, I think there's a lot of concern about the structure and nature of the U.S. government going forward in the FDA, in CMS, in the NIH. I think it's a Richter scale shift. And I think we're all dealing with what the potential consequences of that will be.

Kevin Richardson (CEO)

I would just add that we continue to have good communication as of today. And as Chris mentioned, our visits are scheduled, and we're moving forward in the process. So that really hasn't changed yet.

David Stanton (Head of Healthcare Equity Research)

Very clear. Thank you. Thank you. Thank you.

Chris Behrenbruch (Managing Director and Group CEO)

Good questions. Thanks.

Operator (participant)

Your next question comes from Laura Sutcliffe with UBS. Please go ahead.

Laura Sutcliffe (Head of Australian Healthcare Equity Research)

Hello. Thank you for taking my questions. Could we look at slide 10, which is, like you said, a new slide, I think, for us this time around? It looks as though your first therapeutic product to market will be hitting around 2028. Which of your pipeline assets do you think will make it first?

Chris Behrenbruch (Managing Director and Group CEO)

Yeah, look, we haven't sort of given specific guidance on that. I mean, actually, what I said was that 2027 is our pre-commercial year, so what that means is that in 2027, we expect to have regulatory filings in place. I think that at the rate that we're going with ProstACT Global, I would expect in 2027 that we are having those filing discussions, of course, subject to the clinical data being what we hope, certainly based on PFS data. In 2027, we would also expect to be on the cusp of pivotal trial data readouts, potentially for 101 and 250, because those two assets will go into pivotal trials this year, and we think that based on the clinical trial strategy that we have, those can be fairly streamlined trials.

I think that there's a lot of momentum in the therapeutics program in the second half of 2027 as we get ready to launch those products in 2028.

Laura Sutcliffe (Head of Australian Healthcare Equity Research)

Okay. Thank you. And could I ask about the 591 interim? Obviously, you've been pretty clear that the data will be from the safety run-in phase from part one. Do you expect to be able to give any insights on efficacy, or should we purely expect safety and dosimetry data?

Chris Behrenbruch (Managing Director and Group CEO)

So as an immediate effect of completing the enrollment of part one, it will be safety and dosimetry, although it will be very interesting because it will be comparative information across enzalutamide, abiraterone, and docetaxel combinations. But the intention is still to provide interim PFS data. It will be event-driven, obviously. So I can't give exact guidance of when that's going to be. But there will certainly be ongoing reporting on that study as it progresses. I don't know, Richard, if you want to add anything to that.

Richard Valeix (CEO)

Yeah. As you said, so the primary focus will be the safety and dosimetry, which are already very interesting data for the development of this compound in association with the classical treatments. So the rPFS will come perhaps a little bit later, but we are monitoring that, and we will be keen to disclose that without penalizing the clinical trial.

Chris Behrenbruch (Managing Director and Group CEO)

Yeah. Thank you, Richard. What else have you got, Laura?

Laura Sutcliffe (Head of Australian Healthcare Equity Research)

I'll just go with one more. For your bone palliation agent, so 090, what does the pathway to approval for something like that look like? Do you need one or more full phase IIIs? How big do they need to be, and what does the FDA think is the right comparator in this situation?

Chris Behrenbruch (Managing Director and Group CEO)

Yeah. So we've actually had a pre-IND consultation with the FDA to talk about our current state of data. The predicate product for that is, in fact, a predicate product for that that gives us quite a bit of guidance on how a product like that would be developed. We do have really nice data, including repeat dosing data that shows the clinical utility of the product. The study that we would expect to run is not a classical therapeutic treatment response study. Our first indication is focused on pain management. That results in a very compact trial design. So, historically, we haven't put a trial protocol in front of the FDA. We've been invited to do so.

Historically, a trial like that has been in the vicinity of 150-200 patients with a primary endpoint being pain scoring for a period of time, typically 12-16 weeks of pain scoring. That results in a very tractable trial design that can recruit and complete very quickly. The attractiveness of that agent is really that we are doing some bridging and comparative dosimetry work right now to the predicate product. Once we have that data to present to the FDA, then we will go back with a trial design that is along the lines of what I've just outlined.

Laura Sutcliffe (Head of Australian Healthcare Equity Research)

Super. Thank you.

Operator (participant)

Your next question comes from Andy Hsieh with William Blair. Please go ahead.

Andy Hsieh (Biotech Research Analyst)

Oh, great. Thanks for taking our questions. A couple from us, if you don't mind. So one, I want to go back to the ProstACT Global study, especially with the dosimetry portion of the interim analysis. I'm curious if you will be able to detect what Dr. Louise Emmett had shown in the ENZA-P study where enzalutamide could upregulate PSMA expression just from that dosimetry portion of your trial as a way to kind of amplify the response. So that's question number one. Question number two has to do with the CAIX franchise. I'm curious if you can comment on the labeling efficiency of Zircaix since you're using a different accelerator for this one. Obviously, you have gross margin implications here. And related to that, also STARLITE 2, really curious about when the results will come in.

So I'm just curious if you can comment on kind of the timing and what type of data in combination with nivolumab we can expect? Thank you so much.

Chris Behrenbruch (Managing Director and Group CEO)

Okay. So I think it's kind of three questions there. The first one's very straightforward. I mean, we obviously wouldn't estimate what we might see in clinical data that we haven't yet got in our hands. But you are right. Certainly, part of the basis for the trial design is that there's a synergistic effect for both the ARPs and, in fact, the taxanes and upregulation of PSMA is one of them. Those patients are scanned serially in the study. The dosimetry is a multi-time point dosimetry study. So if there is an effect around PSMA expression levels, then we may well see it from the data. And that's exactly Richard commented, and I won't ask him to repeat it, but that's why Richard commented having the comparative data between the three different standard of cares is going to be really interesting.

We'll certainly put that commentary out there when it's available. Regarding the second question, which was radiolabeling efficiency, so generally, I mean, as a general statement across the antibody drug conjugates, one of the consequences of the type of chelators that we use and the radiochemistry that we use is very high radiolabeling efficiency. Typically, because of the slightly higher cost of goods of a biologic compared to a small molecule, we don't have a tolerance for poor radiolabeling efficiency. But typically, radiolabeling efficiency, we shoot for 85%-90% radiolabeling efficiency. I am bound to tell you, though, it does not have a profound consequence on the cost of goods. The reason is that the production efficiency of zirconium and gallium with the ARTMS target system that we have is extremely high. We produce multi-curie quantities of radionuclide.

So if the efficiency is ±5%, it's in the rounding noise of the economics for the product. And then the third question relates to STARLITE 2. So on the back end of ASCO, where we obviously wanted to give our KOLs the chance to have some podium and poster time, we actually will be shortly running an update on the STARSTRUCK 1, STARSTRUCK 2, sorry, STARLITE 1, STARLITE 2, and STARSTRUCK studies. So yeah, that will be the subject of some further data release quite shortly.

Andy Hsieh (Biotech Research Analyst)

That's super helpful. Thank you so much, and congratulations on all the progress.

Chris Behrenbruch (Managing Director and Group CEO)

Thanks. Thanks very much, Andy.

Operator (participant)

Your next question comes from Tara Bancroft with TD Cowen. Please go ahead.

Tara Bancroft (VP and Biotechnology Research Analyst)

Hi. Good evening, or I guess good morning for you. But I'm hoping you could help us better understand what the implied impact in the second half for pass-through expiry is for Illuccix in your 2025 revenue guidance. So I mean, I guess specifically upon that expiry, do you have an idea of what the average MUC-based pricing would be for fee-for-service patients based on historicals? And also, how many of treated patients would this impact? How many now are CMS patients and specifically fee-for-service?

Chris Behrenbruch (Managing Director and Group CEO)

I'll start, and then I'll hand over to Kevin. I mean, we don't give guidance on what we think our MUC pricing will be since that's obviously a future event that will depend on a number of other pricing parameters at the time that that comes into effect. And clearly, I think as a general statement, the HOPS-impacted segment of the market is roughly half of the market. I think that's generally known. It's a similar phenomenon for Lantheus. So that's the impacted patient population, although there are obviously subcategories of patients within that segment. So that's my initial sort of high-level answer to your question. I don't know, Kevin, if you want to chime in on adding anything.

Kevin Richardson (CEO)

I think I would just add that that's why we have a two-product strategy. The CMS pass-through expiration is a known event, and we plan for that known event with Gozellix launch, and we're timing that up very nicely, and then we'll manage smoothly through that transition, so I think the larger answer to your question is based on our guidance, and you'll be able to look at that and see what we think and what we're going to be able to do in terms of product mix. Remember, we'll be the only company out there with a two-product strategy in PSMA to manage that situation.

Chris Behrenbruch (Managing Director and Group CEO)

Yeah. Just to reiterate earlier that our guidance, as it stands, does not include the impact of Gozellix in the marketplace. It's Illuccix-only guidance.

Tara Bancroft (VP and Biotechnology Research Analyst)

Okay. Got it. And so just to be clear, so your commercial strategy for Gozellix is almost that it will cannibalize the Illuccix revenue after the pass-through expiry, or will it also? Do you plan for it to take from competitors, or do you plan for it to grow the market? Maybe just a little more detail on that.

Chris Behrenbruch (Managing Director and Group CEO)

I don't think cannibalization is quite what we expect. We genuinely expect the two products to exist side by side. Commercial payers have a different dynamic than Medicare and government payers like FSS and 340B and stuff like that. So what we see is that there are some markets where there's an advantage to having a reimbursed product, and we would like to competitively service that advantage. So that's really about taking market share. And we are consistently taking market share. Even in this current backdrop, we expect that market share acquisition to accelerate with Gozellix. Again, that's not in our guidance at the moment. So that's an update for later in the year. But it really is about a two-tier product, as Kevin said in his presentation. It's really about having a two-tier strategy that can deal with different price sensitivity and different reimbursement dynamics.

We think that's very powerful.

Tara Bancroft (VP and Biotechnology Research Analyst)

Okay. Great. Yeah. Thank you for that. And so I guess one last question. So I guess at peak, what do you expect the Gozellix and Illuccix franchise? What market share are you expecting to achieve?

Chris Behrenbruch (Managing Director and Group CEO)

All of it. No, I'm just joking. I don't think we really put out an aspirational number. I mean, our goal, we chip away. We take 2%-3% market share every quarter. We continue to expect to do that. Obviously, again, because Gozellix isn't in our guidance, we haven't given an updated TAM with what we think Gozellix will do. I think currently, our competition and ourselves have a very similar viewpoint around what the size of the market is. It's around maybe the 600,000 scan level. We do see some opportunities to increase that market size. You should remember that probably 15%-20% of the U.S. market is still not reached in terms of scanner footprint and patient footprint. We expect to change that with Gozellix.

The key attribute of Gozellix being a six-hour shelf life instead of a two-hour shelf life, which really gives us enormous reach at a nuclear pharmacy. You have to remember that the advantage of the nuclear pharmacy model is, as Kevin said in his Texas twang, it's locally farmed to bedside or locally farmed to scanner. What that means is that when we compound that product or when we produce that product out of a nuclear pharmacy, there's nowhere where we can't go with Gozellix, and so we really get to pick up that patient population, and it's been well studied. It's been well reported in our field that we have significant patient deserts. Patients travel two, three hours to the big smoke to get a PSMA scan, and if we can bring that to the patient, that gives us an enormous competitive advantage.

Tara Bancroft (VP and Biotechnology Research Analyst)

Okay. Great. Yeah. Thank you so much for all that detail.

Operator (participant)

Your next question comes from Steve Wheen with Jarden. Please go ahead.

Steve Wheen (Head of Healthcare and Managing Director in Equity Research)

Yeah. Thanks very much. I just wanted to go back to the guidance slide. I'm just wondering if you might be able to help us understand in the RLS revenue what amount has been removed for double-counting purposes, giving the starting point for RLS revenues about AUD 158 million.

Chris Behrenbruch (Managing Director and Group CEO)

We have it non-material. The RLS Illuccix component's non-material at this stage. So there isn't much to account for.

Steve Wheen (Head of Healthcare and Managing Director in Equity Research)

Okay. Great. And so then the balance of the RLS revenue, just trying to understand the cost structure of that business that you've acquired, how would we think about the cost and sort of the profitability of that revenue? Obviously, it would look quite different to sort of just straight-out Illuccix profitability.

Chris Behrenbruch (Managing Director and Group CEO)

Yeah, so we're going to start reporting RLS, as you have to remember that our acquisition has just completed, so we're going to start reporting RLS as part of the breakdown for Telix Manufacturing Solutions. I think for simplicity, if you exclude the impact of our product, you can assume that the RLS cost base is neutral to Telix.

Steve Wheen (Head of Healthcare and Managing Director in Equity Research)

Okay. Got it. And then this is the final question I had just to help with some of the modeling. You've obviously been so busy with a lot of acquisitions. When we look at the cost structure, I'm just talking about G&A and sales and marketing lines. When we look at that for FY 2024, can we divide the second half of 2024 up and say that a lot of those costs from those acquisitions are fully baked into those lines, or is there further annualization of those costs that we need to be accounting for in FY 2025?

Chris Behrenbruch (Managing Director and Group CEO)

No, those costs are baked in. I mean, there is some headcount growth in line with our general R&D and commercial plans. I think we've given guidance to the market previously on what we think that SG&A increase will look like. But again, I mean, I know, Steve, I know you're so focused on earnings and bottom line and everything, but it's just not our focus. Our focus is to reinvest everything we can back into our R&D platform, barring some reasonable risk management and balance sheet prudence, right? So you should expect, and I think the numbers are there. Darren's gone through them. I think it's going to be a continued trajectory from where we were last year.

Steve Wheen (Head of Healthcare and Managing Director in Equity Research)

Okay. I mean, I'm not that focused on it. I'm focused on the top line, but I just kind of, we've got to produce a whole P&L. So that's just helpful on that basis. Thank you.

Chris Behrenbruch (Managing Director and Group CEO)

All right.

Thanks.

I think we're past the end of the hour. So I think if there are some remaining questions or some online questions, we had sort of a bumper attendance in this call. So we'll do a follow-up separately. But maybe, Ky, if I could hand back to you.

Kyahn Williamson (SVP of Investor Relations and Corporate Communications)

Yeah. Absolutely. Look, thank you very much. We have run over time. I will respond to the webcast questions, and Darren and I are available today. But thanks for your attention and for tuning in.

Chris Behrenbruch (Managing Director and Group CEO)

Thanks very much, everyone.

Operator (participant)

That does conclude our conference for today. Thank you for participating. You may now disconnect.