Telix Pharmaceuticals Limited (TLX) Earnings Call Transcript & Summary

Welcome, everyone. My name is Kevin McCann. I'm the Chairman of Telix Pharmaceuticals Limited, and it's my very pleasant task to welcome you to the Fifth Annual General Meeting of Telix Pharmaceuticals. As Chairman of the Board, I'll be chairing the AGM. As we did last year, we are hosting a hybrid AGM to enable as many shareholders as possible to participate in this important event in the company's calendar. This means that a number of shareholders are participating online through a hybrid meeting provided by Link Services, and good day to all of you in Australia and the rest of the world. So that -- we're pleased that this hybrid AGM can enable participation by those of you who can't attend in person and that we hope that by continuing the hybrid model, we can facilitate greater participation of engagement of our shareholders. Before I proceed with the formal business, Telix would like to acknowledge the traditional custodians of country throughout Australia and their connections to land, sea and community. And we pay our respects to Elders, past and present and future, and extend that respect to all Aboriginal and Torres Strait Islander peoples joining the meeting physically or virtually today. Now let me turn to formalities. My name is Kevin McCann, and I'm the Chairman of Telix. On my right, we have Dr. Christian Behrenbruch, who is our CEO and Managing Director; Mr. Oliver Buck, who is down -- put his hand up; Dr. Andreas Kluge, Dr. Kluge is one of the founders of this company. Welcome to Australia, Andreas; Dr. Mark Nelson, who is a Non-Executive Independent Director; and Jann Skinner who, is an Independent Director. And in addition, on the screen is Tiffany Olson, who is standing for election as a director today, and she joins us online. Tiffany, who is based in Indiana, was unable to join us in person due to prior family commitments, and she will address the AGM shortly and looks forward to meeting shareholders at the meeting in 2023. We've got members of our management team today, and I'll introduce them and get them to stand up: Doug Cubbin, our group CFO. Thank you. Thank you, Doug; Gabriel Liberatore, our Group COO; our Chief Medical Officer, Dr. Colin Hayward. Please come down the front, Colin. We might need you. We've got group General Counsel and Chief Business Officer, Jonathan Barlow; and on my right side and my right-hand person, I have the group Company Secretary and Chief Governance and Risk Officer, Melanie Farris. Brad Peake from the company's auditor, PwC, is also with us today. Brad, can you identify yourself. Good. Thank you. I'm advised that a quorum is present, and therefore, declare the meeting open. The notice of meeting dated the 14th of April of 2022 was duly given, and the meeting has been properly convened. So I'll take the notice of meeting as read. And the agenda for the meeting will be as follows. We have 2 short videos to share with you about the business. I'll then provide the Chairman's address to shareholders. Dr. Behrenbruch will provide a CEO address. And then we will conclude the formal business of the meeting. As always, voting on the resolutions will be conducted by way of poll, and I declare the poll open now so that anyone who wishes to vote can do so, and if they need to leave early, their vote will be counted. Shareholders and proxy holders who are in attendance here in Melbourne today will have received your yellow or blue card on registration. For shareholders and proxy holders attending the meeting, please follow the instructions you now see on the screen in order to cast your vote. You may also submit questions online. We will seek to answer all questions posed online and in person. Now we have 2 short videos to share with you about the business, and after which, I'll provide my Chairman's address. [Presentation]

Well, I think they were actually excellent videos, and I personally found the second one really very helpful in understanding just how the illuccix product works and the great benefit it provides to patients and clinicians. And also in the first video, we saw how MTR really is a radical new treatment for cancer patients. And Dr. Behrenbruch will explain that in more detail in his address. So let me begin my address. Welcome, shareholders and colleagues, and thanks for your attendance in person or [ online ] at our second hybrid Annual General Meeting and our fifth AGM. It feels somewhat repetitive to once again begin my opening of an AGM and acknowledge the challenging operating environment we find ourselves in. But we mustn't forget that while we have learned to live with a global pandemic and -- in many aspects of our lives, its impacts continue to be very significant health care systems, regulators and supply chains. The war in Ukraine has further heightened geopolitical risk, and the -- it's negatively impacted the global economy. We've seen significant inflation in the United States and extreme volatility in the share market, which has severely impacted the global biotech sector. Telix hasn't been immune from these events, which have impacted aspects of our clinical, manufacturing and regulatory activities. A major, indeed, probably the major, accomplishment in 2021 was the receipt of approval for our prostate cancer imaging agent, illuccix, which is now commercially available in the United States. illuccix is now available to be ordered in Australia for nationwide delivery and patient scheduling from 1 July in concert with the listing of PSMA PET imaging on the Medicare Benefits Schedule. The commercialization of the illuccix product confirms Telix' ability to establish the manufacturing, supply chain and quality systems required for the approval of a pharmaceutical product. We are confident that Telix can identify and execute on further high-value commercial opportunities that will have a major impact on the lives of our patients and their health care providers. PSMA PET imaging has been endorsed by the major clinical guidelines in both the United States and Europe, and there's a high level of expectation amongst key opinion leaders that it will become the standard in prostate cancer diagnosis and staging. We are well positioned for success in this large market opportunity with a product, which we believe is highly differentiated from competitors. Again, Dr. Behrenbruch will enlarge on that. The early response to our illuccix launch in the United States reaffirms market acceptance of the benefit it can provide to patients and clinicians alike. Since we last met in this AGM forum, we've made significant progress across a number of our clinical development programs, including competing -- completing the target enrollment of our Phase III ZIRCON clinical study for imaging renal cancer. Indeed, the company has, at the moment, 20 active clinical trials across 8 indications that it is sponsoring or supporting, including those in our core focus of prostate cancer, kidney cancer and glioblastoma or brain cancer. I believe this is a strong demonstration of our commitment to progressing the company's pipeline. It also reflects the high level of interest shown by clinical partners who are now collaborating with Telix. In January this year, we completed a AUD 175 million placement to institutional investors. The capital raising conducted followed the FDA approval of illuccix and has provided the company with the funds it needs to accelerate the development and advancement of multiple assets in our therapeutic pipeline. It also enables us to invest in a pipeline of additional products that will define the Telix of the future. The capital raise was actually a derisking event for the company. And its importance is quite clear given the current market turmoil and volatility. Telix now has a balance sheet which can enable it to execute its programs with TLX250 renal diagnostic product and the TLX101 glioblastoma imaging product and advance the prostate, renal and glioblastoma therapeutic products towards regulatory approval submissions. We believe these activities will create new value for the company over the next 3 years. As you are aware, Telix entered the ASX200 in February this year and that marks a very important new phase in our growth and development. And we recognize the need of and expectations of shareholders with respect to governance issues, which will include environmental, social and governance as well. And in our most recent annual report, we published the outcomes of an ESG materiality assessment undertaken in Q4 2021 and a dashboard for action in 2022 and beyond to outline priority areas relevant to our strategic objectives and our stakeholders. We actually believe that our approach to ESG will give us a competitive advantage, particularly in respect to environmental management and access to medicine. Our ESG ethos is aligned with the company's values and aspirations to drive positive change for patients, deliver value to shareholders and build a sustainable business, which will create future value. And I would add that it's in line with the expectations of shareholders who I met with recently who are very focused on our ESG performance. In line with the governance principles, the Board continues to ensure that it has the right mix of skills, diversity and independence. I'm delighted to announce and welcome Tiffany Olson to her first AGM as a Non-Executive Director of the company and also Independent Non-Executive Director of the company. Tiffany's CV demonstrates a proven track record in commercial leadership in radiopharmaceutical activities and now appropriately brings a U.S. representative to the Board. U.S. is our largest market, and Tiffany is going to be of immense assistance to our Board. Tiffany will address the AGM shortly when she stands for reelection. At this time, I'd also like to acknowledge the contribution of Mr. Oliver Buck, who retires from the Board at the end of this meeting. He's given us 5 years of dedicated service, and his technical expertise and industry knowledge has been invaluable. Oliver, I speak for the whole Board when I say that we've appreciated your insightful and energetic contribution to our deliberations. My thanks go to my fellow directors for their commitment to the company. As a Chairman, I couldn't have a more collegiate and engaged colleagues over the past year. It was a difficult year, and their contribution to the company was unfailing. Can I give a special thanks to Dr. Christian Behrenbruch, his executive team and Telix' employees across the globe for what they achieved in the financial year? Chris is a CFO of outstanding quality and intellect and commitment to this company. I've worked with a lot of CFO -- CEOs. Chris is the gold standard. So thank you, Chris. Telix has developed some remarkable outcomes for a company of its size over the past 5 years. As you know, it is one of the very few ASX-listed life science companies to have a pharmaceutical product approved by the FDA. That is something I wish to underline. That is quite an achievement. We also acknowledge and are grateful for the support which the Australian government through the R&D tax incentive scheme has enabled us to reinvest back into R&D programs. We recognize the value both to Telix and the broader Australian life sciences and manufacturing -- which life sciences and manufacturing has gained through the modern manufacturing initiative that Telix is providing for in -- with local partners, GMS and Monash. Investment in advanced manufacturing is an important issue for both major parties in the current Australian federal election, with Australian innovation industry set to benefit from the commitment. So it really is important that modern manufacturing, and underlying modern, is now recognized as something we can achieve and seek. We've also got strong industry ties, including with the Australian Nuclear Science and Technology Organization, or ANSTO. And we look forward to building on this relationship as we continue to grow. Let me conclude by thanking you, our shareholders, for your support in 2021 and again in 2022. Our Board and all our executive team and all our employees recognize that you have financially enabled Telix to achieve the commercial and clinical progress I have reported today and have set us up for the further development of our diagnostic and therapeutic pipeline. I'll now call on Dr. Behrenbruch to present the CEO's address.

I think they got the prompt or the -- sort of the different height of my Chairman versus myself. So I'm going to sort of adjust my height to Kevin height. Good morning, shareholders and colleagues. It's a pleasure to be back in Australia to participate at this AGM in person and to have the opportunity to engage with shareholders directly. Notwithstanding Kevin's commentary about risks and challenges, there are clear signs that the world is opening up again, and there's plenty to be positive about. And I will certainly come back to the topic of risk later in this address. In the period since our last AGM, Telix has undergone enormous change. It's hard to understate the effort and accomplishments that are required to transition from a development-stage pharmaceutical company to a commercial-stage organization. Developing clinically effective products is tough, but taking them to market represents a whole different list of growth challenges for a company like Telix. And my view is that the Telix team has faced those challenges confidently and competently, and this is reflected in what has been a very strong and encouraging product launch in the United States for illuccix, our first product. I'm not sure if there are some slides that are going to be shown, or maybe we can let the slide catch up to where I am in my presentation. Down the back there. Thank you. All right. So illuccix is a product for the imaging of prostate cancer. Go to the previous slide, please. Previous slide. Thank you. It's a product currently approved in the United States and Australia. We anticipate adding several more countries this year and are certainly close to the end of the process for Europe and Canada, and we'll be reporting on that in the coming weeks. Last month, we launched illuccix in the United States with the goal of capturing a significant portion of the $1 billion opportunity for advanced prostate cancer imaging. And as of today, there are 117 nuclear pharmacies in the United States that are routinely delivering product to physicians. illuccix has been granted a distinct HCPCS code. It's a CMS or a Medicare code. And we are focused on growing the distribution footprint as the company prepares for full reimbursement for Medicare and hospital outpatients, which is expected on the first of July. There's been considerable speculation around how Telix will report sales during this launch period. I'm sure that's information that you want to know. Given the commercial sensitivity and competitive landscape around prostate cancer imaging, we will continue to report sales figures on a quarterly basis only. However, I do feel comfortable telling you that the strength of the launch has exceeded our expectations, and we are seeing really robust demand for the product, reflective of successful market education and preparation for launch with our business partners. I think you'll all appreciate that a product launch is not an overnight activity. We've been working on it for almost 2 years. And I think the effort and preparation that's gone into that launch has really served us well. This has been very energizing for the team, particularly our talented sales team that's worked hard for this moment, and I really want to acknowledge the effort of those men and women. As Kevin mentioned during his address, January's $175 million placement was a key derisk for the business that enables us to execute on our 3-year commercial plan, which you can see behind me. The key elements of that plan are, firstly, realizing the value of illuccix, our first product, and transitioning Telix to a commercial-stage company. This includes a life cycle management and innovation plan that will hopefully enable Telix to remain at the forefront of prostate cancer imaging. Our commitment to prostate cancer imaging doesn't stop with the illuccix product. Secondly, we will build on illuccix' revenue stream through several other products that are quite proximal to market with regulatory applications expected to be filed over the next year or so. Third of all, transitioning the company's core development focus to our therapy pipeline. I think a lot of shareholders have been very, and rightly so, focused on illuccix as that first revenue generator. But in fact, the really large inflection points for the company coming up are in the therapy program. So although revenue from illuccix and various follow-on products is vital, the biggest future value creation and potential benefit remains in our therapy pipeline. And that's a big focus for the team right now. And then last of all, building the innovation platforms that will define what the company looks like in, say, 5 years from now. And clearly, that investment will be judicious, and it will be a function of commercial success. But my view and the view of the management team is that if we want to maintain our profile as an innovation leader in the field of radiopharmaceuticals, this is absolutely what we need to do. We need to continue to build our pipeline and explore new opportunities for this technology. So I want to talk a little bit more about illuccix. So firstly, although illuccix is now a commercial-stage product, the product journey does not stop with selling a product. We'll continue to demonstrate our leadership in the field of urology through further product development, life cycle management and new clinical applications. We believe that Novartis' therapy approval, which was recently gained, further expands the market size for prostate cancer imaging. And we expect to see a number of other important prostate cancer therapeutic strategies, including, by the way, approved therapies that may benefit from the use of illuccix. And this is a focus of our ongoing commercial research. It's a very competitive market. And while we feel that our business model gives us some unique advantages, product differentiation continues to be an important consideration. And I've put a slide together here, which really illustrates the ways in which we feel that we can capture market share and maintain market share as we progress our leadership in prostate cancer imaging. I note that Telix is the only independent radiopharmaceutical company that's delivering PSMA globally. It's a really subtle but it's a very distinct point. This means that there are many opportunities that Telix, and uniquely Telix, are in a position to capture. And related to that, I note that we are on track to deliver our final submission to European authorities this month for illuccix with the expectation of approval later this year. And similarly, our Canadian submission is progressing well, and we have marketing authorization applications in progress in several other countries in collaboration with commercial partners. Beyond illuccix and the development of a global revenue stream for prostate cancer imaging, we see other near-term opportunities. We've made excellent progress with our renal cancer imaging product, TLX250-CDx, with the completion of target enrollment in the Phase III ZIRCON study, as Kevin mentioned previously. This is a 34-site study conducted in Europe, U.K., Australia, Canada, Turkey and the United States. And we expect the trial to read out later this year. Following trial readout, we will commence the formal process of engaging with major regulators around the product approval process. The market size for renal cancer imaging is roughly half of that, of the prostate cancer imaging market, but with considerably less competition. So certainly on the back end of illuccix, it's a high-value opportunity for the company. And I think it's worth noting that our investment in the commercial team for illuccix, particularly in the United States but also in Europe, is very much with the future in mind, including delivering future urologic oncology solutions in renal cancer and bladder cancer, of course, subject as always to regulatory approvals. The future revenue landscape for Telix also includes an imaging product for glioblastoma that is already well integrated with our therapy trials. This is the TLX101 product. There is also the potential to bring Scintimun, a product that already has approval in Europe, to the United States for some new high potential value indications that we'll be more openly talking about in the future. So this is just as sort of a snapshot of the landscape of the company's clinical activity. Just as we've made significant organizational changes and enhancements to deliver on the commercial needs of illuccix, the development team has also focused on resourcing and scaling to deliver on the next wave of clinical trials that are enabled by our capital raise and illuccix revenues. The biggest focus for the development team is currently on the ProstACT basket of prostate cancer therapy trials and with particular focus on the global Phase III study that we are working on rolling out to sites outside of Australia over the next 6 months or so, and of course, with particular emphasis on the United States, again, subject to FDA agreeing that, that trial is ready for prime time. We're making solid progress. We are routinely dosing patients with TLX591, and we have a clear vision for how we are going to make data available at key congresses and shareholder events over the next 18 to 24 months. This is very much an active program for us. I note that there is a significant amount of excitement about this program, including from key opinion leaders and potential commercial partners. Beyond prostate cancer, we're starting to recruit patients in the STARLITE renal cancer studies designed to explore the utility of lutetium therapy in combination with immuno-oncology drugs. And we've now seen some of the first patients being recruited into those studies in the United States, which is a huge accomplishment for Colin and his clinical team. And then last but not least, we've also moved the TLX101 therapy asset into frontline glioblastoma therapy based on preliminary but really encouraging results in the refractory or the second-line glioblastoma setting. We expect this asset to advance fairly quickly towards a data set that can potentially inform the feasibility and design of a pivotal study in an area of high unmet medical need. I said before that we're a global company, and this is a key differentiator for Telix relative to its peers. Our global strategy also incorporates the Asia Pacific region, particularly the major markets of China and Japan, which require a somewhat different approach to other jurisdictions. We've worked very closely with our partner, China Grand Pharma, during the year. And with their support, we've had productive engagement with the Chinese regulator, the National Medical Products Administration, or NMPA, as we prepare to initiate clinical trials in China for our prostate and kidney cancer programs hopefully later this year. And we're certainly working closely with the NMPA to agree on what the approval pathway will be for illuccix in the Chinese market. Finally, the future innovation part of our plan. Because of Telix' leadership position in the field of radiopharmaceuticals and theranostics, we have no shortage of opportunities to expand our portfolio. However, really high-quality opportunities that deliver fairly near-term value inflections of the company are not straightforward to come by despite what you may see from the emergence of me-too companies in the radiopharma space that appear to have compelling pipelines. Some of our innovation focus is around current pipeline and expanding the potential indications for things that we're already developing. For example, we have several collaborations that evaluate the combination of targeted radiotherapeutics with other companies' drugs, such as our DNA damage repair collaboration with Merck and the STARLITE immuno-oncology combo studies, which utilize third-party immuno-oncology drugs. On a very carefully selected basis, we're also looking at new therapeutic areas for the future, as evidenced by our recent licensing agreement with Eli Lilly and Company for olaratumab. This program will expand Telix' pipeline into sarcoma but also has synergies with the TLX250 program in nonrenal cancer settings. Investors often comment that Telix is a challenging company to understand because of the breadth of activity. However, this is precisely the point of the company. Our mission is to broadly demonstrate the utility of targeted diagnostic and therapeutic radiopharmaceuticals across a very wide range of cancer indications. In doing so, we believe that Telix will be a key player in the delivery of -- in the disruption of radiation oncology and ultimately the transition into a pharmaceutical modality. So as you can see here, the idea that we would move from a box, a piece of capital equipment that sits in the basement of a hospital into something that's a pharmaceutically delivered product. This is a powerful strategy for Telix because it doesn't necessarily entail competing directly with global pharmaceutical companies that are starting to take an interest in this field. Rather it focuses on disrupting radiation oncology, a space that pharma doesn't typically understand all that well. This is why collaborations with companies like Varian and GE and GenesisCare are just as important as our collaborations with big pharma. However, with this big vision, there are also risks. Being a commercial-stage company ultimately derisks the financing needs of the business if we successfully create product revenue streams, but it also introduces new risks related to being a commercial entity. As Kevin noted, we understand that as an ASX200 company with an aspiration of the highest standards of reporting and ESG ethos, we need to ensure that those risks are well understood and well disclosed. Recent discussions with ASIC have highlighted the importance of this not just for Telix but an evolving focus for Australian public companies, particularly in the life sciences sector. 2In terms of what we consider to be the key risks in the company right now, that is not just risks that are inherent to biotech or life sciences company of a generic nature, such as clinical trial failure, regulatory approvals, interruption to supply chain, but things that are rather more specific to Telix. And there are 3 major classes of risk that I would like to clearly elaborate so that they're understood by shareholders. The first risk is commercial risk against the goal of achieving financial sustainability, particularly on the back of the illuccix launch. We think that illuccix has launched really well, but the markets that we're getting into are complicated and competitive, and shareholders need to be aware of that. Second of all, risk in follow-up product development, such as TLX250-CDx and TLX101-CDX for renal and brain cancer. These are programs that are intended to deliver near-term revenue streams behind illuccix. And the third class of risk is the organization and execution challenges of delivering as a late-stage therapeutics company, particularly the investment in the ProstACT global study, which is a large and very complicated study. We want you to know that we tackle these risks in a multitude of ways and articulating risk will feature more prominently in our future communications. However, the 2 biggest ways that we can derisk Telix is by making sure that we have, firstly, the financial power to execute and that we have the talent that's needed in the team to deliver. And by the way, a lot of that talent is really here present in the room today, and I encourage you to interact with the Telix team members after the AGM formalities are over. The former of financial firepower is partially addressed by shareholder capital, and for example, our recent placement, but we fully expect this to be augmented by earnings from product sales. The latter, the talent, is also enabled by commercial success because Telix is clearly a company now with a profile to attract global talent, including from our competitors. And we are successfully doing this every single day. We've been able to attract and recruit some phenomenal people as we approach 200 employees worldwide, an enormous period of growth over the last 12 to 18 months. I should note that this talent acquisition includes the successful recruitment of the new leader of Telix' U.S. business, who will start mid-July. And I'm looking forward to introducing that new member of the executive team to you shortly. Shareholders, I hope this update highlights some of the key facets of the company's accomplishments and current direction. The management team shares with Kevin and the Board of Directors a clear and common commitment to continuous improvement in the company's governance, ESG and risk management practices as we continue to grow and evolve. I would very much like to acknowledge the Board's partnership and recognize the Board's instrumental role in defining the culture of risk appetite in the business. And in particular, I'd like to acknowledge the incredible work of the entire Telix team, including our business partners, that has underpinned the company's success over the last 12 months. It's astonishing to watch team members come together to achieve enormously complex tasks, many of whom who've never met their counterparts in person. And so as the world reopens, I'm looking forward to bringing the team more closely together to achieve a more aligned and unified vision for the future of the company. This is a really major priority for my leadership team. So every year, Telix becomes a better company. This is evident in our clinical, operational and commercial accomplishments. 2021 was a challenging year, laying the foundation for Telix' transition to commercial life. 2022 is exciting precisely because of this hard work, and I look forward to keeping you informed of our progress of your company over the next 12 months. I'll now hand back to Kevin to conduct the formal part of the meeting. Thank you for your attention.

Thanks, Chris. Thanks. Well, we now come to the formal business of the day. We have 9 resolutions to consider today. And each will be determined by poll, meaning that every shareholder, present or by proxy, has one vote for each share they hold. Before you are asked to vote on the resolution, we will display proxy votes that have been cast in advance of the meeting. I will vote the proxies held by me as Chairman of the meeting in favor of the resolutions. As set out in the notice of meeting, the Chairman will vote undirected proxies in favor of all resolutions. There are certain voting exclusions that apply to certain shareholders, a number of resolutions being put to this AGM. Well, the first item now is the financial statements. The Corporations Act requires that the annual report of the company comprising the directors' report, the auditor's report and the financial report be laid before the AGM. These reports were released to the market on the 24th of February and can be found on the company's website and the ASX. This is the opportunity for shareholders to comment or ask questions on the reports on any company matter. Generally, questions may also be asked of the auditor, Mr. Brad Peake of PwC, in relation to the conduct of the audit, the content of the audit report, accounting policies adopted by the company and the independence of the auditor in carrying out the audit. Now I'm going to take, firstly, the -- any comments -- written comments or any -- there are no written comments. Are there any comments from our...

Online, no.

Okay. Well, I'll now turn to the room. Can I have any questions or comments that you wish to make? Yes, the gentleman over there. If you could just come to the mic, let us know who you are. No. Come around the front. It would be quicker. And the mic is a bit idiosyncratic. So just speak into it.

Yes. It sounds okay. My name is Claudio Esposito. I'm a volunteer for the Australian Shareholders' Association. And first of all, I'd like to say congratulations on your progress made this year. Just a quick question on revenues. So it would appear that a significant amount of revenue was earned through research and development services. So I was just wondering if you could sort of just expand on that and whether or not these revenues are going to continue indefinitely.

Right. Well, I think I understand your question being that will we continue to expand the 2021 amount on R&D in the future. Is that all of it?

No, in the revenue section, it's said, from what I could garner, that 55% of the revenues are being generated through research services. Are you earning money through providing research service?

Right. Okay. I'll pass that on to the CEO.

Can you hear me? There you go. It's really directionally -- so there's 2 components to that. So one is the receipt of R&D tax credits, which is for approved expenditures in our R&D programs. It's a tax program. We expect that we will no longer meet the -- that we will surpass the revenue requirements to be eligible for that program this year. So 2021 will likely be the last year that we receive that benefit. There is also some accounting for payments from China Grand Pharma, which is in relation to a license agreement for China rights. We do see future revenue streams associated from that licensing agreement, and they are fully disclosed with respect to the deal structure we did with China Grand Pharma. So the answer to your question in summary is partially yes and partially no. The R&D tax credit will not likely feature because we'll no longer be eligible due to revenues that exceed the threshold, but we do expect to continue to receive licensing and milestone payments from China Grand Pharma in the future. I hope that answers your question.

And just to confirm that, where you have in your annual report the sale of goods, you're referring to the sale and distribution of illuccix?

Correct. So we don't attribute revenue to tax or licensing-related revenues. If it's sales of goods, then it relates to our product sales. So that's correct.

Is there any other shareholder who would like to ask a question?

My name is [ Wayne Arthur ]. I've got 2 questions. First relates to the number of shares on issue and secondly relates to future earnings. Perhaps I'll ask the first question, and this might be answered by the company secretary. The company has been a prodigious issuer of shares over the last 4 months or so. Starting with the annual report and doing the best I can working forward, my best guess is that the company has about $337 million shares on issue. Does that sound about right?

The exact number is $312 million, [ $312.5 million ].

Okay. Okay. Now the second question relates to future earnings. There are such things as consensus forecast put out by analysts, which I've been following. And the consensus forecasts rather suggest that the company will make a loss this year of $0.18 a share, which probably translates to between $5 million and $6 million. The consensus forecast for 2023 is the company will pretty much breakeven. And the consensus forecast for 2024 is that the company will earn about $0.24 a share, which is quite significant. And by my rough calculations, that translates into about $80 million in profit. Now are those analyst forecasts reasonable?

Yes. We actually normally don't comment on -- we actually, as a matter of policy, do not have forecast of revenue. And also, we haven't made a policy of commenting on what analysts are forecasting. Chris, you and the Investor Relations executive have done a lot of presentations. And would you like to supplement my commentary?

I think you've said it pretty accurately, Kevin. We've only just received an FDA approval, and we don't yet have a reimbursed product -- fully reimbursed product in the United States. So to give material guidance on commercial prospects is premature. I think the company, at some point, would like to be able to give forecasted revenues, but the commercial activation for that moment hasn't transpired yet. And that's the reason why we don't give forecasts. It's not because we don't want to get shareholders interested in the company's prospects, but because until we've derisked the revenue stream to be able to forecast, it just simply doesn't add value to the dialogue. Regarding sell-side research, the difficulty with a company like Telix, and it's not just only ASX, it's globally, but particularly the ASX, is that there are relatively few examples of companies that have transitioned from pre-commercial to commercial activity. And so as a consequence, we see in the sell side a very, very wide range of viewpoints on what a company like Telix will do. We do try to provide feedback to sell-side analysts. But at this point in time, to have a company-driven strategy of aligning sell-side research, it's not a practical undertaking. So we allow that there's a fair divergence of opinion out there. And I think that, that divergence of opinion will change as Telix generates revenues and earnings and has a more business principles-driven basis for analysis. So I think -- hopefully, that answers your question. I think that the company -- the products that we're developing have great commercial potential. And I think that over the next 12 months, shareholders will be in a better position to get data and clear data points on where that revenue trajectory and earnings trajectory lies.

If the analysts are getting it wrong, wouldn't it be a good idea to at least put them straight?

The ASX and ASIC has a ruling on this. If they've got it wrong in the current financial year and there's a continuous disclosure issue, they recommend that we should correct those errors. But where the forecast go out over 3 years, it's uncertain. But I'd just reinforced Dr. Behrenbruch's point that there will be data coming into the market that will be very helpful to analysts and shareholders. The other thing to remember is that there's another dimension to the value of this company. It's not just the income that's being generated, but the amount we're spending on R&D should be improving the value of our pipeline. So one would hope that not only would analysts take into account the -- and they will take into account the revenue being generated but also the enhancement of the pipeline as we get down further stage to -- further stage clinical trials.

Could I just add to that, Kevin? I think that's an excellent point, and I should have made it. There are some analysts that take the viewpoint, and it's a pretty market-specific viewpoint that a life sciences company doesn't have any value except for the revenue-generating components. Now that is an analyst's prerogative to take that view. And I would argue that given the micro cap nature of the ASX, that may not be an unreasonable position to take. And we have a lot of companies with negligible market cap that are developing Phase 1, Phase II assets. And so an analyst may choose to take a fairly discounted view of what noncommercial generating assets are doing. That's not the company's -- I mean it's not the company's responsibility to correct that. So we have some analysts that look at it and say there's 2 parts to Telix. There's a revenue-generating component, and there's a prospective risk-adjusted future pipeline value. And there are some analysts that simply say until there's evidence of commercial execution that the pipeline doesn't have value. Of course, we view that the pipeline is the predominant value of the company. That's the major future upside of the business. But that's the opportunity for shareholders. And I guess as we get more comfort -- as we earn more comfort from the market around our ability to execute, I'm pretty sure that, that value of that pipeline will start to crystallize as well.

Thanks, Chris. Yes. Any further questions from the -- yes.

My name is [ Brad Holland ]. My question is -- could you comment on the change in the share price since about January of this year? It has fallen by more than 50%. Is that totally attributable to the share placement, this dilution?

No, it's not at all due to the share placement. In fact, the share placement, as we pointed out, is a transforming event. That placement has meant that the company has cash now to do the distributions, the further work we want to do in clinical trials. I will make some comments, and I'll pass on to my CEO. I think it's due to 2 issues. One, the tech and biological companies on the American market have suffered similar declines. And particularly, there's been a risk aversion to companies that were perceived not to have a sound revenue base. So any company that was -- that had prospects but didn't have a solid revenue history have been very severely impacted. There's some very good Australian tech companies that have had that example. The second was some confusion about the Novartis launch of both a diagnostic and therapeutic product and also the activities of a competitor called Lantheus. Now as our Chief Executive has pointed out, we have significant competitive differentiation between the Lantheus product and the product that we're producing. But also, Dr. Behrenbruch has been at pains to reassure the market that the fact that we have these 2 companies present is actually showing that we have a very, very large market, which we hope to have a share of. But Chris, could I get you just perhaps to enlarge on some of the misunderstanding about the presence of Novartis in the market?

I can address the -- I mean, I'm not a Novartis executive, so I wouldn't purport to convey their commercial objectives. But the prostate cancer market is a very large market. And because of the commercial opportunity that's there, there will always be multiple competitive actors. We've certainly always been transparent about the competitive landscape that the company acts in. And I think that, yes, obviously, there will be -- the market will have a view on what the competitive landscape looks like. And I think we are clearly in the U.S. market. We're successfully selling a product. We are servicing a wide customer base every single day. And I think that once we are in a position to report on our revenues, we'll have a clear -- be able to clearly indicate what sort of market share we've captured. But competitive dynamics are always a part of being a commercial-stage pharmaceutical company. I think regarding the market overall, I mean, I don't attribute our decline in share price to competitive dynamic. I attribute it really to a weakness in the sector. It's been -- a lot of cash is flown into the public biotech market in the last couple of years, not all of that underpinned by commercial fundamentals. And I think that if you were to look at a broad swath of companies, both on the ASX and in the U.S. market, you would see a sort of similar decline over the period. And so I think -- I don't believe that there's anything in our share price movement that's contrary to the broader sector movement that we've observed. To Kevin's point, I think we're in a really unique situation. And I fully agree with his statement that the placement, in fact, was a really important move towards bucking the trend of companies in this space. It's going to be an incredibly tough time for life sciences companies to raise money over the next 6 to 12 months. The wheat from the chaff gets separated very quickly when you don't have a balance sheet to progress your commercial goals. So we have the really enviable position where we are prosecuting a $1 billion market opportunity in a major market with a product that's really highly regarded and addresses a major unmet medical need. So that's one great pillar of strength. And then to have the strong balance sheet to be able to prosecute our rest of our pipeline, that puts us in a really differentiated position. So I would argue that in normal market conditions, our placement would have been a catalyst for rather an upward trajectory of our share price, not a downward one. Hopefully, that answers your question.

Thank you for the question. Any other shareholder like to raise a question? Okay. Well, I think then we can move on to the various resolutions that need to be adopted. The first resolution seeks shareholder approval for the adoption of the remuneration report for the year ended 31 December 2021. Under Sections 249L and 250R the Corporations Act, public companies are required to meet disclosure requirements in respect of director and executive remuneration and to include a remuneration report in the directors' report to shareholders. The remuneration report for the year ended 31 December 2021 commences on Page 45 of the 2021 annual report. The vote on this resolution is advisory only and does not bind the directors of the company. However, we would take into account any comments that may be made today by shareholders. If more than 25% of those voting vote against the resolution, that constitutes a first strike against the company. Key management personnel and their closely related parties are excluded from voting on the resolution under the Corporations Act. Ladies and gentlemen, this question is open for any comment.

So I just want to ask with the STI, LTI targets. So I just want to know why Telix chose to have the approval of medicine as a metric for both the STI and the LTI, as indicated in the annual report. So just as an example, I think you had an STI last year for Dr. Behrenbruch. And now this year, you've got TLX250-CDx as an LTI target. So I just want to know why the 2 in terms of approvals. So you got an EMA approval for 2 drugs, and you've got one for LTI and one for STI. And I just wondered why both.

Yes. Let's deal with the LTI first. We have said we've got a pipeline. We don't want to rely simply on illuccix. And we think the 250 is a very, very attractive product. The importance of that for the company is profound. So we'll have a second revenue stream. And so we felt that was an appropriate -- one of the appropriate metrics for the CEO's LTI -- long-term variable remuneration. In terms of -- Melanie, have you got the rem report? I just want to have a look at the -- what was being referred to there.

I think what Claudio is saying, that last year, there was awarded on STI, which would have been related to illuccix. But the LTI is for the future -- for the future products. So the LTI is for the...

Yes. Last year was the illuccix, and the long term this time is the pipeline product. Why did we have illuccix in the short-term incentive?

They're both an approval. You've got an approval metrics and approval of a medicine for your STI and an approval for LTI. And I just wonder why you have one for STI and one for LTI.

We're on the cusp of getting approval, but it was challenging because of COVID. We had issues with regulators. We had issue with supply chains and manufacturing. And so we wanted a real focus to get that done in FY 2021, which is what actually happened.

Right. Any other questions that shareholders would like to put to me? If not, could I have the proxies there? Now that, of course -- that indicates the proxy votes. There may be some people voting today to change those numbers. But I would like to thank the shareholders for the solid support that appears to be coming for the remuneration report. We take comments about remuneration very seriously. And with the shareholders that I met with the company secretary, we got commentary and feedback. And the general commentary was that we had got it right for 2021 and also for our 2022 year. So thank you for that. Let's move to the next resolution -- by the way, I should say that the outcome of the voting will be made known to the ASX, and that should be this...

As soon as possible. After the meeting.

Okay. Good. The next one is the reelection of Ms. Jann Skinner as a director. Jann seeks shareholder approval for reelection as a director. She was appointed to the Board as an Independent Non-Executive Director in 2018. And the directors, with Jann absenting herself, consider that she is independent. Can I just say before Jann speaks to the resolution and speak -- gives you some background to her role that she is a very important member of our Board. She chairs the Audit and Risk Committee, and she is a very, very -- former auditor, does a good job and is also working with the Board on getting our risk management control structure established and more sophisticated. She's also a very hard-working director who's got a lot of commentary and is quite robust in a collaborative way on issues around the Board. So Jann, over to you.

Thanks, Kevin. I'm pleased to present myself for reelection to the Board of Telix Pharmaceuticals. I joined your Board in June 2018, and I serve -- as Kevin mentioned, I serve as Chair of the Audit and Risk Committee and as a member of the People, Culture, Nomination and Remuneration Committee. I have over 30 years professional experience in audit and accounting with a focus on financial services. I was an audit partner for 17 years with PricewaterhouseCoopers before retiring in 2004. Since then, I've been appointed to a number of Boards, nonexecutive director roles. I'm a director of QBE Insurance Group Limited, HSBC Bank Australia Limited and Create Foundation, which works with children and young people in out-of-home care. I would be very honored to continue to serve on your Board, and I look forward to working with our Chairman, Kevin McCann; and CEO, Chris Behrenbruch; and the wider management team to assist Telix to achieve its vision and reach its potential. On a personal note, I enjoy theater and Chamber Orchestra and bird watching, although this has been somewhat curtailed because of the pandemic. The last 2 years have been difficult for everyone, and I extend my sympathy to those people around the globe who have been significantly impacted by the pandemic or by the tragic events in Ukraine. I would appreciate your support for me to continue on the Board. Thank you.

Thank you very much, Jann. I'd just make one comment. When I first began my director career, I used to be appointed as Chairman of the Audit Committee, being a lawyer. And the days of the gifted amateur are gone. We need professionals, and Jann is the consummate professional. We frankly couldn't do without her. Could we just have a look at the proxy votes? Well, congratulations, Jann, you seem to have got overwhelming proxy support. And we will find out how the vote goes later today. Now the next resolution relates to the election of Ms. Tiffany Olson as a director. Resolution 3 seeks the shareholder approval for the election of Ms. Tiffany Olson as a director. Tiffany is our newest Board member, having been appointed to the Board on the 31st of March as an Independent Non-Executive Director. Tiffany is a U.S. citizen and is based in Indiana. Unfortunately, she's been unable to travel to be at the AGM due to prior family commitments. She is participating, as you can see on the screen, online. And before I ask her to address you, can I say that the Board has been considering a long time -- for a long time on the skill set we must have to -- on the Board, and that is we needed a very experienced executive in radiopharmaceuticals who was based in the United States. And Tiffany is an outstanding candidate. She was involved with the Cardinal Group, and she's also had dealings with -- have been a senior executive of one of the largest European pharmaceutical companies. So she's had experience of working with European companies. So she's attended her first committee meeting today and has already proved her worth by some of the very helpful comments she's made to us. Tiffany, over to you.

Thank you, Kevin. So I am pleased to be standing for election as an Independent Non-Executive Director. My formal education includes a Bachelor of Science from -- of Business from the University of Minnesota. And a few years later, I went on to get my MBA. From my first job out of college, I have stayed in the health care industry. Throughout my career, I've had the opportunity to combine my skills in running a business, my love of science and health care and real desire to improve patient lives. And being on the Board of Telix allows me to continue to do this. I worked for many years for Roche Diagnostics in a variety of positions from Vice President of Molecular Diagnostics for the U.S., so this was all PCR-based technology. I was Head of Global Quality Market and Clinical Development. I was living in Basel, Switzerland. And this was really when I first became part of the global executive leadership team for Roche Diagnostics. Then I became President and CEO of Roche Diagnostics Corporation North America. I went to Eli Lilly, where there was a newly created position for me. Up until then, they were really known for their therapeutics. And I was brought on board to help develop a strategy to bring together the therapeutics and the diagnostics. So this intersection between the 2 of them. And it was here that I first became involved in nuclear with Lilly's acquisition of Avid Radiopharmaceuticals. And this eventually led me to Cardinal, where for over 8 years, I was the President of Nuclear and Precision Health Solutions, where we developed, manufactured, dispensed and delivered over 12 million patient-specific doses a year. And this was through the 130 nuclear pharmacies, our 32 manufacturing sites, CMO and clinical trial locations. But what was most important about this job was that I got an opportunity to know Chris and the Telix team. So my pharmaceutical and diagnostic background together and experience with the largest radiopharmacy network in the world really brings a unique expertise to the Board. I'm really someone who's been there and lived radiopharmaceuticals. My global manufacturing, sales, marketing and new product launch experience also will help Telix to grow. So joining the Telix Board allows me to really continue to be a part of delivering on the promise of precision medicine. It also allows me to continue my personal mission of helping to improve patient lives. I'd like to ask the shareholders for your support in my appointment to the Board, and I'll now hand it back to the Chairman.

Well, thank you very much for that. Are there any questions relating to Tiffany or her appointment? If not, I'll have the proxy votes put up. And I'm happy to say, Tiffany, that you have received overwhelming support for your reelection. We don't have the final numbers through. But if we're in politics, we'd say you're looking pretty good. So thank you very much. And ladies and gentlemen, I think you'll agree with me. We're extremely fortunate to have someone with Tiffany's experience joining us -- joining our Board. The next resolution is resolution 4, and that's the Telix equity incentive scheme. This seeks shareholder approval for the equity incentive plan and the issue of equity incentive securities under the plan. A key component of remuneration provided to senior employees and executives are the long-term incentives, or LTIs, to ensure that their remuneration is aligned with shareholder success. We have the practice -- the practice has been to issue options in accordance with the previous incentive plan, which is approved by the shareholders most recently in last year's AGM. In 2022, we engaged an independent consultant specializing in remuneration policy, market competitiveness and benchmarking to undertake a review of the remuneration of senior management and the executives. And that concluded we should update the plan to allow for the issuance of share appreciation rights, or SARs. The operation of SARs is described in detail in the notice of meeting. But if I could use layman language, if you have it under the old option scheme, if the options were issued at a certain price, the executive had to pay cash out to exercise the options and then often was forced to sell shares in order to pay the tax on the options. SARs basically allows you to take into account the uplift in the value of the -- which the options provide and ensure you can -- you can avoid paying cash by taking fewer shares. It's a very elegant way of avoiding the need for the executive to put his hand -- his or her hand in their pockets. It also has the benefit of meaning we don't have to issue as many shares under the options. So it's a very elegant arrangement. So that gives us the -- and by the way, I should say that equity in this particular space is very important. People come from international companies to join Telix because they feel that if they take long-term incentives in the form of equity awards, this is a chance to really improve their -- not only get attractive careers but also add to their wealth. It's helped us also in the fact that as a company, we can't -- we don't have the cash to match some of the global behemoths, but we can, by equity awards, make it an attractive thing to join our company. Now the gentleman who asked the question was worried about dilution. As I say, SARs gives us a way to reduce the number of equity awards we provide. So otherwise, there's no significant change to the scheme that was approved last year. The terms of the plan were set out in the notice of meeting. And as stated in the notice of meeting, the maximum number of equity securities, which can be issued under the plan during the next 3 years, is 1.5 million, which is -- could you just keep the machine going, please? Which is about 5% of the company's shares currently on issue. So it's not on a diluted basis at this time.

Kevin, sorry, it's 15.6 million rather than 1.5 million.

Sorry. Thank you. Sorry, I got the dot in the wrong place, 15.6 million. This maximum number is not intended to be a prediction of the actual number of equity securities under the plan, but it is a limit. The Board also targets that the number of equity incentives on issue under the equity incentive plan will not exceed 10% of the total shares on issue. So I can assure you that the Board and the CEO will be good stewards of equity. We won't issue equity unnecessarily. But it's a very, very important tool to attract good talent and retain good talent. I'd welcome any questions you have about that amendment, which is really just actually a technical amendment. It's the plan you approved last year with that one change.

So Chairman, I see that -- I mean, it's common for companies to issue options and -- to their executives. But I'm not sure it's that common to also issue the same sort of instrument to nonexecutive directors. And I just wondered, is this something that's going to happen in the future? Or perhaps you could tell us why you intend to pay nonexecutive directors things like SARs to incentivize them.

Yes. Look, I can -- excuse me. I seem to have got a frog in my throat. Have we got a cure for that? Look, the -- I have -- I'm very happy to make an -- repeat an announcement I was going to make later. That is that it is not the intention of the Board to issue any further equity to people joining our Board as an incentive to be a director, and it has never been our intention that existing directors should get remuneration by way of equity. So the scheme will not be used for that purpose.

But you will be issuing SARs for the new director, Ms. Olson?

No. I said no. Perhaps I've made myself [ claim ]. We will not be issuing SARs for new directors, and we'll be not issuing SARs for present directors. I've made that commitment to Ownership Matters and ACSI. So I'm repeating it to this meeting.

Okay. We got the proxies. Okay. So as you can see, there's strong support for that resolution. We await the final outcome. Resolution 5 is the approval of issue of Managing Directors SARs to Dr. Behrenbruch. The long-term variable remuneration is offered to executives to build alignment between KMP and stakeholders over the long term. Now while Dr. Behrenbruch is also a very substantial shareholder of the company, it's only equitable that part of his remuneration should be aligned with that of his fellow senior colleagues. So that is the reason why we have done that. We also think that the LTI is a very good way of preserving cash in a company that is still in a phase of needing to reinvest projected revenue in continued R&D. We have given consideration to the LTI structure and the instruments used on an annual basis since the company listed, which involved reviewing market norms and hearing from advisers on typical arrangements for companies of our size, activity and operations. Up until now, LTIs were issued in the form of options. But aligned with our evolution and anticipation of the first revenue generating product, the remuneration practices were reviewed in 2021. And the Board will award SARs, which operate as a cashless exercise option. They don't vest or become exercisable until very clear performance targets are met. And in the case of Dr. Behrenbruch, there are 3 targets, which was described in the notice of meeting. Transitioning Telix into a sustainable revenue generating company is vital for its future development. And so the Board considered that given the size, growth and future targets, including building on illuccix revenue stream through other products that are proximal to market and transitioning the company's core development focus to our therapy pipeline, SARs is issued in this way that the CEO provides appropriate alignment with shareholders' interests. There are proposed to award the 139,672 SARs in total in 3 tranches. They have a Black Scholes value of $339,752. The very -- the important thing to remember in this package for Dr. Behrenbruch is that he gets by comparison with his peers' modest base salary, a fairly modest STI, and the largest remuneration is the potential gain from the SARs, but they're at risk. He's not guaranteed he's going to get these. It's only if he meets the benchmarks that he will do it. The Board, after deliberation, and with Dr. Behrenbruch abstaining, considers that the proposal grant of Managing Director SARs will produce an appropriate competitive salary for Dr. Behrenbruch in 2022 based on market benchmarking and current executive policy. That's been quite an introduction. So if anyone would like any clarification, please ask me a question. Okay. If there's no questions, could we have a look at the proxy votes? And I'm very happy to see that we have received good support from our proxies for that proposal, and we'll have the final numbers later today. The next resolution was the issue of Non-Executive Director SARs to Tiffany Olson. In appropriate cases, the Board has offered equity subject to shareholder approval as a means to attract high-quality candidates to the Board. All of the nonexecutive directors to date have been recipient of those awards. And we took the view that the proposed issue of SARs to newly appointed director, Tiffany Olson, was an appropriate offer that aligns with shareholders' interest and is consistent with market practice for early pre-revenue-stage life science companies to provide. However, we recognize that our company is changing. It is now going to be a revenue-producing company, and it's no longer an early-stage startup. So I have made a -- we have made a commitment to the market, to our major governance bodies, namely Ownership Matters and ACSI that we will no longer make awards -- SARs awards to nonexecutive directors, either as an incentive to join the Board or following appointment. This resolution asks shareholders to approve the issue of 52,070 Non-Executive Director SARs, which have a Black Scholes value of $113,850. Unlike the Managing Director SARs in the previous resolution, there are no performance conditions attached to the SARs other than Ms. Olson's continued tenure as a director, and that is a 3 years period. So Tiffany must stay with us for 3 years in order to qualify for the award. The Board, other than Ms. Olson, with the benefit of advice from independent specialist consultants, consider the proposed issue as appropriate for a director with the skills that she provides. So we recommend that shareholders vote in favor of this resolution. I'm happy to take any comments, but I do think that I have explained in some detail that there will be no more awards of this kind. If there's no further comments, could we have a look at the proxy position? As you can see, there were somewhat more votes against than in the case of the other resolutions. But at the end of the day, based on proxies, they will be awarded. But we await the final decision after today. Resolution 7, approval of shares under the placement. This is a technical matter, but I'll take you through the detail. We seek approval for the issue of shares under the placement announced by the company in January 3 in total 22.7 million shares issued at $7.70 to new and existing shareholders, raising $175 million. The share purchase plan announced at the same time was subsequently canceled with all monies refunded due to changed market conditions. Funds raised from the placement are being used to execute on the company's late-stage clinical product pipeline and advance multiple products towards commercialization, particularly in the prostate cancer therapy clinical program, targeted alpha therapy and the launch of Telix' first commercial product, illuccix. If the resolution is passed, the issue of the placement shares will be excluded in calculating our placement capacity in Listing Rule 7.1. Otherwise, these shares will be included, effectively decreasing the number of securities the company can issue over the relevant period without shareholder approval. The company wishes to retain as much flexibility as possible to issue additional equity securities in the future without having to obtain shareholder approval for such issues under the listing rule. Therefore, we recommend that shareholders approve the resolution. Now I would say that we recognize, as we got from one of the questions today, that shareholders would, as a rule, prepare if we want to raise money that we'd have a rights issue. Also -- however, there may be circumstances where the timing is such that we need to go to the market and raise money through a placement or we may use equity in appropriate times to acquire assets. In the early life of the company, that is exactly what we did to preserve cash. However, we will be extremely prudent in the way we exercise our placement rules. So with that background, I would invite any questions that you might have about this resolution. Okay. If there's no questions, could we share the proxy situation here? And I'm happy to say we have received strong support for that resolution. I now move to resolution 8, which is the approval of issue of employee SARs to participating employees. This seeks employee SARs under the employee incentive plan. Approximately 2.6 million employees SARs were issued to 128 employees. And details of those SARs were set out in the notice of the meeting. The objective of the equity incentive plan is to attract, motivate and retain key employees and align their remuneration with shareholders. The -- and we use these SARs to attract employees and to retain employees. And it gives them the opportunity to participate in the future growth of the company. The effect of the resolution, if approved, will be that employee SARs previously issued won't count towards the company's 15% placement capacity under Listing Rule 7.1. And we recommend you approve this resolution so that we keep the 15% availability. If we don't have the resolution approved, we lose -- the 15% is diminished by the number of employees SARs awarded. I've already pointed out to you that there are limits on the number that we can issue and there's a total cap of 10%. Any questions? Okay. Could you show us the proxies, Melanie? As you can see, that's received fairly strong support. Thank you. Final question -- final issue is the constitution. This is a resolution seeking amendments to the company's constitution. The constitution has not been changed since listing on November 2017. Since that date, there's been many changes in the corporations or in governance practice, not least the provision dealing with the use of technology and general meetings, including the holding of virtual and hybrid meetings. And they took effect earlier this year to address the challenges we found with the pandemic, where if it hadn't been for the intervention of the treasurer, companies who would not have been able to hold virtual meetings, and it would have been in breach of the law. We sent -- there's a copy of the constitution which shows the markup of the changes. I can attest to having read them carefully, that they are very technical issues dealing with ASX listing rules and these changes to the technology provisions of holding meetings. Now we received quite an amount of feedback after we issued the notice of meeting, where governance bodies said that we could not have an unvetted right to have virtual meetings because we might decide to have meetings and not have shareholders present. I can assure you that would never have happened under my watch and I don't think under the watch of any of my colleagues. Anyway, we've inserted a small amendment, which limits the ability of the company to have virtual meetings to the situations involving a pandemic or health and safety. So it would be the kind of situation we experienced in Victoria over the last couple of years. And so basically, we're updating and modernizing the constitution to take account of legislative changes and prepare for any future challenges that may arise. So I think that's all I want to say on the constitution. But happy to take any questions if you've got them. Okay. And I see the proxies there. Thanks, Mel. The vote against was really created by one corporate governance group that took umbrage at the original version. And even though we had -- we told them about a new version, they didn't bother to change their recommendation. So that's rather disappointing. Shareholders, thank you for your patience. We've certainly had a lot of resolutions. I'm hoping that next year, it will be shorter. But what the Board would like to do is thank you for your participation and hope that you'll join us for some refreshments and some tea and coffee. And feel free to approach any of our Board members, including our CEO, with any further questions you might like to answer off-line. We'll do our best to respond. But thank you. Thank you all, and I'll conclude by saying we're looking forward to 2022 as being a year of continued progress. Thank you very much.