Telix Pharmaceuticals Limited (TLX) Earnings Call Transcript & Summary

Well, good morning, and welcome shareholders and colleagues. It's 11:00. I'm Kevin McCann, Chairman of Telix Pharmaceuticals Limited, and I will be chairing this Annual General Meeting today. On behalf of the Board of Directors, I'm delighted to welcome you to the company's sixth Annual General Meeting. It's sort of hard to believe we've reached a 6-year age, which is -- seems to have gone very quickly. Last year, we hosted a hybrid AGM to enable as many shareholders as possible to participate in this event. And it was -- we were able to get a large number of people throughout Australia joining us and also people from overseas. Before we go to the formal business, I'd like to acknowledge the traditional custodians of country throughout Australia and their connections to land, sea and community. We pay our respects to their elders past and present and extend that respect to any indigenous and Torres Strait Islander peoples joining the meeting physically or virtually today. Could I ask anyone with a mobile offer to please switch their phone off? Could I also ask you that you don't record this event or take photographs? A recording of the presentation will be made available on our website shortly after this meeting. In attendance today, we have some Senior Executives of the company to whom I'd like to introduce. On our top table is Dr. Christian Behrenbruch, our CEO and Chief Executive. Now in the front row, and I'll get them to -- sorry, before that, I'd like to introduce my colleagues. Down the far end is Jann Skinner, who is the Chair of our Audit Committee. Jann, would you like to...

Stand up?

Yes.

I think everyone can see.

Or you can wave. Rather than make you stand up, you can wave. Dr. Mark Nelson. Mark is -- Jann and Mark are both Australian-based. Tiffany Olson, our American-based Director. She comes from Indiana. Dr. Behrenbruch, I've already acknowledged. And we've got Genevieve Ryan, who is our Company Secretary. Now in the front row, we have some other executives, and I'll get them to stand up and introduce themselves. Darren Smith, who's our group CFO. Richard Valeix, who's our Chief Commercial Officer. Dr. Colin Hayward, our Chief Medical Officer; Kevin Richardson, who is the CEO of Americas; Raphael Ortiz, who's CEO, Europe and Middle East and Africa; and David Cade, who is the CEO of Asia Pacific. We also have a number of other executives. I won't go through them name by name, but could you stand up, the other senior executives?

Good turnout.

Thank you very much. Good. Brad Peake, a partner of our auditor PricewaterhouseCoopers, is present. And Brad will answer any questions relating to the audit of the company, the financial report and remuneration report when they table at the meeting. Brad, would you identify yourself? Good. Thank you. I'm informed by the company's Secretary we have a quorum, so I declare the AGM open. A notice of meeting has been distributed to shareholders take the notice as read. The agenda for the meeting will be as follows. We have a short video to share with you. I will then provide a summary of the major objectives and activities of the company in 2022, including the important transition from commercial stage to a company generating cash. And the -- I'll also go through the investment we're making in research and development and commitment to environmental, social, governance and sustainability. Dr. Behrenbruch will give you additional comments on our performance, progress against key strategic objectives and developments. We will then conduct the formal business of the meeting, which includes voting on the resolutions put to the meeting. To facilitate a smooth hybrid meeting with multiple avenues for shareholders and proxies to ask questions, we have 2 scheduled question times. One is after the tabling of the financial statements and the other at the end of the formal business. So there will be ample time for shareholders and proxies to ask questions. If you are joining us online, please submit your questions through the online platform at any time. I've arranged that these questions will be read out for response during the question time. Now we will turn to our video before we go to the business of the meeting, and I'll provide my Chairman's address after. [Presentation]

Well, I hope you found that video interesting. Dr. Behrenbruch will be elaborating on the status and progress of the 250-CDx product. I'll now turn to my Chairman's address. The financial year 2022 has been one of outstanding achievement for Telix. It's provided a value creation for shareholders and had a very positive impact on clinicians across the world and their patients who use our commercial and investigational imaging and therapeutic products each day. A highlight of the last 12 months has been the commercial launch of Illuccix, our prostate cancer imaging agent. Since launching Illuccix in the United States in April 2022, we have generated AUD 247 million in revenue from sales. In Q1 2023, we delivered our first quarter of AUD 100 million of revenue. While the U.S. represents our largest commercial opportunity, Telix is also demonstrating its commitment to deliver advanced prostate cancer imaging globally. Illuccix is now commercially available in Australia, New Zealand and Canada. And we've filed regulatory submissions in the EU and U.K. And we're also awaiting marketing authorizations approval decision in Brazil and planning for regulatory filings in the Asia Pacific, with a particular focus on Japan and China. PSMA-PET imaging is widely considered one of the most important advancements in nuclear medicine and prostate cancer imaging. Telix is a leading global player and innovator in this rapidly growing market. Our ability to deliver globally is also enabling us to partner with large pharmaceutical companies and supply global clinical trials in prostate cancer as PSMA-PET imaging can be used to monitor disease and response to a range of prostate cancer therapies. You've seen from the video the highly positive readout, the Phase III clinical study ZIRCON for our investigational renal cancer imaging agent, TLX250-CDx, and this was really a major highlight for 2022. The potential of this imaging agent has been increased with the data recently presented to the American Neurological Association's Annual Meeting in Chicago this year. It confirmed its utility and effectiveness in very small renal masses, which are prevalent and represent a significant diagnostic challenge. Subject to regulatory approval, once commercialized, TLX250-CDx fills a major unmet need in noninvasive diagnosis and characterization of clear cell renal carcinoma, the most common and aggressive form of kidney cancer. In 2022, Telix transitioned from an -- to an operating cash flow positive company. And we were able to achieve this important financial outcome within a year of commercial launch due to our growth in sales and commitment to control management of resources and expenditure. We are in the rare position of being a biotechnical company that has been able to build a global commercial organization and fund its research and development programs in a sustainable manner. I'd like to thank our shareholders present and in person and online for your support in 2022, which saw prolonged periods of great market volatility. Fortified by a strong cash balance following our capital raise in January 2022, the team at Telix was able to focus on delivering its priority commercial and clinical goals. This effort and sustained performance is now being recognized in the share market at present. Ladies and gentlemen, it's an exhilarating time to be part of the radiopharmaceutical industry, which is experiencing such a surge of clinical and investor enthusiasm, driven by its clinical evidence of its benefits, commercial successes and a maturing supply chain. We believe Telix is a standout global leader in this sector with demonstrated expertise and a pipeline of opportunities for our core investigational agents obtained from our research and innovation programs. The company has a very clear strategy, which our Managing Director and Group CEO, Dr. Behrenbruch, will again articulate today. We intend that it will create further benefit for patients, physicians and our shareholders. The continued commercial growth of the company via Illuccix will be the major focus of the coming year. But equally important is the investment in bringing out our next 2 imaging agents in the market for brain and kidney cancer. We will also expect to deliver clinical milestones across our late-stage prostate, renal and brain cancer therapeutic programs. The investments we are making in late-stage assets and the continued innovation evident in all technologies and partnerships that Telix identifies will underpin the next phase of value creation and innovation in our field. I would like to reinforce our commitment to improvements across ESG matters. Good corporate governance is integral to the culture and business practices here at Telix. It enhances performance, creates value and supports risk and return framework. During 2022, we made progress across key areas identified for action in our 2021 ESG report, including the environment of an environmental sustainability policy. We will also shortly publish our Modern Slavery Statement, which is required now for companies of our size under Australian law. Let me now turn to our people. I would like on behalf of the Board to recognize the work of Chris and the entire Telix team for their achievements in 2022 and the year-to-date. The Board regards their accomplishments as absolutely exceptional. I'd also like to recognize the contribution of my hard-working and committed Board colleagues, who continue to add value to Telix. I can assure you, they're a very, very committed group and very generous with their time. Let me conclude on this note. I'm sure that many of you have seen the ravages of cancer affecting family and close friends. We, at Telix, have a highly talented and dedicated team who intend to fulfill our mission to deliver the promise of targeted radiation, which will help patients with cancer to live longer, better and quality lives. Now it's my pleasure to hand over to Dr. Behrenbruch for his address.

Thank you, Mr. Chairman. And I'd like to also echo Kevin's acknowledgment of my executive team presence here today. It's really important that you have the opportunity to meet them and interact with them. So please take that opportunity afterwards. And also thank you for your commitment because many of you have come a long way to be part of this important event. So good morning, shareholders and colleagues. When I said before you this time last year, I outlined the key elements of our growth strategy for 2022: firstly, to realize the value of Illuccix and to transition to a truly commercial-stage company; to build on the Illuccix revenue stream and bring some additional products to market, and you've gotten a little bit of a glimpse of that, and I'll certainly be talking more about that; and thirdly, to transition the core development focus to our therapy pipeline, and clearly, that's the future value creation for the company overall; and then last of all, to build the sort of innovation platforms that will define the and its pipeline well into the future. I think it's fair to say that the achievements of the past year demonstrate that we are delivering on this strategy on multiple fronts. We're now a fully-fledged commercial-stage company with a very successful product launch under our belt. We have additional near-term commercial operates with our imaging agents in renal cancer and in brain cancer. We're making good progress towards regulatory filings for these 2 additional products this year and with launch planned in 2024, subject, of course, as always, to various regulatory approvals. And we believe these products address significant unmet medical need and will lead to material revenues alongside what we've already seen with Illuccix. In concert, we're driving forward our extensive therapeutic pipeline. We think we have the best-in-class pipeline in our field in our industry. We are now dosing patients across multiple clinical trials and have now completed enrollment even in the ProstACT SELECT study. So making tangible and demonstrable progress across our pipeline. Behind the scenes, our team has been expertly delivering the preparatory work that goes into delivering these studies, including manufacturing and site initiation. And again, I encourage you after the AGM to interact with some of my colleagues that do the heavy lifting. I don't do it, they do, and so please do take that opportunity. The highest priority and resource focus is understandably directed at the ProstACT GLOBAL Phase III prostate cancer therapy study. And although we'll have other near-term data readouts for this asset, delivering ProstACT GLOBAL is a key goal for the company, really occupies the major focus of the executive team right now. We are now nearing completion of the build-out of our facility in Brussels South, or Seneffe. We call it Brussels South because nobody knew where Seneffe was and it was easier to recruit people to Brussels South. And with the acquisition of Optimal Tracers in Sacramento, California, we've added new capability in radiochemistry process development and clinical dose manufacturing in the U.S. It really is a first step towards building a more vertically integrated business. So all of this is done alongside our established supply chain manufacturing distribution network, which has demonstrably underpinned the success of the Illuccix launch and, of course, delivery of global clinical trials. And radiopharma is a challenging space. Supply chain and manufacturing is everything. So a lot of demonstrated progress there. On the innovation front, we have a best-in-class R&D program, or what we call research and innovation. We don't really like to do basic discovery. So that's why we call it research and innovation. And this team is really pushing forward to new frontiers such as targeted alpha therapy and driving new platform technologies like artificial intelligence that will embrace and extend the lifecycle of products, particularly Illuccix in the near term. We believe that this focus on research and innovation is vitally important to maintaining our competitive advantage in the longer term and really future-proofing the company. And Mike Wheatcroft, our Chief Scientist, is over there in the corner. Hands up, Mike. And so if you want to bug him about AI or targeted alpha after the meeting, I encourage you to harass him vigorously. When Andreas Kluge and I started the company, we recognized that building the depth of capability in urologic oncology was going to be important to the future of the business, and it's a key momentum in our field right now. With Illuccix successfully launched in the clinical development of our renal cancer product completed, this vision is coming to life. And the traction that we have with physicians is enormous. So if you've just seen some sound bites from some of the leading minds in this business field, there's no doubt that what we have developed is going to be high impact. We also have studies exploring the utility of our technology in bladder cancer. And that aim really is to become a one-stop shop for diagnostic imaging and then, ultimately, therapy in urologic oncology. So building that depth of pipeline is a very big strategic imperative. And the imaging is important. Don't think of it as diagnostic medicine. It really forms the basis of our precision medicine strategy, which is patient selection for therapeutics and bringing molecular imaging into the operating theater. We believe actually that anything we can do on the imaging side that leads to an intervention, whether that's a therapeutic drug or a surgical intervention, that's a really good outcome for patients, preferably as early in their cancer journey as possible. So unconventionally, we take a fairly broad view of what a theranostic, a therapeutic and a diagnostic pair could be, so long as we're delivering on those patient outcomes. So yes, it's a really exciting vision for the future of cancer care. Now in some cases, the products that we develop will be informing the surgeon, and in some cases, the medical oncologist. And you'll start to see that strategy unfold over the coming months and years as we build lifecycle management into our products and deepen our pipeline. And of course, in all cases, we hope that patients will benefit, including from our own therapeutics in due course. Tying all this together will require Telix to have strength not just in pharmaceutical development but in medical technologies, including things like image analysis tools, artificial intelligence, as I mentioned before, clinical decision support. So merely aiding a diagnosis, helping a radiologist to understand the disease. In some respects, it's not that interesting. It's important, but it's only just the beginning of the story. So we want to build on that informatics platform that will inform how to optimize that intervention and maybe even predict patient response to therapy. That's a really key concept of precision medicine. So we want to move from lumpology, which is what radiology has been traditionally about, to something that's much more biologically driven. And again, you heard some sound bites not just from physicians treating patients, but patients on the receiving end of treatment. They want to understand and they want to know what their biology means. And so this is why we continue to invest in such technologies as reflected in our recent acquisition of Dedicaid GmbH, which is an Austrian AI team. Really exciting bolt-on, and I would imagine not the last foray we will make into that sort of general area. And so that's really an illustration of how we're layering those platform technologies onto our core radiopharmaceutical development capabilities. So moving on a bit from the R&D, the question investors often ask us is how much will you invest in R&D now that we're starting to generate some earnings. That seems to be a fairly elastic question. And I would like to take this opportunity to reinforce that while investing in the commercial operations and R&D is important, the level of investment is also a function of our commercial performance. So it will be appropriate and commensurate to the success of the company. The trend over the past year illustrates our approach to the fiscal management of the company. Since our commercial launch, R&D and SG&A costs have declined as a percentage of revenue and our cash balance is steadily increasing. And it's our intention to continue this trend, to continue this trajectory, in order to ensure that funds are available for strategic investment for pipeline expansion and, of course, for risk management in the kind of volatile and challenging environment that we are part of. We've been very clear that our R&D spend for 2023 is a budgeted spend that sits at around $100 million, plus or minus a few percent. And that is a budgeted and fixed view of what our expenditure will be this year. We're also very clear internally on our development priorities and, accordingly, how resources will be allocated. And where we have discretion and where we don't, clearly, we have key programs that are going to be invested in no matter what, and then we have things which are secondary importance where we can decide to switch on or switch off as conditions require. So we can go harder or pull back accordingly. This flexibility is really important given the experience of the markets over the past couple of years. So again, I want to reemphasize that our investment in R&D is not disconnected from the market reality that we're in. But encouragingly, the trends you're seeing should give you assurance over the approach to financial management of the business as we continue to grow commercial revenue and drive forward our programs. To deliver on this performance, we've had to significantly build out our organization, as you can see from this diagram here. It's a very simplistic diagram, but this organizational outline illustrates at a very high level how we've done this from product development activity all the way down to what we now call global services or internal service delivery. Telix is a truly global company. We have operations in the United States, actually in Americas, Canada as well. Europe, Asia Pacific region. And we've built the infrastructure to support our workforce and our operations globally, including very sophisticated capabilities around manufacturing and supply chain. There are 2 particularly noteworthy developments in this slide. The first is that we've invested in building a commercial team that can deliver multiple products, particularly in commercially important and complex markets like the United States. I'm particularly thankful for the excellent leadership of Kevin Richardson, Telix Americas CEO, who is building a truly world-class sales, marketing and customer service organization, and it's just great to see the momentum that the U.S. team has right now. It's an exciting place to be. I go there to get energy. In health care, customer service and market access matters. We have a very talented team, and that's valued by our customer base. And I really believe that service and customer service can be a very big differentiation because we're not dealing with small numbers of patients. We're not dealing with minor indications. We're dealing with really whole-hearted change in the way in which we manage patients, and they are a customer for us. Secondly, to accelerate and de-risk our clinical programs, particularly the therapeutic programs, we now have a more formally defined organization around 3 distinct stages of product development, research and innovation. So they're really early stage, mostly preclinical activity than what we call early stage programs, which is really to the end of Phase II in humans and then commercial development, which is effectively Phase III development onwards. This structure reflects the fact that the talent and the resources that are required to deliver on product development at different stages is very unique. It's very distinct. And so by having smaller, more focused and more agile teams, we think we can deliver better on our corporate objectives. I'll be the first to admit, we lost some momentum during COVID. It was really tough coming out of COVID and supply chains getting back online and getting manufacturing of really complicated pharmaceutical products back on track, but I wish to assure you that we're really getting some momentum now, and we're seeing a good realignment of the business in that post-COVID environment. So now to conclude, just to wrap up, I think my part of the AGM informally, I want to kind of summarize the task ahead in the simplest way forward, simplest way possible. So in 223, our mission is to grow and develop the Illuccix franchise. The way we're going to do that is not just pushing the top line in markets where we're already active, but really looking at that geographic coverage, and also strategic cycle management. Illuccix in the limit will not be a single product. It will be a portfolio of products that reflects our leadership in prostate cancer imaging. So we have a very clear vision around how we're going to maintain a leader in prostate cancer imaging. And we're going to continue to take our fair share or more than our fair share of the market. We have 2 more drug approvals to submit this year. This is a big focus for the team right now, and a significant proportion of our regulatory quality and manufacturing resources are focused on this task, including getting ready around the market access and reimbursement deliverables. We don't sell any of these products if they don't have reimbursement. If we can't articulate what the health care economics and the pharmacoeconomic benefit of our products are, we don't make money. So commercial launch starts now. It's about that preparation and being ready to be in the standards, guidelines and to have traction when we come out the door, hopefully, with an FDA-approved product and then shortly after Europe and other jurisdictions. There's also a considerable amount of pre-commercial activity in play that is not necessarily obvious to shareholders. So for example, we just launched an expanded access program for our renal cancer agent. That's so that we can start making the product available to patients in advance of an approval. In fact, that's something that the FDA asks us to do as part of our breakthrough designation. So it's really an illustration that we have something important. And as a company, we have that commitment to making it available to a -- to patients as soon as possible. And we believe that we can deliver the same sort of momentum for our renal cancer program as we saw with prostate cancer. We had about 85 customers using the prostate cancer imaging agent before. We got FDA approval to build that understanding and traction in a very controlled and appropriate way, but that's really important for our product launch, really serves as an entry point for that dialogue with the future customer. And finally, as I've said, our therapeutic programs remain a top priority. And with our supply chains and clinical activity moving into a more normal mode of operation, thankfully. We will start to demonstrate a much speedier execution on our programs. And I think you'll be really happy with our progress over the next 6, 9, 12 months on this front. The ProstACT GLOBAL study is a key focus. But over the next 12 to 18 months, we're going to be delivering a huge amount of clinical data that will be of interest to opinion leaders. It will be of interest to clinical partners. You can already see some of the buzz around the renal cancer program and also in variably strategic partners. I mean there's no doubt that as our portfolio grows and its execution maturity that, that is -- that strategic discussion becomes really important to Telix. We are certainly garnering a high level of attention at the moment, and we clearly understand what data we need to deliver in order to trigger those strategic conversations for the business. So as a final wrap-up, I'm grateful for the support and advice of our excellent Board of Directors and, in particular, Telix Chairman Kevin McCann. We've accomplished a great deal as a team, Board and management. And we've worked extremely hard in a complex and rapidly changing environment. It's been a really tough couple of years. But it's been very gratifying to see the positive outcomes. I personally appreciate the level of counsel of Kevin and the Board, as does the wider management team has a high degree of access to the Board. The level of engagement is very high, and it should give comfort to shareholders that we have such a hand-on and strategically active Board. It's a real strength of the company. And I'd like to also take a moment to acknowledge our clinical partners, manufacturing and supply chain partners and, of course, our patients. Every week, thousands, let me repeat, thousands of patients receive a Telix product, either as an approved product or as an investigational product in a clinical trial or under compassionate use in about 30 countries around the world. So this doesn't happen accidentally or in isolation. It only happens through partnership and a really firm conviction that we can deliver positive outcomes for patients living with cancer. I wish to assure you that as we've grown, we've maintained that commitment to patient outcomes and the culture and the DNA of the business, and our people are passionate about this. That's a great talking point for you to have with my team after this meeting to understand their commitment and engagement on this topic. And then finally, thank you to our shareholders for your support during a complex and turbulent 12 months. We've had some amazing long-term backers of the business who lend their advice and valuable insights freely to the Board and management, and we consider you to be part of our team. So thank you. We are grateful for the commitment and the belief in what we're doing for patients globally. I've always believed that if we execute on the mission, the share price will take care of itself, and it's gratifying to see this causality playing out to the benefit of our shareholders. So thank you. Thank you for your attention and your support. I'll now hand back to Kevin for the formal part of the proceedings. Thanks.

Well, Chris, thank you very much for that informative address, and I hope the shareholders have a much better idea of what we've accomplished and what we have planned for 2023 and beyond. All right, we now turn to the formalities. I'll shortly invite questions from shareholders and proxies. However, before I do, I'll outline the preliminary voting and question procedure at today's meeting. Shareholders and proxies who are in attendance here in Melbourne have received an admittance card, a yellow card, which has been issued to shareholders and proxies entitled to vote. Blue cards are for those shareholders entitled to speak but not vote. The yellow card displays a series of boxes for voting. Please remember to indicate on your card how you wish to vote by marking the appropriate boxes. Visitors today have been issued with white cards. They are not entitled to speak or vote at the meeting. For shareholders or proxies attending the meeting online, please follow the instructions on your screen in order to be able to cast your vote. You may also submit questions online or by telephone. The resolutions at today's meeting will be decided by a poll. I now declare the poll open. So those of you who need to leave the meeting before it concludes, can complete your voting card. Mr. Kompogiorgas of Link Services is -- which is our share registry, will act as returning officer in relation to the poll. If there are any aspects of the voting that you don't understand, please ask one of the Link staff or contact Link on the telephone number provided on the online platform. The results of the poll will be obtained later today by visiting the company's website or the ASX website. Except where a director has a personal interest in the outcome of a resolution, I confirm that the Board recommends shareholders' vote in favor of all resolutions other than resolution 4. As Chairman of the meeting, I intend to vote all undirected proxies given to me in favor of each resolution. Questions. I will invite questions from shareholders and proxies following the table -- tabling of the financial and other formal reports and, again, after the formal resolutions. If you are physically present and would like to ask questions at that time, please raise your hand, show your card to the microphone attendant who will introduce -- and introduce yourself before asking your question. I'll also ask for questions received on the online platform or on the phone. They will follow the questions from people in the room. We'll now proceed with the first item of business which is set out in the notice of meeting, and that is the tabling of the financial report and formal reports. The tabling of the financial report for the year ended 31 December 2022, the reports of the directors and the auditor of the company, which have been made available to shareholders. The reports are tabled but they're not the subject of a resolution, but they do give shareholders and proxies the ability to ask questions relating to the financial affairs of the company and generally. So ladies and gentlemen, the forum is now open for you to ask any questions and also ask questions of the auditor if you have them.

Yes. We'll get you just a microphone.

Thank you, Chairman. Good morning. Good morning to the Board. My name is Claudio Esposito, I'm with the Australian Shareholders' Association. So with Telix's result, obviously, Illuccix has done very well, but I noticed you said you were not quite into profitability yet. And I just want to know how patient we really need to be in order for that to actually come to fruition.

Well, look, I'm not going to give a profit forecast, but what I can say is that the financial progress to date has been -- we've revealed that today. We're a company that is emerging in -- we're already in commercial, and we're emerging, we have a positive cash flow. But I don't want to make any forecasts about when profits are going to emerge. Chris, do you have any supplemental answer?

Will there be a trigger event, Dr. Behrenbruch?

We'll be there.

A trigger event before the company enters profitability?

Well, I think the best way to answer your question is, there's 2 types of investors in the world. There's those that are interested. They're health care investors that want to see a profitable bottom line-driven business, and then there's kind of a negative EPS investor that wants to see growth and value creation in the pipeline. And we're a bit of an odd company because we sort of have to satisfy both. And that's certainly the goal. So the goal is to continue, as I said in my address, to build our balance sheet, but also we are reinvesting the majority of our earnings back into our pipeline because we think that that's where the ultimate value creation will be for shareholders. And I would hope that what we can deliver as an outcome is a premium on a market valuation at some point rather than two cents on the dollar for a dividend. So I hope that gives you a bit of color as to how we see the investment strategy for the business. And it's very, very typical of a life sciences company.

Sure. And just while we're on that, I can see that Illuccix is growing and the revenues are growing. And in combination with the capital raise that you had last year, how long do you think that's going to stave off the need for another capital raise?

Yes, I'm happy to answer that. We have no plans for a capital raise at the moment. You can see that we are generating some positive, albeit nascent, but positive cash flow. We -- when we raised that capital, we transparently disclosed to the market that it was sufficient use of proceeds to enable a 3-year transition to a commercially viable business. I dare say that transition has perhaps happened a bit faster than what we thought. So it's definitely a positive momentum. That said, we are a public company. And were there a need for us to access the public markets for a growth strategy or a strategic opportunity, we would do so. That's the -- I believe that's a tacit part of being a publicly traded company. But I can tell you categorically, at this point in time, we have no need to raise capital to fund our current activity.

Okay. Thank you. Would I be able to ask one more question while we're on it?

Yes, sure.

So this is just a general business question with regards to the antibodies that Telix acquire. And I can see it's a very critical part of the business. So I'm just wondering, with these antibodies, is it possible for perhaps a competitor come along and perhaps outbid the purchase of the antibodies that you acquire simply because they had deeper pockets or better connections or what have you?

No doubt the pharmaceutical space is very competitive. When we license technologies, we license very watertight agreements that are -- cannot be sort of vexatious or kind of arbitrarily kind of run over. A lot of the intellectual property that we have that enables our products are internally generated. So when we started the company, we had a very high reliance on external IP. Now we have a more internally derived intellectual property portfolio. So I don't consider this to be a risk. And in fact, in order for us -- to go back to your first question, in order for us to deliver a strong outcome to shareholders in the long term, we need to be pretty confident that we have control over what we do. And also to get a product approved and operate in a major market like the United States, that's a big test. That should give you a lot of comfort because typically what happens when you have a product out in the market and it's generating revenue, that's when your intellectual property and your commercial viability gets stress tested. So I think it's good for you to raise the topic, but it's not -- certainly not the biggest thing that keeps me awake at night. Let's put it that way.

Okay. Thanks very much.

And thank you for the ASA's attendance today and your questions. Thank you. The gentleman behind you.

My name is [ Wayne Arthur ]. One of the things I always do when I look at annual accounts is compare the profit and loss account with the cash flow account. And 2 figures struck me. One was the revenue figure in the profit and loss account was about $160 million, but the receipts figure in the cash flow statement was only $124 million. So there's quite a significant difference, whereas in most companies, they're broadly similar, not identical, but broadly similar. Is there some explanation why the receipts are so much less than revenue? Is it because of the new launch commercially? Or is it because maybe a bit slow in ringing in the cash or what?

Chris, do you want to answer that or...

No, I can answer it. Certainly, if Darren thinks there's more color, I'll send him a microphone. I think CEOs should be able to answer P&L questions. So it comes down to the fact that, and it's a very standard part of the pharmaceutical industry, very few pharmaceutical companies self-distribute their products. They always use some sort of a partner as a channel, whether it's to stock a pharmacy or to make a product available through a retail outlet or however, and there's always a lag in the payment terms. So what happens is when we inject a patient, we recognize revenue at that point in time. And our enterprise IT system enables us to track the delivery of doses all the way to the patient. So we know that we've delivered a dose to a patient and the patient has been injected, and that's the point at the time at which we recognize that revenue. But depending on the nuclear pharmacy network we use, payment terms can vary, I'll say, generally speaking, between 30 and 60 days. That's commercial and confidence information. So I can't elucidate it, but there is typically a delay between the revenue recognition event and the cash in the bank account. And that's it. It's nothing more nefarious than that. And clearly, because we've been ramping up so fast, that gap right now is, because our growth rate quarter-on-quarter is very high, that gap is quite large. One day, not soon, hopefully, but one day as that business starts to steady state, the gap will be much smaller because our revenues and our collections will be more or less the same on a quarter-by-quarter basis. So my final comment to you, you should be delighted to see a gap between the 2 because it means that our sales are outstripping our ability to collect cash, not ability, but the timing of cash collection. Do you want to add anything?

No. I think you have [indiscernible].

I've been well trained.

Clearly, the growth of the organization and the fact that it's only the first year of revenue generation, so that's all working capital. So obviously, that's a working capital build in the first period of time. It is a timing difference. As Chris said, as it levels out, which you don't want to see at this point in time, the cash receipts will start to match the sales. Yes.

Does that answer your question?

Yes. Thank you.

Thanks. Good question, by the way.

Any other questions from the room? If not, we've had some questions online, one of which I think is probably appropriately dealt with here, and I'll read that out. It says the pundits -- this is from [ Mr. Stephen Mayne ]. The pundits are saying that artificial intelligence is going to cause major disruption in the medical space. What has happened so far with cancer imaging? And is this a threat or opportunity? And I'll pass this over to Chris, but I'll just -- [ Mr. Mayne ], we did publish the fact that we have made an investment in the company for Dedicaid, which does provide artificial intelligence and machine learning.

I don't think there's anything much more to add. I think it's we've been really publicly clear. It's a key part of the future of the industry. it's not new. Radiology has been using automated tools for a long time. They're just getting better.

Would you -- can I read out any other questions which are relevant to this part of the meeting? Some questions are only relevant when we go through resolutions -- the resolutions.

Okay. First question. Did any of the 5 main proxy advisers, ACSI, Ownership Matters, Glass Lewis, ISS and ASA recommend a vote against any of today's resolutions? Which of the proxy advisers are covering us? And have there been any material proxy protest votes? And will you disclose proxy votes before the debate on each resolution so that shareholders can ask questions?

I think that question is better answered when we've been through the proxies. I will answer that later.

The next question is the -- pundits are saying that artificial intelligence is going to...

We've dealt with that question. The number 3.

Okay. Sorry. The medical commercial university research precinct in Carlton is trumpeted as one of the best in the world. Melbourne should be very proud of Telix. Which institutions, facilities and people within this precinct were most important in assisting delivery of what we see with Telix today.

Chris, you have permission to answer that.

We work with almost all of them whether it's in clinical trials or basic research. There's a reason why we're obviously in that area because there's a lot of talent and a lot of smart people. So yes, that's -- I think that's about it.

Okay. Question number 3 from [ Mr. Mayne ].

The CEO owns 22.6...

Sorry. We seem to be on different planets [indiscernible]. Do you want me to read that? I'll read that. Our auditor PwC has been in the news for all the wrong reasons recently. How long is the current contract for the auditor of Telix? And has the Board considered the change of auditor or move forward [ in the next ] tender process in light of the revelations of our colleagues of confidential federal government tax information to global clients of PwC? What is the history of Telix's relationship with PwC? No, I think the best person probably to answer that is obviously Brad. But firstly, Jann Skinner, who chairs our Audit Committee, did give me some relevant information about the issue and its relevance to Telix. Can we give Jann a...

Thanks, Kevin. So PwC has been the auditor since Telix commenced in 2017. The information that was disclosed was prior to that time, 2015, so it's in the period before Telix commenced. It's not -- at the moment, we have an open contract with PwC, and we haven't made any decisions to change that.

Brad, would you like to make any comment?

No further comment.

It's not PwC's AGM. It's our AGM.

Right. Okay. Well, I just wanted to give Brad the opportunity if he wished to respond. Now next question.

So I can read out the question. The next one received online is, Page 154 of the annual report lists 3 custodians, HSBC, JPMorgan and Citicorp. As the 3 largest shareholders in our company with a combined 30%, you should know these entities are not actual shareholders but custodians for many shareholders. Who are our actual largest shareholders apart from the CEO? And would you undertake to only publish beneficial owners above 5% in next year's substantial shareholders section of the annual report?

I will address that. So we have a very fluid shareholding situation right now, and it's very typical of an ASX-listed company where there's a growing overseas interest. A lot of the ownership of the company is held indirectly through nominees and through swaps. And so absolutely we do periodic register analysis to try to decipher that a little bit, but it's not a very exact science. And it's probably not something that provides a great deal of elucidation, I would say. We do watch it. I certainly would say that we haven't seen any change in the shareholder register that's particularly unusual. It just seems to be a growing interest in overseas shareholder base and using a nominee is obviously a relevant way of achieving that objective.

Yes. The question -- could you just -- you want to say the question?

I can read it out so that everybody can hear, Kevin.

Sorry.