TheraPharm Deutschland GmbH (TLX) Earnings Call Transcript & Summary

Yes. Good morning, shareholders, and thank you very much for taking the time to listen to this brief. We think when we do a major transaction like this, perhaps not such a material transaction, but certainly a strategically important one that it's worth opening up the opportunity for dialogue. So again, thank you for your time. Skipping through the presentation, which will be shortly posted to ASX, and I hope that you can see on the webcast. Skipping over to Slide #3. Just a little bit of an overview on this presentation. First, I want to make the point that this is an acquisition that is -- or a transaction that's really within Telix's sweet spot. It relates to a radioactive antibody drug. It's an area that Telix has a uniquely advanced and a capable team. And so we really see this transaction as leveraging the core competencies of the company in a very additive way. I'm going to be talking more about the technology in a second, but this relates to bringing on a new targeting asset that's relevant through the field of hematology with a lot of exciting applications. And as I said, throughout the course of this presentation, I'm going to give you a bit more context on that. This is a fairly modest transaction consisting of approximately AUD 33 million in upfront payments; earnouts; and then additionally, royalties. And I will go through the details of the transaction in a second. EUR 10.2 million or EUR 16.5 million of that is upfront, mostly in the form of a script-based deal. There's $200,000 -- EUR 200,000 sorry, of consideration, which is really in order to execute some agreements regarding access to clinical data. But mostly, this is a cash-preserving transaction from the Telix perspective. This is a true theranostic product. So there is a diagnostic product, which is actually an approved product in Europe. It's very modestly selling. It does a few million euros in sales a year because it's a very niche product. But we see the opportunity to considerably expand the indication of that product, and that's part of the business case we're taking this asset on. And then a very exciting therapeutic landscape, which we think is a very nice augmentation of Telix's existing therapeutic focus areas. Just by background, moving on to Slide 4. TheraPharm, just a bit of background on the company. This is a Swiss-German company, headquarters in Zug in Switzerland; which was founded by an ex Roche executive and a colleague, Silke Thomsen, so it's Klaus Bosslet and Silke Thomsen, you can see a short biography there on the slide. Really in the last 5 years has been developing this technology for some of the application areas that we're going to talk about in this presentation today. The technology originates from a Behringwerke, which for those of you who know a bit of pharma history is a very fertile innovation -- has a very fertile history of innovation. The imaging rights to the technology have been licensed to Curium Pharma. Curium is a company that Telix already has an existing relationship with, and these rights are mostly around the European rights. So Telix will be certainly looking at developing these assets in other -- or making this asset available in other territories as well. And of course, the key driver for this transaction is the therapeutic applications, which I'll go into in a second. So that's just a little bit of background on the company. Moving to the next slide, Slide 5. So this is really a science lesson for the morning. But it really highlights why this is strategically such an interesting transaction. So the left couple of scans that you can see there will be very familiar to you. These are gallium PSMA or prostate cancer imaging scans. This reflects the state of the art of the technology that Telix is currently commercializing. And for those of you who are newer shareholders or a newer interest in the company, we have filed U.S. and European marketing authorization for this product and expect to commercialize next year. And the purpose of these images is to image cancer cells that express a specific target, which is called PSMA, prostate-specific membrane antigen. And so when we see a hotspot, most of those little arrows are relating to clusters of cancer cells that are being imaged by basis of that cell surface signature. On the right-hand side, this is a completely different thing. This is imaging cells as well, but instead of imaging cancer cells, it's actually imaging immune cells. And so what these scans are really doing is they're imaging a math of your immune systems activity or, to be accurate, a subset of your immune cells, where they are in the business -- where they are in your body and where they're localizing. Now those scans that you can see there, the 2 skeletal-looking scans, those are really scans of bone marrow -- location of bone marrow and unsurprisingly, you're getting essentially a skeletal scan. But this technology is also capable of looking at the scenario where immune cells migrate and concentrate, for example, in response to an injury or an infection or an inflammatory process, as you can see from the example there of a patient with essentially a type of arthritis, where you can see that there's an accumulation of inflammation in the feet. So a really novel concept. This is about looking at imaging immune function and treating immune function rather than imaging a specific oncology target. But same principle, but a very expanded utility. So taking this concept ahead and moving into Slide 6. So just as Telix has been traditionally developing theranostic products for oncology targets for imaging and delivering radiation to oncology targets. The purpose of this transaction is to deliver imaging and therapeutic radiation to immunology targets, specifically a certain set of subclasses or subtypes of white blood cells, or what we call leukocytes. And there are 3 types of leukocytes that express the target, which is called CD66 or cluster-of-differentiation 66. The CD66 target is expressed in bone marrow plasma cells. So really the cells that essentially define your bone marrow neutrophils, which are the white blood cells that flock to the site of an injury or an infection or an inflammatory process. And then the third one, which is also really interesting, is that there are lymphocytes that live inside the tumor microenvironment. They're called tumor-infiltrating lymphocytes. And they are essentially part of their -- increasingly understood to be part of the bad actors, as we call them, inside a cancer, micro -- a tumor microenvironment that essentially stops an effective immune response from attacking those cancer cells. So they're essentially an immunosuppressive species of cells that lives in the tumor microenvironment. So 3 very, very clinically and medically interesting targets -- target cells to be able to image and then also to be able to deliver therapeutic radiation. And so you can see, those arrows on the right-hand side, for the bone marrow, we want to essentially radiate bone marrow in many instances, and I'll talk more about that in a second. This is a therapeutically important task to be able to do. For the second application, per the example on the previous slide, where we're looking at a particular accumulation of immune cells being able to image, that's where the DX stands for diagnostics, to be able to look at infection management and understand the trafficking of immune cells in immunology and rheumatology applications. It's very exciting. And then the third application is potentially improving the efficacy of different types of immunotherapies by being able to target these bad actor cells that are living in the tumor microenvironment. So 3 very important applications where localizing this target CD66 is meaningful -- CD66 is meaningful. So moving on to the next slide. We are starting to build an articulation at Telix about really what the big-picture vision is for the company in terms of the role of targeted radiation. And it's been clear from our commercial activity over the last couple of years that we have a very ambitious plan for making sure that diagnostic- and therapeutic-targeted radiation is a standardized part of cancer care. And so the historical areas that we focused on, obviously, diagnostic imaging is a cornerstone of what the company has been doing to date. We've announced a number of collaborations and partnerships recently around radiation oncology. So that's integrating molecularly-targeted radiation with conventional external beam radiation in an additive way. We increasingly see value of bringing imaging into the operating theater. So again, we've announced a number of collaborations recently in technology acquisitions where we're looking at, not only being able to do a whole body scan, but then being able to do intraoperative guidance. And you're going to see a lot more collaborations in that space over the coming months and years. And then per some of the fairly large clinical trials that we're either running or getting ready to run really the combination with medical oncology. So how do we maximize the standard of care in combining medical oncology with radiation oncology approaches. And so from the company's perspective, we really think that there's a missing puzzle piece there, which is, if you think about a sort of a fourth pillar of therapeutic modality in treating modern cancer applications, one of those is really in cell and gene therapies. And so this acquisition is essentially adding and completing the picture or what we think of as a kind of missing puzzle piece for where targeted radiation can play an important role. So I really want to make it clear. We're not changing the company's business model. We're not getting into cell therapies per se. What we're doing is, is we're looking at how to utilize radiation in a manner that is additive and beneficial to this increasingly important pillar of therapy and not just oncology, but in some very exciting non-oncology areas as well. Moving to Slide 8. So this is a summary of a diagnostic product. So this is a technetium-99 labeled product. It comes with a cold kit, very consistent product format to other Telix products. As I mentioned in the opening comments, it's an approved product in Europe and a handful of other countries currently distributed by Curium. It has a very narrow indication right now, which is really in bone infection. But as we understand the utility of this technology more and more, it's clear that there's a whole variety of high-value indications that we can expand in, and it's -- as expand into. And it should be obvious that once you have a product that's approved, expanding the utility of that product is a relatively straightforward activity. So we have plans over the next 2 years, both through company-sponsored studies and also through investigator-led studies to expand the data set to be able to, we think, significantly increase the range of indications that this technology can be used for. You don't need to be a medic to appreciate that some of those applications listed there are extremely large indications. So a lot of great potential for expanding the use of this imaging agent. And again, to be able to do so with an improved product, at least the European approval, makes life relatively pleasant. Moving to the next slide, Slide #9. So just consistent with all of the Telix products that are under development, we have both the diagnostic and the therapeutic. The premise of this transaction is really driven by the therapeutic applications. The diagnostic is a nice to have, and it's certainly going to be useful for patient selection and for looking at treatment response for some of the therapeutic applications, but it's the therapy applications themselves that are particularly interesting. So the TheraPharm team has been developing an yttrium-labeled variant of their besilesomab antibody and have been -- I'm studying it primarily in this general application of bone marrow conditioning. And essentially, what bone marrow conditioning is, is that prior to giving a bone marrow transplant or specifically, a bone marrow stem cell transplant, this can be an autologous transplant, i.e., originating from the patients themselves or it can be a donor-matched transplant. And increasingly, there is an availability of donor matching for these types of stem cell transplant applications. Essentially, the goal is to eradicate the patient's existing bone marrow before effectively transplanting a new immune system. And I think this is essentially analogous to rebooting your immune system, and in some cases, not just rebooting your immune system, but literally transplanting the immune system of another patient or of a donor that may not have some of the characteristics or some of the defects that are innate in a patient's bone marrow. This has utility in -- and has been widely used in a variety of blood cancers and what we call hematologic cancers. But as I'm going to show you in a second, there's also tremendous utility and some very high-value non-cancer indications, which may pave the way to a fairly rapid product approval for this therapeutic indication. There have been a number of clinical studies run in Phase I and Phase II that show extremely nice safety and efficacy data. This is a well-tolerated therapeutic. It has a broad orphan drug designation in Europe for bone marrow conditioning for hemopoietic stem cell transplants. And so we think that with the orphan indication and the clinical experience in hand, that there's a very fast approach to getting a first indication in a rare disease area called SALA, which I will elucidate further in a second. But once we've got an initial foothold in that indication, the ability to expand that therapeutic potential in an extremely broad fashion, and I'll give you the laundry list in a second of disease areas that could potentially benefit from this therapeutic approach, it's clear that this has got -- this is a platform technology that has a lot of opportunity to develop and evolve over time. And so just to be clear, we're acquiring this company, we're acquiring the TheraPharm assets in order to be able to build a long-term development plan around anti-CD66-targeting technology. And we think that this transaction gives us a very, very nice leg up in achieving that goal. Slide #10 just summarizes why this asset -- this therapeutic asset is so important. So I've given you the high-level sort of concept of why we do bone marrow conditioning or what we call BMC for stem cell transplant. The standard approach today is to use chemotherapeutic approaches principally revolving around a molecule called melphalan. It's a highly toxic drug. It has a very high -- or a comparatively high patient morbidity and mortality rate. It requires significant hospitalization, sometimes very acute hospitalization. In some countries, patients are in hospital for several weeks on an observational basis. And really the cost of managing that acute care, that intensity of care is pretty significant. And so the value proposition really of this technology is it has the potential to be used in an outpatient basis, dramatically reduced hospitalization times. But most importantly, there's a whole swath of patients that are going to be able to get bone marrow conditioning that wouldn't have been eligible before, particularly older patients with some pretty clear thresholds in clinical practice where, if you're dealing with a patient over 60, very unlikely to receive this therapy. Patients that have impaired biological functions such as impaired renal function are not eligible for the standard approaches. The standard approaches carried a high risk and long-term consequences in pediatric patients. So if we can come up with a better, safer, faster from a hospitalization perspective way of preparing patients for these stem cell transplants, we have the potential to really transform the utility of the field. And I mean to be clear, today, and you can see from the graph there, this type of stem cell transplant is widely used in a variety of oncology and non-oncology applications. But we see the potential to really expand the field. If we can make a bone marrow stem cell transplant or hemopoietic stem cell transplant commonplace, safe and accessible to a very wide range of patients, then the utility of the approach in this field is going to expand considerably. Moving on to Slide 11. I don't think it would be reasonable to talk about a new technology acquisition without noting some competition. Clearly, the standard of care, which I've just sort of outlined is, it's a well-established standard of care. There's a lot of optimization that's happening in that standard-of-care field, new combinations with other chemotherapeutic agents to try to improve the therapeutic index and improve the risk-benefit profile. But generally speaking, we see that this is an area that's under-innovated where there's the potential to come out with things which are much better tolerated and applicable to a much wider range of patients than the current standard-of-care approach. But it is worth noting from a competitive perspective that we're going to need to show the clinical trials that give clear evidence that we can displace the standard of care. There's 2 other companies, Actinium Pharmaceuticals and Magenta Therapeutics, that are developing conceptually very similar products. We think that it's a good sign that there's other development activities happening in this space, there's a clear recognition that there is a need to improve the standard of care, but we, nonetheless, take the view that the approach of the TheraPharm team is highly differentiated and is likely to have a clear commercial and clinical success profile than some of the competing solutions that are out in the space at the moment. Moving on to the next slide. So this is kind of an embarrassment of richness in the slide, but essentially, it really illustrates that if you can make a HSCT procedure very commonplace, low risk and broadly applicable to the widest possible range of patients, there's a ton of diseases and serious conditions that would benefit from this. We like this asset because it's grounded very much in the oncology domain, which is something that Telix understands, that we're building a good commercial footprint in. But you can see, it also has the potential to expand into a whole lot of non-oncology indications for, in some cases, very high-value rare diseases. And I think most people know that if you can pursue a rare disease application, your path to market, your clinical trial burden, it can certainly be greatly accelerated. And so we see the potential, in terms of the development strategy for this asset, to first focus on the high-value rare disease application with a good market size in its own right, and then over the course of time then to expand with the clinical evidence into some very broad oncology and immunology and inflammatory applications as well. Moving on to the next slide, Slide 13. So I've mentioned SALA before. SALA sounds like it should be a brand of cracker or something, but it actually stands for systemic amyloid light-chain amyloidosis, which sounds like an incredibly redundant sentence. But if you're a medical specialist in this field, it's a very descriptive name indeed. So this is essentially a rare disease with a very poor prognosis. And essentially, what it is, is that your plasma cells or your leukocytes and your bone marrow, they basically don't express antibodies in the correct way. They spit out pieces of antibody that's misfolded. This forms an aggregate or a fibral, which in turn gets deposited into your major organs. And the net result of it is once you're diagnosed with it in this pathology is progressing, you have a very, very short period of time to intervene. It is an orphan drug. Prevalence is 30,000, 40,000 patients a year in the major markets. We see, based on reasonable price benchmarks, that this is a -- around a USD 600 million addressable market for the U.S. and EU5 across this -- the size of this patient population. The current standard of care is pretty aggressive. It's essentially to prepare for that stem cell transplant. But these patients are challenging because the deposition of that amyloid into the major organs means that a relatively small percentage of patients, perhaps, at most, 20% or 30% are eligible for the type of standard conditioning regimens that are used. And so there's an absolute major unmet need to prepare these patients for a stem cell transplant in a different way. And so we have a trial -- I shouldn't say we. It's a royal we, TheraPharm team in collaboration with the University of Southampton, has a study running called TRALA, which is just in the process of reading out. In fact, we're going to be expecting a data readout in the next couple of weeks. But the purpose of this is to look at the yttrium-90 anti-CD66-MTR, the TheraPharm therapeutic asset, as the sole conditioning regimen. In other words, there's no other preparation of the patient for a stem cell transplant than this therapeutic asset. So it will be really exciting in a couple of weeks' time to be able to present the top line data from that study. But you can see, this is an example where we have a patient population in need of stem cell transplant to essentially to remedy the defect of their bone marrow. We can't use standard conditioning regimens because they're too toxic for those patients or for the majority of those patients. And so having a highly differentiated and innovative approach is a game changer in this patient population. Okay. That's probably the end of the science. And hopefully, that gives you a bit of context as to why we're so interested in this. To summarize, we intend to pursue the oncology and some of the bigger applications from a therapeutic perspective, but to start with a rare disease indication that can go extremely fast for which there's already a lot of key opinion leader engagement and certainly a vibrant dialogue with the regulators as well. And so we see a pathway to move very quickly in the development of the therapeutic asset. And of course, the diagnostic asset being already approved in many countries, indication expansion is very rapid and tractable and cost-effective. Moving on to Slide 14. So just to summarize the acquisition, the transaction details. So as I mentioned, there's an upfront component, mostly consisting of a script-based acquisition based on the 10-day VWAP at completion, EUR 10 million. There is this EUR 200,000 cash payment, which is really to facilitate some data acquisition as part of the transaction. So just trying to make that as a streamlined process in terms of moving ahead with the clinical data. There are 3 earn-outs. So there's a first earn-out, which is a EUR 5 million payment upon successful completion of a Phase III pivotal trial for the first therapeutic indication only. There's a second earn-out, which is based on a first approval, either in the U.S. or EU. So that's first indication. And then there's a royalty of 5% on net sales for the first 3 years of therapeutic product sales for the U.S. and Europe -- in terms of these sales for the first 3 years of therapeutic product sales for the U.S. and Europe. In terms of the script-based component, I note that the founders -- the principals of TheraPharm shareholders, TheraPharm Fintech will have their shareholding subject to a 24-month escrow period. We expect the transaction to complete probably before the end of this week, but it may take a couple of days extra. It's a bunch of administrative matters, particularly novating some contracts, some commercial agreements that we wanted to trigger post completion and disclosure of the transaction rather than beforehand. So anyway, that's a summary of the acquisition. It's a modest acquisition. It's back-ended. It's cash preserving. And we think that it values the assets appropriately relative to the stage of development, but captures that risk-adjusted upside for Telix shareholders in the near term. Moving to the next slide, a key slide in my opinion. This is the operational and budgetary aspects. So I note that we're expecting the first clinical data from the TRALA trial to read out fully in the next couple of weeks. I've mentioned that the therapeutic modality has potential for a very fast-track-based approach. And so in terms of budgetary impact in '21, we are expecting that this acquisition will add about AUD 5 million in terms of operational development costs. It's well within our capital capacity for the company, both in terms of our current balance sheet, but also our revenue and earnings expectations for next year. So it's a modest incremental financial burden. One thing we note is that we have an investment next year in our Seneffe site in Belgium, which we acquired earlier this year. That investment is leveraged very much by this activity. So the infrastructure, the build-out and the planning that's going on at the Seneffe site will underpin this asset as it will the other Telix pipeline. So it's very, very synergistic. I note that the cofounders of the TheraPharm team, Silke and Klaus, will join Telix, both in the commercial and program management activity. And we're certainly delighted to have a couple of stellar new team members join the business and help us to pave the way for a product approval for the therapeutic asset. And it's fair to say that over the last 3, 4 years, they've assembled an absolutely stellar scientific Advisory Board, particularly Dr. Kim Orchard at University of South Hampton, somebody who has contributed a great deal intellectually to the development of these assets. And we are certainly looking forward to inviting the TheraPharm Scientific Advisory Board Members to the Telix SAB in due course. So just to wrap up, Slide #16, before I hand it over for questions and comments. Just to summarize, we're really excited. We've built a company over the last 5 years that has an enormous execution in clinical capacity. I'll remind some of our long-term shareholders that when we went out and raised the first capital 3 years ago at roughly $0.18 a share, our goal was to build a nuclear medicine business that could consolidate the potential of this industry. And we've executed extremely well over the last 3 years as a public company. And we believe that as we look to the 5-year anniversary, on the 6th of December at Telix through both its private and public existence, we are looking over the horizon at where the next big opportunities are in nuclear medicine, and this is certainly a really exciting one. This is a single asset that opens up a whole new range of indications and opportunities in oncology and transplant medicine and some exciting rare disease applications. We are picking up the diagnostic product that, although today, has very modest revenues, we see tremendous opportunity to expand the clinical utility. It will require some collaboration and investment, but it's a very tractable problem. And we think that Telix is uniquely suited to executing that. The therapeutic product will go rapidly to a product approval with the right clinical data. And we're very confident that the TheraPharm team has the intellectual property to secure that application for this asset. And really, this acquisition clearly leverages the investment in the infrastructure and particularly the manufacturing infrastructure in Europe that Telix has developed. And of course, as I've mentioned, we're delighted to note that the key team members will be joining Telix as well. Anyway, that's a summary of the technical financial and operational considerations behind this transaction. Again, we're really excited about the potential of this. And on that note, I will open it to the floor for questions and with analysts first.

[Operator Instructions] Your first question comes from Shane Storey with Wilsons.

Perhaps we can start with the Y-90 therapeutic asset, please. Do you feel it's more characterized enough to go into pivotal studies for any indication in this sort of medium term? And maybe some comments on what you've seen in terms of safety with the targeted indications in mind.

Yes. Sure, Shane. Look, so one of the advantages is that the dose of the antibody that's used in the therapeutic application is essentially the same dose of the antibody that's used for the imaging application. So the pharmacology is very well understood at that dosing range. And because we have the imaging, we know the biodistribution and targeting of the therapeutic asset extremely well. In fact, it's really an ultimate theranostic application in terms of being able to image the extent of the disease or image the extent of the bone marrow, if it's a conditioning application, look at the dose symmetry, deliver the dose and then look at the imaging of response. So we have safety data in around just under 90 patients in total across all of the trials that have been studied to date. We think it's a highly tolerated, good safety profile therapeutic modality. And in fact, it's really that tolerability and safety attribute that compels us to develop the asset in a rapid way. So I think, yes, we do have the data to support it. I think that the TRALA top line data, when it comes out, will be highly instructive as to how we progress. But we'll certainly, in the new year, early in the new year, be consulting, again, with the European regulators around the best pathway to take the asset forward based on the data that we have. And certainly, the fact that the antibody -- the exact same antibody is approved and in use in another product, a diagnostic product, but nonetheless, a pharmacologically relevant application, I think, is very beneficial to expediting that. Certainly, the CMC package and the manufacturing package for the antibody is the same as the approved product dossier.

Look, you've been pretty clear about the -- I guess, the sequencing of the indication here in terms of your R&D and clinical development. But I guess if you had the 2 or 3 sort of top indications in mind, maybe if you could help us size the R&D investment that we should be thinking about, say, over the next 3 years, that would be very helpful.

Well, I think the main challenge is to run a clinical trial where you can really justify a totally alternative conditioning regimen based on a non-chemotherapeutic approach. I think one of the challenges that we always have in breaking new technology into new areas, even if we look at the existing conditioning regimens, they're well understood. The hospitalization and management of those patients, whilst demanding, is well understood. So you've got to go -- you've got to bring a new technology into a relatively refined understanding of how to manage patients today. So what we're excited about with the SALA application is it's clearly an area where the existing conditioning regimen is just not a fit. And so if we can show in a monotherapeutic context, a new conditioning strategy, which is it shows really clear efficacy in that patient population where conventional regimens don't work or aren't the best fit, then that really then opens the door for a broader utility once that first indication is approved. There's no clinical difference in conditioning a patient for myeloma or ALL or some other proliferative disorder. There's no difference in conditioning those patients. So once you have an approval and once you can demonstrate that, that conditioning regimen works in 1 indication, it is fully applicable to all the other potential utility for that therapeutic as well.

Your next question comes from Hashan De Silva with CLSA.

Starting with the imaging agent. What's the plans there for that product? Are you looking to seek approval in the U.S.? If so, what's required?

Yes. So we do plan to have that consultation with the FDA. It's not clear to us at this point in time. And certainly, from a commercial modeling and a transaction valuation perspective, we don't assume the U.S. market. But that said, yes, we will absolutely be looking to expand the utility of the technology into other markets where it's not currently represented. The history of the asset in terms of how it was developed and how it's got European approval is a little bit torturous. And we've got some work to do to put a package in front of the FDA to get them comfortable that this is something that should have a U.S.-based approval. So we certainly are going to do that. In the meanwhile, we've got a number of key opinion leaders identified -- in fact, have identified us as much as we've identified them in the process of diligencing these assets that are ready to start to do clinical studies to expand the utility in some of these key areas. And there's a growing interest in looking at the role of this target in a whole bunch of clinical applications from a diagnostic perspective. So there's no shortage of potential collaborators in Europe and beyond for us to look at that indication expense into the diagnostic asset.

Perfect. So thinking about that diagnostic asset, I guess, the near-term growth from that product is by label expansion as opposed to geographic expansion, would that be right?

Yes. I think the priority is label expansion. It's very low cost for us to do, very accessible. A lot of sites already incorporating the asset into different protocols, off-label protocols. So in some cases, we'll be looking at de novo studies. In some cases, we'll be collaboratively accessing data. But -- and that's very cost effective, obviously, to be able to leverage existing clinical experience. There's some absolutely beautiful data sets out there regarding some of the indications that we're interested in. So that will be certainly the priority. But Telix's mission, of course, is to have products that are available on a global basis. And we think this concept is powerful enough that we should be able to offer the technology to patients in all the markets that we serve, not just selected markets.

Great. Perfect. And moving on to nibezlizumab in SALA. Can you just give us a bit of color on what the clinical trial might look like, obviously, pending regulatory discussions? How many patients would you look to recruit? And would you also look to recruit patients in the U.S. as well as EU?

So I think the priority, because of the regulatory status and the history of discussions with European regulators, it will be much faster to get the study up and running in Europe. And certainly, the supply chain and logistics and manufacturing package already has a strong experience in Europe. So that will certainly -- that will be the priority. In terms of the size of the trial, look, we haven't had scientific advice yet on the trial design from European regulators because that will depend on the data readout from this first study. But pending that readout, in early next year, we'll be getting in front of the European regulators with a proposed design. Typically for these very rare disease applications, you're able to run a trial that's less than 100 patients and potentially significantly less than that. But again, I'd have to caveat, that would be dependent really on feedback from a regulator based on a final statistical plan. These would not typically be a randomized trial. We're looking at patients that are not eligible for the existing conditioning regimens. So it's likely going to be a single-arm monotherapy preconditioning to stem cell transplant with the primary endpoint being the proportion of patients that have successfully engrafted at a certain time point post procedure. Typically, it's a relatively short time point. The trials for HSCT engraftment outcome don't typically have a very long observation period. It's usually within a few months, you have the primary end point. Of course, you're following up patients observationally for a longer period of time. But this does not have to be a long-winded trial. This can be a very short, very compact, fast, small numbers of patients. And we probably have, today, 12 to 15 sites, predominantly in Europe, but a few outside of Europe that are ready to participate in a study like that with good interest and good awareness of what the technology is potentially capable of doing for those patients.

Great. Just my final question. Just like by Devil's Advocate, Chris. Like you say, we can see a clear path to market this product on the market potentially as early as 1H '23 with a relatively cheap trial. Why would TheraPharm give up this asset at this stage and also for what it appears to be a relatively small sum of money? Just playing Devil's Advocate here, Chris. So...

Well, I don't think it's a small sum of money. I mean I think that if the earnout is successful, I think that the TheraPharm team will do very well out of it. Developing radioactive antibodies is a really tough thing to do. It's very interdisciplinary. It requires a lot of different skill areas. And it requires the ability to mobilize the supply chain and deliver that supply chain effectively. The discussion with the TheraPharm team actually started in relation to Telix building manufacturing capacity in Europe. Because there just aren't that many places in Europe where you can do scaled up yttrium-90 production. And we happen to have a license. It's one of the few really impressive production licenses in Europe that could meet the needs of the TheraPharm team. So I think what happened was, if I could sort of characterize the history of the discussion, it really started as how can we work together to bring a product to market, rather than Telix really making another asset acquisition. And I think the more that we delved into it, the more we realize that if Telix was going to become the go-to-market partner, and if we looked at the risk benefit to the company, we were shouldering a lot of financial and infrastructure and clinical and regulatory risk, and if we're going to shoulder that risk, then we might as well take a larger share of the upside for doing so. And that's essentially how we've ended up in this situation. I can't tell you, Hashan, for every new asset or a new indication that Telix might go after in the future, because we obviously have the goal of expanding our pipeline over time. I can't guarantee that there's a need for us to acquire every asset that we ever partner with. I mean, clearly, in the past, that's been the case. I mean, we have lots of technology in the Telix portfolio that didn't come from acquisition, but rather from in-licensing and partnering. But in this particular scenario, relative to the amount of investment and the potential return, we thought that an acquisition was the right economic model for the company.

Your next question comes from David Stanton with Jefferies.

Just following up on a previous question. I wonder if you could give us sort of details regarding the lower toxicity and greater tolerability of the phase -- in the Phase II Y-90 clinical trial compared to, say, the standard of care at present. Just give us some color around that.

Yes. Look, yes, so the asset doesn't have the sort of chemo toxicity of the existing standard of care. So in terms of the side effect profile, in terms of the off-target toxicity, and I think the real advantage of the antibody-based approach is that the delivery of, let's call it, the delivery of toxicity is very selective. And because of the dose level, because of the nature of the antibody, the biodistribution of the antibody and because of the localization of the target, the radiation is only delivered really to 2 organs. It's delivered to bone marrow, and it's delivered to the spleen. The spleen is a very radiation hardy organ. We don't generally worry too much about the spleen and the dose that's delivered to the spleen is well within critical organ safety limits. But the fact that you can deliver a fairly substantial dose of radiation in such a localized way means that the toxicity profile and the AE profile is really limited to very mild clinical events. Typical side effect profile for radiation, fatigue, perhaps a little nausea, but not any of the critical toxicities that you see with a chemotherapeutic approach. So I guess to summarize, David, the fact that we're using an antibody directed radiation like this in such a selective way means that we don't have to deal with these general toxicities of chemotherapeutic approaches. And that's a really important deal. You'll see from the scans that I even showed you before, where you see a perfect skeletal image, you're not even getting a major clearance organ dose. Essentially, when you inject this thing, it just gets absorbed like a sponge directly into the bone marrow, as I said, a tiny little bit of splenic signal, but no meaningful liver or kidney signal. And typically, that's where the toxicity comes in is through your clearance organs. There's effectively negligible clearance organ irradiation because of the way that this thing behaves in the body.

Understood. And I know that you've got orphan drug designation in SALA for this product or the Y-90 product. Can you outline which other companies have often drug -- different orphan drug designations in SALA? Are there any that you're aware of?

Actually, our orphan drug designation is much broader than that. So the orphan drug designation is actually for bone marrow conditioning for HSCT. So the orphan drug designation is far -- it's a superset of the indication for SALA, not the specifics for SALA. Yes. So if we so choose to, and if the results of the TRALA study are we hope they'll be, then we can obviously -- we can apply for a more specific orphan indication to facilitate regulator discussions. But the current orphan drug designation does encompass the SALA indication as well as, frankly, all of that laundry list of other potential application areas that I presented during the deck.

Well on that basis and as a follow-up, is it fair to say that Actinium and Magenta also have orphan drug designation in bone marrow transplant?