ITM Isotope Technologies Munich SE (TLX) Earnings Call Transcript & Summary

Good morning and good evening, everybody, and thank you so much for joining us today to discuss the announcement we made a short time ago regarding the merger of Telix and ITM. If we could just move to the next slide, please. Before we get into the official proceedings, I just have a few short disclaimers to read to you. This presentation contains forward-looking statements regarding our proposed transaction with the shareholders of ITM and expectations for ITM-11. These statements are subject to substantial risks, including, but not limited to, the outcome of the FDA's review following NDA resubmission, clinical trial results, regulatory approvals required in multiple jurisdictions and our ability to realize projected synergies. Actual results may differ materially. You are cautioned not to rely on these forward-looking statements, which are made only as of today's date. Please refer to the risk factors across our ASX and SEC filings and the legal section noted in this announcement and the ASX and the full disclaimer of your materials. With that, let us move into the official proceedings. So I'm very pleased to be welcome today by Dr. Christian Behrenbruch, the Managing Director and CEO of Telix Pharmaceuticals, along with Dr. Andrew Cavey, CEO of ITM; and Darren Smith, Group Chief Financial Officer of Telix. We will run through some formal remarks and then move to questions as time allows. So with that, I'd like to hand over to Chris.

Good morning, everyone, and thanks for joining us today. Thanks, Kyahn, for the introductory comments. Today's news is a transformative step for Telix and for ITM. This transaction brings together 2 best-in-class companies that have really shaped the radiopharmaceutical industry over the past 2 decades, each with deep expertise, differentiated capabilities and a shared commitment to innovation for the benefit of patients. Telix and ITM have a long history of partnership and collaboration spanning almost a decade. Through that relationship, we developed a deep appreciation for ITM's capabilities, its technology platform and its excellent people. And so we entered this agreement with confidence of the strategic and cultural alignment between our firms. As many of you know, this industry is undergoing a rapid evolution and a period of consolidation. It's always been our view that long-term leadership in radiopharmaceuticals will require control across the whole value chain from radioisotope supply and product development through manufacturing and logistics to ensure that we can meet the needs of patients worldwide. This is why this combination is strategically important. This merger brings together complementary strengths across supply chain, manufacturing, development, commercial reach and adds therapeutic pipeline depth, and we'll go into that in a little bit more detail in a minute. Just as importantly, it combines 2 highly experienced teams with specialist capabilities that are very difficult to replicate. So in summary, and with reference to this graphic, ITM brings a commercially scaled and validated isotope business, particularly lutetium-177, and important capabilities in next-generation radioisotopes that are important to the pipeline, particularly with actinium and terbium. It also immediately adds revenue and cash generation to the group. This is a very commercially successful business and will be additive to Telix's financial position. Secondly, we'll have the industry's most advanced therapeutic pipelines, including 4 therapeutic assets in Phase 3 trials. The addition of ITM-11 accelerates Telix's entry into the commercial therapeutic space and into a well-validated therapy market in neuroendocrine tumors, and we're really excited about that. Finally, this also builds on Telix's market-leading precision medicine platform and specialist commercial organization, which we believe are strategic assets in their own right. As you'll see in a minute, ITM expands our global footprint and creates additional opportunities for life cycle management across our portfolio. And as we've demonstrated with our multiproduct PSMA imaging portfolio, this has been quite a successful hallmark of our sustained commercial growth. So in short, I believe that this transaction is accretive to shareholders with the strategic and financial benefits creating a pathway for significant value creation. Moving on to the next slide, please. So overlaying the strategic rationale with the transaction terms, we believe this is a compelling and financially disciplined opportunity for Telix shareholders. At a high level, ITM adds a profitable and growing isotope manufacturing business, strengthening the group EBITDA and giving Telix greater control over a critical part of the therapeutic supply chain. ITM-11 brings potentially an accelerated entry point into commercial therapeutics with a differentiated and novel late-stage candidate in neuroendocrine tumors that we believe is highly differentiated and well positioned to compete. ITM is expected to deliver a positive EBITDA contribution in 2027, supported by revenue growth and cost synergies between the businesses. So in terms of the structure, Telix will acquire 100% of the shares of ITM for $1.65 billion upfront on a debt-free, cash-free basis. So that means a total of $1.25 billion upfront, that's less approximately the $400 million in debt and transaction costs will be the amount paid to the sellers. $302 million of net debt will be assumed by Telix at closing. A meaningful portion of the total consideration is also performance linked with $700 million of deferred milestones tied to ITM-11 regulatory approvals and a 2030 net sales target. The upfront consideration will be settled in Telix shares and released as ADRs after the escrow periods. The use of ADRs is expected to support greater liquidity and visibility on Nasdaq over time. The deferred consideration will be paid in either cash or shares at our election and closing remains subject to shareholder approval and is expected to conclude before the end of 2026. I'm pleased to say that Andrew and the ITM leadership team will play an important role in the combined business, subject to Telix shareholder approval. Dr. Andrew Cavey and Dr. Barbara Weber, who are both members of the ITM Supervisory Board, will be appointed to the Telix Board, and I couldn't be happier about these additions to the Telix Board. These additions reflect the strength of partnership and trust between the 2 parties. Both bring a great degree of scientific and commercial acumen with years of industry experience in our field, and I'm very much looking forward to working more closely with both of them. With that in context, I'm now going to hand over to Andrew to speak a little more about ITM's business, its manufacturing platform and the growth opportunity ahead. Over to you, Andrew.

Thank you, Chris, and I'm delighted to be with all of you here today to share more about this exciting announcement. Just to introduce myself, I'm Andrew Cavey. I'm the CEO of ITM. I joined just over 2 years ago, having spent much of my career in radiopharma, including some time at BMS, where I helped the company establish its entry into radiopharma and then at Novartis, where I co-led the company's RLT platform. Let me turn to ITM. ITM was founded over 2 decades ago. And like Telix, it's been 1 of the foundational catalysts of the field. We have 2 pillars of value at ITM. You can see these on both halves of the page, a leading radioisotope production and manufacturing business, that's on the left, and a radiopharmaceutical drug development capability on the right of the page, both under 1 roof. And having this dual competency is rare. Most of our peers specialize in 1 or the other and being able to bring this to Telix will offer us significant strength. But let me talk about the radioisotopes first on the left side. Our company has been built on the innovation and scale that we brought to non-carrier-added lutetium-177, which is now really the established therapeutic radioisotope in oncology, and it underpins more than 100 clinical trials today. It's really the workhorse of the workhorse radioisotope of the industry. And we have a broad manufacturing business here with multiple customer relationships across pharma companies, including Telix, hospitals and scientific research institutes. Through doing this, we've really seen firsthand how demand for therapeutic radioisotopes has continued to grow, both for approved products and also clinical development programs. And we're not stopping there. We're also moving into actinium. But already today, we supply 1 of 2 approved products in this class, Pluvicto. And we think that commercial validation has come because of our consistent approach to quality and reliability as a partner. To introduce the right side of the page, our second pillar of value, the radiopharmaceutical pipeline. Much like Telix, our central position in the industry for so long has allowed us to identify promising assets early. As we grew our isotope leadership and the deep relationships we had with customers who are researchers and research institutes gave us firsthand access to new innovation, and it allowed us to expand our own pipeline of radiopharma medicines. And today, that pipeline spans multiple cancer indications, late and early-stage assets, our lead late-stage assets, ITM-11, which I'll speak to more about in a moment. And we also have early-stage assets, including, for example, ITM-31 in glioblastoma. And this pipeline also spans a range of radioisotopes across lutetium, actinium and terbium-161. Next page. Importantly, this is an existing growth platform. ITM delivered approximately 40% of revenue CAGR between 2021 and 2025. And if you look at where this goes next, to understand the outlook, it helps to look at the current status of clinical trials as these are lead indicators of future potentially approved products. And we really see the field here reaching an inflection point. In that middle bar chart on the page, you can see lutetium. Lutetium already supports 2 commercial therapies, and there are a further 41 assets in development behind these, speaking very much to the depth of the field and its future potential. And if you look on the right-hand bar chart, that's on actinium. The next wave of radioisotope growth is also taking shape. Actinium is now the second most used radioisotope in clinical trials. There are 34 assets in development. And we see this as strong evidence that the industry is moving well beyond a single isotope. So overall, for us, the commercial opportunity is substantial. We see radioisotope markets forecasted to grow by roughly 30% annually through 2035 with risk-adjusted markets of over $2.1 billion for lutetium and around $1.4 billion for actinium-225 in that time period. Back over to you, Chris.

Thanks, Andrew. So just on the next slide here. I mean, just to wrap up sort of all of the pieces together, most of you will be familiar with Telix's growth strategy. We've talked about a lot over the last couple of years, which is really to build a global radiopharmaceutical platform with the capabilities that are necessary to develop, manufacture and commercialize products at scale. Combination with ITM fits that strategy very deliberately. It strengthens the areas where we believe that will matter most over time, which is securing radioisotope supply, differentiated manufacturing capacity and additive depth to the therapeutic pipeline. ITM also adds proven commercial scale isotope production and expands our near-term therapeutic opportunity through ITM-11 and the broader pipeline and really brings a team with deep operating experience in a highly specialized part of the industry. So taken together, this reinforces the competitive moat around our combined platform and gives us a greater strategic control over all aspects of that radiopharmaceutical verticality as the field continues to grow. So I think now I'd like to ask Andrew to go back in and give us a little bit of a deeper dive into the ITM manufacturing platform and why that capability is so important.

Thanks, Chris. Yes, I know many of you will already be familiar with the field of radiopharma, but if you'll indulge me, I'll maybe just say a word about what radioisotopes are. These are the individual atoms that form the cancer-killing payload of the radiopharmaceutical medicine. And what makes them tricky is that they decay rather quickly. So in the case of lutetium-177, for example, within 10 days, you have to irradiate the raw material, manufacture this under GMP, deliver it across the world and inject it into a patient in that very short period of time. That's the proverbial delivering the melting ice cube around the world. But at ITM, we have been doing this for a long time now. And we've built unique capabilities at each step of the value chain. And so let me take you through that. This little wheel here, if you start at 12:00 at the top of the page, that's the value chain for non-carrier-added lutetium-177. So what does it take to make it? Well, first, at the top right, you need to start with a raw material. In this case, enriched ytterbium-176, and we have substantial stockpiles of enriched ytterbium-176 underpinned by exclusive supply agreements. Next on the wheel at sort of 3:00, you need to take that ytterbium and you need a source of neutrons to irradiate it. And we have, like other companies, an extensive research reactor network. But uniquely, we also have an exclusivity with the largest power plant in the world, giving us a much more reliable and regular access to neutrons. Then as you move to the bottom of this wheel, next in the chain, you need to purify the hot material you've got. We have the 2 largest GMP manufacturing plants in the world, both outside of Munich in Germany. And then from there on the left side of the wheel, you need to sell and distribute this around the world. And we do this daily to 400-plus customer sites around the world. Next page, please. This page just shows an overview of the radioisotopes we play in today. Now I've talked a lot already about lutetium at the top of the page. As I said, it's the workhorse therapeutic radioisotope for the radiopharma industry. But maybe I'll just make 1 additional point on lutetium before I move on. ITM supplies lutetium for Pluvicto. Pluvicto is 1 of only 2 approved products in the class, an important medicine. And we see this as direct validation of our manufacturing position from the market itself. I also mentioned that Telix is already a customer, and we really view the merger as a strong -- it gives us a strong ability to help ensure supply security for the supply of our merged pipeline as well. Just maybe touching on the other 2 isotopes. You see actinium here in the middle of the page and terbium below that on the ITM side. We are very much focusing on actinium-225, kind of the next wave of growth from our radioisotopes. To do this, we have formed a joint venture called Actineer with the Canadian Nuclear Laboratories, where we bring the best strengths, we think, of both organizations. The path we've taken to produce actinium-225 involves starting with radium-226 as a raw material. It's a very difficult radioisotope to use with a 1,600-year half-life. And that's why we combined with CNL because they bring deep expertise and significant stocks of this precursor material, and they also have long-standing experience of managing the waste. And in turn, in this joint venture, we bring our expertise in GMP manufacturing and supply and distribution. We're also now exploring terbium-161. You can see that third bucket on this page. This is a promising isotope. It's a beta emitter just like lutetium, but it also emits what are called Auger and conversion electrons, which in many ways, behave with short pathway length and high energy, akin to how alpha emitters behave. And these have shown strong data in preclinical data and early clinical data, which give us excitement to invest. But additionally, the supply chain for terbium-161 is highly synergistic with the supply chain of lutetium-177. It's essentially the same, although you start from a different raw material. And we view this strength of radioisotopes that we bring across these 3 isotopes as also very synergistic with what Telix has also been building over recent years. Maybe, Chris, do you want to talk about that?

I think this slide shows the complementarity. I'd say, in a nutshell, ITM is the master of reactor-based -- for the most part, reactor-based radionuclide production. We have a very strong cyclotron-based capability through the ITM acquisition. And as you can see, we've got a very complementary set of capabilities. But I think for Telix, this materially derisks, as Andrew said, the lutetium supply chain for our own therapeutic pipeline and strengthens our ability to plan, develop and ultimately commercialize these products, which are in late-stage development. And then we look forward to bringing the ITM team in with real experience in scaling radioisotope production for therapeutic use. And I'd like to reiterate what Andrew has just said, that operating experience is difficult to build. It's highly competitively differentiated. And it gives the combined company a stronger foundation to move products all the way from early development to commercial supply. So I'd say together, the combined entity will have the broadest and most capable portfolio of both diagnostic and therapeutic radioisotopes and can cover both the workhorses that are being used today and the things that are in the combined pipeline as well as the next generation of isotopes that may ultimately shape the future of the field. So I think this is a very exciting picture. And maybe just to continue this, if we can move on to the next slide. I think Andrew very eloquently noted their enormous customer reach and the fact that they deliver mission-critical isotopes to hundreds of customers around the world every day. In fact, I consider ITM's logistics team to be really unparalleled in the industry. And so what you can see from this map is that together, Telix and ITM bring a highly complementary global footprint, lots of opportunities to align our commercial teams. And that just covers everything from isotope production, radiopharmacy distribution and delivery and of course, spanning both diagnostic and therapeutic products. Now in the U.S., our last mile delivery network already covers approximately 85% of the market. Internationally, the combined network spans more than 65 countries and including in key growth markets across Europe and Asia, including China and Japan, which are important focus areas for Telix at this point in time as well. And we think this reach really matters. In radiopharmaceutical supply opens markets where reliable isotope supply exists, then the commercial market follows because customers, that's hospitals and physicians, will have the confidence that product can be manufactured and delivered consistently. And that's -- I think that's the precursor for commercial success. So for us, we see this as not just infrastructure and supply chain for the products we have today, but it's also infrastructure that can support new market entry, broader adoption and long-term category growth for the combined business. And I just want to note, we remain very committed to working with our partners, customers, hospitals and physicians. We have -- both companies have a lot of third-party relationships that are extremely important. And we've really built both companies on partnership and collaboration. And so the combined organization will be there to support third-party development to continue to supply isotopes to all corners of the industry, but it is also about shoring up the pipelines that we have together. And I'm sure that we will continue to be an organization that helps to foster innovation across the industry for the benefit of patients in a collaborative way. Okay. Well, I'd like to just change gears a little bit and shift into the therapeutic opportunity of the ITM transaction. So just stepping back from ITM-11 specifically on the next slide, please. This slide shows selected elements of the broader portfolio optionality that comes with ITM, and we can see why this is more than a single product transaction. Now clearly, ITM is the lead value driver given that it's a very late-stage program. It's completed Phase 3 development in its initial indication and already has potential expansion opportunities in areas such as more aggressive neuroendocrine tumors, lung NETs and pediatric indications. And so this gives us a lot of growth trajectory around this lead asset. And Andrew is going to talk a little bit more about the lead asset in a minute. ITM also brings some early-stage programs that are highly complementary to Telix's existing portfolio and areas of focus, particularly in neuro and uro-oncology, which, as you know, are key focus areas for Telix from a disease area perspective. So when we go about optimizing the pipeline, we'll be thinking about how we prioritize the programs with the strongest strategic and commercial fit. That's those that provide life cycle management opportunities and also how we use the combined capabilities of Telix and ITM to build durable positions in these disease areas that we think are the winning areas to focus on. This is important strategically, but it's also important financially. It allows us to remain disciplined about R&D investment and capital allocation while pursuing the most compelling growth opportunities. And so maybe at this point, I'll hand back over to Andrew to go into a little bit more detail about ITM-11, which I think is a really exciting asset and a big part of this transaction. Andrew, over to you.

Yes. ITM-11. So ITM-11 is indicated in GEP-NETs, gastroenteropancreatic neuroendocrine tumors. And these are tumors where there remains a substantial unmet medical need. GEP-NETs are frequently diagnosed late, and the true population is in all likelihood underestimated. We are also seeing incidence of this disease increasing over recent years. And the market is attractive and what is already a commercially validated category and a market we estimate to be around $1.7 billion in the U.S. alone. So what is ITM-11? ITM-11 is a differentiated next-generation therapy combining an SSTR targeting molecule with our high-purity non-carrier-added lutetium-177. We have already started to build a compelling clinical data package here. I'll start talking about COMPETE, which is our first Phase 3 study. COMPETE produced positive Phase 3 results last year -- early last year, demonstrating progression-free survival, and I'll show you those charts in a moment, but importantly, also in a harder-to-treat pancreatic neuroendocrine population. And we designed the study at the time when we designed it, we knew we needed a competitive edge. And so the study design was rather unique. It was a monotherapy of ITM-11 versus an active targeted therapy comparator in everolimus with a favorable dosing schedule every 12 weeks. And also, it is a medicine that benefits from a longer shelf life. I'll come back to that in a moment, but that's very important in a field where you only have a limited time to get your medicine to your customer and to your patient. There's also meaningful room for expansion. We have other Phase 3 studies that are ongoing, and I'll also come to those in a moment. Next page, please. This was the first head-to-head study against an active comparator with ITM-11 as a monotherapy. Here on the chart, you can see the Kaplan-Meier curve showing the primary endpoint of progression-free survival. The dark blue line is ITM-11 with the red line, the comparator of everolimus. And the primary endpoint was met convincingly. There was an impressive median progression-free survival reached at about 24 months with ITM-11 compared to about 14 months after everolimus, so a 10-month delta of PFS, and that represented about 33% reduction of risk of progression or death. And this is very much a meaningful -- a clinically meaningful outcome for patients and physicians alike. But importantly, this efficacy was also accompanied by a favorable safety profile. Grade 3 or 4 treatment-related adverse events occurred in 18% of patients receiving ITM-11 compared with 40% for everolimus. I also touched on a moment ago, the longer shelf life. And this gives significant advantages when it comes to customers and nuclear pharmacies. In fact, this is an area where we view the merger with Telix. We think this will contribute, thanks to Telix's deep operational understanding of how radiopharmacies dispense products in the U.S. And so we see the totality of this data as positioning us to have the best-in-class product in the neuroendocrine tumor space. Next page, please. Data that you just saw was published in the Lancet a few months ago, and that provided us with important external validation. We had also submitted the study to the FDA about a year ago. And on August 7, we received a complete response letter for ITM-11 from the FDA. I want to be clear about what that letter does and doesn't reflect. Importantly, the FDA did not identify any concerns regarding the clinical or nonclinical data package nor on the safety profile of ITM-11. The entirety of the CRL was contained around CMC and inspection items related to a third-party facility in the U.S., which received a Form 483. We are already working with that third party to address the items that were cited with a clear goal to resolve them as quickly as possible. And we've also already announced our intention to resubmit. We will request an FDA Type A meeting before the end of the year to make sure that we fully address the FDA's feedback and we align on the remediation pathway. So overall, we think we have a full understanding of the CRL and our remediation is on track, and we're in process of working with the agency to align on our path forward.

Yes. And Andrew, if I could just chime in from Telix's perspective. I mean, we've obviously had direct experience in managing CRLs. So we understand the process and the practical steps required to work through it. Importantly, as Andrew said, the issues identified are CMC and inspection related. They are not clinical or safety issues. So we have full faith in the clinical data, and the FDA has not requested additional clinical data. I think it's also just worth noting that we know this third-party facility very well and the broader regulatory context. Radiopharmaceutical products are technically complex. And in many ways, the regulatory framework is still evolving alongside the science, particularly when it comes to manufacturing and handling and delivery. So through our own experience, including Pixclara, we've demonstrated that a CRL is not the end of the road where the underlying product profile is very strong, and this is certainly the case here. From a transaction perspective, we have also reflected this appropriately in the deal structure. So a meaningful portion of the consideration, up to $700 million, is deferred and linked to regulatory approval milestones with specified achievement dates and net sales targets. So I think that the parties have really apportioned risk appropriately in this transaction. And of course, I will note that it is a closing condition of the transaction that the ITM-11 NDA has resubmitted. So this is not expected to be a protracted and drawn-out process. So I think -- yes, I think that's sort of all I've really got to add on this topic. Maybe, Andrew, do you want to go on and talk about some of the upside of this program?

Yes. Let me talk a bit about our ongoing clinical development plan. Next page, please. Because we have several expansion programs for ITM-11, which represent significant opportunities. And importantly here, the investments for these opportunities are already behind us. So the first on the left of the page is the COMPOSE Phase 3 study. This addresses a more aggressive form of the disease evaluating ITM-11 in Grade 2 and Grade 3 SSTR-positive GEP-NETs where effective treatment options are frankly rather limited. The recruitment for this study is complete. We've enrolled our target population of, I think, 250 patients, and we're evaluating this in first and second line, again, importantly, against an active comparator with PFS as our primary endpoint. On the right of the page, you see a third Phase 3 trial called the LEVEL study, evaluating ITM-11 in lung and thymic neuroendocrine tumors. And to give you a sense, lung NETs represent about 20% to 30% of all neuroendocrine tumors, but with really limited treatment options today. And for this study, the LEVEL study, we've recruited already approximately 90% of our target 170 patients, meaning the study is approaching full enrollment right now. With that, I'll hand back over to Chris and Darren for the next section.

Yes. Thanks, Andrew. It's really an exciting indication expansion and looking forward to seeing that extra data come out. Look, at this point in time, I think I'll hand over to Darren to go through the numbers in a little bit more detail. Darren, do you want to pick up?

Yes. Thanks, Chris, and hello, everyone. I want to spend a bit of time on the financials. As Andrew has outlined, ITM's radioisotope manufacturing business has delivered impressive revenue growth, primarily through the supply of lutetium. Importantly, this is a business operating in a high-growth market underpinned by long-term contracts with multiple customers. As discussed today, ITM is well placed to maintain its leading position as demand for therapeutic radioisotopes continues to grow, driven by commercial adoption and increasing clinical trial activity. For Telix, this adds a resilient and growing revenue stream and diversification. On a pro forma basis, taking into account our current guidance, reported income and ITM's current run rate for the first half of 2026, the combined business would be on track to deliver revenue and income in excess of $1.3 billion this year. On the right-hand side of this slide, you can see that the combined business today would have 3 primary sources of revenue. Firstly, from our precision medicine product sales, including Illuccix, Gozellix and shortly Pixclara. Secondly, external revenue from Telix Manufacturing Solutions, predominantly third-party sales through RLS, our radiopharmacy network; and thirdly, revenue from ITM's isotope manufacturing business. Together, TMS and ITM would represent just under 40% of the revenue on a pro forma basis for the first half of 2026. ITM is expected to contribute positively to the group's EBITDA from 2027 onwards, which I'll cover in the next slides. Next slide, please. Build on that, I wanted to spend a moment on the financial profile of ITM and why we believe it is an attractive fit for Telix. Firstly, ITM adds to our revenue. In the first half of 2026, ITM generated revenues of $156 million and an attractive gross margin of approximately 40%. It is a very different margin profile to the external revenues currently generated by Telix Manufacturing Solutions, and it adds a high-quality revenue stream to the group. We see 2 key growth drivers. Firstly, the continued expansion of the isotope manufacturing business, which today is anchored in lutetium. However, there is the additional near-term growth potential for actinium, an isotope that is increasingly relevant across the industry in clinical development. And secondly, the potential approval of ITM-11, which would create an additional source of high-margin therapeutic revenue. This is directly aligned with Telix's stated growth strategy. Moving to the second column. Note that ITM enhances our EBITDA, and we expect this transaction to be EBITDA positive from 2027. ITM's manufacturing division is expected to generate EBITDA of $106 million in 2026 on an annualized basis. We see 3 factors supporting a pathway to positive EBITDA contribution from ITM. The first one, continued revenue growth from the manufacturing business; secondly, cost synergies and operating efficiencies, including disciplined management of the group's operating expenses. ITM has initiated a cost-saving program following the receipt of the CRL, which is expected to bring the operating costs down to the FY '25 levels. We see further synergies as a combined organization, which I will come to on the next slide. Historically, we have maintained operating expenses as a consistent percentage of revenue, and we do not see this changing with the addition of ITM. And thirdly, pipeline optimization across the combined R&D portfolio in keeping with our disciplined approach to capital allocation. The combined Telix and ITM pipeline is extensive, and that is an asset. In terms of prioritization, our immediate focus will be on the ITM-11 program. Clinical development is largely finished with 2 Phase 3 studies completed and the third indication expansion trial nearing its target enrollment. We will selectively advance ITM's early-stage programs with a focus on those that complement our existing clinical areas of neuro and uro-oncology and where we see attractive life cycle management opportunities. This is very consistent with Telix's disciplined approach to building sustainable commercial franchises in our focused markets. Looking at the third column, we note that the combined group will have a strong cash balance with sufficient flexibility and balance sheet capacity to manage the capital needs of the enlarged business. This transaction does not change our approach to financial management. We will continue to invest in the pipeline, and we will do so in the same discipline around capital allocation and cost control, prioritizing the assets we believe can deliver the most attractive near- and medium-term returns. ITM's existing debt of $302 million will be rolled over and deducted from the upfront consideration. So it is built into the valuation and deal structure. Turning to the next slide, please. In addition to the cost savings noted previously, we also believe we can generate cost synergies of $50 million over the first 2 years from efficiencies within the combined organization. This is in addition to the cost savings program already underway at ITM to achieve a positive EBITDA in 2027. From a synergies perspective, we see value across several areas. This includes operating efficiencies from bringing together complementary infrastructure, manufacturing expertise and corporate functions. Second, there is a portfolio efficiencies as we prioritize investments across the combined R&D pipeline and focus capital on assets with the clearest clinical, commercial and financial return profile. I do want to reinforce that the value of this transaction is not driven by cost savings alone. Radiopharmaceuticals is a high-growth and emerging industry. Therefore, the transactions we undertake has to be judged by its ability to accelerate our strategy, deepen our capabilities and create attractive growth opportunities over time. We have spoken today about the growth potential of ITM's manufacturing business. It is clearly important financially, but it is also strategically valuable. ITM strengthens our access to lutetium, which will be used for ITM-11, our 2 prostate cancer therapy programs and our kidney cancer therapy program. All of these are late-stage assets, and it is vital that we build this capability now to support the therapeutic programs as they move towards commercialization. The transaction also deepens our pool of specialist talent in manufacturing, radiochemistry and scientific and clinical development, which are also key to our long-term success. Taken together, these factors support the financial and strategic rationale for the transaction. We expect ITM to broaden Telix's revenue base and to contribute positively to EBITDA in 2027. Over time, the opportunity is to translate that additional returns on invested capital through a successful commercial launch of ITM-11 and is supported by disciplined integration, focused R&D prioritization and continued cost control. Back to you, Chris.

Thanks very much, Darren. So just to close out, and this is our last slide before we go to Q&A. I want to bring this all back to why we believe this proposed transaction is important for Telix shareholders. Today, we've outlined why Telix and ITM fit together strategically. Telix brings a global precision medicine platform, development and commercial capabilities and a late-stage therapeutic pipeline. ITM brings scaled isotope manufacturing, specialist supply chain expertise, deep radiochemistry capability and a complementary therapeutic portfolio. Subject to completion, those capabilities will create a stronger, more integrated radiopharmaceutical platform with the potential to support products from development through to patient delivery, so the full end-to-end solution. As Darren has just outlined, we believe the proposed transaction is financially disciplined with a structure that reflects the key value drivers and appropriately links a meaningful portion of consideration up to $700 million to future performance and regulatory milestones within specified achievement time frames. Of course, completion remains subject to Telix shareholder approval and other customary closing conditions. Subject to completion, our combined focus will be clear, supporting ITM's manufacturing momentum, progressing the regulatory submission and launch pathway for ITM-11, and I can tell you that our commercial team is primed and ready to take on this challenge. And of course, prioritizing the combined pipeline around the areas of strongest strategic and commercial fit and bringing the 2 organizations together carefully and deliberately and with cost optimization in mind. In short, we believe that this has the potential to add significant value to shareholders, patients, our partners and employees, and we are really excited about this opportunity ahead. So now with that said, I'm happy to open up the floor to questions.

[Operator Instructions] Your first question comes from Andy Hsieh with William Blair.

I have a question in terms of the value proposition of ITM-11. Just given the dynamic of having an incumbent and also potential generic coming online, I'm just curious about that product in the NET space. And also from a manufacturing perspective, Andrew, I'm curious if you can comment on the actinium production route from Actineer. Just kind of lay it out for us why the p,2n pathway is, in your view, the best approach just given several methods out there. So that's all I have.

Andrew, shall we divide and conquer on this one. Maybe I'll just give a little bit of a view from -- on ITM-11 from Telix's side. And then maybe, Andrew, you can fill in the gaps if I've missed them and then take on the actinium question. Look, fundamentally, we obviously see the increased competition in the NET space. We fully understand the commercial strategy of the incumbent. But this is also a highly differentiated product. It is not a me-too product. It has a differentiated clinical profile. We believe that, that's supported in the data. We also see a clinical and label profile for this asset that's highly differentiated that we think lends itself to some unique commercial strategies. And then perhaps, Andrew, you can elaborate a little more on some of the logistics and supply chain advantages that this asset has.

Thank you. Yes, I certainly agree that I look at this -- I look at the strength of ITM-11, both on the basis of its clinical differentiation and its nonclinical differentiation. And so Chris talked about the former. I think on the nonclinical side, the fact that we have a longer shelf life than the incumbents opens up a lot of possibilities for us because it gives us more time to leverage the radiopharmacy network and to prepare more customer-friendly and patient-friendly doses that we can deliver directly to the nuclear medicine department. We've also built a sort of an end-to-end customer experience pathway that allows us or that will allow us, subject to FDA approval, to touch on all the friction points that we're seeing in the market commercially today. And by the way, it's nice to reconnect, Andy. Nice to hear your voice.

Do you want to maybe pick up on the actinium?