Telix Pharmaceuticals Ltd

ASX:TLX

Earnings Call Analysis

Company Details R&D Spending and Trial Updates

The company maintains its planned R&D expenditures around $100-$105 million, with additional costs for preparing commercial manufacturing once two new diagnostic assets are approved. Current trials show good tolerance in patients, with results expected early next year. While hoping for a priority review of their breakthrough designation, the official PDUFA goal date is yet to be finalized. The contingent consideration regarding a technological acquisition reflects a percentage of 12-month sales, already accounted for in the balance sheet, indicating clear expectations from Illuccix sales, capped upon certain preconditions.

Continued Growth and Clinical Developments

The company is continuing to demonstrate growth, with significant updates on their clinical programs. A slight delay in submission due to augmentation of the clinical package was noted, but it's not expected to materially impact the overall program. They are prepping for regulatory approval and advancing clinical studies across various regions, exhibiting confidence in expanding the product reach in 2024.

Financial Resilience and Cash Flow Positivity

The company reported an impressive fourth consecutive quarter with positive operating cash flow, highlighting strong revenue growth and effective working capital management. Cash on hand rose to $137.4 million, reflecting a $5.7 million increase from the previous quarter, and the operating cash generation reached a notable $21.4 million, marking a significant $10.4 million improvement over the prior period. These financial achievements are supportive of the investments into late-stage assets, gearing towards introducing two new revenue streams.

Robust Revenue Growth

Revenue has continued to climb, backed by increasing demand for Illuccix and expanding into new customer accounts, while maintaining consistent gross margins on the product. An 11% growth in both global revenue reaching $133.6 million and adjusted EBITDAR at $50.6 million was reported this quarter. This continued financial improvement builds a solid foundation for the company's expansion goals.

Strategic Investment in Commercialization

Commercial operating expenditures remained steady at 25% of sales. With a strategy in place to support and grow the Illuccix global business, the company is preparing for commercial launches of imaging agents for renal cancer and brain cancer, reflecting an articulated vision for scalable infrastructure and market readiness.

Manufacturing, R&D, and Regulatory Update

Regarding R&D, a planned expenditure of around $100 million to $105 million was confirmed, with additional spending anticipated for getting commercial manufacturing ready for upcoming product approvals. Regulatory submissions of Illuccix in other countries are progressing well, with European approval moving forward as expected and groundwork being laid for a potential Japanese filing next year.

Earnings Call Transcript 2023-Q3

[Operator]

Good day, and thank you for standing by. Welcome to the Telix Q3, 2023 Results and Business Update Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.I would now like to hand the conference over to your first speaker today, Kyahn Williamson, SVP of Investor Relations and Corporate Communications. Please go ahead.

[Kyahn Williamson, executive]

Thanks so much, Maggie, and thank you, everybody, for joining us today. So, before we kick off, I'd like to just point out that we've literally just launched an interim readout from our ProstACT SELECT study, after receiving the finalized clinical data overnight. So, appreciate that people won't have had time to have read through that, we will include some snapshots of that presentation in today's slides.So, I just firstly want to introduce the speakers. Joining me today, we have Dr. Christian Behrenbruch, our Group CEO and Managing Director; Dr. Colin Hayward, our Group Chief Commercial Officer; and Darren Smith, our Group Chief Financial Officer.So, today, we will take you through the operational and financial highlights for Q3. Chris will talk us through the imaging technology portfolio, including a commercial update on Illuccix and the development updates across the portfolio. We'll hand over to Colin to speak through the program updates and the snapshot of the ProstACT SELECT data. Darren will finish with financial results commentary and then we'll move to Q&A.So, just moving -- and I'll just mention that the slides are all being simulcast via the webcast, if you're following on there, so they'll differ slightly from the ASX release launched yesterday due to the inclusion of the SELECT data.So, just moving to Q3 2023 highlights. I really just want to call out some of the key themes for the quarter. It's our fourth consecutive quarter of positive operating cash flow. This is an important milestone in our evolution and maturity as a company. We've had another strong growth quarter for Illuccix and we continue to feel optimistic about our performance and the growth prospects for this market overall.We have some key value drivers ahead with the filings of our renal and brain cancer imaging agents, and preparation for commercial launch and regulatory filings is well underway. And we're making excellent progress right across that industry-leading pipeline.We're obviously really excited today to be able to share with you the snapshot of the ProstACT SELECT clinical readout as well. So I think the sum of these parts really reinforce our differentiated position -- our [ differentiation ] in the industry and the robustness of our business.Next slide, please. So, just touching on the key financial metrics. I won't talk you through the numbers. I'll let Darren do that at the end of the presentation, but I think the key thing here is, we've delivered improvements across all of the key financial metrics and continue to deliver consistently strong performance, net cash flow positive, growing cash balance and growing revenue streams.So, with that, I'd like to hand over to Chris to take us through the Illuccix update and the imaging portfolio update.

[Christian Behrenbruch, executive]

Thank you. Thank you, Kyahn. I'm going to now put a bit of color around the quarter from an Illuccix perspective as well as a general progress update. Slide 7, please, over to the next slide.So, the third quarter saw continued double-digit growth in Illuccix sales and very much a continued positive trend in demand. Revenue in the U.S. was up 13% for the quarter, continuing the trend of market share capture from prior quarters.As we have previously discussed, revenue generally underestimates volume growth because of the growing mix of payers. So, for example, government or 340B account, and this is really a feature of picking up larger oncology customers from competition.So, really very good growth in the quarter. This growth continues to be a mix of some new customer acquisition as well as growth in existing customer accounts that trust and value the Illuccix product.Going into Q4 and 2024 more generally, we see some positive tailwinds for the business, including guideline development that we believe is starting to push additional growth in procedure volume. We also see continued momentum around patient selection for radiotherapy, particularly as new data is starting to come out, including, I should mention, our own investigational product that Colin Hayward will talk about shortly.I'd like to also specifically mention that there are signs of positive change in the reimbursement landscape for diagnostic radiopharmaceuticals. This is a very active policy area right now in the United States, and frankly, in other countries. And we are certainly expecting some commentary from CMS next month to indicate where this is going. But, we see certainly positive direction on that front as well.Moving on to the next slide, please. So, I've presented this slide before actually during the last quarterly call, but it takes time for guideline evolution to turn into clinical practice. And what we are starting to see is really that increased interest in the field and the use of PSMA imaging for longitudinal assessment.So, we really can stand by this market size upgrade as a tailwind, not just for Q4 but as we go into 2024. This topic is just getting a lot of airplay at major academic and clinical conferences. So, we see a very bright future for the asset in terms of this market expansion potential.Moving on to the next slide, please. So, just to wrap up where we're going with Illuccix, and I think the field more generally mapped out onto the prostate cancer patient journey. So that blue squiggly line is PSA -- patient PSA levels. The dark blue bubbles are the current indications we have approved for Illuccix in the U.S. and other jurisdictions. The pink bubbles represent momentum around the guideline-driven use of PSMA imaging and monitoring therapy and disease progression. This is really a longitudinal imaging application.And then the light blue bubbles represent areas of R&D and clinical data focus for Telix, including utilization of some of the new technologies that Telix is incorporating into the portfolio around AI and applications in early surgical and radiation intervention. I think it's a nice sort of big picture view of just all the opportunities to interact with the patient along that journey.Moving to the next slide, please. This last quarter, we continue to develop and evolve our clinical messaging around Illuccix's differentiation in terms of clinical efficacy, specifically accuracy. This is very much reflecting the guideline evolution that we're starting to see in the U.S. and in other countries. This messaging continues to resonate with customers, and we think it's even more important as we start to see new competitive entrants into the market that we frankly do not believe meet the necessary level of clinical performance to deliver diagnostic confidence.So you'll continue to see this clinical messaging evolve. We really are following the practice guidelines and the best clinical understanding of these agents. But I think what it does is it really positions Illuccix as the clear front-runner from a diagnostic perspective.Moving on to the next slide, please. I mentioned in my earlier comments that we continue to deliver reliably and flexibly to our customer bases. And this is a really big part of deepening the relationship with our customers. And so as we start to see not just other 18 f or fluoride -- 18 fluorine-based products come to market, but also competing scanner demands from other types of PET imaging, particularly around neurodegeneration in Alzheimer's applications on the back of CMS' reversal of their non-coverage policy for amyloid imaging.And so what that means is, we're only going to see more demand for customer -- for scanner utilization, and so providing customer flexibility is going to be more important than ever. And that's what this chart really shows. So, one of the great things about Illuccix is it gives our customers the best flexibility, not only in terms of the time of the day they can have the dose, but the imaging window they have to work with to effectively manage patients in a busy imaging environment.Now, this is partially achieved through the proximity of the pharmacy distribution model, which we've always talked about as being a key differentiation, preparing the radioactive drug product very close to the customer, but also through the flexible dose bracketing that we offer our customers. And this results in a far longer imaging window compared to our competition, frankly, an almost 3x a wider window.So, this highlights the differentiation in our approach and the differentiation in our package insert and really positions our product well and takes the strain out of running a complex patient management environment; in an environment, frankly, that's only getting more complicated. This topic is actually quite hotly debated in the field, but you can't fudge mother nature. Half-life is a half-life. The bottom line is that the unique attributes of our product is helping customers to deliver demand in a highly differentiated way. That's your physics lesson for the morning.Moving on to the next slide. Just to round out the discussion before handing over to Colin Hayward, Telix's Chief Medical Officer, just a few more high-level updates from me. Firstly, as Kyahn mentioned, we continue to remain on track for commencing the BLA submission for TLX250-CDx, our renal cancer imaging product. This is a huge deliverable for the company, and the team is pushing hard to get it done by year-end as well as lining up all the commercial manufacturing activity and readiness for launch. The FDA has formally agreed to our rolling submission for the commercial manufacturing data, so that's a real success for the company.Also, we've now launched our expanded access program in a number of countries, including the United States, and this is an important part of delivering on our commitment to patients with unmet medical need. Although it typically garners less attention from the market, our NDA submission for TLX101-CDx in glioma imaging is also progressing really well.In response to a clinical data review of the agency, we have elected to augment the clinical package slightly, which has delayed submission by a couple of months, but not material to the program and it's with data that we already have. So we are not going to be running additional studies to provide that data.In parallel, like for 250-CDx, we are launching an early access program that is ready to go. It's been filed. It's just pending regulatory approval. So, plenty of momentum with this program and lots of opportunities to engage with key opinion leaders for these 2 programs over the next few months.Finally, in the earlier prostate cancer journey slide, Slide 8, I think it was in the released investor presentation, I mentioned that new technology is an important part of -- or we believe is an important part of driving the utility of our diagnostic platform, not just for Illuccix, but for all of the future assets in the company.We've made excellent progress with our activity around AI and clinical decision support that is expected to benefit all of Telix's imaging agents as they become approved. And we are already preparing to file our first regulatory approval before Christmas, that's this year, for an Illuccix-related AI application. So our regulatory team is certainly very busy at the moment.Similarly, the completion of the Lightpoint acquisition from the business development team is expected to take place by end month, opening the door to a whole raft of new applications for Illuccix and other Telix imaging products in the operating theater. In the near-term, it's about building depth of relationship and offering to urology. But in the longer-term, we can see the utility of this intraoperative guidance technology in many different surgical settings. This is really [ unique ] technology and we're looking forward to expanding its capability under the Telix roof.So, 2023 has been a big year leap forward for the company, both commercially and technologically. I see Darren is going to spell out the commercial pieces in a minute from a finance perspective and a Q3 results perspective. We are looking forward to commercially progressing many new products in many new jurisdictions in 2024.I'll now hand over to Colin Hayward to give you a clinical overview as well as cover off on our late-breaking ProstACT SELECT data that's coming overnight. Take it away, Colin.

[Colin Hayward, executive]

Great. Thanks very much, Chris. And yes, it's very nice to go before finance for a change, so thank you. So, let's go on to the next slide, ProstACT SELECT study. Well, let's just remind you of the study purpose. Really, it's about comparing that biodistribution for the small molecule PSMA imaging agents to our antibody, our first-in-class antibody therapy.And this is really critical for patient selection. It's also about reinforcing the tolerability profile and understanding that a little bit more as well as capturing some activity data, although, of course, this is not an efficacy or a controlled study. We're continuing to monitor patients in this study to generate that activity.If we go to the next slide, please. What are the key findings? Well, the objectives are met, really demonstrating the safety profile of those 2 doses in that patient-friendly regimen, which is 2 doses apart. And of course, showing that there's uptake concordance with the small molecule as well in those -- the clear dose symmetry of the product, which I'll go into more detail. But really, the key thing is that retention of the activity.We do have some preliminary activity in those patients who had a baseline PSA and had the full dose with PSA reductions seen in over half the patients. And there's still a large number of patients in follow-up, so we're continuing to monitor that radiographic progression-free survival.So if we go to the next slide, clearly, beta emitters in patients who have much better marrow reserves, like this patient population, that is the patient population reflective of ProstACT GLOBAL, and we can see that the hematological profile, those adverse events, those Grade 3 and Grade 4 adverse events are much lower than we saw with earlier studies. Why is that? That's really because those earlier studies were performed in patients who have much more advanced disease. So, really 25% of patients having Grade 4 thrombocytopenia, which was also recovering as well.And if we go to the next slide, you can see here some comparative dosimetry. Obviously, these are in separate studies. But what this does for me is, is really illustrate the point of where an antibody uptake is versus a small molecule, and we can see there's much less exposure of the antibody, in particular, in the kidneys and the salivary glands.If we go to the next slide, I just want to summarize that clearly, this is a study. It's a snapshot of the data so far. We're continuing to follow up those patients. We see lower rates of toxicity and this really sets the scene for us to move forward and continue with the ProstACT GLOBAL study and as we open those sites for enrollment and expanding into international sites early next year.The next slide is a slide that you're more than familiar with. It shows the depth of our pipeline, particularly across the [ GU-oncology] space, but also progressing in GBM and bone marrow conditioning.And if we go to the next slide, this shows our research pipeline with different combinations, different isotopes and different molecules, all being prepared to be advanced to become moved to our late-stage pipeline in the future.If we go to our last slide -- my last slide in terms of the core pipeline development highlights, I really want to highlight the progress in some of our therapeutic studies. CAIX program, really the first patient cohort being assessed for safety now in the STARSTRUCK study, that's the Lutetium girentuximab in combination with peposertib. The STARLITE studies the combinations with the therapeutic girentuximab together with immune-oncology agents continuing to progress. And as Chris mentioned, the 250-CDx EAP is open and starting to take off really for Zirconium-girentuximab.If we look at the prostate cancer therapy, we talked about SELECT and then also ProstACT GLOBAL in APAC is active and expected to open into U.S. sites in quarter 1, 2024. And meanwhile, in brain, the IPAX-2 the first patient cohort has been dosed. And again, we were at that point assessing for efficacy so we can progress rapidly to the next dosing cohort. And the IPAX-Linz, which is really a follow-on to that original IPAC study in a recurrent population, is going to be generating some interesting information in that recurrence GBM.Other things at near-term horizon, really 101-CDx expanded access program as we prepare for the NDA as well. And then think about label indicating studies to follow on from IPAX-2. And, of course, in our rare disease programs, looking to start the radiolabeled olaratumab, TLX300 in sarcoma patients pending ethics approval as well as TLX66, the Technetium besilesomab in patients with AML. And we're also waiting our first dose of investigator study in the U.K. of this agent in pediatric leukemia.So, I think that shows, just with a snapshot from SELECT today, but also the clear progress across the board, yes, imaging, but also clearly in our therapeutic programs across all of those key areas.And with that, I will hand over to Darren to talk about the finance.

[Darren Smith, executive]

Thank you, Colin. I'm now turning to Slide 23 in the financial commentary. I'm very pleased today to be on the call to present Telix's quarter 3 [ quarterly ] financials as it represents a major milestone in the company's maturation by achieving its fourth quarter of consecutive positive operating cash flow. This delivers on our stated financial goals of establishing a sustainable commercial enterprise that is capable of funding its development of its own industry-leading pipeline.Cash on hand continued to increase, ending the quarter at $137.4 million. This is a $5.7 million increase on the prior quarter. Operating cash generation this quarter was a very respectable $21.4 million. This is a $10.4 million improvement over the prior quarter. As previously reported, strong revenue growth and a focus on managing and controlling working capital has delivered on this fourth quarter of positive cash.More specifically, and as displayed in the graph on the bottom right of this slide, customer receipts improved $18.5 million to $130.7 million. This is a 16% improvement over the prior quarter and was driven by continued revenue growth and improved customer collections. These cash inflows funded and more than covered increases in our cost of goods sold due to the increased sales volumes.It also covered off the increases in our investment into progressing Telix's late-stage assets towards delivering 2 new revenue streams next year. And it also met the requirements of our first annual contingent consideration payment of $17.8 million for the first 12 months of commercial sales of Illuccix.Now turning to Slide 24. During the last quarter, revenue continued to grow on the back of average daily demand of Illuccix increasing month-on-month. This was achieved through the acquisition of new account and improving volumes through existing customer sites. The Illuccix percentage gross margin remained consistent with previous quarters. This reflects stable selling prices within market segments and good control and stability of materials, manufacturing and supply chain costs.Commercial operating expenditure was consistent with previous quarters at 25% of sales. It's worth noting that this investment includes a focus on continuing to support and drive the growth of the global Illuccix franchise by pursuing new marketing authorizations for Illuccix in U.K., Europe, Brazil and selected countries in Asia Pacific.It also included the commencement of preparing the market for Telix's 2 new revenue streams and ensuring that the business' infrastructure is scalable for the future growth. Telix's pipeline investment continued the plan, with a majority of the investment advancing the U.S. regulatory filings for our renal cancer and brain cancer imaging diagnostics, including their manufacturing scale up and also the commencement of the ProstACT GLOBAL study.Now, turning to Slide 25. Telix's financial performance in terms of global revenue and EBITDAR has improved every quarter since the commencement of the commercial sales in April '22. This quarter is no different with 11% growth quarter-on-quarter in both global revenue to $133.6 million and the adjusted EBITDAR to $50.6 million.It is worth noting that this quarter's revenue annualizes to $535 million. This is a great achievement to be delivered in 18 months from a standing start. This growth, in turn, has delivered 4 consecutive quarters of positive and growing operating cash flow, which permits us to pursue our strategic objectives.Telix remains focused on contributing -- on continuing this trajectory by: continuing to grow its global Illuccix business through geographic and indication expansion; through investing in advancing the U.S. regulatory filings and commercial launch preparations of our renal cancer and brain cancer imaging agents; and finally, progressing our therapeutic pipeline and commencing our ProstACT GLOBAL study in the U.S.I'll now hand you back to Chris to round out with our outlook and upcoming milestones.

[Christian Behrenbruch, executive]

Thanks, Darren. Great summary. And as you know, it is very satisfying to have both achieved the milestone of 4 consecutive quarters of positive cash flow as well as $0.5 billion in annualized sales for Illuccix or well over that. So, yes, great financial momentum.So, moving to Slide 27, the final slide in the deck. Just to conclude this presentation with an umbrella view of the business. We continue to achieve tremendous goals and are on track to meet our corporate objectives for 2023. We still have some important data readouts and clinical milestones between now and the end of the year, as Colin has alluded earlier.Aside from the new product filings, which I've already covered off, the big focus is on ramping up ProstACT GLOBAL and expanding the current APAC recruitment to include the U.S. and Europe. We're making very good progress on this, and there are really very encouraging data from SELECT that Colin quickly went through, and I encourage you to look at the full presentation on the -- that's been lodged with the ASX this morning as well as recent commercial activity in the market around PSMA therapeutics more broadly.It reminds us that this is a vibrant and high-value opportunity that Telix has in sight. It's very motivating. Just to mention, because I do get asked periodically, our regulatory submissions for Illuccix in other countries continue to progress in line with expectations. Brazil approval has taken a bit longer because of scheduling manufacturing site inspections with our manufacturing partner in Brazil.But otherwise, European approval is progressing as expected. We had a very useful consultation with the Japanese PMDA this quarter as outlined in the 4C, that sets a stage for a potential filing next year as well as continued recruitment progress in our Chinese Phase III bridging study with Grand Pharma. So, really progress on all fronts.I'll now, on that note, open it up to questions and comments from analysts. Thank you.

[Operator]

[Operator Instructions] Our first questions come from Shane Storey from Wilsons Advisory.

[Shane Storey, analyst]

I might start with Colin please and the SELECT data. The first question there is, look, our first impression here is that the PSA responses in the higher grade AEs both look a little bit lower than what we've seen in previous studies. So, Colin, I wondered if you could tell us, are there any significant differences in the patient population there that we should have in mind?And then maybe as a follow-up, conceptually, do you think you could possibly dose higher than the, I think, the 76 millicuries that you're currently using?

[Colin Hayward, executive]

Yes, Shane. Look it's -- this is a data snapshot. We've certainly seen, and you asked about the significance, we haven't done statistics on these. But clearly the AE profile looks a lot more encouraging. I think this is reflective of the second-line metastatic population, a patient group with much better marrow reserve than before -- than the earlier studies in patients who are very advanced.I think what we need to do is continue to follow up the patients. There's still a number of patients in follow-up, and we've seen some later PSA responses. So we need to understand the efficacy and how that might relate to dose. Approximately, the dose is a 45 millicurie per meter squared dose given as a set free. So I think we need to see the final activity data going forward.

[Christian Behrenbruch, executive]

Yes. Can I -- Shane, just before you go on, can I just chime in?. I mean, you have to go back to the Phase II trial data and remember that those were pre-palliative patients. I mean those were very -- those were super-heavily pre-treated patients that had very little hematologic capacity. So now, we're treating patients in a much more -- much earlier setting.And just like we've seen in the recent Pluvicto results that came out in advance of ESMO, healthier patients are resulting in fewer AEs. And I would go so far as to say that although it's a relatively small data set, it's 30 patients enrolled, 28 patients counted. From a safety data set perspective, it's still a good size data set, and it's a fixed dose. It's not a dose escalation. So what you're seeing is a competitive AE profile to other agents in that setting.And then I think we put some -- so we put some -- so we think that SELECT goes a good way towards dispelling this issue of toxicity. And in fact, when you look at the comparative biodistribution, you can see just how much more targeted the antibody-based approach is.And then, the other thing regarding PSA, we've always said and it's pretty well documented out there in the public domain that doing a comparative PSA profile between a small molecule and a biologic isn't going to be straightforward. The reason why we put out 3 case studies showing very different levels of disease burden and that biodistribution element that was part of the study, is it just shows you how late some of those PSA nadirs are, like a year, a year before you hit rock bottom on PSA.So, we're going to have to have -- as we go through and not only read out this study in terms of PSA and PFS, but as we go full throttle into GLOBAL, how we monitor PSA in the longer window is going to be really important for this agent.

[Shane Storey, analyst]

Yes. I was going to ask you, actually, mechanistically it seems early, I mean, the early data from both small molecule and antibody, if you put it together, I mean, it seems to be suggesting that an antibody-mediated sort of therapy tends to have, I guess, more modest PSA responses initially, but then longer survival. So mechanistically, I was going to ask you to help explain that and reconcile that for us.

[Christian Behrenbruch, executive]

Well, it's just because of the retention of the agent. So if you compare internalization, retention and excretion of lutetium, the lutetium just hangs around a lot longer, and that has a very different radiation biology profile in turn than the small molecules do. And that's why we're seeing some of these incredibly long and slow PSA drops.And that's just something that you don't generally see in small molecules. And that's the reason why the dosing regimen for small molecules tends to be 6 to 8 weeks apart as a way of kind of throttling that treatment, whereas our strategy is about a very deep and aggressive treatment on the front-end that we hope, and of course, we've now got to show it in a randomized study that we think is going to potentially lead towards a more durable response in patients.And just the fact that we are tracking PSA nadirs out to a year, I mean I think it's going to be very exciting when we do actually have the PFS data for this agent because we are -- we will read out PFS for this study. I imagine it'll come in sometime in the new year, early in the new year. But it's a little hard to predict just because some of these patients have been hanging around for a long time.

[Shane Storey, analyst]

Understood. And then finally from me, you mentioned the Pluvicto pre-chemo result in the last few days. I'm conscious that the full data hasn't been released yet. But did that change your thinking or any -- in terms of how you may sort of seek to tweak the protocol heading into ProstACT GLOBAL IND filing later this year?

[Christian Behrenbruch, executive]

I'm actually going to let Colin, and this is really Colin's wheelhouse, except to say that we will be talking more about -- there has been some amendments made to ProstACT GLOBAL. Despite the fact that the readouts are new, the protocol is not. So we have certainly taken into account SPLASH and PSMA-4.Maybe Colin, do you want to talk about kind of real-world standard-of-care?

[Colin Hayward, executive]

Yes. Yes, for sure. I think there's been a lot of criticism about a number of prostate cancer studies where they're compared to the next generation of ARPI. So a second abiraterone followed by enzalutamide, for example, on progression. So, what we wanted to do is -- and again, having a patient-friendly 2 doses really gives us the opportunity to add on to additional therapy.And so, what we want to do is really open up to existing true standard-of-care and allow the sites to define what that would be within reason through the 2 most common standards-of-care, which would be a second novel hormonal therapy or androgen receptor antagonist or docetaxel as well. So, really, we want to open it up to patients who would be potentially receiving taxane as well. And I think that's a key thing so that we're really reflecting true standards of care out there.

[Operator]

Next, we have David Stanton from Jefferies.

[David Stanton, analyst]

Just 2 from me. I know it's following up Shane's question, that those 4 patients or 17% received intervention for hematological toxicity in the ProstACT SELECT trial. I wonder if you could explain that compared to what you would expect to see in terms of a percentage that would require an intervention in terms of standard of care chemotherapy only. So if we could compare what standard of care chemo only would look like compared to what you've done in the ProstACT SELECT trial, that would be great.

[Christian Behrenbruch, executive]

Colin, do you want to open up with that? And then maybe I'll chuck a couple of comments on the end?

[Colin Hayward, executive]

Yes, sure. Look, I think, clearly, this is not a controlled study. I think we'll be able to actually get that much more from the PSMA-4 data as it comes out and understand what the true toxicities in both arms are. We've serious adverse events in that study 20% to 30% in the arms, respectively. Clearly, docetaxel is associated with hematological toxicities. That will be one of the comparators.So, I think I would just say, at this stage, it's a lot less than we've seen in prior studies because these patients have better marrow reserve than our earlier studies for sure, and we'll know more when we've got a proper controlled study.

[Christian Behrenbruch, executive]

Yes, I think that's a good answer. And I also think that the -- I mean, the tox comparison from the ESMO abstract is out there. And what you'll see is what's been classified as a serious AE, which we interpret to be a Grade 4, looks fairly comparable to what we've seen in this study. Admittedly noting that this is a smaller study, but still from a safety study perspective, it's a reasonable number of patients at a single dose.And then also they have published the comparator arm, the control arm data. And as Colin has noted, there is toxicity in that control arm. So, I think, again, the overall message, and indeed, it's a message that's coming out very loud in the field overall, is that as we move PSMA therapies into earlier line patients, toxicity is something that's better managed. And so it's really about a race around durability.And we've always said that. I mean, David, as you know, because you've been at the forefront of asking these questions. I've been saying for 2 years now, was, in fact, one of the exciting reasons why we decided to do this SELECT study as well as getting that radiogenomic data, which we need for patient selection, is to really have a safety data set there with the dosing schedule that we expect to use for ProstACT GLOBAL and to be able to show that when you move into patients that are not on their last breath, which is really where the historical studies were done, you actually have a very different safety profile.

[David Stanton, analyst]

Understood. And my second question is for Darren, if I may. I note that you've had an R&D spend of, call it, close to $84 million this financial. What should we be thinking for the full year? Should we be thinking the third quarter number again into the fourth quarter in terms of an R&D spend? So around that $34 million number, please?

[Darren Smith, executive]

Yes. Thanks, David. I think one of the things, maybe it is footnoted within the presentation, but just to make clear is that there is expenditure going on that relates to the scale up of the manufacturing. So, it's not just purely R&D. So, we've kind of captured a number of things under that big bucket. But obviously, it does reflect the preparation for delivering those 2 new revenue streams. So, R&D purely, definitely, still will remain on plan with the requirement for us to get ready for the manufacturing of commercial product pending the approval of those 2 new diagnostic assets.

[David Stanton, analyst]

I'm sorry, I didn't quite follow that. So, are you saying that you're sticking to the $100 million or it's going to be more than that? Just bold a question as I can make it.

[Darren Smith, executive]

For R&D, we'll be to plan, which is around that $100 million, $105 million mark, which we've talked about before. And then additional to that, there'll be some expenditure that's reflective of getting commercial manufacturing ready for -- that will be within that bucket as well, as we describe it.

[Operator]

Next, we have Dennis Hulme from Taylor Collison.

[Dennis Hulme, analyst]

Just firstly, in relation to the ProstACT SELECT data, where we saw lower homological tox in the Phase II. You were asked previously about maybe increasing the dose. I was also interested to know, are you contemplated putting in additional cycles of treatment, perhaps into the ProstACT GLOBAL trial?

[Christian Behrenbruch, executive]

Colin, do you want to open with that?

[Colin Hayward, executive]

Sure. Look, I'd want to see the final activity data. But there's -- I think the data that we have generated, the overall survival that was done in the early studies that was over 40 months was with a similar dosing regimen of the 2 doses [ too ]; but doses apart. And so that is the dose proposed into the ProstACT GLOBAL study right now.

[Christian Behrenbruch, executive]

Well, it's not the -- it's the dose that's being -- it's the dose that's active in the study. So, Dennis, we don't plan to change the dosing regimen. In fact for the last 2 or 3 years, mostly we've had commentary that maybe we ought to consider lowering the dose because there wasn't necessarily the confidence that when we moved into earlier stage patients that the toxicity profile would be any better.So I think we don't plan to change the dose. There's always possibility of making additional doses available to patients as an optional study protocol. But at the moment, we really see great commercial value in keeping the dose regimen short, from a trial perspective.We think that's what the market really wants. We think that's what patients want, fewer hospital visits, shorter period of treatment and much more flexibility given back to the medical oncologist to look at the range of other therapies that are out there. And I think sometimes in the radiopharmaceutical world, we get a little bit myopic and we think that everything stops and ends with nuclear medicine. But there's a whole vibrant field of drug development in prostate cancer right now.And by integrating radiopharmaceuticals into medical oncology, the way that we are proposing to do, that's going to give the patient the biggest number of options. So I think we're pretty satisfied with the protocol that we have.

[Dennis Hulme, analyst]

Okay. So, my second question is just on the CUPID trial of TLX592. You've mentioned in the presentation that dosing commenced in the final cohort, hope to fully enroll this quarter. I was just interested, when we would expect to see results from the CUPID trial? And just to check with that cohort, are they being treated with the therapeutic or is this still the imaging component of the trial?

[Colin Hayward, executive]

So, that is recruiting into the final cohort right now. These are patients with bulkier disease than the early cohort. So the only thing we can say right now is it's extremely well tolerated. They are being treated with the copper version, the copper TLX592. That will give us an understanding of the dosimetry of the biodistribution. And then once we've recruited, if we've recruited this quarter, then early next year we'll be able to provide an update.

[Dennis Hulme, analyst]

Okay. And so this is on the dosimetry? They aren't actually undergoing alpha therapy in this cohort.

[Colin Hayward, executive]

Not in this cohort right now, no

[Dennis Hulme, analyst]

Yes. And Dennis, -- I think, Dennis, there's been some confusion around that. So just to be clear, we are not commercially developing a copper agent. That's just as a proxy for actinium because we can't detect actinium straightforwardly in a scanner that's going to give us dosimetry. So, once we have that dosimetry and we've -- this study enables us to set the mass dose and set the radiological dose for the agent, then that enables us to then safely switch the study over to actinium therapy.

[Operator]

Thank you. There's no further audio questions. I will pass on to Kyahn for web questions.

[Kyahn Williamson, executive]

Thanks, Maggie. I just have a couple of questions. The first is, do you think your submission timeline for TLX250-CDx will allow you to meet the deadline to receive October 2024 pass-through?

[Christian Behrenbruch, executive]

It's a bit tough to answer that question right now because we don't have a PDUFA goal date. But we're obviously hopeful that the breakthrough designation, which will entitle us to a priority review, would get us pretty close to that date. But I think until we have a PDUFA date, finalized, it's going to be hard to say. So, that will all fall into place pretty quickly once our BLA submission started.

[Kyahn Williamson, executive]

Thank you. We just have time for one more question. And that question is for Darren. Is the contingent consideration of fixed annual fee from now on? And should it be considered as an operating expense?

[Darren Smith, executive]

Interesting question. It's a bit of an accounting question. Basically, as we spoke about before, the contingent consideration relates to Illuccix sales and it's an earn out on the acquisition of that technology back in 2017. So it is based on the percentage. So, obviously, if you take the first 12 months of sales, there's a bit of a formula on how it's calculated, but an effective rate, you can just put the -- what we've paid out for those first 12 months over the top of those first 12 months of sales and that will give you an effective rate. So that would continue on from a payment perspective.Wherever it goes into the P&L, the issue is it's already been accounted for. So you'll note within the balance sheet, there is a contingent consideration liability that reflects what we'll need to pay over the lifetime of that agreement. So -- and that's where we draw down the cash from. So it doesn't actually hit the P&L unless we change our forecast for what we expect that will be generated over the next number of years from Illuccix sales. So hopefully that kind of covers that off.

[Christian Behrenbruch, executive]

Yes. I mean, I don't think it really matters. I mean, I think at the end of the day, the revisiting of that contingent payment is just a function of commercial success.

[Darren Smith, executive]

Correct.

[Christian Behrenbruch, executive]

And if we don't have the commercial success, then we don't pay it. If we do, we do. And of course, just to remind everybody, and we discussed it in the past, we also do have a cap on that earnout. So -- which we have -- we've met the preconditions for -- to cap that liability. So I don't -- I think we have a pretty good handle on the forecast right now, and I think that, that contingent consideration is well understood and consistently documented now.Kyahn, do we have any other questions from web?

[Kyahn Williamson, executive]

No, we don't. So with that we can come to the end of allotted time. So we can close. So, thank you very much for joining us today. Please do take a look at the more extensive SELECT documents that are on the ASX, and thank you for participation and questions.

[Christian Behrenbruch, executive]

Thanks very much.

[Operator]

Thank you. This concludes today's conference call. Thank you all for participating. You may now disconnect.