Good day. Thank you for standing by. Welcome to the Telix second quarter, 2023 results and business update conference call.
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I would now like to hand the conference over to your speaker today, Kyahn Williamson, SVP of Investor Relations and Corporate Communications. Kyahn, you may proceed.
Well, good morning, welcome to our investor call today to discuss the Appendix 4C and activities report lodged with the ASX after market close.
I'm joined today by Dr. Christian Behrenbruch, our Group CEO, Darren Smith, our Group CFO, and Colin Hayward, our Group Chief Medical Officer. Today, we'll be talking you through the presentation that was lodged on the ASX yesterday afternoon, which is also displayed on the webcast. For those joining by phone, we'll give a verbal cue on each slide change, and then we'll open up to Q&A at the end.
Just moving to the next slide, please. Q2 operational highlights. The achievements for this quarter, again, demonstrate how we are making progress across the pipeline, delivering a strong commercial performance and double-digit revenue growth from sales of Illuccix through the U.S. and our other regions.
Simultaneously, there's a major organizational focus on preparing for the launch of the two new imaging agents in brain and kidney cancer next year. Some really exciting progress across the clinical pipeline, advancing prostate cancer therapy program, scouting new indications for our TLX250 program, and progress with our Chinese partner, Grand Pharmaceutical Group, in terms of advancing our clinical programs in China. acquisitions, the Lightpoint Medical and Dedicaid AI platform, add to our late-stage product pipeline and further differentiate and deepen our product offering in the urology field, complementing our prostate and kidney programs.
We also completed stage of the build-out of the production facility in Brussels South, a very important pillar of our growth strategy and evolution to a vertically integrated business. Next slide, please. I won't talk too much about the key financial highlights.
You can see the figures here, but it certainly demonstrates that the trend of the past two quarters has continued with the growth in revenue, a steady growth margin, and an improved cash balance in what is our third consecutive quarter of positive operating cash inflow.
Darren will talk through these results in more detail, but first, I'll hand over to Chris to kick off with some color on the commercial performance for the quarter.
Good morning, everybody. Thank you very much for attending this webinar today.
We could please move on to slide seven. As you can see, the continued quarter-on-quarter growth trend, particularly for the U.S. market, has certainly delivered again this quarter. We are up 19% for the quarter to AUD 116 million or $77.6 U.S. on the prior quarter.
Actually, all operating segments of the business, APAC and Europe, are ahead of our internal plans. We're really starting to see, you know, the overall commercialization momentum of Illuccix build. I think that's reflective of the adoption and utility of PSMA imaging globally. We expect this trajectory to continue. We don't see any real signs of abatement.
We feel that our marketing strategy is continuing to capture market share. We're getting a clear message out about our differentiation, particularly around clinical differentiation, which has also started to be reflected in the practice guidelines.
We continue to get very positive feedback on our customer service and our overall customer approach. Through a combination of continued white space prosecution and basically new customer acquisition, we feel that we've got a steady trajectory ahead of us. Moving on to slide number eight.
I think this is just a really important slide to remind listeners that, you know, this is an evolving field, and as we get more clinical experience and we have the opportunity to take a comparative approach products, it's become clear that, you know, not all PSMA imaging is created equal, and there are attributes of the various products that are either in the market or proximal to market that are certainly unique and differentiated.
One of the key messages that we've been putting out there, which is very much starting to align with the practice guidelines, is that additional care is warranted when using F-18-based products, F-18 PSMA-based products. We know...
We obviously recognize that there's diagnostic utility there, but, there's certainly a need for patient, and physician education, around some of the consequences of using, F-18-based products. We're really hanging our hat on not just our supply chain and distribution reliability, which we, you know, we believe is best in the industry, but really also that clinical reliability and dependency as well. We feel that's a message that's resonating well with our customer base.
Certainly from a, peer review literature and practice guidelines perspective, this is, you know, this is certainly coming into line with our understanding. I'll now hand over to Darren to give you a little bit more of a deep dive into our financial results for the quarter. Darren, over to you.
Thanks, Christian. Now turning to slide 10. Today's Q2 4C presents Telix's third consecutive quarter of positive cash flow from operations. The AUD 10.8 million generated during this quarter represents an AUD 8.4 million improvement on the prior quarter. This cash flow increased Telix's cash on hand to a respectable AUD 131.7 million, being AUD 10.4 million higher than at the end of March. T
The graph at the bottom right of the slide highlights the key cash movements during this quarter. Firstly, Telix continued revenue growth of 20% for the quarter, plus improved cash collection, drove customer receipt AUD 29 million higher than the prior quarter, to a total of AUD 112.2 million. This is a 35% improvement.
The cash receipt improvement was offset by a number of key costs, one being the payment of cost of goods, being at $10.2 million higher, reflecting the growth in sales volume. Operating costs being $2.5 million higher to support sales growth. An additional $2.1 million directed to support the regulatory submissions of TLX250-CDx and TLX101-CDx, and the $5.8 million payment for the 2022 U.S. income tax. Now turning to slide 11, Telix's profit and loss performance.
On the back of a healthy revenue growth, Telix's commercial business continues to focus on extracting incremental improvement through the management and control of its expenditure base.
As represented in the top right graph, gross margin is incrementally improved from 63% in Q1 to 64% in Q2, reflecting volume-related efficiencies. Operating expenditure as a percentage of sales has improved or reduced to 25% in Q2 versus 28% in Q1.
Turning to our product development programs. During Q2, we have continued to invest strongly into our late-stage assets in line with plan. Approximately 80% of this quarter's investments being focused on supporting the regulatory submissions and the manufacturing scale-up of TLX250-CDx and TLX101-CDx. Included in this investment is the commencement of the ProstACT GLOBAL clinical study.
Turning to slide 12, we can see that Telix's financial performance continues to improve quarter-on-quarter.
This is evident and supported by strong and steady revenue growth over five quarters since the commencement of sales. Quarter two revenue of AUD 120.7 million represented 20% growth quarter-on-quarter, an annualized sales rate of AUD 480 million. Secondly, positive operational cash flow for the third consecutive quarter and growing. This clearly demonstrates that Telix can self-fund its product development activities through its commercial operations. Third, our adjusted EBITDAR for the fourth consecutive quarter is positive and growing, having increased 24% over the previous quarter to AUD 45.6 million.
This result has been driven by the revenue growth and the management and control of expenditure as a percentage of revenue.
Telix increased its cash on hand balance over the quarter by AUD 10.3 million, to finish at AUD 131.7 million at the end of June. Together, these financial metrics place Telix in a sound financial position to prosecute its product development activities and plans. I'll now hand you back to Christian to take you through our product development progress in a little bit more detail. Thank you.
Thanks, Darren, for the comprehensive summary. Before I let Colin loose on some of the more interesting program updates, I know there's a lot of interest in how we're progressing on the 2 follow-on imaging products. Just on slide 14, you know, and Colin, you may choose to make some comments when we transition, but, you know, we've presented a lot of new data over the past, I'd say, 2 quarters. It's been very gratifying to see the sort of continued release of updates around the utility of the TLX250-CDx program for renal cancer. We see utility in this in a wide variety of settings, from incidental renal mass detection to surgical staging, and certainly the ability to detect both localized and metastatic disease is a compelling attribute of this product.
Making really good progress towards our BLA filing, which is still expected to take place this year. We've just recently had a meeting with the FDA to review our entire BLA submission plan. That was a very satisfactory meeting with clear guidance. I think we're on good track to progress that filing with no further clinical data required. We are also launching an Expanded Access program. This is an important pre-commercial activity. It's part of our Breakthrough designation in the United States, but it's also, you know, good practice in terms of maintaining the momentum and availability of this very important asset to patients.
We're really delighted about that. We've launched in Europe, and U.S. and Australia are expected to follow in the next couple of weeks.
Also on slide 15, a little snapshot of our glioma program. This is an under, sort of an under-discussed, perhaps underappreciated program, but we're really excited that, you know, we actually have 2 drug approvals to file this year. This program has made great strides over the last couple of weeks. We have had a pre-NDA meeting with the FDA, and we really understand the pathway that we need to take for this, and we're expecting a submission in the next few months for this asset as well. It's initially a fairly small market opportunity, because our indication will be quite narrowly focused, but we see tremendous opportunity to expand the utility of this product, you know, more generally into CNS malignancies.
It has an orphan designation, as I said, you know, the regulatory pathway from the U.S. perspective has been well, well mapped out. We're really excited about, you know, the prospect of these two further regulatory submissions in the second half of this year. We certainly, we certainly scaled up our workforce and, you know, our commercial team to be ready for these products. Colin, maybe I'll hand over to you now just to do some highlights.
Yes.
Obviously, any other comments you Want to make about the ZIRCON experience.
Of course. Well, even the FET experience as well, and I think, you know, that utility in that post-progression setting where MRI really doesn't do a great job, is where I get a lot of interest from sites around the U.S., who are very eager to get this on board. If we can move to slide 16, really based on that unprecedented sensitivity and specificity in ZIRCON, and the fact that we see this continue through the very small renal masses and, you know, as per that SNMMI presentation from Jeremie Calais, you know, that we see that we're detecting disease outside of the kidneys as well.
It becomes a lot of interest in utilizing this product, not just for imaging, such as in the zero dose China study, where we've had our first patients dosed, but also in therapeutics, of course.
Heavily in renal cancer with STARSTRUCK and STARLITE studies, but also in STARSTRUCK and STARBURST in other areas where CA9 might be expressed, and I'll touch on those two studies very shortly. As it was mentioned earlier by Darren, the prostate cancer therapeutic studies are also gaining momentum. The 30 patients recruited in the ProstACT SELECT. I've shown you before how well the antibody targets tumor and how long that activity is residualized into that tumor. The ProstACT GLOBAL study, the sites are onboarding and start up on the way right now. Not forgetting GBM, and TLX101, in terms of the therapeutic programs there. The IPAX-2 study is open now in all sites and actively screening patients, and we hope to be able to produce some news for you soon on that first patient being dosed.
Also with the IPAX-Linz study, investigator-led study, continuing the work of the original IPAX study in the relapsed refractory setting for patients and 50% recruitment there. If we look at rare diseases, then, the TLX66 in pediatric leukemias in the UK study is about to start, and we're also preparing a Phase II study in AML in Australia for this program. Let me go back to the STARBURST study with slide 17. This is one of my most exciting studies this year. It's a very simple study. All good things are very simple. Imaging patients who have a high potential for CA9 expression.
We know CA9 is almost ubiquitously expressed in clear cell renal cancer. We know from the literature, I encourage you to go and look into PubMed on CA9 and other tumor types. It's heavily expressed in a number of other tumor types, particularly things like head and neck cancer, pancreatic cancer. It's a marker for hypoxia. This study is open and recruiting now, and it's doing just that. It's examining the potential to identify CA9 in other tumor types, and this complements well our investigator study program as well in triple negative breast cancer and bladder cancer. Of course, the beauty of theranostics is if we can get the zirconium tagged girentuximab to the tumor site, then of course we can get girentuximab therapeutic isotopes in different tumor types.
This study really could open up the potential for CA9 as a pan-tumor target. If we go to slide 18, you can see the rationale for doing this study, which I've talked about before with you. It's a collaboration with Merck KGaA, with their DNA damage repair inhibitor, peposertib. The combination of that and radiopharmaceuticals with lutetium-250, we can see that it has a very good effect in the preclinical models. Our first patients have been dosed in this study, and this includes a renal cohort, but also a general CA9 cohort as well. Really understanding whether we're going to be able to target renal cancer and combine radiopharmaceuticals with DNA damage repair inhibitors.
Complementing well also the STARLITE studies, which look at the combination of lutetium girentuximab to potentially enhance immune oncology. The STARLITE studies are, again, active as well. Whilst you can see we're looking at CA9 in other tumor types, we're heavily within the renal space, we're heavily within prostate, within the ProstACT program of studies and really showing our leadership within GU oncology. I'll hand over to Chris to continue that.
Yeah, thanks, Colin. I think, you know, it's helpful to visualize the 250 therapy program.
It's really having a wave front of 4 studies. The 2 STARLITE studies, which are understanding combination. The Starstruck study, which is really looking at DNA damage repair inhibition, and it's a pan-cancer study. It's all kind of tied together with the Starburst study, which is really about not just looking at renal cancer, but going beyond renal cancer, and where could these therapeutic modalities play a role? It's really gratifying to see all of these studies. They're all up and running. They're all patients. They have a ton of investigator interest.
Really, over the next 12 months, these studies are going to generate a ton of important data about how we prosecute a pivotal trial strategy for the TLX250 therapy program. I think as Colin pointed out, you know, it's really important to understand these products are theranostics. Every time we do an imaging study in a new cancer type with zirconium, we're getting the dosimetry data to decide whether, you know, it's worth pursuing a therapeutic radionuclide strategy in those patients. You know, hats off to the clinical team. It's been a really strong quarter of progress. Just moving on to slide 19.
This is starting to show the evolution of the strategy for Telix, and I'll talk a little bit more in a second about some of the acquisitions that we've made.
You know, there's a kind of an elephant in the room with Illuccix, which is, you know, the two major indications for Illuccix are high-risk men prior to intervention, so let's say a prostatectomy, and then a biochemical recurrence setting. Those two indications for Illuccix bookend a procedure which is, you know, in most places, or at least in the United States, a prostatectomy. What we really see is the opportunity to engage with the urologist as a key stakeholder and to make sure that we are bringing the benefit of Illuccix into the operating theater.
For quite a while now, we've had a number of collaborations over the last two to three years.
The LightPoint relationship actually started off as a collaboration. We're also really excited about our relationship with Mauna Kea Technologies for endomicroscopy, which is again, about doing assessment of pathology in real-time in the operating theater using molecular imaging tracers. The kind of common theme there is how do we bring molecular imaging into the operating theater? The urologist is such a key stakeholder in the use of PSMA imaging. We think this is a really worthwhile clinical and commercial objective that's going to have significant impact on patient outcomes. What you can start to see as Telix grows and evolves, is we're building a business that's going to go from initial diagnosis and staging, and we've got a whole bunch of current and future indications there that can continue to grow Illuccix.
You know, the 250 program, the 250 imaging program, comes in very elegantly behind that. We then Want to take the benefit of that data into the operating theater. That's where, for example, Lightpoint comes in. At the back end of the disease progression, or as we move more towards a systemic disease progression, that's then again, with both respect to the prostate and the renal programs, we've got those systemic therapies there. It's really about building that continuity of solutions across urology care. Underpinning this really is a platform technology.
It's clearly to move this information around and to provide the clinical decision support, we need to have tools. This is not about eyeballing images anymore.
This is about looking for changes, this is about quantifying things, this is about looking at the map of disease and making the best decisions about how to progress, the patient's treatments forward. That's why decision support and AI tools are so important. Again, we've made some significant investments there. Moving on to slide 20. you know, I have to tell you, as a bit of a technology nerd, this is an acquisition that I think is going to be very exciting for the company, the acquisition of Lightpoint and the SENSEI probe. This is a very small,
a small probe that's about, you know, a little bit bigger than, or a little bit smaller than the size of a triple A battery, actually easily fits through the body cavity through the tool port of a robot or a laparoscopic system. It's actually able to be pressed right up against a lymph node or a section of tissue and measure whether or not that tissue, contains cancer or not. We think this is a tool that's going to enhance surgical workflow. We think this is a tool that's going to open up the potential for, other types of surgical, interventions and perhaps lead to more widespread adoption of things like lymph node resection.
Clearly, there's an opportunity to use this technology to register that preoperative Illuccix scan with that intraoperative guidance through a radiopharmaceutical. This is really kind of taking the impact of Illuccix right into the front line of that surgical intervention. We see a clear expansion pathway into renal and bladder cancer. This technology is highly compatible with the future development of our pipeline, particularly TLX250-CDx. You know, this is a platform technology that we think's just got a lot of longevity for the company. Yeah, really exciting acquisition, and we're in the process of concluding that transaction, and we look forward to welcoming the Lightpoint team to the company in the next few weeks. From slide 21.
I'm not going to talk too much about the AI because we have sort of talked about it in the past, and it has been an ongoing development activity at Telix, but we did have the opportunity to make an acquisition. And we think that this acquisition is particularly exciting because what it does is it allows us to build blocks of quality controlled code that do very specific image analysis functions, and then essentially to use an assembly process that's code-free, to build a customized tool for each type of imaging agent that we want to develop. And this is by no means restricted to prostate cancer. We see this as a platform that allows us to super rapidly assemble image analysis tools to cover the entirety of the portfolio.
I'll give you an example of one of the early applications that we'll be working on, which actually, the Dedicaid team has actually developed a needleless biopsy tool, which is essentially enabling a PET scan to predict what the Gleason score of a patient is. What that would potentially mean is that instead of an uncomfortable and, you know, sometimes challenging to recover from core biopsy, we can start to assess pathology in vivo in a non-invasive fashion.
Again, this is not obviously a clinically approved product, or a clinically approved application yet, but we're working extremely assertively towards having these tools clinically validated with strong data sets behind them, collect a lot of data, and, you know, to have the regulatory platform around these tools, so that they may be reliably used in the clinical setting. Very, very exciting tool, and we think, again, it's going to significantly broaden and expand the utility of our pipeline. Just to sort of round off some of the, you know, some of the corporate development of the business over the last quarter or so, slide 22.
We had a really wonderful event, a few weeks back in Brussels, at our Seneffe or Brussels South facility, where we had the opening event for this production site. It's come together really beautifully. It's a 9 clean room production facility. It's in the process of being commissioned for radiation and going through all the quality and validation aspects. This is a key jewel in the crown of the business, really from 3 perspectives. One is for European markets, to deliver on sort of the post-Illuccix world. We're going to need a facility like this just because of the style and nature of the regulatory and manufacturing environment. For delivering zirconium and ruthenium-based products, this site is vital.
The second is it allows us to focus on the production and availability of key isotopes. It's a very, very large radiation license, so it gives us a ton of optionality in the way in which we work with our supply chain, and indeed collaborate with our supply chain. Third of all, it's going to become a strategic hub for R&D. That means other academics, and small companies are going to be able to work with us. We even have a guest suite there to enable other companies to come in and work with us to do manufacturing scale-up of their products. Just to be clear, our aspiration is not to be a CDMO. You know, we partner with CDMOs for that work.
We feel that the process of manufacturing scale-up is really important to control and understand, and there's a lot of intellectual property there, and so we Want to have a strong handle on the way in which we conduct that. This site is licensed and suitable for both beta emitters and alpha emitters. In fact, they have a dedicated lab for alpha emitters. You know, this is just a really powerful asset for Telix. As I think Kai said early on in the piece, this is reflective of our strategy becoming, where appropriate, more vertically integrated from a manufacturing perspective. Well, just to wrap up and to move on to a kind of a bit of forward-looking outlook slides. You know, slide 24, I think, summarizes the ongoing mission of the company.
We aspire to be a household name in urologic oncology with that, as I described, that end-to-end solution from diagnostics and staging through to intervention and systemic therapy. We are really excited to be able to also expand that strength from urologic oncology into neuro-oncology. We're going to be talking much more about that over the coming weeks and months. The data that we're collecting, both on the diagnostic and the therapy side in neuro-oncology is very compelling. That's going to garner a lot more momentum over the next few quarters. Then that clearly leads to this concept of unlocking the value of our therapy pipeline. At the moment, focus and attention is on Illuccix.
A tiny little bit on our renal program. Really, we still get benchmarked and assessed on our ability to deliver Illuccix. In fact, the company is far more than that. We're excited to continue to unlock the value of that pipeline through compelling clinical data and execution. Just to wrap up, this is the sort of landscape slide 25. We put this slide together at the start of the year to sort of map out what the landscape looks like for the business over the course of 2023. You can see, there's a lot of tick boxes starting to appear there, which is really gratifying. There's obviously the major ones, where we're continuing to hit on our financial performance and leadership around our prostate phase 3 program.
Of course, also getting ready for those 2 additional submissions this year, which is really All hands on deck, and all eyes focused from the team to make sure that those things happen in the second half of this year. A lot of other smaller milestones that we've ticked off already, but overall, you know, it's been a very compelling quarter, and we're very pleased to be able to present the outcomes of our efforts to you in this call. That, I'll pass it back to Kai, I think, for Q&A.
We'll take questions from the phone line first. Josh, if you want to announce our first questions from the line of Shane Storey at Wilsons Advisory.
Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again.
One moment.
Our first question comes from Shane Storey with Wilsons Advisory. You may proceed.
Yeah, good morning, everyone. Christian, I'm going to start with slide 8, please. There is chatter in the industry about equivocal skeletal findings using PSMA agents. I appreciate your ADC competitors have drawn all of that early attention, but my questions to you are: Can you help us understand that issue from an absolute incidence perspective? I mean, how common is that? Is the data, do you think, preset is probably emerging, but is it of sufficient quality to start to understand those comparative rates across the, I guess, the three different F-18s, and your own gallium-based agent? Is anyone planning sort of head-to-head studies to define that?
Yeah, thanks for the question, Shane. We are capturing a lot of data around this. We haven't, you know, yet disclosed whether we plan to do a more formalized comparison. Generally, we take the view that more availability of PSMA imaging is good for patients, you know, we want to see these agents in widespread use. Also, it does afford the company an opportunity to competitively position itself, you know, we want our customers to understand that when they use Illuccix, they're using the most reliable product, right? You know, fortunately, there's a growing body of peer-reviewed literature that supports that statement.
We're starting to see some adjustments to practice guidelines to raise awareness that there can be a higher, in some cases, much higher false positive incidence rate, particularly for bony lesions. The consequence of that is it may lead to patient overtreatment. I don't think anybody, you know, has any concern that in a, you know, in a top-tier, you know, tertiary academic center, that that's going to be a problem. In order for this technology to really, you know, have its maximal impact, it's got to be available and usable by everybody. We just think we have a better value proposition there. In terms of your question about whether there's a class effect or not, there clearly is a class effect, and it comes down to a very simple thing.
When you have an F-18, these are quite a bit larger than some of the things that we're used to using, like FDG. They have a much more kind of a linear structure. Their stability is rather different. You know, as a class, these F-18-based PSMA agents do degrade, some so than others. Some are more stable than others. The net result is you end up with free F-18 ion in solution, which gives you a bone. It's not problematic, PSMA with an F-18 based agent. It's just that users have to understand that they're not getting just a targeted imaging agent, they're also getting a significant non-specific component. That is significantly actuated in, accentuated in the whole class.
Right, it doesn't make you sort of rethink, you know, ADNS, say, in your ADNS set agent, say, for one-on-one?
No, not at all. That's a different issue, and it's a different issue from a molecule stability perspective. you know, when we diagnose a patient with glioblastoma, or we look at CNS Mets, we're looking entirely at organ. We're seeing, looking for a cranial met or some view is very narrow. the cranial, that's sort of not. In fact, FET PET has very poor peripheral uptake altogether. It is a rather bone-specific, rather brain-specific imaging agent, which is, you know, one of the reasons why it's quite useful clinically. No, I mean, F-18 based agents are super important. We're seeing an explosion of F-18 and gallium-based products. you know, I'm an old-timer in nuclear medicine.
You know, F-18 production is one of the great achievements of PET. You know, we deliver millions of F-18 based doses, but we have to look at a very specific product class, and F-18 based agents have the class characteristics, and I think the product lens are being updated. Where we, gallium, we don't have bone accumulation, only excluded.
Got it. Understood. The final one for me, really, one for Darren, please. With stage one of the TMS in Brussels now completed, how should we be thinking about the CapEx investment that you have planned over the next couple of years as that facility develops, please?
Thanks, Shane. We did do the official opening just probably at the beginning of June or July. While we had the official opening, the operational component of that is still, we're still working through that, and that should be done within the next 6 months. You know, get the approvals, get it up and operational. We are also looking at bringing in some cyclotrons to build the capability there. That's all within what we've previously announced to the market as part of our capital plan. I think once we get it up and running, we'll start to look at, well, how do we expand on that further?
We've obviously got quite a bit of, land and space there. There is further opportunity there. Obviously we will look elsewhere as well, if necessary.
Right. That's it for me. Thank you.
Thank you.
One moment for questions. Our next question comes from David Stanton with Jefferies. You may proceed.
Thank you very much, and good morning, and good evening, everyone. Thanks for taking my question. I'd just like to hear a little bit more about, you know, when we might expect the U.S. FDA submission for TLX250-CDx. I'm sure we'd be thinking about it this quarter or next quarter?
Well, we haven't been as specific as that, because we've only just had a consultation meeting with the FDA. I would, you know, I haven't given firm guidance on it, but I would expect it to happen around the November timeline.
Okay. Thank you. I guess another timeline question, Chris, now that I've got you there. Given that ProstACT SELECT is fully recruited, you know, should we expect those top line results, you know, around the start of fourth quarter, calendar 2023?
We'll certainly put something out this year. You know, as you know, when you close out a clinical trial, there's a data collection process. It just takes a bit of time. Yeah, we are expecting to put results out this year.
Okay. And final one from me, and then I'll get back in the queue. You've mentioned previously that there's the potential for potentially lower pricing for Illuccix in the U.S. towards the end of calendar 2023. I noticed that that's sort of not mentioned anywhere in this presentation. Is that still likely to be the case in your view?
I actually don't think I've ever said that, to be honest with you. I mean, I can understand how there might be a misconception about it, but what I've said is that we expect that the market will be more penetrated by the end of this year. Though that's more of a statement around competitive landscape. I don't think it necessarily translates into, you know, a pricing, discount per se. I think that what I've said is that as we move into a more penetrated environment and where there's a greater focus on national account strategies, there's always a trade-off between acquiring market share and pricing in that sort of environment. So, you know, volume incentive pricing may become more of a feature. You know, so far we've seen very stable pricing.
We had a our average ASP went down a little this quarter, but that was because we had a higher proportion of government contracts or a higher proportion of patients that were under government contracts or under government reimbursement. The price, you know, the pricing mix changed a little bit. In terms of the pass-through pricing, it's been extremely stable. Yeah, that's not necessarily a given. It was more of a comment around competitive dynamic.
Understood. Thank you.
Yeah.
Thanks.
All right, next question then.
One moment for questions.
Our next question comes from John Copley with UBS. You may proceed.
Good morning, John Copley on for Laura Sutcliffe. Could you tell us, please, what % of U.S. Illuccix sales are same-shop versus new customers at this stage? Thank you.
We don't really disclose that sort of level of detail around customer build. You know, it's not something that we've sort of tended to do because we don't see a competitive advantage in doing that. What I can tell you is that our growth this quarter was a fairly balanced mix of white space customer acquisition and increasing our share at either sites where they're users of multiple products or where we've been able to acquire business away from competition. I think it's a fairly evenly mixed profile, if that makes sense.
Okay. Thanks, Christian. One more from me. Since Novartis don't report Locametz sales, could you tell us, please, what market share you think you have by value and volume at this point in time?
We have an internal viewpoint on Novartis. I mean, we have a very clear understanding of what accounts Novartis has, so I think that's a well-understood number. I think as a total market share, it's a low single-digit %.
Okay. How about yourselves, though? Do you have a view on that as well?
I mean, just in terms of, I mean, Lantheus hasn't put out their quarterly guidance yet, I'd say we're pretty robustly trending to about a 30% market share.
Okay, great. Thanks very much.
Yeah.
Thank you. One moment for questions.
Our next question comes from Steven Wheen with Jarden. You may proceed.
Thanks very much. It's just a question on the STARSTRUCK program, and the expression of CA9 on other tumor types. Just interested in whether or not the data that you've collected, and have, you know, received on clear cell, renal cancer, how much you can rely on that to actually fast-track labels for these other cancer types, in a diagnostic setting?
I'll give an initial comment and then, Colin, if you've got anything to chime in on, you know, feel free. You know, essentially the purpose of STARSTRUCK is it's a... Oh, sorry, STARBURST study. It's more of a setting study, so it's about, you know, narrowing down the, you know, half dozen to a dozen or so cancers where we know that CA9 is an important biomarker, where it's been well studied and well understood. That's really the scope of it. You know, what we expect is that it's very unlikely that we would run a pivotal trial for the therapy just in a single cancer setting.
What the front-end studies that we're developing right now is leaning more towards a kind of a Loxo style basket study, where the label that you'd be ultimately seeking to go after would be something along the lines of, you know, CA9, you know, treating a CA9 positive tumor by verified by imaging, right? Imaging becomes the biomarker tool. That's obviously why the approval of the 250-CDx imaging agent is actually a critical milestone towards the clinical availability and sort of acceptance of the therapy. From a predictive perspective, the great thing about Zirconium-89 is it gives you predictive dosimetry for a whole variety of radiant requirements, in fact, not just lutetium, but also alpha emitters. That's why the STARBURST image is so informative.
It's going to not only tell us about expression level, but it's going to tell us predictively whether we're getting enough radiation into those tumors to have a likely treatment effect. Did that make sense?
Yeah, that did. Yes.
Yeah. Alan, did you want to add anything?
Well, I think you covered it extremely eloquently, but, you know, just to be clear, the STARSTRUCK study is the combination with the DNA damage repair agent. It does include a renal cohort and a non-renal cohort that we will identify by using zirconium girentuximab. In terms of the imaging utility, again, we'll see within the STARBURST study where we really examine CA9 expression utilizing zirconium girentuximab, and yes, that could potentially lead to imaging, but also, you know, perhaps more interesting and more relevant to that patient population that we're studying, potential therapeutics in the future as well.
Yeah. Thanks.
Great. Understood. Can I just also ask, I mean, obviously, the Brussels plant is allows you to be a bit more vertically integrated. Just wondering, is there gross margin implications from that, and when we might expect to see that come through your numbers?
Well, it's not about gross margin implication, it's about enablement. You know, just to be clear, we won't launch a product in Europe with zirconium or lutetium without the use of that facility. It's not about margin improvement, it's about actually having the scale and manufacturing capability to deliver to the European market.
Okay. Yes, understood. Lastly, just on the European approval, the pathway that you're undertaking at the moment, that seems to be certainly relative to our expectation, sooner than expected. Is, is that your understanding? What, with the first half 2024 expectation of a decision, can you start commercializing that product in Europe straight away after that?
Well, once we have an approval, we can start to commercialize. I mean, obviously, the reimbursement varies from country to country and can be shorter or longer, depending on the relevant bureaucracy. Yes, certainly once we have approval for that product, and it's our dossier has now been accepted in all of the countries that we've applied for. It's 19 European countries plus the U.K. We are, you know, once we have that approval, that reference competent authority approval, we can start. We are obviously making Illuccix available under or making it available under appropriate compassionate use programs, which varies from country to country and varies depending on whether there's an approved product in the market or not.
We can continue to see a robust utilization of Illuccix in Europe. Clearly, as we have approved products coming into the market, you know, that dynamic will change over the next 12 months, but we're in the market ourselves. I think there's going to be a pretty tight concentration of new product availability and approval. As you would have seen in the U.S., Steve, you know, although we were second to market, our ramp-up is very fast with Illuccix. We're pretty confident that there's a informed and loyal customer base out there that's, you know, committed to using the product for the long term.
Excellent. Thanks, Chris. That's all for me.
Thank you.
Thanks.
One moment.
We'll move on to the next one.
One moment for questions.
Our next question comes from Dennis Hulme with Taylor Collison. You may proceed.
Good morning. Thanks for taking my question. With the first patient to be treated in the PROSPECT Trial this quarter, can you give us some color about what we should expect to see the site roll out, both in APAC and in other territories? Also, when are you targeting opening up PROSPECT in U.S. sites?
The regulatory work should be done by the end of the year. We're on track to achieve that for the US, and Europe will be the focus early next year, but we do want to include European studies. I'm also currently in China at the moment, where we're meeting with our partner, Grand Pharma, to talk about how we include some wider APAC region patients into the study as well. Overall, the progress on PROSPECT has a lot of momentum in all the territories that we plan to operate in, beyond just the current ANZ footprint. We haven't given guidance on site ramp up. It's very unusual for companies to do that kind of thing, to be honest. But, you know, clearly, once the study is in a.
steady state recruitment mode, I would expect that we'd be able to give visibility on time horizons for recruitment milestones. I don't think that's likely to happen until, you know, the beginning of next year at the earliest. I do think that, clearly, you know, there's a ton of patients available, so we don't see recruitment as being a challenge. Once the study is fully operationalized, I think that will be the time for us to give a clearer picture on that.
Okay, thanks for that. Secondly, we see that Blue Earth announced the commercial launch of their F-18 imaging agent, POSLUMA, late last month. Are you seeing any evidence of the presence of, Blue Earth in the market with POSLUMA in the U.S.?
There's evidence. I mean, they're advertising and they're marketing, and they've got a sales force out there. I have to admit, I don't think we bump into them an awful lot. You know, I think, as I've alluded to before, you know, not all F-18 based agents are created equally, and I think that they've got a significant headwind to overcome in terms of both the market being satisfied with the availability of an 18 F-based product, and also, you know, a product that's currently available, you know, widely available, that has, you know, we think, clinically better performance.
I think what it's going to come down to is a kind of an Olympic, you know, podium-style bake-off between the well-established use of Gallium PSMA and PYLARIFY, and then a new entrant, which really hasn't demonstrated any clinical differentiation or clinical advantage, in fact, may have significant disadvantage compared to the incumbent solution. You know, we obviously believe that there will be a market share effect, and they'll pick up some customer base for sure, but so far, we don't really see it as a strong commercial contender. It's a market that's pretty well educated. You know, customers have either decided that they're happy with cyclotron-based product, or they're happy with the nuclear pharmacy-delivered product.
You know, they're going to probably have a larger impact on our competition than us. That's what we currently believe at this point in time.
Okay, thanks for that. That's all from me.
Thanks. Dennis.
Thank you. One moment for questions.
Our next question comes from David Stanton with Jefferies. You may proceed.
Thanks very much. I'm happy to jump back on. One thought for Darren, please. You've mentioned in the pack that overall investment is currently tracking to plan for 2023. You've previously talked to about $100 million in F 23 R&D expense. Should we still be thinking that number?
We haven't given any modified guidance to our R&D expenditure.
Okay. All right. Understood. Christian, my final one, you know, are you starting to see any seasonality in Illuccix sales in the U.S. at all?
Sorry, you just broke up a bit then. Can you say that again?
Sorry. Is there any reason to think that there might be seasonality in Illuccix sales in the US over the medium to longer term?
I mean, there's always seasonality. The pluses and minuses and the swings and roundabouts of each month and, you know, Fourth of July holidays and Christmas season and summertime and whatever, there's all sort of pluses and minuses, and they all kind of average each other out. I think every quarter has got something. I don't really think that seasonality is going to be something that we're going to kind of obviously be, you know, be too super worried about. The only thing I'll note is that this whole field is growing at an extremely fast rate, and that I think usurps, you know, any sort of kind of localized effect.
Understood. Thank you very much.
Yeah. I'm sure you'll hammer me next quarter, David, when I put out our results, and then I'll say, "Well, it was a seasonal effect." You'll then have the license of this answer to draw a reference upon.
Looking forward to it.
All right, we just have time.
I think it's. Go on.
We've just got a couple of questions on the webcast. We've got time for those just before we wrap up. I think the first question is just a couple of questions about update on the submission process in Europe for Illuccix.
Yeah, I think I've covered that one off.
Yes. Finally, just a question around the life cycle management for Illuccix, whether there is the opportunity to extend patents or make product improvements, with a next generation product?
Absolutely, yeah. I mean, we've been quite public about it. We have a clear vision for what Illuccix's 2.0 and how that looks like. We're committed to being a category leader in prostate imaging for a long time. Our product has some attributes that make it quite amenable to product life cycle management. Yeah, watch this space. You know, that'll become a lot clearer over the next few months. Clearly, you know, there's a number of ways to risk manage pass-through, one of them, of course, is to continue to provide new products. Yeah, we'll be talking a lot more about that in the coming months, life cycle management's absolutely a key focus.
I've said in the past that, it surprises people, but probably 25%-30% of our R&D budget is actually focused on building and growing Illuccix. That doesn't just mean label expansion and new clinical utility, but it also means thinking about the product itself. Watch this space. That's my only teaser statement for the morning.
Well, thank you. That's all the time we have for questions now. Thank you everyone for your attention. You know, as we open, it's been, you know, a quarter of significant progress, and you know, a lot of exciting things happening right across the pipeline. Thank you for your attention, and we will... If you can always get in touch with me via email, if you have any further follow-ups.
Thanks, everyone, for your time. Much appreciated.
Thank you.
Thanks, all. This concludes today's conference call. Thank you for participating. You may now disconnect.