Telix Pharmaceuticals Limited (TLPPF) Q4 2023 Earnings Call Transcript

Telix Pharmaceuticals Limited (OTCPK:TLPPF) Q4 2023 Earnings Conference Call February 22, 2024 5:00 PM ET

Company Participants

Kyahn Williamson – Senior Vice President of Investor Relations & Corporate Communications

Christian Behrenbruch – Managing Director & Group Chief Executive Officer

Darren Smith – Group Chief Financial Officer

David Cade – Group Chief Medical Officer

Conference Call Participants

David Stanton – Jefferies

Laura Sutcliffe – UBS

John Hester – Bell Potter

Operator

Thank you for standing by, and welcome to the Telix Pharmaceuticals Limited FY2023 Results Call. [Operator Instructions] I would now like to hand the conference over to Mr. Kyahn Williamson, Senior Vice President, Investor Relations and Corporate Communication. Please go ahead.

Kyahn Williamson

Thank you. Thank you, everybody, for joining our call this morning. You’ll have seen that we have launched our annual report and full-year results on the ASX after market closed yesterday. Joining me today on the call is Chris Behrenbruch, Managing Director and Group Chief Executive Officer; Darren Smith, our Group Chief Financial Officer; and Dr. David Cade, our Group Chief Medical Officer.

If we just turn slide 4, please? Just a few introductory remarks. I mean, it’s been a very exciting news to hear at Telix and a lot of hard work, which has led to a lot of achievements. It’s been our first full year of commercial sales with reimbursement of Illuccix in the US, and that’s delivered 214% growth in revenues to achieve a total revenue of just over $0.5 billion. It really shows the strength of demand for Illuccix, but has also demonstrated our ability to build a highly effective and profitable commercial business.

The operational highlights we’ve achieved this year are really driving towards our next phase of value creation. We are preparing to launch two new additional diagnostic imaging agents subject to regulatory approval by the end of this year. And that allows us to layer in new revenue streams. And also particularly the case of Zircaix, further strengthen our offering to the urology field as a perfect follow-on product to Illuccix.

You’ll also see the momentum is really starting to build across the therapeutic pipeline. Notably, prospect global is now enrolling patients, and we’re preparing to roll it out integration international sites. Our reputation for innovation has paved the way for several important acquisitions, notably, LitePoint, dedicated and QCM, which further enrich and differentiator pipeline and into and offering with targeted radiation at every step of the patient journey, vertical integration of supply and manufacturing is a key focus for us in the business. The addition of optimal prices and in our Brussels South and production capabilities further expands our capability and capacity in production manufacturing technologies in research and development.

With that, I’d like to hand over to Chris to talk briefly about the financial metrics of the highlights for the year.

Christian Behrenbruch

Thank you, Kyahn. Our gross summary. So I’ll move into the next slide, slide number 5. The slide is fairly self-explanatory. Slowed and demonstrates what a transformational year 2023 was for two weeks. Our record revenues of $512 million over 200% higher than 20 to 2022 were low with are actually slightly ahead of analysts’ consensus, notwithstanding a significant year of investment in our clinical programs, readiness for to further product launches from a manufacturing, and regulatory perspective and some pretty significant technology, and infrastructure investments.

We have really turned the corner in terms of our earnings, operating cash flow, and of course, our and very importantly, our first profit, you reiterated the company’s execution strategy. Our commercial activities, which are currently centered around alludes to expect soon to be a multi-product multi-geography landscape is there to fund our pipeline, particularly our therapeutic pipeline. We also invested heavily in our infrastructure and supply chain, as Kyahn mentioned last year to be able to be ready for those additional revenues revenue streams when they come on later this year. As such, our investment decisions are not passive decisions based on a significant risk management, competitive landscape and shareholder value creation strategy that’s centered on a game plan for growth.

Given the significance of our near-term commercial opportunities in our long-term value creation to our best-in-class or first-in-class therapeutic pipeline. We believe this investment is highly defensible and justified represents the best use of our earnings. The leverage we are for our shareholders is significant. If I can have the next slide, please. I had mentioned to manufacturing and infrastructure. And this was also a big area investment focus in 2023, and we’ll continue to be a focus in 2024 this investment focus, not only on supply chain and partnership readiness for Pixclara and Zircaix launch of these are following the glioblastoma and renal imaging products, but also scale up of our sales, PDX development, and delivery infrastructure.

I am pleased to particularly note that our self Brussels or CNS side as it was formerly known, has now completed buildout and is now a commission and hot sites and is preparing for regulator inspections to probably go live later this year.

The site significantly underpins our initial launch of our therapy programs globally as well as servicing the European market for logistics or cakes and other products when the requisite approvals are in place complementary to our Sacramento innovation location. We are also building out Hotlab and development infrastructure, our corporate headquarters in Melbourne, to be able to facilitate clinical trial activity in the APAC region, which is of strategic importance to the company.

We are continuing to work towards a high degree of development and clinical self-sufficiency alongside side carefully selected strategic manufacturing, isotope supply and nuclear pharmacy partners. Finally, just as a side note, we’ve commissioned our AlphaLab, as we call it, at the synapse site. This lab alongside the relevant investment and cyclotron infrastructure enables us to internally explore future isotope production technologies around Telix asset team led to 12 and terbium. This is bolted onto the back of our aerial extent of R&D infrastructure, the SNF side and includes two dedicated GMP lines that facilitate manufacturing scale up as we initially used for clinical trials. But in time, we’ll also be available for club for commercial use. This is really world class infrastructure that most companies in our space can really only dream about on paper.

The next slide, please. Finally, on the Illuccix front, you can see we continue to enjoy significant growth for logistics in the US market. We had an excellent second half in terms of growth with clear demonstration that we are taking market share sitting at over 30% on a volume basis. We continue to capture significant oncology accounts, evidenced in our payroll mix.

As you can see from those two pie charts, we’ve seen stable pricing across all reimbursement categories. We have also implemented a price adjustment for 2024. And I think from a perspective, revenue growth perspective, we’re in really good shape. Most importantly, we are seeing just how challenging it is for new entrants to capture any meaningful market share to take a piece of this market is not just about making a product and hopefully having a supply chain. And these are clearly both, quite critically important but also having a sufficient commercial infrastructure in place to effectively engaged 2024. We’ll continue this trend of growth, and we’ll speak to our guys are addressing our European and other jurisdictions, submissions on track and in line with process in each jurisdiction.

So there’s no surprises there. We have disclosed the existence of an elusive lifecycle management program that will deliver further innovation for our customers in 2024 and 2025. And it really demonstrates our commitment to being at the forefront of Urologic Oncology imaging. In short, our customer base continues to grow because of our performance. Our innovation in our SaaS supply chain; these attributes are pretty hard to be and will continue to capture further share this year and beyond.

Darren, over to you to provide further financial commentary.

Darren Smith

Thank you, Chris. Now turning to Slide 9. When we look at our revenue and adjusted EBITDA; 2023 represents still exist first years of losing sales following US commercial launch in April 22 since then. And that’s until by the growth we have achieved significant month-on-month and quarter-on-quarter growth in revenue by continually taking market share in the US, we estimate. So we currently have about 34% of the market volume as a result to Alex’s total group revenue is $502 million; a $340 million improvement on the prior year.

At Telix, we’re not only focused on driving the top line, but rule also line to optimize the contribution of the commercial business and what it generates. We do this by assessing the commercial earnings before our investment into our asset development pipeline. As you can see in the growth of EBITDA, before R&D has continued to improve in line with our growth in revenue. The commercial business obviously is a key funding source for the business within other choices. And that’s how we spend those funds. We can either keep your earnings and pay taxes in the dividend. All we can reinvest them back into to Telix’s third non-stick pipeline to create future value for the business and shareholders. As Chris previously talked about, we have decided to do the latter.

Turning to slide 10, in the group profit and loss, we can see that in 2020 through till it has delivered his inaugural tax profit after tax of $5 million, which is $109 million improvement on the prior year. Most importantly, this result demonstrates that the company has built a self-sustaining business with strong performing commercial business is funding a significant investment into the company’s latest stage diagnostic and therapeutic assets.

Closer attention to the P&L highlights at to Telix’s financial plan. Performance has improved not only on the top line, but across all investment categories. Gross margin has improved to 63% compared to the 59% last year. Reflecting control of its manufacturing costs and optimization of its distribution network. The Company has also continued to invest into commercial capability to grow sales and ensure that we have the infrastructure to support a larger business as we can be seen in the resulting sales growth has outstripped our increase in investments, thus reducing expenditure as a percentage of sales, improving profitability and leveraging the P&L. This performance permitted until it to invest. $128 million into our pipeline supports a third of our workforce that is dedicated to developing the product pipeline, along with $86.3 million invested with our external development partners.

Now turning to the cash flow on slide 11. At the end of 20 to 2023, Felix has achieved five consecutive quarters of positive operating cash flow, resulting DISX. no longer requiring us to launch our quarterly cash flow and activities reports resource. There’s a signal to Telix’s maturation as a sustainable commercial business. This is permitted to Alex to self-fund its product development through its commercial business while maintaining its cash on hand position. This has been supported by a continued focus on customer cash collections and a sound working capital management. It is worth noting that the positive operating cash flows was maintained during the second half of the year, despite including its first annual payment of 16.3 million for the and any contingent consideration.

Also the filing C first, the CapEx of $5.9 million in funding the commercial manufacturing process that qualification and Zeltiq for qualification and validation. So cakes index, Clara. On slide 12 and site specific on slide 12, we can see the detail of the profit contribution from the commercial per foot operations that also you can see this in note three of the financial accounts, which is our segment reporting. Clearly, the numbers presented speak for themselves is that validate to Alex’s commercial strategy and its execution with a growing top line and expenditure reduced.

And as a percentage of sales, the significant sales growth and the continued market share gains is a result of Helix is directed investment into promotional marketing growth programs. The establishment of 226 strong radiopharmacy distribution network, providing proximity to customers and the build-out of a professional sales force to technical support services team that has enabled us to build deeper relationships with our customers. This investment will be further utilized when we bring to market next production to coax FDA willing during this year. No slow.

Turning to Slide 13 and our R&D investment journey. Telix invested $128 million in product development to create future value. As can be seen progress on this slide. The investment was across three important components.

The first, it relates to the Capes and Pixlara in our lifecycle management product development activities. 42% was directed to delivering these two late stage diagnostics to commercial launch. This involved commercial manufacturing process qualifications and validations, the preparation of the US Food and Drug Administration filings and the commercial launch in preparing for the commercial launch, including the starting of the market for the launch, a further 25% was directed towards our late stage therapeutic assets for the preparation and commercial commencement of a large Phase 3 randomized clinical study, prostate global and for the related clinical manufacturing processes to support throughout the final 33%. This relates to Telix ‘s internal assets, which is its development teams that are responsible for delivering the development of Texas pipeline towards commercialization.

In summary, still needs to be considered a biotech. We have a date certain Bostik pipeline commercial business that is growing and taking market share while funding our development. I’ll now pass you over to David Cade — Dr. David Cade, to take you through the pipeline. Thank you.

David Cade

Thanks, Darren. Always a pleasure to talk clinical. I’ll move on to Slide 15, please. So this is our core pipeline that I think most investors are familiar with this. However, there’s a number of key takeouts that I would like to highlight. If you look across the imaging portfolio, there’s a significant momentum for lose six beyond the US commercial performance.

With that, which Darren talked about, I think reflecting the truly global nature of the company. And specifically the global rollout of a low six are currently awaiting a European approval decision, which we anticipate this year. And of course, over in the Far East, our registration enabling Phase 3 trial in China is recruiting very strongly, and it’s on track not to complete recruitment in the second half of the year. And that really does reflect the or the very strong and close collaboration with our partner, China, Grand Pharma.

What I’m really excited about is the momentum behind the first in class imaging agents of their CapEx for kidney cancer and Pixlara acquired last summer, and Brian and getting these into the hands of now extraordinarily capable of U.S. sales force. So although the market opportunity for these assets shortly as well as some of the highlights of the progress the company’s made across the therapeutic programs. Next slide, please.

So when we look back over 2023, it really is quite astonishing what our development teams have achieved from new data generated from the therapeutic recruiting patients into ongoing and new trials and to the regulatory filings to the FDA for the registration of new products. This really we truly is a huge amount of activity across the company’s portfolio. If we look at the prostate program for Crosstex, select study generated really valuable safety data to the hit towards the end of last year. And together with the Cuban study of Telix, is targeted alpha therapies program.

It’s going to generate further clinical data, including some early efficacy data during 2024 with prospect global, which I’ll give some more color on in a moment. It really was pleasing to see this Phase three pivotal registration trial commenced recruitment here in Australia. And I do look forward to opening this highly anticipated study in North America and other countries over the coming months. Turning to the CI. nurse by to actually came up that have a poor prognosis. And we’ve seen some very, what I call encouraging data emerging from the Prostate Essence study in women with triple negative breast cancer while on the therapeutic front, CI9 is a very active program with the Starlight two trials are progressing very well.

And we’re expecting some initial data from this trial because there are no program, it’s pleasing to see the company makes such rapid progress in this disease state. It’s a disease that continues even in 2024 to have very grim prognosis with fixed Clara for the imaging of glioblastoma would have had extensive interactions with the FDA. And we have, I think, what we believe to be a clear path to an NDA filing for this asset by asset.

And on the therapy front, we continue to develop TLX one-to-one in both the frontline and the recurrent disease settings in the OpEx family at studies and in OpEx to with one or one where it’s used in the frontline setting, together with conventional radiation therapy and chemotherapy following surgery, December dose escalation study that aims to identify the optimal dose for Telix one or one for us to take into Phase two and ultimately registration enabling trial, which we do plan to do and initiate phase towards the end of the. I won’t spend too much time on the rare diseases program. Suffice to say, our early-stage assets, the soft tissue sarcoma and bone marrow conditioning will be heading towards the clinic.

Moving to slide 17. This is the design of our multi-center international randomized trial, known as prospect global in up to 400 patients, which recently commenced equipment in Australia that was November of last year when we started that. So in this pivotal study are patients with metastatic castrate resistant prostate cancer who prefer, yes, on a prior androgen receptor pathway inhibitor or a chemotherapy agent such as docetaxel that have PSMA positive disease, not going to be randomized on a two-to-one basis to receive standard of care with the second IRPI. or docetaxel plus heart nine one, which is the investigational agent for the standard of care alone with a very standard, highly used primary endpoint, radiographic progression-free survival of the primary outcome measure.

And what I would like to get across is that we’ve done a huge amount of homework in designing this trial, which has had considerable patient import into its design. And it’s really seen as a compelling study from both leading clinicians in this therapeutic area and importantly, patients as well.

Next slide, please. So saying in the realm of prostate cancer in acrylics, recently completed with Tom entered into an agreement soon to complete to acquire QSAM Biosciences based in Austin, Texas. And that companies investigational bone seeking agent noted some area and 1,320 and eight, which I’ll, for simplicity sake of, I’ll call it data and paid. And the reason for that is that that’s the key leader that is critically differentiated in this asset. The reason we acquired this asset is because ultimately virtually all patients with advanced metastatic prostate cancer will progress. And we say this is a highly complementary asset to our existing portfolio, given that the need for specific palliation of bone pain is really such a hallmark of late-stage prostate cancer.

So really there are two major potential and the applications of the asset in the clinic on firstly, palliative management of bone pain caused by bony metastases from prostate cancer, but also from breast cancer and lung cancer amongst others that tend to exhibit skeletal involvement.

And second memory, osteosarcoma of bone cancer, including in the pediatric population. Moving on to the imaging portfolio. I’d like to give a little bit more color around 50 CDx, which we which we called their CapEx. And the next slide, please. This is how we view the US market opportunity for their CapEx in our rental imaging, which we’ve shown before and announce it really amounts to a total addressable market value of USD500 million in the first instance, with the potential to expand this through new indications and the evolution of clinical practice guidelines.

So the cases a first in class imaging agent for renal cancers that I believe may do for the staging and treatment decision making around kidney cancer. While PSMA PET imaging has done over the last two to three years for prostate cancer. And while we anticipate FDA approval for their CapEx towards the end of the year, were put in place an expanded access program to ensure ongoing patient and physician access to the asset prior to the FDA’s formal marketing approval and the commercial launch of the asset towards the end of this year.

So on the left-hand side, really there are two main clinical settings in which the case may be used. Firstly, for the characterization of a real mess that’s been found in a patient as either renal cell carcinoma or not. In other words? Yes, as a surgeon, I’ll need to take it up for. The patient may be suitable for a more conservative management and active surveillance.

And then secondly, in patients with no one renal cell carcinoma to accurately stage disease for patients who have undergone surgery for renal cell carcinoma to provide long, but you know, surveillance with imaging to enable the detection of recurrence of their disease, particularly my question is with Harvest visits.

And on the one hand side, I won’t go into too much detail on represented this before, but our initial market opportunity amounts to over 100,000 tons expects the cake scans of the year. We are very rich potential to bring the benefits of the cat and non-cat imaging to adjacent indications.

Moving on to a fixed [indiscernible]; this is our brain cancer imaging. And this is how we view the US market opportunity for the Explorer for the imaging of brain cancer, which amounts to a total addressable market value of over $100 million from launch, but again, with significant potential to expand this through new indications. So we’re getting very close with the FDA to filing the NDA package, and we’re currently implementing an expanded access program. Again, this asset so that patients can have access to it prior to the official conventional commercial launch.

So on the left hand side, I think it’s worth explaining how it may be used. We’ve outlined here three main clinical settings in which picks power would be able to provide clinical utility. So firstly, in patients with glaucoma, so which serve Adrienne radiation therapy at the mainstays of treatment today in our eye is not able to distinguish in up to 40% of patients, whether the patient’s disease is responding to the treatment arm or whether it is fair to say in this setting, picks power is better able to distinguish between what we call pseudo-progression, which does not affect the treatment, what true disease progression.

And that’s a critically important decision because these patients need to be actively traded that don’t have a long processes. Secondly, Pixlara by defining where the glioma is most biologically active could provide valuable information for radiation treatment planning. And then there’s a third clinical application, potentially where there are many other can’t have a predilection for McKesson sales into the brine.

So we believe is the case may have a role in the future in for us in the status of the cerebral component of these diseases. And then on the right-hand side, Al initial market opportunity to amount amounts to over 20,000 scans Explorer a year, and that’s based on the annual incidence on. And unfortunately, these patients have chronic written prognosis.

Typically a median survival of 12 to 15 months are really critical for that. In addition to understand whether the disease is responding to treatment or progressing. So with that, I hope that gives an oversight of the second and third cabs off the rank in terms of commercial assets. And with that, I’ll hand back to you, Chris. Thanks very much, David.

Moving on in the in the package to slide number 23. So this is our inaugural guidance to the market as we transition to a rather different operating basis, does that have a profitable company. It’s appropriate to give forward-looking guidance. So our expected revenue for 2024 will be in the range in USD40 million and USD45 million to USD465 million, and that’s $675 million to $705 million as the at current exchange rates. This represents a 35% to 40% increase over last year.

I want to make it very clear that this guidance is based on worldwide sales of a loose six in jurisdictions in which we currently have regulatory approval. So it’s not based on speculative or future approvals. It’s based on approvals that we have today. There is, of course, upside in these numbers from the approval of the CapEx and picks client, which are reasonably expected this year as well as further territory approvals for at least six over the course of the year. And as we get those additional product and jurisdictional approval approvals, we will then update guidance appropriately.

And accordingly, additionally, we expect to invest around 40% to 50% more in R&D compared to last year. This includes both Agency this from a little charts on the right, both the internal staffing and headcount and infrastructure, as well as external manufacturing and R&D costs. We expect to fund the entirety of our R&D activities through operating cash flow and broadly in line with this revenue growth.

As you can see, and I think if you take a look at the allocation of R&D investment going forward, you can see that there’s a greater focus on therapeutic programs. And while we will continue to do to make further investments in our imaging programs, really what you’re seeing now is that a transitional trajectory towards investment in our therapeutic pipeline.

But I think for those shareholders that look at Helix is outlook as a healthcare company, clearly expanding our indications for our existing commercial programs, logistics lifecycle management to maintain our presence in the market and to continue to innovate. That platform is still a meaningful. So our investment for the company 2024 R&D activity is really summarized in three major buckets, as David said, really getting the market our launch in place for our to follow on products. And you can see that the commercial opportunity of those products can certainly eclipse our current sale of the Lutonix.

Second of all, we are we’re pleased to be operationalizing our Phase three trial, and that includes very shortly, the U.S. as well. And we expect to also add European and additional APAC sites later this year. So really that’s a significant part of that therapeutic investment allocation out, right. And of course, the broader pipeline still remains as important as well in terms of in terms of progressing ahead.

And then finally are clearly the lifecycle management of Olympics and ongoing indication expansion and really maximizing our competitiveness for our core money earner right now is a key focus for the business.

Moving onto the next slide, so just to summarize, I think this is a very comprehensive viewpoint, Telix. It summarizes the prospects of the company very nicely. We have a fantastic pipeline of late-stage therapeutic programs that are making tremendous progress. And I think David really eloquently articulated all of the clinical piece progress that we’re making. We’re recruiting patients every day and every week, every month into those into those programs.

And we have a ton of data readouts over the course of the year to encourage you to go back and have a look at the pipeline slide and look at the milestones that are so here, our commercial team is going to be super busy with the launch of to further products and geographic expansion of the logistics. And we are currently commercially active and four jurisdictions as an approved product. I expect that we will be active and over 20 jurisdictions by the end of the year.

So this is really a massive year geographic expansion and of course, revenue de-risk. And of course, we continue to make sure that our lead program is the best product cancer imaging agent in the market. We also have our future pipeline. You know, the Calyxt in five years, our pipeline coming in behind, we’re going to have some exciting opportunities to talk about our next-generation products, particularly our Alpha programs over the course of the year. And we will continue to invest where appropriate and where it’s complementary to our existing partnerships in vertically integrating our supply chain and nine factoring activity. And I think everybody on the line knows that’s a critical activity for a radio pharmaceutical company, particularly one of our size and stage of commercial development. So I’ll leave it there.

That’s the last slide out in the presentation. And I’d be pleased to open it up to the floor for questions from analyst.

Question-and-Answer Session

Operator

[Operator Instructions] David Stanton, Jefferies.

David Stanton

Morning team, and thanks very much for taking my questions. I wonder if you could give us an idea of what you’re thinking for percentage gross margin for ’24. Should it be similar to down on F23 given you’ve had that you’ve taken price?

Kyahn Williamson

I don’t think that we’re expecting a great change. We see plenty of reasons to have pricing stability remain in 2024. We haven’t seen the competitive perturbations around our pricing yet that really gives us concern around gross margin. We also continue to invest in manufacturing infrastructure and operational improvements that will, you know, we’ll continue to maintain or perhaps even slightly improve gross margin. And then clearly the follow on products. I mean, logistics has a certain production and distribution profile of the follow on products have some similarities with a loose six in terms of our cost base. But I think that that sort of 65% to 70% gross margin should be taken as an indicative gross margin for an imaging product in the TLX portfolio.

David Stanton

Understood. And in terms of the second question, in terms of prospects select and the PFS data that we’re looking forward to seeing, we should still thinking around the middle of the year, calendar 24 for that?

Kyahn Williamson

It’s been hard to say, David, because it’s an event-driven process. So you know it. And fortunately, unfortunately, a certain number of patients after progress before we can make that readout take place. And those events have not yet happened. We closed the probably. So we’re still waiting for adequate progression data to add to enable us to give that readout. But best guess at this point in time is sometime around the middle of the year, probably until you make an offer on one of the it’s one of those perverse things, right? We’re no longer is better in some respects, even though it’s since it’s frustrating for the market. Understood.

David Stanton

And finally, last one from me and thanks for that extra clarity on the contingent considerations, the MD and me on contingent consideration looks like it’s around 10% of illicit sales. Is that is that correct? Just broad brush? Thank you. Brought broad-brush. I mean, it said there is some have deducted from that. But that’s roughly correct. And obviously, I mean, we’re only paying this consideration out as a function of commercial success. It’s not as we’ve disclosed to the market before. It’s not in a never-ending contingent consideration. It’s only for a period of time and there is the ability to add to the terminated after three years. So this is something that people are just going to have to get used to seeing it a function of our commercial success. Understood. Thank you.

Operator

Laura Sutcliffe, UBS.

Laura Sutcliffe

Hello. Thank you for taking my question. First one is just on the preparations for those that came through a complete and what sign offs in terms of manufacturing facilities do you need to get it launched in the US?

Kyahn Williamson

Yes, good morning, Laura. Thank you for your question. So we have we have fully engaged the manufacturing infrastructure that we will be using because in order for us to engage in a BLA submission process, those things need, those manufacturers have record need to be defined. We haven’t for commercial and competitive reasons yet and disclosed to the market who are manufacturers will be. But obviously, as we start to get ready for commercial launch, that, that information will come into the public domain. But as of this point in time, all of the infrastructure that we need ranging from raw material production antibodies, production systems for zirconium, nuclear pharmacy partnerships for distribution, which we have several of those, that infrastructure is all in place and validated for commercial launch; so I think.

Laura Sutcliffe

And then a second question, just on Zircaix and possibly payment. I’m sorry, I’m extremely bullish on this topic, but I think Lantheus that either night that they think about 20% of prostate cancer patients impacted by that price reduction as a result of the end of pass-through?

Kyahn Williamson

I think that’s somewhat lower than I than what we’ve assumed third tier. And that’s our forecast to be a little bit too hot. I realize you can’t comment on lumpy business, but perhaps you could tell us what you think that portion looks like CityLink. Well, we don’t have I mean, you’re right, you are right on more than Board of the topic of pass through. But I can also understand why it’s an important topic to kind of get right Lantheus until it’s don’t have a terribly different payer mix and that, you know, the and the impact of pass-through has a very defined payer mixes. So I think it’s relative straightforward to calculate.

I don’t think Lantheus this commentary is too far off the mark on. I think that we have to remember that pass through only effects of certain segments. So there’s a certain analysts model that implies that when pass through ends for one vendor, just kind of moves to the next person because they sell expediency in that in practice, we all service customers that have multiple payer segments. And so the net result is you’re going to see a drop in ASP across the average of those payer segments. We don’t think that drop is dramatic. We think that tap the market will continue to grow. That top line in the business will continue to grow even post pass-through environment. We think that our customers there are sticky and have chosen our products for a reason and remain loyal to the product that had Lantheus would make a similar claims.

And given that we are competing in effectively with each other in the market. And I think we would both agree that the appearance of new entrants and there hasn’t been particularly dramatic or successful. So I think that that customer relationship continues to be an important factor in how the market plays out over the next 18 months. That said, we don’t take any chances on pass-through. So whilst as an industry in a topic that has a lot of spotlight from an analyst’s perspective, clearly a lot of people are thinking about it. We’re going to make sure that when our pass-through expires that we are in the market with a lifecycle management that preserves our position in the market. And so we know we have a multi-pronged approach to managing our position in the market, which is about maintaining our ongoing commercial relationships, being part of the industry, lead reform of the reimbursement landscape for this class of products, and then also making sure that our life cycle management strategy specifically addresses the topic of pass through.

Does that answer your question?

Laura Sutcliffe

Yes. As I look at it leads to my last question, which is there anything you can say to us at the moment about the opportunities for and lifecycle management of analytics driven working really hard on this for many months.

Kyahn Williamson

And we expect to have a follow on products filing in the first half of this year. And we will give more detail to the market at the time which that that filing takes place, including the indications associated with it.

Laura Sutcliffe

Thanks very much.

Operator

[Operator Instructions] I’ll now hand back to Ms. Caldwell [ph].

Kyahn Williamson

I mean, clearly incentive to address any webcast questions. Thank you and have further questions on the webcast. Is the bulk of R&D spending, if like, going to have current FY24? Or do you anticipate similar levels of R&D over the next few years?

Christian Behrenbruch

I don’t really understand that question. We haven’t given guidance beyond FY 24. But again, I think it’s worth reiterating what the commercial strategy of the Company is. We believe that the best use of our earnings is to reinvest into the Company’s pipeline. That doesn’t mean that over the course of time, we might take a more diversified view of where our earnings go. I mean, I think I speak on behalf of have Darren with we’d like to see maybe a little bit more allocation to risk management.

A little more allocation towards building a balance sheet gives the Company optionality for strategic transactions. So I think there’s plenty of things that can be done to grow the business with that cash and of course, to risk manage the business. But for the foreseeable future, you know, shareholders should understand that we are going to invest proportionately into our R&D programs. We have a terrific pipeline. We’ve shown already that we can build USD2 billion of enterprise value in the company’s just with one product fast, where we can significance jointly increase that enterprise value.

And so I know our strategy is to continue to do that. And clearly, the big prize and all of this is our therapy programs. And over the last couple of years, we’ve been able to invest and develop those therapy program to the point where they’re there on the cost of adding value to the business as well. So I think in a nutshell, that’s the game plan for the Company and isn’t going to change in the near future.

Kyahn Williamson

Thank you. Our next question is I understand the growth in R&D and sales and marketing investment. What is driving the growth and admin expenses, if this is the go-forward cities to grow much slower than revenues?

Christian Behrenbruch

I mean, you’ve seen it over the course of the last three years, our admin costs as a proportion of revenues has decelerated significantly. And we expect that trend to continue. SG&A is not going to grow at the same rate as our revenue because the incremental cost of prosecuting the current commercial opportunities is much lower than the revenue streams that they enable. So I mean, just as a kind of a rough kind of signal, we would expect SG&A, which is predominantly US SG&A. Of course, Europe will also increase a little bit around the middle of the year as we expect to get our arms our regulator guidance around at least for the European market. But you know, since the second half of the year, Europe will increase a little bit as well. But for US SG&A, we expect to see it now have 15% increase this year, and that’s clearly a much, much smaller increase than the expected revenue forecast. So I think that some modest SG&A increases, what should be reasonably expected from a commercial evolution of the business perspective. I hope that answers the question.

Kyahn Williamson

Thank you. Our next question is when do you expect to complete a rolling submission certificates?

Christian Behrenbruch

Great question. And we have actually have answered this question in the public domain before our agreed time line with the agency is to have it completed by May. Thank you.

Kyahn Williamson

And what will be the triggers for the past that global interim readout? And what type of data do you expect verticals?

Christian Behrenbruch

So we’ll be talking a lot more about the prospect global study over the coming over the coming months. You know, a lot of it is dependent right now on getting our IND finalized with the FDA, which we’re making great progress on that. And that’s an imminent event. That trial design will then obviously be I’m much more the focus of investor attention and we’ll be spending a lot more time talking about it. We do expect on the basis of our current clinical recruitment plan to have an interim readouts that would be able to provide a preliminary PFS signal from the global trial. We would expect to have that readout recruited by around the end of Q3 of this year.

That would lead to a first half of next year. Likely interim readout from the study. And we’ve designed that interim readout in such a way that it will enable us to compare to the rPFS signal from ProstACT select. I’d like to remind you that the ProstACT trial and while it’s a similar patient population in some respects to the prospect global trial, it’s a little bit more advanced stage each patient. So I’ve described the patient population is somewhere between a prospect, global flash PSMA for trial and the VISION trial. So it’s still going to sort of in the middle of the mixture of those patients on. So the PFS result that we’re going to get this year, it’s going to be a really interesting kind of flag in the sand for PFS. Yes, then we want to be able to compare that PFS to what we see in the prostate global trial, which is in a true second line patient setting.

And again, to reiterate, we expect to be able to do that in the first half of next year. So yes, these commercial milestones are not far off for the prospect global trial.

Operator

Laura Sutcliffe, UBS.

Laura Sutcliffe

Thank you for taking my questions. And just one this time around, I think you mentioned just now I’m sorry if I misheard that would be an opportunity to talk about the alpha emitter at some point this year. Could you just give us a little bit more color on what you had to do that?

Christian Behrenbruch

We actually have several alpha programs, but I assume you’re meaning our five nine two actually. So we have actually completed the CUPID two trial. We’re expecting we’re just going through the machinations right now of closing out that study and reporting data. And we should have a readout to talk about the market in the next couple of months.

Laura Sutcliffe

Thanks.

Operator

John Hester, Bell Potter.

John Hester

Good evening, Chris, just on the interim readout from the Crosstex LIG study, we’ve got a few data points it from competitors in the market to the call to the PFS of 9.5 months in the Novartis product at 12 months. What sort of number for parking that you would hope to achieve with prospects slate and done? And what would be the number that you would have to consider this trial is not worth progressing if you if you didn’t achieve a certain level of rPFS, while we wouldn’t give speculative guidance on what a PFS might or might not be?

David Cade

I think that if you look at the range of trial PFS is the range from mid sixes up to them, not quite sure you’re somebody that PFS is quite right there on vision. But nonetheless, the range of PFS tends to be in the six to seven and above. I think that we always have to remember and clearly we have published PFS data for this asset before. So you don’t historically looked at up, but I think that fundamentally on PFS isn’t a strong indicator of overall survival. So it’s really more of an indicator of whether our dosing regimen as effective or not. And yes, we’ll look forward to providing that update when it’s available. Just to remind you of my earlier comments, we finished recruiting the prospect SELECT study in May of last year. And so we’re still waiting for you now have sufficient events to be able to report the study out. And so giving guidance beyond that at this time isn’t feasible.

John Hester

Fair enough. I wasn’t actually referring to the VISION study in my comment was the subsequent have a strong, but I want to get hung up on that. But you said that our PFS is not an indicator of overall survival. Is that so I understand that correctly. Is that correct?

David Cade

Yes, yes. So look, across every across every study that’s been performed with these assets with the PSPSMA class of assets. And indeed, many of the androgen receptor inhibitors as well on PFS is not a strong predictor of overall survival. So it’s a useful measure. It’s the usual useful measure of whether or not some things worthwhile taking a deeper look at but it’s not really a prognostic measure.

John Hester

Okay. We’ll perhaps we’ll explore and upon. But thank you very much.

Operator

If there are no further questions at this time. I’ll now hand back to Ms. Kyahn Williamson for closing remarks.

Kyahn Williamson

Yes. Look, I quit country, we really appreciate the time taken to tuning in and we’ll be looking forward to keeping you abreast of that progress over the coming of the company.

Operator

Thank you very much, everybody. Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.