See it.
Treat it.
Annual Report
2019
CONTENTS
Mission
Business overview
Chairman’s letter
CEO report
Clinical pipeline
People
Partnerships
Executive team
Directors’ report
Financial report
Shareholder information
Corporate directory
02
04
05
06
08
12
13
14
16
37
89
92
Annual General Meeting
Telix Pharmaceuticals will hold its AGM
at 11:30am AEST, Tuesday 12 May 2020 at:
The Larwill Studio
48 Flemington Road
Parkville VIC 3052 Australia
Registered Office
Telix Pharmaceuticals Limited
401/55 Flemington Road
North Melbourne VIC 3051 Australia
Australian Business Number
85 616 620 369
Telix Pharmaceuticals Limited
Annual Report
We are a dedicated team
of drug developers, clinicians
and executives, with a passion
for radiation biology and oncology.
Telix’s pipeline focuses on unmet
needs in cancer care, specifically
in prostate, renal (kidney) and
glioblastoma (brain) cancer.
1
Annual Report
Telix Pharmaceuticals Limited
Mission
Our mission is to help patients
with cancer live longer with a
better quality of life.
MOLECULARLY TARGETED RADIATION (MTR)
MTR drug
The radioactive isotope (the payload) is connected
to a small molecule or antibody (the targeting
molecule), which binds to a cancer cell.
A specific target on the cancer cell is the ‘address’
to which the radioactive isotope will be delivered.
Intravenous injection
MTR is administered via the blood stream and
binds to cancer cells, wherever they are, including
small metastases.
Targeted delivery of radiation
to cancer cells
MTR binds to a specific target on the cancer cell
• Low doses may be used to image the
patient’s cancer (See the cancer)
• High doses destroy the cancer cells
(Treat the cancer)
Quality of life
Radiation relieves the pain of bone metastases
2
Telix Pharmaceuticals LimitedAnnual Report Telix Pharmaceuticals Limited
Annual Report
MTR enables precise diagnostic imaging of a cancer.
PET 1 scanner generates
diagnostic image
Advanced prostate
cancer image using
TLX591-CDx2
Advanced kidney
cancer image using
TLX250-CDx 3
Brain cancer image
using TLX1014
MTR is highly effective at treating cancer.
1. Positron emission tomography.
.
2. Courtesy of Dubai Nuclear Medicine & Molecular Imaging Center, UAE.
3. Courtesy of Radboud University Medical Centre, Netherlands.
4. Glioblastoma multiforme, courtesy of Kepler Universitats Klinikum and Medizinische Universitat Wien, Austria.
3
Telix Pharmaceuticals LimitedAnnual ReportBenefitImpactAccurate cancer stagingOptimal patient selection Personalised therapyPersonalised radiation dose for the patient’s cancer burden Reduced side effectsBenefitImpactPreciseActs only on cancer tissue, with minimal ‘off-target’ damage to healthy tissuesSystemicTargets cancer cells wherever they are located in the bodyDurableTargets cancer cells. Radiation also destroys the tumour micro-environmentMulti-modalRadiation damage mobilises the immune system which contributes to the treatment responsePersonalisedDiagnostic imaging enables accurate cancer staging, patient selection, treatment planning, therapy optimisation (personalised MTR dose)SynergisticCompatible and often synergistic with other cancer treatmentsQuality of lifeRelieves pain of metastases
Annual Report
Telix Pharmaceuticals Limited
Business overview
2015
Founded
2
Two commercial
product launches
with current cash
reserves
8
Clinical trials
in progress
65+ 17
Countries
in our
distribution
network
Countries
in which we
have a clinical
and regulatory
footprint
INDIANAPOLIS
United States
Regional Office
10 people
KYOTO
Japan
Regional Office
5 people
BRUSSELS and LIEGE
Belgium
Regional Office
27 people
4
MELBOURNE HQ
Australia
Corporate Head Office
20 people
Telix Pharmaceuticals LimitedAnnual Report Chairman’s letter
Telix Pharmaceuticals Limited
Annual Report
With clinical activity in 20 countries, Telix
has built an excellent global reputation in an
astonishingly short period of time.
H Kevin McCann, AO
Independent Non-Executive Chairman
Dear Shareholders
The past 12 months represented a period of significant growth
and transformation. For Telix, 2019 was about building the
clinical experience with our product pipeline, establishing the
foundation of a revenue-generating company and furthering
Telix’s engagement with the global oncology community
through meaningful commercial partnerships. We successfully
demonstrated all these important aspects across the backdrop
of a year of significant growth in the capability and maturity of
the Company.
There are four areas of accomplishment that warrant particular
mention. The first is the Telix team. Delivering advanced
healthcare solutions is a people-centric business and over the
last year Telix has significantly built out the executive team of the
Company with some outstanding operational and commercial
additions to the executive team. It has been a focus of the Telix
Board to support the executive team in addressing founder and
key employee risk in a systematic and considered way. Telix now
has a leadership that is of the calibre and functionality expected
of a growth-stage biopharmaceutical company.
The second area of focus – and a continued focus in 2020 –
is risk management. As the Company grows in its operational
scope and stage of product development, a more sophisticated
and comprehensive risk-management framework is critical,
particularly as Telix brings its first products to market. The
transition from a development-stage company to a commercial
entity means that, as a Board, we must be more attuned to the
competitive, regulatory and commercial risks that are inherent
to the commercialisation process. These are exciting times for
the Company, but they are also complex.
Telix has built further credibility
with clinicians, regulators and the
wider pharmaceutical industry
as a company with a strong
commitment to patient care.
Financial stability and the resulting operational resilience of
a properly capitalised enterprise was also an important focus
for the Company this past year. We were appreciative of the
support from both existing and new shareholders for our over-
subscribed placement and rights issue, raising $45M of further
capital. Our augmented balance sheet puts us in a strong
position to not only complete the launch of Telix’s first product
in Europe and the United States (TLX591-CDx for the imaging of
prostate cancer), but to also complete the clinical development
of our second product (TLX250-CDx for the imaging of kidney
cancer), further de-risking the commercial future of the
Company.
Finally, the Telix team had real-world impact. This year we
delivered benefit to over 11,500 patients through clinical trials
and compassionate use access to our product pipeline. This
activity has helped us to build further credibility with clinicians,
regulators and the wider pharmaceutical industry as a company
with a commitment to patient care and the capacity to deliver
at the level required to impact human health. With clinical
activity in almost 20 countries, Telix has built an excellent global
reputation in an astonishingly short period of time.
Although 2019 was a critically important year for Telix, 2020 will
be a pivotal year. In 2020 we expect to become a fully fledged,
commercial-stage company with first product approvals. Our
engagement with regulators this year has been positive and
helpful in terms of steering our development strategy towards
marketing authorisations in key commercial territories. Our
Australian and international teams are ready to deliver on the
next major milestones of the business.
I wish to extend my sincere gratitude to Telix’s people, our
CEO and Management team, and our shareholders for the
commitment they have demonstrated through the year.
We look forward to keeping you closely informed of our
progress as the year proceeds.
H Kevin McCann, AO
Independent Non-Executive Chairman
5
Telix Pharmaceuticals LimitedAnnual Report Annual Report
Telix Pharmaceuticals Limited
CEO’s report
These are exciting times and we are focused on
building a commercially aware and performance-
based culture within the business.
Christian P. Behrenbruch, PhD MBA JD
Chief Executive Officer and Managing Director
When my co-founder Dr Andreas Kluge and I started Telix in
late 2015, we did so with the conviction that the field of Nuclear
Medicine was ready for commercial ‘prime time’ and that
diagnostic and therapeutic (‘theranostic’) radiopharmaceuticals
would become an asset class that would finally capture the
attention of clinicians, pharmaceutical companies and the
investment community. Four years on, it is evident that we
are operating in a landscape that has a significant amount
of momentum and the last 12 months clearly reflect this.
The fundamental philosophy of Telix’s Management team is
that if we can develop products that address true unmet clinical
need, and develop them well, then the commercial success
will follow. Of course, commercialisation of pharmaceutical
products is fraught with its own set of risks, independent of the
clinical realities of drug development. This is why an important
part of de-risking the future of the business has been to invest
in people and capabilities that deliver the commercial nous
needed by the Company at this critical juncture.
As such, we invested in the expansion of the leadership team
and key functional hires and I have been personally delighted
with the calibre of people we have been able to recruit, not
just in Australia, but also internationally. Although we continue
to invest in our Melbourne-based headquarters’ team, most
of the growth is in the US and European teams as we gear up
for commercialisation in the major markets for our products.
These are exciting times and we are focused on building a
commercially aware and performance-based culture within
the business.
In 2019 we generally delivered well on our clinical objectives.
We activated a tremendous number of clinical sites around the
globe and we successfully engaged with key opinion leaders
(KOLs) in each of the disease areas that we are active in. We
delivered prostate cancer imaging doses – and patient benefit
– to over 11,500 patients around the globe, evidence that
there is a genuine demand for the technologies that Telix is
developing. Telix does not yet have any regulatory-approved
product and our ability to impact patient outcomes is currently
limited to clinical trials and various investigational exemptions.
That said, our presence is being noticed and the commercial
and partnering interest in our pipeline is real.
We also missed some targets in 2019. We had expected to
complete the ZIRCON Phase III trial for TLX250-CDx (imaging
of renal cancer) by the end of the year. Instead, this trial is now
expected to complete recruitment around mid-2020 due to the
relatively late addition of US sites – approximately six months
behind schedule. The rapidly evolving landscape of prostate
cancer care also meant that we elected to more closely align
partnering discussions and Phase III trial development for
TLX591 (prostate cancer therapy). This has introduced a few
months of delay around key regulatory consultations, although
we feel that our submissions are much more robust because
we have had ‘Big Pharma’ input into their design. This is also an
important market education exercise, and we need to get it right.
Telix generated some early sales in 2019, with $4.4M in orders
of the TLX591-CDx (prostate cancer imaging) kit received and
revenue of $3.5M booked. Although this revenue is nascent
and hardly indicative of the market opportunities we are
pursuing, this revenue is also meaningful because it required
the Company to develop the frameworks and infrastructure to
deliver a commercial product. In practical terms, this has meant
a soft launch of our commercial machinery in advance of the
various marketing authorisations we expect to achieve in 2020.
This represents a significant de-risk of the business and we
have learned many hard lessons along the way that set us in
good stead for actual commercial launch.
We are ready.
Although the development
strategy and timelines for
therapeutic drugs are far more
complex than diagnostics, the
inflection points are also
much greater.
6
Telix Pharmaceuticals LimitedAnnual Report Telix Pharmaceuticals Limited
Annual Report
2020 will be a truly
transformative year.
11,500+
We delivered prostate cancer imaging doses – and
patient benefit – to over 11,500 patients around the
globe, evidence of the demand for the technologies
that Telix is developing.
Our stated mission is ‘to
help patients live longer with
a better quality of life’ and 2020
represents the year where the
Company truly has the potential
to deliver on this formidable and
worthwhile objective.
Finally, collaboration. Telix had an excellent year of high-
level collaboration and engagement with the pharmaceutical
industry. Our collaborations with Novartis and Merck Group are
just a few of our active partnerships that will continue to deliver
interesting scientific and clinical outcomes in 2020. We are also
on the radar of a number of key players in Radiation Oncology
and Interventional Oncology, and we are actively looking at a
number of clinical indications for our existing product pipeline
that could lead to expanded use of our products in the future.
Of course, none of this progress would be possible without
the commitment of our shareholders, employees, clinical
collaborators and – above all – patients. Our stated mission is
‘to help patients with cancer live longer with a better quality of life’
and 2020 represents the year where the Company truly has the
potential to deliver on this formidable and worthwhile objective.
Christian P. Behrenbruch
PhD MBA JD
Chief Executive Officer and
Managing Director
Whereas 2019 was the year that the IPO ‘black box’ was
unlocked, and we were able to demonstrate to clinical and
commercial stakeholders the immense potential of our
business, 2020 is truly the pivotal year. In 2020, we expect
to achieve our first marketing authorisations in the US and
Europe for TLX591-CDx (prostate cancer imaging). Close behind
is the kidney cancer imaging product (TLX250-CDx). With the
$45M over-subscribed capital raise that was completed this
year, we have runway out to at least mid-2021. Our balance
sheet is in a strong position to cover the financial needs of the
commercialisation of our first two products.
In 2020 our therapeutic programs will also attract more
attention as we start to achieve the regulatory clarity required
to move these assets ahead to the next stage. Although the
development strategy and timelines for therapeutic drugs are
far more complex than diagnostics, the inflection points are
also much greater. We have already given a glimpse of progress
with our glioblastoma program (TLX101) and the urology
therapeutics programs (TLX250, TLX591) are getting very
close to commencement of the next wave of trials. The
clinical community is excited about these assets.
7
Telix Pharmaceuticals LimitedAnnual Report
Annual Report
Telix Pharmaceuticals Limited
Clinical pipeline
Telix is a pre-commercial stage pharmaceutical company focused on the
development of diagnostic and therapeutic products for prostate, kidney
and brain cancers using Molecularly Targeted Radiation (MTR). In their very
essence is a precision medicine approach, whereby the diagnostic product
is intended to identify patients suitable for treatment and monitor those
patients’ response to treatment, while the therapeutic product is intended
to treat the cancer that has thus been identified with the diagnostic product.
Telix’s clinical development programs for its diagnostic products support
the development programs for the accompanying therapeutic products.
Consequently, Telix’s diagnostic products provide an opportunity to
generate early revenue, gain physician familiarity with MTR, and de-risk
the therapeutic programs.
See it. Treat it.
TELIX’S ADVANCED PIPELINE OF MOLECULARLY TARGETED RADIATION
PRODUCTS FOCUSES ON THREE MAIN CANCERS1.
Targeting
Molecule
Cancer Cell
Target
Radioactive
Isotope
Phase I
Phase II
Phase III
Commercial
Small molecule PSMA (3)
68Ga
TLX591-CDx (5)
Imaging
Imaging
Antibody
PSMA
177Lu
TLX591
Antibody
CAIX (4)
89Zr
TLX250-CDx
Therapy
Imaging
Imaging
Antibody
CAIX
177Lu
TLX250
Therapy
Small molecule LAT1(6)
Small molecule LAT1
124I
131I
TLX101-CDx (Research use only)
Imaging
TLX101
Therapy
e
t
a
t
s
o
r
P
y
e
n
d
K
i
i
)
2
(
n
a
r
B
1. Shaded arrows indicate development objectives over next ~18 months.
4. CAIX = Carbonic anhydrase IX.
2. Glioblastoma multiforme (GBM).
5. CDx = Companion diagnostic.
3. PSMA = Prostate-specific membrane antigen.
6. LAT1 = Large amino acid transporter 1.
8
TLX591-CDx(5)TLX591TLX250-CDxTLX250 TLX101-CDx (Research use only) TLX101 Prostate cancer
Telix’s prostate cancer program comprises the prostate
cancer imaging product TLX591-CDx and the prostate cancer
therapeutic product TLX591. The TLX591-CDx program is the
Company’s most advanced program, with the product branded
as illumet® kit for investigational and clinical trial use in the
US, and as a 68Ga-PSMA-11 kit for investigational, clinical trial
and special access use in Europe. During 2019, over 11,500
individual patient doses of TLX591-CDx were delivered under
these defined use conditions.
In July 2019, Telix completed a successful pre-New Drug
Application (pre-NDA) meeting with the US Food and Drug
Administration (FDA), at which the process for submission of
the New Drug Application (NDA) for TLX591-CDx was agreed.
As part of the Procedural Guidance received during the pre-
NDA meeting, the FDA provided Telix with the opportunity to
review and provide an opinion on the completeness of Telix’s
clinical data for TLX591-CDx in advance of the FDA accepting
the Company’s full NDA submission. Consequently, Telix
submitted a full Clinical Briefing Package, comprising the safety
and effectiveness data for TLX591-CDx, in December 2019.
Telix expects to receive a response from the FDA in respect
of the adequacy of its clinical data for TLX591-CDx in
February 2020.
Planning for the Phase III PROSTACT trial with TLX591 is
well advanced with a pre-Phase III meeting request expected
to be submitted to the FDA during the first quarter of 2020.
TLX591-CDx for prostate cancer
imaging is a USD $500M market
Detecting early metastatic disease is
a major unmet need
100
TLX591-CDx used at >100 hospital sites
globally, mostly at large cancer centres
3,000,000
3 million men are living with prostate cancer in
the United States 450,000 of these men do not
know where the disease is located in their body
9
Telix Pharmaceuticals LimitedAnnual Report Clinical pipeline continued
Kidney cancer
Telix’s kidney cancer program comprises the kidney cancer
imaging product TLX250-CDx and the kidney cancer therapeutic
product TLX250. These products target carbonic anhydrase
IX (CAIX), which is highly expressed by clear cell renal cell
carcinoma (ccRCC), the most common type of kidney cancer.
TLX250-CDx is expected to be the first imaging agent to enable
the non-invasive assessment of patients with suspected ccRCC.
This represents a significant opportunity, as an asymptomatic
‘renal mass’ is a common incidental finding on CT, MRI or
ultrasound investigation performed for another health
condition. Today, such incidental renal masses are typically
followed up via invasive kidney biopsy or surgery.
During 2019, Telix initiated the Phase III ZIRCON trial with
TLX250-CDx at sites in Europe and Australia, and submitted
an Investigational New Drug (IND) application to the US FDA
in order that the ZIRCON trial may be conducted in the
US. The ZIRCON trial is an international, multicentre Phase
III registration trial that will recruit up to 252 patients and
determine the sensitivity and specificity of pre-surgical imaging
using TLX250-CDx in detecting ccRCC, compared to histology
from the surgical resection. The ZIRCON trial is expected to
open for patient recruitment at five US sites in the first quarter
of 2020, and patient recruitment is expected to be completed
approximately mid-2020.
Planning for the two STARTLITE Phase II trials with TLX591
in combination with immunotherapy is well advanced, with
an IND application expected to be submitted to the FDA in
the middle of 2020.
TLX250 therapy for patients
who have progressed from
immunotherapy estimated
USD $400M+ market
73,000 new cases of kidney cancer in the
United States per year, 70% of these are the
clear cell renal cell carcinoma (ccRCC) the most
aggressive form of kidney cancer
TLX250-CDx is expected to be the first imaging
agent to enable non-invasive diagnosis of
patients with suspected ccRCC
Phase III ZIRCON trial with TLX250-CDx at sites
in Australia, Europe and the United States expected
to complete patient recruitment mid-2020
No competing product for TLX250-CDx product
presently available
10
Telix Pharmaceuticals LimitedAnnual Report Glioblastoma
Glioblastoma multiforme (GBM) is the most common type
of brain cancer and has a poor prognosis due to a dearth of
effective treatment options. Telix’s GBM therapeutic product
TLX101 is a novel approach that is able to freely cross the
blood-brain barrier, when many pharmaceutical agents cannot.
In July 2019, Telix commenced enrolling patients into the
Phase I/II IPAX-1 trial of TLX101 plus external beam radiation
therapy (EBRT). The IPAX-1 trial aims to evaluate the safety
and effectiveness of TLX101 combined with standard EBRT
in patients with recurrent GBM. As Telix announced in
December 2019, the Phase I component of the IPAX-1 trial
is recruiting to plan, with both the single and multi-dose
(known as fractionated) cohorts recruiting patients. Single
Photon Emission Computed Tomography (SPECT) imaging has
demonstrated encouraging evidence of tumour targeting by
TLX101 and disease stabilisation has been observed in patients
with recurrent GBM in both the single and multi-dose cohorts.
Telix expects that the Phase I component of the IPAX-1 trial,
which will enrol up to 22 patients, to complete recruitment
during the second quarter of 2020, with data available mid-
2020 that will be used for consultation with the US FDA and
European Medicines Agency (EMA).
TLX101 is a novel therapy for the treatment
of GBM that is intended to act in concert with
standard of care external beam radiation
therapy and chemotherapy
10,000
Approximately 10,000 new cases of GBM
diagnosed in the United States annually
Recurrence of GBM is nearly universal
following standard first-line therapy
TLX101 has received orphan drug
designation in United States and Europe
11
Telix Pharmaceuticals LimitedAnnual Report People
Telix’s mission is to help patients with cancer to live longer,
better quality lives. To be able to optimally serve patients and
the clinicians providing their care, Telix recognises it needs
the best people, who possess the necessary qualifications
and experience, and a commitment to delivering to market
potentially life-changing new diagnostic and therapeutic options.
A significant priority during 2019 was to build the executive
leadership of the Company, as Telix transitions from a clinical
stage, to a pre-commercial and then revenue-generating
company. During the year, highly experienced leaders were
appointed into the roles of Chief Operating Officer, Chief
People Officer, Global Head of Drug Development and Chief
Business Officer. Additional senior appointments were made
to put in place the required Clinical Trials, Regulatory, Supply
Chain, Manufacturing and Sales & Marketing executional
capability to advance the Company’s clinical pipeline and
take Telix’s innovative products to market.
Telix has rigorously road tested its global supply
chain well ahead of commercial product launch
Gabriel Liberatore
COO
The calibre of people we have been able to attract
to Telix globally has been quite remarkable
Melanie Farris
CPO
12
Telix Pharmaceuticals LimitedAnnual Report Partnerships
Telix Pharmaceuticals Limited
Annual Report
COMMERCIAL READINESS
RESEARCH PARTNERSHIPS
Telix has developed considerable expertise in the research,
development and manufacture of Molecularly Targeted Radiation
(MTR) products. This expertise includes capabilities in the diverse
fields of antibodies and small molecules, radioactive isotopes,
and chelator (‘linker’) chemistry, all of which are required to
produce a diagnostic or therapeutic MTR product.
Beyond being capable of producing an MTR product, Telix
demonstrated during 2019 that it is also suitably adept at
distributing its products, delivering over 11,500 patient doses
of its prostate cancer imaging product TLX591-CDx to over 100
hospital sites around the world for clinical trial, investigational
and special access use.
This commercial readiness was significantly enhanced during
the year via the completion of distribution agreements in the
United States with United Pharmacy Partners Inc. (UPPI) and
PharmaLogic for the distribution of the illumet® prostate cancer
imaging product, as well as manufacturing and distribution
agreements with additional partners covering Latin America,
Europe, Turkey, Middle East, North Africa and Asia. Pending
the necessary marketing authorisations from US and European
regulatory authorities, Telix believes it is ready to reliably deliver
its MTR products to hospitals and cancer centres in these
markets.
For a pharmaceutical company of Telix’s size, the Company
has established a significant portfolio of research collaborations
with pharmaceutical companies, medical technology enterprises
and academic research institutions. During 2019, these included
clinical and pre-clinical research collaborations with Novartis,
Merck Healthcare KGaA and GenesisCare, as well as the in-
licensing of a clinical-stage Single Photon Emission Computed
Tomography (SPECT) prostate cancer imaging agent from the
Mexican National Institute of Nuclear Research (ININ). SPECT
imaging is considerably more ubiquitous than PET imaging,
which is of more limited availability in less developed markets.
A SPECT-based prostate cancer imaging agent accords with
Telix’s view than all patients, regardless of where they are
located, should have access to world class diagnostic tools
to guide their cancer care.
During the year, Telix entered into significant clinical trial
collaborations with leading academic and research institutions
in United States, Germany, France, Japan and Australia. A
significant theme of several of these clinical trial collaborations is
that of indication expansion, in which Telix’s targeting molecules,
isotopes and chelator (‘linker’) chemistry are being evaluated
for potential new indications including lung, ovarian, bladder
and other poorly served cancer types. Telix firmly believes that
such exploratory work is critical to the building of a sustainable
pipeline of assets for the future.
We are totally committed to improving care for
patients and that’s why after just 4 years we have
a lead product in Phase III.
Ros Wilson
GHDD
Telix is at the vanguard of Nuclear Medicine as
it rapidly becomes a mainstream part of cancer
diagnosis and care
David Cade
CBO
13
Executive team
Chief Executive Officer and Managing Director
Dr Christian Behrenbruch BEng (Hons) DPhil (Oxon) MBA JD FIEAust GAICD
Dr Behrenbruch has 20 years of healthcare entrepreneurship and Executive leadership
experience. He has previously served in a CEO or Executive Director capacity at Mirada Solutions,
CTI Molecular Imaging (now Siemens Healthcare), Fibron Technologies and ImaginAb, Inc. He is
a former Director of Momentum Biosciences LLC, Siemens Molecular Imaging Ltd, Radius Health
Ltd (now Adaptix) and was the former Chairman of Cell Therapies Pty Ltd (a partnership with the
Peter MacCallum Cancer Centre). Christian is currently a Director of Factor Therapeutics (ASX:
FTT) and Amplia Therapeutics Limited (ASX: ATX). Christian holds a DPhil (PhD) in biomedical
engineering from the University of Oxford, an executive MBA jointly awarded from New York
University, HEC Paris and the London School of Economics (TRIUM Program) and a Juris Doctor
(Law) from the University of Melbourne. He is a Fellow of Engineers Australia in the management
and biomedical colleges and a Graduate of the Australian Institute of Company Directors.
Group Chief Financial Officer
Mr Douglas Cubbin BBus FCPA GAICD
Mr Cubbin has fourteen years’ experience in CFO, COO, commercial and business development
roles in the Nuclear Medicine sector, including as Chairman of Australian Nuclear Medicine Pty
Ltd and as General Manager of Business Development at the Australian Nuclear Science and
Technology Organisation (ANSTO). Doug is a fellow of the Australian Society of CPAs and
a Graduate of the Australian Institute of Company Directors.
Group Chief Operating Officer
Dr Gabriel Liberatore BSc (Hons) PhD (Melb) MBA (La Trobe) MAICD
Dr Liberatore has 20 years of experience in senior Business Development and R&D roles
including with CSL Limited (ASX: CSL), Deloitte (Australia), Swisse Wellness (HK: 112) and the
PACT Group (ASX: PGH). Gabriel holds a PhD in Neuroscience from the University of Melbourne,
a post-doctorate from Columbia University and an MBA from La Trobe University. Gabriel is an
Advisory Board member at Swinburne University. Gabriel joined Telix in February 2019.
Global Head of Drug Development
Dr Rosalind Wilson MBBS MBA
Dr Wilson is a graduate of the Monash University Medical School and holds an MBA from London
Business School. Following her earlier career in clinical medicine, Ros joined the pharmaceutical
industry and worked for Roche in Australia, the United Kingdom and the Company’s global
headquarters in Basel, Switzerland over a 12-year period. Ros commenced her pharmaceutical
career in Medical Affairs, eventually leading the team that developed pertuzumab in HER2-
overexpressing breast cancer. Ros has previously served as CEO of Factor Therapeutics (ASX:
FTT) and has consulted extensively to Australian biotech companies, helping them to develop
clinical research and product pipeline strategy.
14
Telix Pharmaceuticals LimitedAnnual Report Chief Business Officer & Head of Investor Relations
Dr David Cade MBBS MBA GAICD
Dr Cade joined Telix in October 2019 as Chief Business Officer and Head of Investor Relations.
Before joining Telix, David worked at Cochlear Limited (ASX: COH), where he served as Chief
Medical Officer. Prior to Cochlear, David spent many years in the Oncology and Nuclear Medicine
therapeutic areas with Sirtex Medical Limited (ASX: SRX), where he served as Chief Medical
Officer and in other senior roles across the US, Europe and Australia. Earlier in his career
David trained in surgery at Monash Medical Centre in Melbourne and worked at management
consultancy, Booz and Company across Asia Pacific. David holds an MBBS from Monash
Medical School, an MBA from Melbourne Business School and ESADE Business and Law School
Barcelona, and is a Graduate of the Australian Institute of Company Directors.
Group Secretary & Head of Corporate Governance
Chief People Officer
Ms Melanie Farris BComn FGIA FCIS MAICD
Ms Farris is an experienced governance, communications and operations professional and
non-executive director. Career roles include with Factor Therapeutics Limited (ASX: FTT), Invion
Limited (ASX: IVX), Menzies Research Centre, HRH The Prince of Wales’s Office, Global Asset
Management, Imperial Cancer Research Fund, and The Prince’s Foundation. Melanie holds a
Bachelor of Communication (Public Relations), and a Graduate Diploma in Applied Corporate
Governance. She is a Fellow of the Governance Institute of Australia, a Fellow of the Institute
of Chartered Secretaries (UK) and a Member of the Australian Institute of Company Directors.
President, Telix USA
Dr Bernard Lambert PhD
Dr Lambert has a long career in the Nuclear Medicine sector. Bernard has served as Vice
President, CMC and Radiopharmaceutical Development at Zevacor and IBA Molecular, and led
the manufacturing of 124I-Girentuximab (the predecessor to Telix’s TLX250 product) that was
studied in the Phase III REDECT trial by Wilex AG. A radiochemist by training, Bernard has a PhD
in Chemistry from the University of Liège, Belgium.
President, Telix Japan
Dr Shintaro Nishimura PhD BSc (Keio)
Dr Nishimura is a highly experienced drug development and commercialisation professional,
with many years’ experience gained in the pharmaceutical industry. Shintaro has held senior
positions at Eli Lilly, ImaginAb and Astellas, as well as academic appointments at Kyoto Prefectural
University of Medicine, University of Tsukuba, Tohoku University, and Gifu University. Shintaro
received his doctorate in organic chemistry from Keio University, Japan and was a post-doctoral
researcher at the University of Michigan Medical School, US.
President, Telix Europe (Interim)
Mr Ludovic Wouters
Mr Wouters has 20 years’ experience in the Nuclear Medicine industry covering R&D, production,
medical devices and regulatory. Ludo is a former lead designer for GE Healthcare for both medical
devices and in a pharmaceutical environment. Ludo has held various management positions in
other medical device companies and he co-founded ANMI SA in 2015 (subsequently acquired by
Telix in 2018), where he acted as CEO.
15
Telix Pharmaceuticals LimitedAnnual Report Directors’ report
Your Directors present their report on the Telix Pharmaceuticals Group for the financial year ended 31 December 2019. The Telix
Pharmaceuticals Group (‘Group’) consists of Telix Pharmaceuticals Limited (‘Telix Pharmaceuticals’ or the ‘Company’) and its wholly
owned subsidiaries.
The names and details of the Company’s Directors in office during the financial year and until the date of this report are detailed
below. Directors were in office for the entire period unless noted otherwise.
H Kevin McCann AO
Chairman
Christian Behrenbruch PhD
Managing Director and Chief Executive Officer
Andreas Kluge MD PhD
Executive Director
Oliver Buck
Non-Executive Director
Mark Nelson PhD
Non-Executive Director
Jann Skinner
Non-Executive Director
H Kevin McCann
AO BA LLB (Hons) LLM (Harvard) Life Fellow AICD
Appointed Non-Executive Director and Chairman, 17 September 2017
Mr McCann is Chairman of China Matters. He is a member of the Male Champions of Change,
a Pro-Chancellor of the University of Sydney, a Trustee of the Sydney Opera House Trust and
a Director of the US Studies Centre. Previously, Kevin has been Chairman of Macquarie Group
and Macquarie Bank Limited, Chairman of Origin Energy Limited, Healthscope Limited and ING
Management Limited. Kevin practiced as a commercial lawyer as a partner of Allens Arthur
Robinson from 1970 to 2004 and was Chairman of Partners from 1995 to 2004. Kevin has a
Bachelor Arts and a Bachelor of Law (Honours) from Sydney University and a Master of Law from
Harvard University. He was made an Officer of the Order of Australia for services to business,
corporate governance and gender equality in January 2020, and is a Life Fellow of the Australian
Institute of Company Directors.
Christian Behrenbruch
BEng (Hons) DPhil (Oxon) MBA (TRIUM) JD (Melb) FIEAust
Appointed Executive Director, 3 January 2017
Dr Behrenbruch has twenty years of healthcare entrepreneurship and executive leadership
experience. He has previously served in a CEO or Executive Director capacity at Mirada Solutions,
CTI Molecular Imaging (now Siemens Healthcare), Fibron Technologies and ImaginAb, Inc. He is a
former Director of Momentum Biosciences LLC, Siemens Molecular Imaging Ltd, Radius Health Ltd
(now Adaptix) and was the former Chairman of Cell Therapies Pty Ltd (a partnership with the Peter
MacCallum Cancer Centre). Christian is currently a Director of Factor Therapeutics (ASX: FTT) and
Amplia Therapeutics Limited (ASX: ATX). Christian holds a DPhil (PhD) in biomedical engineering
from the University of Oxford, an executive MBA jointly awarded from New York University, HEC
Paris and the London School of Economics (TRIUM Program) and a Juris Doctor (Law) from the
University of Melbourne. He is a Fellow of Engineers Australia in the management and biomedical
colleges and a Graduate of the Australian Institute of Company Directors.
16
Telix Pharmaceuticals LimitedAnnual Report Andreas Kluge
MD PhD (Berlin)
Appointed Executive Director, 3 January 2017
Dr Kluge provides advisory services to the Group under a consulting agreement as Chief
Medical Advisor. It is anticipated Dr Kluge will transition to a Non-Executive Director upon the
appointment of a Group Chief Medical Officer.
Dr Kluge has over 20 years of clinical research and development experience, including as
Founder, General Manager and Medical Director for ABX-CRO, a full service CRO for Phase I-III
biological, radiopharmaceutical and anticancer trials based in Dresden, Germany. He is also
Founder and was founding CEO of ABX GmbH (www.abx.de), one of the leading manufacturers
of radiopharmaceutical precursors globally. Andreas is further Founder, General Manager and
Medical Director for Therapeia, an early stage development company in the field of neuro-
oncology, which was acquired by Telix. Andreas has extensive experience in the practice of
Nuclear Medicine and radiochemistry, molecular imaging and the clinical development of
novel radionuclide-based products and devices. He is the author of numerous patents and
publications in the field of Nuclear Medicine, neurology, infection and immunology. Andreas
is a registered physician and holds a doctorate in Medicine from the Free University of Berlin.
Mark Nelson
BSc (Hons) (Melb) MPhil (Cantab) PhD (Melb)
Appointed Non-Executive Director, 17 September 2017
Dr Nelson is Chairman and Co-Founder of the Caledonia Investments Group, and a
Director of The Caledonia Foundation. He is Chairman of Art Exhibitions Australia, a Director
of Kaldor Public Art Projects, Director of The Mindgardens Neuroscience Network, and serves as
a Governor of the Florey Neurosciences Institute. Previously Mark was a Director of The Howard
Florey Institute of Experimental Physiology and Medicine, and served on the Commercialisation
Committee of the Florey Institute. Mark was educated at the University of Melbourne and
University of Cambridge (UK).
Oliver Buck
Dipl Phys (Theoretical Biophysics, TUM)
Appointed Non-Executive Director, 16 January 2017
Mr Buck is a bio-physicist who has spent his professional career in a variety of entrepreneurial
and management positions in industrial companies. Oliver has served as founder and Managing
Director of several companies in the fields of manufacturing, technology, demilitarisation,
pharmaceuticals and information technologies. Oliver is the co-founder of ITM Isotopen
Technologien München AG, one of the largest isotope manufacturing and distribution companies
in the world, founded with Technical University of Munich. Since 2012, Oliver has acted as senior
advisor to the CEO in a role that continues to support the ITM group as it has become a leader in
next generation medical isotopes and theranostics. Oliver holds a graduate degree in theoretical
physics from the Technical University of Munich and is an alumnus of the German National
Academy for Security Policy and the ‘Young Leaders Program’ of the Atlantik Brücke/American
Council on Germany.
Ms Jann Skinner
B Com FCA FAICD
Appointed Non-Executive Director, 19 June 2018
Ms Skinner has extensive experience in audit and accounting and in the insurance industry.
She was a partner of PricewaterhouseCoopers for 17 years before retiring in 2004. Jann is an
independent non-executive director of QBE Insurance Group Limited, where she also serves as
Chair of the Audit Committee and Deputy Chair of the Risk & Capital Committee. She also serves
as a Director of the Create Foundation Limited and HSBC Bank Australia Limited. Jann is a Fellow
of both Chartered Accountants Australia & New Zealand and the Australian Institute of Company
Directors.
17
Telix Pharmaceuticals LimitedAnnual Report Directors’ report continued
DIRECTORS’ INTERESTS IN THE SECURITIES OF TELIX PHARMACEUTICALS LIMITED
In accordance with section 300(11) of the Corporations Act 2001 (Cth), the interests of the Directors in the shares and options of Telix
Pharmaceuticals Limited, as at the date of this report were:
K McCann
C Behrenbruch
A Kluge
O Buck
M Nelson
J Skinner
Number of:
Ordinary
shares
160,000
24,675,000
24,675,000
1,222,335
2,238,750
100,000
Options
990,000
400,000
-
330,165
990,000
495,000
DIRECTORS’ MEETINGS
The number of meetings of Directors and committees of Directors held in the year to 31 December 2019, and the number of
meetings attended by each Director, is as follows:
Board of Directors
Audit and Risk
Management Committee
Nomination and
Remuneration Committee
Eligible to
attend
Meetings
attended
Eligible to
attend
Meetings
attended
Eligible to
attend
Meetings
attended
K McCann
C Behrenbruch(i)
A Kluge
O Buck
M Nelson
J Skinner
6
6
6
6
6
6
6
6
6
6
6
6
4
-
-
4
4
4
4
-
-
4
4
4
2
-
-
2
2
2
2
-
-
2
2
2
(i) C Behrenbruch attended all Committee Meetings as an observer by invitation.
COMMITTEE MEMBERSHIP
At the date of this report the Company has the following
Committees of the Board in place:
• Audit and Risk Management Committee, the members of
which are independent Non-Executive Directors Ms Jann
Skinner (Chair), Mr Kevin McCann and Dr Mark Nelson, as well
as non-independent Non-Executive Director, Mr Oliver Buck.
• Nomination and Remuneration Committee, the members
of which are independent Non-Executive Directors Mr Kevin
McCann (Chair), Dr Mark Nelson and Ms Jann Skinner, as well
as non-independent Non-Executive Director, Mr Oliver Buck.
PRINCIPAL ACTIVITIES OF THE COMPANY
IN THE YEAR UNDER REVIEW
Telix Pharmaceuticals Limited is a Melbourne-headquartered
oncology company that is developing a pipeline of ‘molecularly
targeted radiation’, or ‘MTR’, products for unmet needs in
cancer care. The Company was established on 3 January 2017
and listed on the on the Australian Securities Exchange on
15 November 2017.
Activities during the year were directed to furthering
strategic commercial global partnerships and the continued
development of the Group’s three lead assets:
− TLX250 / TLX250-CDx: diagnosis and treatment of renal
(kidney) cancer
− TLX591 / TLX591-CDx: diagnosis and treatment of metastatic
castrate-resistant prostate cancer
− TLX101: treatment of glioblastoma (brain cancer)
18
Telix Pharmaceuticals LimitedAnnual Report Principal achievements during the year included finalising the
global strategy for prostate cancer imaging; agreement with the
US FDA for the NDA process for illumet®; submission to the FDA
of an NDA clinical briefing package for the TLX591-CDx product;
submission of a Phase lll IND application and conclusion of
strategic commercial partnerships in renal cancer program;
the opening of multiple clinical trial sites and commencement
of the Phase II portion of the TLX101 (glioblastoma) therapy
program (the IPAX-1 study).
With the 2018 acquisition of ANMI SA, the Company is now able
to develop and deliver a global strategy for prostate cancer
imaging and expects to conclude commercially significant
agreements with key marketing and distribution partners.
CORPORATE STRUCTURE
Telix Pharmaceuticals Limited is an entity incorporated and
domiciled in Australia. Telix Pharmaceuticals Limited is listed
on the Australian Securities Exchange with the code TLX
(ASX:TLX). Telix operates globally in a number of jurisdictions
through wholly owned subsidiaries. Subsidiaries of Telix have
been established or acquired in order to optimally manage
the Company’s extensive intellectual property portfolio and to
facilitate clinical, operational and commercial activities in the
key territories in which the Company does business.
FINANCIAL RESULTS AND DIVIDENDS
Telix is a revenue-stage company, through the early
commercialisation and sale of its investigational product
illumet® (prostate cancer imaging kit). Revenue from the sale
of illumet® was recorded at $3,485,000 for the year. With three
lead assets under clinical and regulatory development, Telix
recorded an operating loss for the year.
The loss after tax of the Group for the year ended
31 December 2019 was $27,867,000 (2018: $13,830,000).
Total equity recorded at 31 December 2019 was $70,081,000
(2018: $52,905,000). At 31 December 2019, the Group held
total assets of $102,608,000 (2018: $76,709,000) and net
assets of $70,081,000 (2018: $52,905,000). No dividend was
recommended or paid during the year. There was no return
of capital by the Company to any of its shareholders during
the year.
The total issued securities of the Company are as follows:
SIGNIFICANT CHANGES IN THE
STATE OF AFFAIRS
Issue of unlisted share options: On 19 January 2019, the
Company issued 6,845,000 unlisted share options with an
exercise price of $1.09 and an expiry date of 11 June 2022.
The options were issued to staff and consultants to the
Company. Of those options, 895,000 were issued to Directors
C Behrenbruch and J Skinner subject to shareholder approval,
which was received at the Company’s AGM held on 22 May 2019.
Issue of fully paid ordinary shares: On 24 July 2019,
30,770,000 fully paid ordinary shares were issued further to
a private placement announced on 17 July 2019. Shares were
issued at $1.30 per share to raise $40,001,000 before costs. On
22 August 2019, 3,846,128 fully paid ordinary shares were issued
further to the Share Purchase Plan (SPP) announced on 17 July
2019 to raise a total amount of $5,000,000 before costs. The SPP
enabled existing eligible shareholders to purchase up to $15,000
of shares at $1.30 per share, without brokerage fees.
Proposed acquisition of European production facility:
On 3 October 2019, the Company announced it had entered
into a conditional purchase agreement to acquire a licensed
radiopharmaceutical production facility in Seneffe, Belgium.
Ownership of the site is expected to deliver a range of
commercial benefits to Telix including a Class IIA licence,
enabling Telix to manufacture a broad range of diagnostic
and therapeutic radiopharmaceuticals; the expansion of Telix’s
existing product R&D and commercial manufacturing footprint
in Belgium; a fully-licensed production facility strategically
located in western Europe with excellent logistics and ready
access to key commercial territories; and the capability to
produce certain isotopes at the site in the future (if required),
to protect and augment Telix’s core supply chain. Subject to
several closing conditions related to attaining the requisite
regulatory approvals in Belgium, the Company will acquire
the site for a nominal cash sum in addition to assuming the
future decommissioning liability associated with the site. This
liability is currently estimated to be up to €5.2m over the
operating lifetime of the site, with certain downside cost and
risk mitigations in place with relevant government agencies as
part of the proposed transaction structure. The transaction is
anticipated to complete before 31 March 2020.
Ordinary shares
Share options and warrants
At 31 December 2019
At the date of this report
253,279,999
18,595,088
253,444,834
21,985,253
19
Telix Pharmaceuticals LimitedAnnual Report
Directors’ report continued
REVIEW OF OPERATIONS
In 2019, Telix transitioned from a clinical stage to a pre-
commercial stage pharmaceutical company, with Telix reaching
agreement with the US FDA on the process for submission of
the Company’s first New Drug Application (NDA) for its prostate
cancer imaging product illumet®, as well as generating early
revenue from the sale of over 4,600 TLX591-CDx (illumet®) kits
for investigational and clinical trial use in the US and Europe.
Given the typical time required to take a new drug from
discovery to market is 10 to 15 years, these achievements
are highly significant for a company founded four years ago,
that has been public for only two years.
During the year, Telix made several key appointments,
both to complete its Executive Leadership, as well as put in
place the necessary Clinical Trials, Regulatory, Supply Chain,
Manufacturing and Sales & Marketing executional capability
required to advance the Company’s clinical pipeline and take
Telix’s innovative products to market. At the end of 2019, Telix
had 60 people – up from 50 at the end of 2018 – comprising
20 in Australia, 10 in United States, 27 in Belgium and 3 in
Japan. Telix’s corporate head office is in Melbourne Australia,
with regional offices in Indianapolis USA, Brussels Belgium and
Kyoto Japan.
The manufacture of Molecularly Targeted Radiation (MTR)
products requires highly specialised expertise in radioactive
isotopes; antibodies and small molecules; and chelator
chemistry, the process of attaching the radioactive isotope to
the antibody or small molecule to produce a final drug product.
In October 2019, Telix entered into an agreement to acquire a
significant licensed radiopharmaceutical production facility in
Seneffe, Belgium from the German company Eckert & Ziegler
Strahlen und Medizintechnik AG. This facility has one of the
most extensive private enterprise nuclear licences in Europe,
which delivers significant operational flexibility to the Company
and the ability to deliver all of Telix’s European production
needs for its product portfolio. The timing of this acquisition is
significant as the Company expects to undertake the European
launch of its prostate cancer imaging product TLX591-CDx
and its kidney cancer imaging agent TLX250-CDx in the next
18 months, subject to regulatory approvals. However, there is
significant lead time to complete the requisite regulatory and
compliance requirements, ahead of the Seneffe production
facility becoming operational.
The completion of the transaction is subject to several
closing conditions related to regulatory approvals in Belgium.
Conditions include receiving approval from Belgium’s Federal
Agency for Nuclear Control relating to the license to enable
production activities to commence, as well as repeat verification
of key environment testing.
In the Americas and Asia Pacific regions, Telix has
established partnerships with leading firms that have
sufficient manufacturing capacity to support the Company’s
commercialisation of its product portfolio. During 2019, while
additional supply side agreements were entered into with GE
Healthcare, Cyclotek and Thermo Fisher Scientific, the pre-
commercial stage that the Company has now entered saw Telix
enter a number of distribution agreements. These included
additional distribution partners United Pharmacy Partners
Inc. and PharmaLogic in US; a manufacturing and distribution
agreement with Istanbul, Turkey based Monrol for Turkey,
Middle East and North Africa; a distribution agreement with
PI Medical Diagnostic Equipment for the Netherlands; and a
manufacturing and distribution agreement with Porto Alegre,
Brazil based Grupo RPH for Latin American markets.
During 2019, the investigational and clinical trial use of Telix’s
prostate cancer imaging product illumet® occurred in over
100 hospital sites around the world, including 52 sites in
US. The supply of the illumet® product to these sites, which
are predominantly large cancer centres, while generating
early revenue for Telix, also facilitated the streamlining and
strengthening of the Company’s product supply chain, prior
to full commercial launch pending marketing approvals.
FORWARD STRATEGY AND
OPERATIONAL TARGETS
Telix’s forward corporate objectives are reflective of the
Company’s commercial launch goals and comprise three key
areas of focus: programs and commercial; infrastructure; and
organisational and corporate development.
Programs and commerical
Telix’s clinical pipeline comprises five main programs in prostate
cancer imaging and therapy, renal cancer imaging and therapy,
and glioblastoma therapy.
Telix’s prostate cancer program is the Company’s most
advanced, with TLX591-CDx (prostate cancer imaging) the
closest to commercial launch and generation of revenue.
Telix submitted a clinical briefing package to the US FDA in
December 2019 and expects to receive correspondence from
the FDA during the first quarter 2020 on the forward steps
required to finalise the NDA submission.
In Europe, Telix has received positive consultation from the
Danish Medicines Agency for European approval of TLX591-
CDx. Formal recognition in both the American Society of Clinical
Oncology and European Association of Urology clinical practice
guidelines for the use of prostate-specific PET imaging tracers
in the management of prostate cancer is considered supportive
of Telix’s commericalisation efforts for TLX591-CDx, through
increased awareness and formal recognition of medical utility.
Telix expects to file its US and major European marketing
authorisations for TLX591-CDx during the first quarter
of 2020.
20
Telix Pharmaceuticals LimitedAnnual Report REGULATORY AND
ENVIRONMENTAL MATTERS
Telix is required to carry out its activities in accordance with
applicable environment and human safety regulations in each
of the jurisdictions in which it undertakes its operations. The
Company is not aware of any matter that requires disclosure
with respect to any significant regulations in respect of its
operating activities, and there have been no issues of non-
compliance during the year.
SIGNIFICANT EVENTS AFTER THE
BALANCE DATE
On 13 January 2020, the Company issued 3,555,000 unlisted
share options to employees and consultants to the Company.
Options have a four-year term, with an expiry date of 12 January
2024. The exercise price of $2.23 per option is a 43% premium
to the five-day volume weighted average closing price prior to
the day of issue ($1.56). Options remain unvested for a three-
year period, and ‘cliff vest’ on 24 January 2022.
On 23 January 2020, the Company announced that the US
Food and Drug Administration had approved the ZIRCON study
for recruitment of American patients. The receipt of the IND
notice of allowance enables patient recruitment to commence
in the US after 30 days.
Other than the matters referred to above, there were no
subsequent events that required adjustment to or disclosure in
the Directors’ Report or the Consolidated Financial Statements
of the Company for the year ended 31 December 2019.
The Company’s Phase III ZIRCON trial of TLX250-CDx (renal
cancer imaging) is expected to complete patient enrolment
in mid-2020. The Company has received Investigational New
Drug (IND) approval from the FDA for this program. The study is
expected to close approximately two months after enrolment of
the last patient and provide first data read-out shortly thereafter.
Telix’s prostate cancer therapy agent TLX591 is the
Company’s most advanced therapeutics program. Phase III
trial development for TLX591 and partnering discussions are
reliant on guidance from the US FDA, in respect of trial design,
appropriate clinical endpoints, study size and other factors.
The Company expects to submit a pre-Phase III briefing package
to the FDA in the first quarter of 2020, with the intention of
transitioning to a Phase III therapeutics company during the year.
Infrastructure
Telix expects to launch its first commercial product TLX591-CDx
(prostate cancer imaging) during 2020 and is working to secure
US and major European distribution agreements capable of
supporting the broader product portfolio. The Company is also
working to implement the fundamental support infrastructure
required for the transition to a commercial-stage company,
including organisation-appropriate enterprise resource
planning and customer relationship management systems.
Organisational and corporate development
As Telix transitions to a revenue stage company there is
recognition across the global team that the Company must
embrace a commercially-aware, performance-driven culture
that is capable of anticipating and managing developmental,
competitive, regulatory, commercial and other risks to the
business. Focus is therefore placed on setting and measuring
corporate, team and personal objectives; resourcing and new
hire planning; professional development; financial control,
reporting and analysis; and communication across the Group.
LIKELY DEVELOPMENTS AND
EXPECTED RESULTS
The likely developments in the operations of the Group and
the expected results from those operations in future financial
years will be affected by the success of management in
reaching critical development and commercial milestones in
its core programs. This will include developing and expanding
existing and emerging commercial partnerships with leading
global healthcare companies, securing one or more commercial
transactions for one or more of the Group’s drug assets, as well
as establishing a sustainable revenue stream for the Group via
the commercialisation and sale of the Group’s TLX591-CDx ‘kit’
and other assets under development.
21
Telix Pharmaceuticals LimitedAnnual Report Directors’ report continued
LETTER FROM CHAIRMAN OF NOMINATION AND
REMUNERATION COMMITTEE
Dear Shareholder
On behalf of the Board, I am pleased to present the Remuneration Report for the year ended 31 December 2019. This Report
contains information regarding the remuneration arrangements for the directors and key management personnel (KMP) for the
Company during 2019.
The Board is committed to a remuneration framework that drives a culture of performance and that links overall remuneration
and incentives to the achievement of the Group’s long-term strategy and business objectives. The Board assesses the remuneration
framework on an annual basis, and firmly believes that our current remuneration framework is fit for purpose for the Company in
that it is effective to both reward and incentivise, is aligned to shareholder and stakeholder interests, and supports our global team
in their work towards achieving the Company’s global business goals.
In setting and reviewing the remuneration policy, the Board considers the remuneration guidelines of shareholder and corporate
governance adviors. In the event that we depart from these guidenlines, we explain the Board’s reasoning. The Board aims to
provide clarity in the remuneration framework so that our shareholders, employees and all other interested parties understand
how remuneration at Telix helps drive the business forward.
Kevin McCann AO
Chairman, Nomination and Remuneration Committee
22
Telix Pharmaceuticals LimitedAnnual Report REMUNERATION REPORT (AUDITED)
Remuneration practice and philosophy
This Remuneration Report for the year ended 31 December
2019 outlines the remuneration arrangements of the Group in
accordance with the requirements of the Corporations Act 2001
(Cth) and its regulations. This information has been audited as
required by section 308(3C) of the Corporations Act 2001 (Cth).
The Remuneration Report details the remuneration
arrangements for key management personnel (KMP) who are
defined as those persons having authority and responsibility
for planning, directing and controlling the major activities of the
Company, directly or indirectly, including any Director, whether
executive or otherwise.
For the purposes of this report, the term ‘Director’ refers to
Non-Executive Directors (NEDs) only. ‘KMP’ refers to Executive
Directors and other key management personnel.
The names and details of the Directors and KMP of the Group
in office during the financial year and until the date of this
report are detailed below. Unless otherwise noted, Directors
and KMP listed are in office at the date of this report.
Non-Executive Directors
H Kevin McCann AO
Director and Chairman
Oliver Buck
Mark Nelson PhD
Jann Skinner
Executive Directors
Director
Director
Director
Christian Behrenbruch PhD Managing Director and
Group CEO
Andreas Kluge MD PhD(i)
Executive Director
Other key management personnel
The Group’s guiding principle for remuneration is that
remuneration should be simple and transparent, should
reward achievement, and should facilitate the alignment of
shareholder and executive interests. The Company’s philosophy
is that shareholder and executive interests are best aligned:
• by providing levels of fixed remuneration and ‘at risk’ pay
sufficient to attract and retain individuals with the skills and
experience required to build on and execute the Company’s
business strategy;
• by ensuring ‘at risk’ remuneration is contingent on outcomes
that grow and/or protect shareholder value; and
• by ensuring a suitable proportion of remuneration is
received as a share-based payment so that reward is earned
by achievement and performance over the longer term.
The Telix leadership team is responsible for making decisions
that build Group value. In setting the remuneration philosophy
and design, the Board aims to balance reward for short-term
results with long-term business performance and value creation.
Our remuneration, rewards and benefits design recognises
the remuneration guidelines of shareholder and corporate
governance adviors and explains where we depart from them
in specific instances. The Board’s aim is to provide clarity so that
our shareholders, executives, and all other interested parties
understand how remuneration at Telix helps drive the business
strategy and shareholder alignment.
Policy and process for remuneration
setting and review
The Group aims to reward personnel with a level and mix
of remuneration commensurate with their position and
responsibilities so as to:
• attract and retain appropriately capable and talented
individuals to the Company;
Doug Cubbin
Group Chief Financial Officer
• reward personnel for corporate and individual performance;
Gabriel Liberatore PhD(ii)
Group Chief Operating Officer
• align the interest of personnel with those of shareholders;
(i) A Kluge was appointed Executive Director on 3 January 2017. Dr
Kluge provides advisory services to the Group under a consulting
agreement as Chief Medical Advisor. It is anticipated Dr Kluge will
transition to a Non-Executive Director upon the appointment of
a Group Chief Medical Officer.
(ii) G Liberatore was appointed as Group Chief Operating Officer on
18 February 2019.
and
• build a strong cohesive leadership team which can deliver
execution excellence against the strategy.
Remuneration consists of:
• Fixed remuneration
• Short-term incentives (STI)
• Long-term incentives (LTI)
• Benefits
23
Telix Pharmaceuticals LimitedAnnual Report Directors’ report continued
Fixed remuneration
Long-term incentives (LTI)
To ensure that the Company continues to attract, retain and
motivate talented staff at a competitive cost, the Company will
aim to align total fixed remuneration to the median rate paid
by others operating in the relevant market, with consideration
given to experience, qualifications, performance and other non-
financial benefits. Total fixed remuneration will be reviewed
using market data to determine what, if any, adjustments may
need to be made to individual remuneration.
Performance and remuneration reviews are combined and are
conducted on a single cycle which runs from 1 January to 31
December. There are no automatic adjustments to individual
total fixed remuneration other than those required by law.
Position descriptions are prepared for all positions. Position
descriptions are reviewed when necessary due to internal or
external changes and are considered as part of the annual
performance and remuneration review. The Nomination
and Remuneration Committee recommends to the Board
the remuneration packages for KMP. The Committee may
seek external advice to determine the appropriate level and
structure of the remuneration packages. The CEO determines
remuneration packages for non-KMP team members. The CEO
refers the remuneration packages of the senior executive team
- that is executive team members that report directly to the
CEO - to the Committee for information.
Short-term incentives (STI)
STI reward performance against annual Key Performance
Indicators (KPIs) – maintaining a focus on underlying value
creation within the business operations. KPIs, weightings
and targets are set at the start of the performance year,
incentivising KMP to work together to achieve key business-
building short-term objectives. STI is an annual cash payment.
The Board has discretion over and approves KPIs and all
outcomes at the end of the performance year.
STIs comprise 30% of fixed remuneration for the CEO and
between 10% and 25% for other personnel. Corporate KPIs
are approved by the Board on an annual basis, and individual
KPIs and commercial targets are set by the CEO. STI calculations
and actual payments are based on achievement against
KPIs. In prior years, STI payments for the CEO and KMP were
determined solely (100%) based on achievement against
corporate objectives. Effective 1 January 2020, the relative
contributions of corporate and individual KPIs for company
personnel are:
• CEO = 100% corporate objectives
• All other personnel = 75% corporate objectives and
25% individual objectives
For the year commencing 1 January 2020, the Company
has included culture based KPIs in addition to program and
commercial objectives against which STI payments will be
assessed. These culture based KPIs promote both performance
and the delivery of objectives in line with Telix’s Code of
Conduct and corporate values.
LTI are offered to build alignment between KMP and
stakeholders over the long term. On an annual basis, the
Nomination and Remuneration Committee considers the
recommendation of the CEO regarding the issue of LTI in
light of the performance, financial position and current issued
capital of the Company. There will be no automatic grant of
LTI following each performance and remuneration review.
At the discretion of the Board, the Company may also offer
grants of LTI as an award to incentivise high-quality prospective
employees to join the Company. The Board may also consider
equity-based remuneration for consultants to the Company
as a means of preserving cash reserves.
The terms of any LTI grant are determined by the Board.
LTI grants normally take the form of the issue of unlisted
share options. Share options are normally issued under the
Company’s equity incentive plan (EIP). All grants of equity are
determined by the Board, following a recommendation by
the Nomination and Remuneration Committee.
Prior to 31 December 2019, the Nomination and Remuneration
Committee reviewed the general terms of new options to be
issued. Options will be typically granted with an exercise price
that is between a 40-50% premium to the market price of shares
on the day of issue, and with an expiry date that is between
three and four years from the date of issue. As LTIs are offered
to incentivise, reward and retain personnel, options will typically
vest at a ‘cliff’ prior to the expiry date. The Board has considered
adopting performance-based metrics for the vesting of LTIs. The
Board is of the view that in future years, and once the Company
has a sustainable revenue stream, performance-based metrics
will be appropriate and will be applied to the vesting of LTIs. At
this time given the Company’s objectives and growth trajectory
and as LTIs are ‘premium-priced’, the Board has not applied
separate performance-specific metrics to the vesting of LTIs.
However members of the senior executive team who do not
achieve greater than 70% of their individual KPIs in any given
year will not be eligible for LTI grants in that year.
The terms of options, and what happens to options in the
event of cessation of employment, is at the discretion of
the Board. However generally, in the event that a holder of
unvested options ceases to be employed, if the ceasing of
employment is due to death or permanent disability, or in
any other circumstances determined by the Board to be on
a ‘good leaver’ basis, options that are vested remain vested
and the Board, in its sole discretion, will determine the vesting
of any unvested options. If, at the absolute discretion of the
Board, the ceasing of employment occurs for any other reason
than in ‘good leaver’ circumstances, including, but not limited
to, termination for cause, or due to resignation, all unvested
options lapse immediately and the expiry date is taken to
have occurred on the last day of engagement. In the event of
a change of control, the Board, at its absolute discretion, may
determine that a proportion or all unvested awards will vest.
24
Telix Pharmaceuticals LimitedAnnual Report Benefits
Market competitive benefits, aligned with the customary
remuneration arrangements of the broader workforce in the
country of residence, may include superannuation or local
pension plans, car parking, telephone and/or participation
in local health insurance or other benefit programs.
Clawback and Malus Policy
‘Malus’ means reducing or cancelling all or part of an
individual’s variable remuneration as a consequence of a
materially adverse development occurring prior to payment
(in the case of cash incentives) and/or prior to vesting (in the
case of equity incentives). ‘Clawback’ means seeking recovery
of a benefit paid to take into account a materially adverse
development that only comes to light after payment or the
vesting of equity incentives.
The Board, in its sole discretion, may reduce, cancel in full,
or seek to clawback any incentive provided to any employee,
including former employees, if it determines that an employee
has at any time acted dishonestly (including, but not limited
to, misappropriating funds or deliberately concealing a
transaction); acted or failed to act in a way that contributed
to a breach of a significant legal or significant regulatory
requirement relevant to Telix; acted or failed to act in a way
that contributed to the Group incurring significant reputational
harm, a significant unexpected financial loss, impairment
charge, cost or provision; and/ or acted or failed to act in
a way that contributed to Telix making a material financial
misstatement.
Nomination and Remuneration Committee
The objective of the Nomination and Remuneration Committee
is to assist the Board in fulfilling its duties and responsibilities
by reviewing, advising and making recommendations to the
Board on:
(a) Nomination
− Board composition and succession planning, taking into
account diversity objectives and the mix of Director skills
and experience;
− induction and continuing education for Directors;
− Board performance evaluation; and
− the performance of the CEO and KMP.
(b) Remuneration
− implementing policies for the purposes of using
remuneration to foster long-term growth and success;
− monitoring the implementation by management of the
Board’s strategic objectives and policies;
− remuneration for Non-Executive Directors; and
− remuneration and incentive arrangements for the CEO
and other KMP.
Remuneration and awards for the financial
year ended 31 December 2019
Detailed remuneration benchmarking was undertaken prior
to the Company listing on the ASX. During this review, total
fixed remuneration was benchmarked against 50 comparable
(market capitalisation, pre-revenue stage) ASX life sciences
companies. Since Listing, the CEO salary has represented
a bottom quartile ASX-benchmarked salary, reflective of the
‘start-up’ mode of operation and in consideration of the CEO’s
significant founding equity ownership. KMP salaries were
benchmarked to the middle of the ASX for peer companies
in the biopharmaceutical industry. CEO and KMP salaries
have been reviewed for the 2020 financial year. The Board
has agreed that the CEO salary will be reviewed following the
anticipated receipt of marketing authorisation from the FDA
with respect to the Company’s TLX591-CDx asset.
STI awards for the financial year ended 31 December 2019
were applicable to KMP following the achievement of targets
determined by the Board. The corporate objectives set by
the Board for the year under review included completion of
enrolment of the TLX250-CDx (kidney cancer imaging) trial (the
ZIRCON study); commencement of the Phase II portion of the
TLX101 (glioblastoma) therapy program (the IPAX-1 study); the
submission of a New Drug Application (NDA) to the US Food
and Drug Administration (FDA) for the prostate imaging product
(TLX591-CDx/Ilumet®); the identification of a potential Phase III
strategy for the TLX591 (prostate cancer) platform and revenue
generation from the commercialisation and sale of the Ilumet®
product (prostate cancer imaging kit).
Based on recognition of overall team performance during the
year and the actual achievement against corporate objectives
70% of STI entitlements due to each eligible KMP for the year
was awarded. The remaining 30% of STI entitlements due to
each eligible KMP for the year was forfeited.
LTI awards made during the year, effective
in future years
Prior to 31 December 2019, and as part of the FY2019
remuneration review, the Nomination and Remuneration
Committee recommended that LTIs in the form of unlisted
share options were made to new and existing employees,
including KMP, as a tool to both incentivise and retain
personnel. The issue of unlisted share options was made on
13 January 2020. Options issued have a four-year term, with
an expiry date of 12 January 2024. The exercise price of $2.23
per option is a 43% premium to the five-day volume weighted
average closing price prior to the day of issue ($1.56). Options
remain unvested for a three-year period, and ‘cliff vest’ on
13 January 2023. The Company considers that this grant of
options allows the Company to maintain cash reserves for its
operations whilst both incentivising and rewarding and KMP
and personnel for their commitment and contribution to the
Company. The Board considered adopting performance-based
metrics for the vesting of LTIs. The Board is of the view that in
future years, and once the Company has a sustainable revenue
stream, performance-based metrics will be appropriate and
will be applied to the vesting of LTIs. At this time given the
Company’s objectives and growth trajectory and as LTIs are
‘premium-priced’ with a three-year vesting point, the Board
has not applied separate performance-specific metrics to
the vesting of these LTIs.
25
Telix Pharmaceuticals LimitedAnnual Report Directors’ report continued
Non-Executive Director remuneration
All Non-Executive Directors enter into a letter of appointment, which
summarises obligations, policies and terms of appointment, including
remuneration, relevant to the office of Director of the Company.
In accordance with the Constitution of the Company and ASX
Listing Rules, the aggregate remuneration of Non-Executive
Directors is determined from time to time by General Meeting.
The last determination for Telix Pharmaceuticals Limited was
made at the General Meeting of shareholders held on 22 May
2019. At that meeting, shareholders approved an aggregate
annual remuneration pool for Non-Executive Directors of
$500,000. The total Non-Executive Director remuneration of
Telix Pharmaceuticals Limited for the year ended 31 December
2019 utilised $323,077 of this authorised amount.
Fees to Non-Executive Directors reflect the obligations,
responsibilities and demands which are made on Directors.
The Board has resolved that the remuneration of Non-
Executive Directors should only be paid as cash fees and that
fees will be reviewed periodically by the Board. In conducting
these reviews, the Board will consider market information,
to seek to ensure that fees are in line with the market, as
well as the financial position of the Company. Although the
Chairman of the Board receives a higher fee, the remuneration
of Non-Executive Directors consists only of Directors fees,
Non-Executive Directors do not receive committee fees or
retirement benefits. The Board has resolved that following
appointment remuneration of Non-Executive Directors
shall only be in the form of cash fees. Annualised fees are
base remuneration fees inclusive of superannuation (where
applicable). Fees as recorded below remain in effect at
1 January 2020 and at the date of this report.
Annual fees
K McCann, Chairman
O Buck, Non-Executive Director
M Nelson, Non-Executive Director
J Skinner, Non-Executive Director
Additional fees
J Skinner, Non-Executive Director(i)
2019
$
2018
$
120,000
120,000
65,700
65,700
65,700
65,700
65,700
65,700
14,345
14,345
(i) In consideration for agreeing to join the Board, and in lieu of an equity grant at the time of appointment, the Board offered Ms Skinner an additional
fee of $14,345 per annum (inclusive of statutory superannuation), effective to the date of the Company’s 2019 AGM. Following shareholder approval
for the issue of options to Ms Skinner, the fee ceased to be payable effective 1 June 2019.
Non-Executive Directors are able to participate in the
Company’s Equity Incentive Plan (EIP) under which equity
may be issued subject to Shareholder approval. Options are
however normally issued to Non-Executive Directors not as
an ‘incentive’ under the EIP but as a means of cost-effective
consideration for agreeing to join the Board.
Following Shareholder approval at the EGM held on 13 October
2017, Non-Executive Directors were granted Director options,
the vesting of which was contingent on the Company’s IPO
and listing. These options became eligible to vest upon listing
and vest equally over three years from the date of issue. The
options have an exercise price of $0.85 per option and an
expiry of 14 October 2021. The Company considered that this
grant of Director options allowed the Company to maintain
cash reserves for its operations while providing cost-effective
consideration to the Non-Executive Directors for agreeing to
join the Board (in the case of Messrs McCann and Nelson) and
rewarding their commitment and contribution to the Company
(in the case of Mr Buck).
Ms Jann Skinner joined the Board as a Non-Executive
Director on 19 June 2018. At the AGM held on 22 May 2019,
shareholders approved the issue of 495,000 options in the
Company to Ms Skinner. Options offered have a four-year
term, with an expiry date of 24 January 2023. The exercise
price of $1.09 per option is a 44% premium to the five-day
volume weighted average closing price prior to the day of issue
($0.7561). Options remain unvested for a three-year period and
will ‘cliff vest’ on 24 January 2022.
26
Telix Pharmaceuticals LimitedAnnual Report
Remuneration for the year ended 31 December 2019
The below table shows details of the remuneration expenses recognised for KMP measured in accordance with the requirements
of the accounting standards.
Fixed remuneration
Variable remuneration
Total
STI and
option
STI and
option
Salary
and fees
$
Superann-
uation
$
Other
$
STI(i)
$
Non-Executive Directors
K McCann
O Buck
M Nelson
J Skinner (ii)
109,550
10,450
65,700
60,000
65,458
-
5,700
6,219
300,708
22,369
Executive Directors
C Behrenbruch
319,445
17,816
A Kluge
65,700
-
385,145
17,816
Other KMP
D Cubbin
G Liberatore (iii)
243,000
216,987
459,987
Total for all KMP
1,145,840
23,085
20,614
43,699
83,884
-
-
-
-
-
-
-
-
-
-
-
-
Share-
based
payment
(options)
$
78,210
39,105
78,210
35,393
230,918
$
$
198,210
104,805
143,910
107,070
553,995
78,210
39,105
78,210
35,393
230,918
-
-
-
-
-
70,825
28,600
436,686
99,425
-
-
65,700
-
70,825
28,600
502,386
99,425
46,565
40,144
86,709
91,010
28,600
403,660
306,345
119,610
710,005
157,534
379,128
1,766,386
137,575
68,744
206,319
536,662
%
39
37
54
33
-
23
-
34
22
-
-
(i) C Behrenbruch is eligible to receive an annual STI of up to 30% of remuneration. D Cubbin and G Liberatore are eligible to receive an annual STI of
up to 25% of remuneration. No other KMP are eligible to receive an STI amount. In the year to 31 December 2019, based on recognition of overall
team performance during the year and the actual achievement against corporate objectives, 70% of STI entitlement due to each eligible KMP for
the year was awarded. The remaining 30% of STI entitlement due to each eligible KMP for the year was forfeited.
(ii) In consideration for agreeing to join the Board, and in lieu of an equity grant at the time of appointment, the Board offered J Skinner an additional
fee of $14,345 per annum (inclusive of statutory superannuation), effective to the date of the Company’s 2019 AGM. Following shareholder
approval for the issue of options to Ms Skinner, the fee ceased to be payable effective 1 June 2019.
(iii) G Liberatore was appointed as Group Chief Operating Officer on 18 February 2019.
27
Telix Pharmaceuticals LimitedAnnual Report
Annual Report
Directors’ report continued
Remuneration for the year ended 31 December 2018
The below table shows details of the remuneration expenses recognised for KMP measured in accordance with the requirements
of the accounting standards.
Fixed remuneration
Variable remuneration
Total
STI and
option
STI and
option
Salary
and fees
$
Superann-
uation
$
Other
$
STI(ii)
$
Share-
based
payment
(options)
$
$
$
Non-Executive Directors
K McCann
O Buck
M Nelson
J Skinner(i)
109,589
10,411
65,700
60,000
39,161
-
5,700
3,720
274,450
19,831
-
-
-
-
-
-
-
-
-
-
78,210
198,210
39,105
104,805
78,210
143,910
-
42,881
78,210
39,105
78,210
-
195,525
489,806
195,525
Executive Directors
C Behrenbruch
A Kluge
280,000
157,850
26,600
-
73,584
-
-
-
-
380,184
73,584
157,850
-
538,034
73,584
62,410
351,490
110,590
62,410
351,490
110,590
-
73,584
48,180
48,180
-
-
-
-
-
121,764
257,935
1,379,330
379,699
Other KMP
D Cubbin
437,850
26,600
220,000
220,000
-
20,900
20,900
Total for all KMP
932,300
67,331
(i) J Skinner was appointed to the Board on 19 June 2018.
%
39
37
54
-
-
19
-
-
31
-
-
(ii) C Behrenbruch is eligible to receive an annual STI of up to 30% of remuneration. D Cubbin is eligible to receive an annual STI of up to 25% of
remuneration. No other KMP are eligible to receive an STI. In the year to 31 December 2018, based on successful completion of 75% of pre-set
corporate objectives, and in recognition of significant achievements against new targets set following the realignment of corporate strategy during
the year, 80% of STI entitlement due to each eligible KMP for the year was awarded. The remaining 20% of STI entitlement due to each eligible KMP
for the year was forfeited.
Related party transactions with KMP
Remuneration: Remuneration to KMP is recorded in the tables above.
Loans: There were no loans between the Company and any KMP in the years ended 31 December 2019 and 2018.
Other transactions: ABX CRO is a clinical research organisation that specialises in radiopharmaceutical product development. Telix
has entered into a master services agreement with ABX CRO for the provision of clinical and analytical services for its programs.
Director and Chief Medical Advisor, Dr Andreas Kluge, is the principal owner and Managing Director of ABX CRO. In the year ended
31 December 2019, the total amount paid or payable to ABX CRO was $2,048,381.
Other than those noted above, there were no related party transactions with any KMP in the year ended 31 December 2019.
28
Telix Pharmaceuticals Limited
Employment contracts
Executive Directors and other key management personnel have rolling contracts, not limited by term. Details of contractual terms
effective 1 January 2020 are as follows:
KMP and start date
Remuneration
Notice period
Christian Behrenbruch
MD & Group CEO
Appointed
3 January 2017
Base salary of
$317,240 subject
to annual review.
Exclusive of
superannuation
paid at government-
determined levels.
Andreas Kluge
Executive Director
Appointed
3 January 2017
Base fee of up to
$160,000 (€100,000).
Dr Kluge is engaged
on a consulting basis.
Doug Cubbin
Group CFO
Appointed
22 May 2017
Base salary of
$250,290 subject
to annual review.
Exclusive of
superannuation
paid at government-
determined levels.
Gabriel Liberatore
Group COO
Appointed
18 February 2019
Base salary of
$257,500 subject
to annual review.
Exclusive of
superannuation
paid at government-
determined levels.
Three months’ notice
of termination by either
party. All payments
on termination will
be subject to the
termination benefits
cap under the
Corporations Act.
Shareholder approval
was obtained prior to
listing for the provision
of benefits on cessation
of employment.
Three months’ notice
of termination by either
party. All payments
on termination will
be subject to the
termination benefits
cap under the
Corporations Act.
Shareholder approval
was obtained prior to
Listing for the provision
of benefits on cessation
of employment.
Three months’ notice
of termination by either
party. All payments
on termination will
be subject to the
termination benefits
cap under the
Corporations Act.
Shareholder approval
was obtained prior to
listing for the provision
of benefits on cessation
of employment.
Three months’ notice
of termination by either
party. All payments
on termination will
be subject to the
termination benefits
cap under the
Corporations Act.
Shareholder approval
was obtained prior to
listing for the provision
of benefits on cessation
of employment.
STI and treatment of
STI on termination
LTI and treatment of
LTI on termination
Eligible to receive an
annual STI of up to 30%
of base remuneration.
Payout of any STI is at
the discretion of the
Board.
The treatment of STIs
on termination is at
Board discretion.
Eligible to participate
in the Company’s EIP.
Any issue of securities is
subject to shareholder
approval.
The treatment of LTI on
termination is at Board
discretion.
Eligible to participate
in the Company’s EIP.
Any issue of securities is
subject to shareholder
approval.
The treatment of LTIs
on termination is at
Board discretion.
Eligible to participate
in the Company’s EIP.
The treatment of LTI on
termination is at Board
discretion.
Eligible to participate
in the Company’s EIP.
The treatment of LTI on
termination is at Board
discretion.
Not eligible.
Eligible to receive an
annual STI of up to 25%
of base remuneration.
Payout of any STI is
at the discretion of
the Board.
The treatment of STI on
termination is at Board
discretion.
Eligible to receive an
annual STI of up to 25%
of base remuneration.
Payout of any STI is
at the discretion of
the Board.
The treatment of STI on
termination is at Board
discretion.
29
Telix Pharmaceuticals LimitedAnnual Report
Directors’ report continued
Shareholdings of Directors and KMP for the year ended 31 December 2019
K McCann
O Buck
M Nelson
J Skinner
C Behrenbruch
A Kluge
D Cubbin
G Liberatore
Balance
1 January
Shares issued from
options exercised
Net acquired/
(disposed)
Balance
31 December
160,000
1,057,500
2,238,750
100,000
24,675,000
24,675,000
-
-
-
164,835
-
-
-
-
-
-
52,906,250
164,835
-
-
-
-
-
-
-
-
-
160,000
1,222,335
2,238,750
100,000
24,675,000
24,675,000
-
-
53,071,085
Shareholdings of Directors and KMP for the year ended 31 December 2018
K McCann
O Buck
M Nelson
J Skinner
C Behrenbruch
A Kluge
D Cubbin
Balance
1 January
Shares issued from
options exercised
Net acquired/
(disposed)
Balance
31 December
160,000
1,057,500
2,238,750
-
24,675,000
24,675,000
-
52,806,250
-
-
-
-
-
-
-
-
-
-
-
100,000
-
-
-
160,000
1,057,500
2,238,750
100,000
24,675,000
24,675,000
-
100,000
52,906,250
30
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Telix Pharmaceuticals LimitedAnnual Report
Directors’ report continued
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Telix Pharmaceuticals LimitedAnnual Report
TELIX PHARMACEUTICALS LIMITED PERFORMANCE AND SHAREHOLDER WEALTH
Basic loss per share (cents)
Net tangible assets per share (cents)
Dividend per share (cents)
Closing share price ($)
Increase/(decrease) in share price (%)
Market capitalisation ($)
2019
(11.94)
25.99
-
1.55
+138
2018
(6.84)
6.67
-
0.65
+5
2017
(4.98)
38.74
-
0.62
(5)(i)
392,584,000
141,938,000
122,411,000
(i) Telix listed on the ASX on 15 November 2017. The opening share price at listing was $0.65.
ROUNDING OF AMOUNTS
The company is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the ‘rounding off’ of amounts in the
Directors’ Report. Amounts in the Directors’ Report have been rounded off in accordance with the instrument to the nearest
thousand dollars, or in certain cases, to the nearest dollar.
INDEMNITY
Subject to the Corporations Act 2001 (Cth) and rule 10.2 of the Constitution of Telix Pharmaceuticals Limited, the Company must
indemnify each Director, Secretary and Executive Officer to the maximum extent permitted by law against any liability incurred by
them by virtue of their holding office as, and acting in the capacity of, Director, Secretary or Executive Officer of the Company,
other than:
a) a liability owed to the Company or a related body corporate of the Company;
b) a liability for a pecuniary penalty order under section 1317G of the Corporations Act 2001 (Cth) or a compensation order under
section 1317H of the Corporations Act 2001 (Cth);
c) a liability owed to a person other than the Company that did not arise out of conduct in good faith.
The Company has paid premiums in respect of a contract insuring its Directors, the Company Secretary and Executive Officers for
the financial year ended 31 December 2019. Under the Company’s Directors and Officers Liability Insurance Policy, the Company
cannot disclose the nature of the liabilities insured by the policy or the amount of the premium.
Indemnification of auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, PricewaterhouseCoopers, as part of the terms
of its audit engagement agreement, against claims by third parties arising from the audit. No payment has been made to indemnify
PricewaterhouseCoopers during or since the financial year.
AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES
A statement of independence has been provided by the Company’s auditor, PricewaterhouseCoopers, and is attached to this report.
During the year the Company’s auditor performed non-audit services being tax advice relating to incentive plan structure. The
provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations
Act 2001 (Cth), and the Directors are satisfied that the nature, scope and quantum of the non-audit services provided did not
compromise auditor independence. The details of the services provided and their costs are as follows:
Taxation advisory services
$
5,500
5,500
33
Telix Pharmaceuticals LimitedAnnual Report Directors’ report continued
COMPANY SECRETARY
Melanie Farris
(FGIA, FCIS, MAICD) BComn Grad Dip ACG
Ms Farris holds a Bachelor of Communication (Public Relations), and a Graduate Diploma in Applied Corporate Governance. She is a
Fellow of the Governance Institute of Australia, a Fellow of the Institute of Chartered Secretaries (UK) and a Member of the Australian
Institute of Company Directors.
CORPORATE GOVERNANCE STATEMENT
Telix Pharmaceuticals and the Board are committed to achieving and demonstrating the highest standards of corporate governance.
The Company has reviewed its corporate governance practices against the Corporate Governance Principles and Recommendations
(4th edition) published by the ASX Corporate Governance Council. The 2019 Corporate Governance Statement reflects the corporate
governance practices in place throughout the financial year ended 31 December 2019 and is available in the Investors section of the
Company’s website: http://www.telixpharma.com/investors/corporate-governance/.
Signed in accordance with a resolution of Directors on 24 February 2020.
Kevin McCann AO
Chairman
Christian Behrenbruch
Managing Director and Group CEO
34
Telix Pharmaceuticals LimitedAnnual Report Auditor’s independence declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Telix Pharmaceuticals Limited for the year ended 31 December 2019, I
declare that to the best of my knowledge and belief, there have been:
Auditor’s Independence Declaration
(a)
As lead auditor for the audit of Telix Pharmaceuticals Limited for the year ended 31 December 2019, I
declare that to the best of my knowledge and belief, there have been:
(b)
(a)
This declaration is in respect of Telix Pharmaceuticals Limited and the entities it controlled during the
period.
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Telix Pharmaceuticals Limited and the entities it controlled during the
period.
Jon Roberts
Partner
PricewaterhouseCoopers
Jon Roberts
Partner
PricewaterhouseCoopers
Melbourne
24 February 2020
Melbourne
24 February 2020
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
35
35
35
Telix Pharmaceuticals LimitedAnnual Report Annual Report
Telix Pharmaceuticals Limited
36
Telix Pharmaceuticals Limited
Annual Report
Financial report
Consolidated statement of
comprehensive income or loss
Consolidated statement
of financial position
Consolidated statement
of changes in equity
Consolidated statement
of cash flows
Notes to the consolidated
financial statements
Directors’ declaration
Independent auditor’s report
38
39
40
41
42
79
80
37
Consolidated statement of comprehensive income or loss
for the year ended 31 December 2019
Continuing operations
Revenue
Cost of sales of goods
Gross profit
Research and development costs
Administration and corporate costs
Employment costs
Depreciation and amortisation
Finance costs
Other income and expenses
Loss before income tax
Income tax benefit
Loss from continuing operations after income tax
Loss is attributable to:
Owners of Telix Pharmaceuticals Limited
Loss for the year
Other comprehensive income/(loss)
Items to be reclassified to profit or loss in subsequent periods:
Exchange differences on translation of foreign operations
Total comprehensive loss for the year
Basic loss per share from continuing operations attributable to the ordinary equity
holders of the Company
Diluted loss per share from continuing operations attributable to the ordinary equity
holders of the Company
Note
4
5
6
7
8
9
10
11
Note
31.1
31.2
2019
$’000
3,485
(2,543)
942
2018
$’000
195
-
195
(21,162)
(18,692)
(6,826)
(8,974)
(4,236)
(2,408)
(4,246)
(4,897)
(7)
(29)
11,542
11,962
(31,122)
(15,714)
3,255
1,884
(27,867)
(13,830)
(27,867)
(13,830)
(27,867)
(13,830)
(116)
54
(27,983)
(13,776)
2019
Cents
2018
Cents
(11.94)
(6.84)
(11.94)
(6.84)
The above consolidated statement of comprehensive income or loss is to be read in conjunction with the notes to the consolidated
financial statements.
38
Telix Pharmaceuticals LimitedAnnual Report Consolidated statement of financial position
as at 31 December 2019
Current assets
Cash and cash equivalents
Trade and other receivables
Inventory
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Non-current trade and other receivables
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Deferred tax liabilities
Government grant liability
Contingent consideration liability
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Foreign currency translation reserve
Share-based payments reserve
Accumulated losses
Total equity
Note
12.1
12.2
14
12.3
15.1
16
17
12.4
18
15.2
19
18
15.2
13.2
24
20
2019
$’000
2018
$’000
44,598
12,071
542
1,468
25,771
8,436
643
1,007
58,679
35,857
1,899
41,948
82
43,929
102,608
9,218
469
21
917
10,625
292
1,349
3,170
650
16,441
21,902
32,527
70,081
226
39,451
1,175
40,852
76,709
6,893
1,133
-
216
8,242
596
-
4,374
-
10,592
15,562
23,804
52,905
21.1
115,943
72,053
21.2
(62)
2,274
54
1,005
(48,074)
(20,207)
70,081
52,905
The above consolidated statement of financial position is to be read in conjunction with the notes to the consolidated financial
statements.
39
Telix Pharmaceuticals LimitedAnnual Report
Consolidated statement of changes in equity
for the year ended 31 December 2019
Balance as at 1 January 2018
Loss for the year
Other comprehensive income
Total comprehensive income/(loss)
Shares issued as consideration on
acquisition of subsidiaries
Warrants issued as consideration on
acquisition of subsidiaries
Share based payments
As at 31 December 2018
Share
capital
$’000
Accumulated
losses
$’000
Note
Foreign
currency
translation
reserve
$’000
55,561
-
-
-
(6,377)
(13,830)
-
(13,830)
21.1
16,492
21.2
21.2
-
-
16,492
72,053
(20,207)
54
1,005
Share
capital
$’000
Accumulated
losses
$’000
Note
Foreign
currency
translation
reserve
$’000
Share-based
payments
reserve
$’000
109
-
-
-
-
184
712
896
-
-
54
54
-
-
-
-
Share-based
payments
reserve
$’000
1,005
-
-
-
-
-
1,269
1,269
2,274
54
-
(116)
(116)
-
-
-
-
Total
equity
$’000
49,293
(13,830)
54
(13,776)
16,492
184
712
17,388
52,905
Total
equity
$’000
52,905
(27,867)
(116)
(27,983)
45,254
(1,364)
1,269
45,159
70,081
-
-
-
-
-
-
-
-
Balance as at 1 January 2019
Loss for the year
Other comprehensive loss
Total comprehensive income/(loss)
72,053
-
-
-
(20,207)
(27,867)
-
(27,867)
Contributions of equity
21.1
45,254
Transaction costs arising on new
share issues
Share based payments
As at 31 December 2019
21.1
21.2
(1,364)
-
43,890
115,943
(48,074)
(62)
The above consolidated statement of changes of equity is to be read in conjunction with the notes to the consolidated financial
statements.
40
Telix Pharmaceuticals LimitedAnnual Report Consolidated statement of cash flows
for the year ended 31 December 2019
Cash flows from operating activities
Receipts from customers
Receipts in relation to R&D tax incentive
Payments to suppliers and employees
Interest received
Interest paid
Net cash used in operating activities
Cash flows from investing activities
Payment for acquisition of subsidiary, net of cash acquired
Purchase of intangible assets
Purchase of plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Repayment of borrowings
Principal element of lease payments
Proceeds from issue of shares and other equity
Transaction costs of capital raising
Net cash provided by/(used in) financing activities
Net increase/(decrease) in cash held
Net foreign exchange differences
Cash and cash equivalents at the beginning of the financial year
Cash and equivalents at the end of the financial year
Note
2019
$’000
3,427
9,261
2018
$’000
-
1,178
(36,002)
(22,243)
98
(117)
333
(17)
22
(23,333)
(20,749)
24
16
15.1
18
15.2
21.1
21.1
12.1
-
(65)
(403)
(468)
(943)
(224)
45,254
(1,364)
42,723
18,922
(95)
25,771
44,598
(2,693)
-
-
(2,693)
(869)
-
-
-
(869)
(24,311)
1,323
48,759
25,771
The above consolidated statement of cash flows is to be read in conjunction with the notes to the consolidated financial statements.
41
Telix Pharmaceuticals LimitedAnnual Report Notes to the consolidated financial statements
1. CORPORATE INFORMATION
Telix Pharmaceuticals Limited (‘Telix’ or ‘the Company’) is a for profit company limited by shares incorporated in Australia whose shares
have been publicly traded on the Australian Securities Exchange since its listing on 15 November 2017 (ASX:TLX). Telix is an oncology
company that is developing a pipeline of ‘molecularly targeted radiation’, or ‘MTR’, products for unmet needs in cancer care. Telix is the
Parent company of the Telix Pharmaceuticals Group (‘the Group’).
This consolidated financial report of Telix Pharmaceuticals Limited for the year ended 31 December 2019 was authorised for issue in
accordance with a resolution of the Directors on 24 February 2020.
2. SEGMENT REPORTING
The Telix Pharmaceuticals Group is an oncology group with operations in Australia, the United States, Belgium and Japan. The Group
does not currently consider that the risks and returns of the Group are affected by differences in either the products or services it
provides, nor the geographical areas in which the Group operates. As such the Group operates as one segment. Group performance
is evaluated based on operating profit or loss and is measured consistently with profit or loss in the financial statements. Financing
(including finance costs and finance income) and income taxes are managed on a Group basis.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies that have been used in the preparation of these financial statements are summarised below.
3.1 Going concern
The Group is a development stage medical biotechnology company and as such expects to be utilising cash until its research
activities have become marketable. For the year ended 31 December 2019, the Group incurred an operating loss of $27,867,000
(2018: $13,830,000) and an operating cash outflow of $23,333,000 (2018: $20,749,000). As at 31 December 2019 the net assets of
the Group stood at $70,081,000 (2018: $52,905,000), with cash on hand at $44,598,000 (2018: $25,771,000).
The Group has recorded current trade and other receivables in the amount of $11,326,000 (2018: $7,758,000) from the Australian
Taxation Office (‘ATO’) in respect of its Research and Development (‘R&D’) tax incentive claim for eligible R&D activities undertaken
in the year to 31 December 2019. The Group expects to receive this amount during the 12 months ending 31 December 2020. The
Group expects the R&D tax incentive to be applicable in subsequent years for eligible R&D activities undertaken, until the Group
reaches $20M of revenue in a financial year.
Cash on hand at 31 December 2019 is considered sufficient to meet the Group’s forecast cash outflows in relation to research and
development activities currently underway and other committed business activities for at least 12 months from the date of this report.
On 24 July 2019, 30,770,000 fully paid shares were issued further to a private placement announced on 17 July 2019. Shares were
issued at $1.30 per share to raise $40,001,000 before costs. On 22 August 2019, 3,846,128 fully paid ordinary shares were issued
further to the Share Purchase Plan (SPP) announced on 17 July 2019 to raise a total amount of $5,000,000 before costs. The SPP
enabled the existing eligible shareholder to purchase up to $15,000 of shares at $1.30 per share, without brokerage fees.
On this basis, the Directors are satisfied that the Group continues to be a going concern as at the date of this report. Further, the
Directors are of the opinion that no asset is likely to be realised for an amount less than the amount at which it is recorded in the
consolidated statement of financial position as at 31 December 2019.
As such, no adjustment has been made to the financial report relating to the recoverability and classification of the asset carrying
amounts or the classification of liabilities that might be necessary should the Group not continue as a going concern.
42
Telix Pharmaceuticals LimitedAnnual Report 3.2 Basis of preparation
These general-purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001 (Cth). Telix Pharmaceuticals
Limited is a for-profit entity for the purpose of preparing the financial statements. All amounts have been rounded to the nearest
thousand, unless otherwise indicated.
a. Compliance with IFRS
The consolidated financial statements of the Telix Pharmaceuticals Group also comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
b. Historical cost convention
The financial statements have been prepared on a historical cost basis, except for the following: intellectual property, share based
payments, government grants and contingent liabilities which are measured at fair value.
c. Comparatives and rounding
Where necessary, comparative information has been re-classified to achieve consistency in disclosure with current financial amounts
and other disclosures. The Company is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the ‘rounding off’
of amounts in the consolidated financial statements. Amounts in the consolidated financial statements have been rounded off in
accordance with the instrument to the nearest thousand dollars, or in some cases the nearest dollar.
d. New and amended standards adopted
d.1. Change in accounting policies following the adoption of accounting standards in the current period
In the current reporting period, the Group had to change its accounting policies and make adjustments as a result of adopting
AASB 16 Leases. The impact of the adoption of the leasing standard and the new accounting policy is disclosed below.
d.2. Impact of change in accounting policy
This note explains the impact of the adoption of AASB 16 Leases on the Group’s financial statements and discloses the new
accounting policies that have been applied from 1 January 2019. The Group has adopted AASB 16 retrospectively from 1 January
2019 but has not restated comparatives for the 2018 reporting period, as permitted under the specific transitional provisions in
the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognised in the opening
statement of financial position on 1 January 2019.
On adoption of AASB 16, the Group recognised lease liabilities in relation to leases which had previously been classified as
operating leases under the principles of AASB 117 Leases. These liabilities were measured at the present value of the remaining
lease payments, discounted using the lessee’s incremental borrowing rate as of 1 January 2019. The weighted average lessee’s
incremental borrowing rate applied to the lease liabilities on 1 January 2019 was 8% being the rate that the individual lessee
would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic
environment with similar terms, security and conditions.
In applying AASB 16 for the first time, the Group has used the following practical expedients permitted by the standard:
• the use of a single post-tax discount rate to a portfolio of leases with reasonably similar characteristics; and
• the use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.
The Group has also elected not to reassess whether a contract is or contains a lease at the date of initial application. Instead, for
contracts entered into before the transition date the Group relied on its assessment made in applying AASB 117 Interpretation for
determining whether an arrangement contains a lease.
The Group’s leasing activities and how they are accounted for
The Group leases various offices and motor vehicles across all jurisdictions of activity. These leasing contracts are typically made for
fixed periods of two to four years but may have extension options. Lease terms are negotiated on an individual basis and contain
a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be
used as security for borrowing purposes.
Until 31 December 2018, leases of property and motor vehicles were classified as operating leases. Payments made under operating
leases (net of any incentives received from the lessor) were charged to profit or loss on a straight-line basis over the period of the lease.
From 1 January 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset
is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to
profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each
period. The right-of-use assets are depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.
43
Telix Pharmaceuticals LimitedAnnual Report Notes to the consolidated financial statements continued
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present
value of the following lease payments:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• variable lease payment that are based on an index or a rate;
• amounts expected to be payable by the lessee under residual value guarantees;
• the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
• payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the lessee’s incremental borrowing rate (8%), being the rate that the lessee would have
to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms
and conditions.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less any lease incentives received;
• any initial direct costs; and
• restoration costs.
Operating lease commitments disclosed as at 31 December 2018
Add: adjustments as a result of a different treatment of extension and termination options, net of discounting
Lease liability recognised as at 1 January 2019
Current
Non-current
Lease liability as at 1 January 2019
2019
$’000
163
327
490
204
286
490
The right-of-use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued
lease payments relating to that lease recognised in the statement of financial position as at 31 December 2018. There were no
onerous lease contracts that would have required an adjustment to the right-of-use assets at the date of initial application.
The recognised right-of-use assets relate to the following types of assets:
Properties
Motor vehicles
Total right-of-use-assets
The change in accounting policy affected the following items in the statement of financial position on 1 January 2019:
• property, plant and equipment – $Nil;
• right-of-use assets – increase by $490,000;
• deferred tax assets – increase by $Nil; and
• lease liabilities – increase by $490,000.
The net impact on retained earnings on 1 January 2019 was $Nil.
1 January
2019
$’000
217
273
490
44
Telix Pharmaceuticals LimitedAnnual Report e. New standards and interpretations not yet adopted
New and amended standards adopted by the Group
The Group has applied the following standards and amendments for the first time for the annual reporting period commencing
1 January 2019:
• AASB 16 Leases (See note 3.2 d.2);
• AASB 2017-6 Amendments to Australian Accounting Standards – Prepayment Features with Negative Compensation;
• AASB 2017-7 Amendments to Australian Accounting Standards – Long-term Interests in Associates and Joint Ventures;
• AASB 2018-1 Amendments to Australian Accounting Standards – Annual Improvements 2015-2017 Cycle;
• AASB 2018-2 Amendments to Australian Accounting Standards – Plan Amendment, Curtailment or Settlement; and
• Interpretation 23 Uncertainty over Income Tax Treatments.
The Group had to change its accounting policies as a result of adopting AASB 16. The group elected to adopt the new rules using
the modified retrospective approach. As a result, the comparative financial information has not been restated. This is disclosed
in note 15. The other amendments listed above did not have any impact on the amounts recognised in prior periods and are not
expected to significantly affect the current or future periods.
New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2019
reporting periods and have not been early adopted by the Group. These standards are not expected to have a material impact
on the entity in the current or future reporting periods and on foreseeable future transactions.
3.3 Principles of consolidation
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies
of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
3.4 Current and non-current classification
Assets and liabilities are presented in the consolidated statement of financial position based on current and non-current classification.
An asset is current when it is expected to be realised or intended to be sold or consumed in the Group’s normal operating cycle; it is
held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash
or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.
All other assets are classified as non-current. A liability is current when it is expected to be settled in the Group’s normal operating
cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is
no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are
classified as non-current. Deferred tax assets and liabilities are always classified as non-current.
3.5 Cash and cash equivalents
For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or
less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank
overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the consolidated statement of financial position.
45
Telix Pharmaceuticals LimitedAnnual Report Notes to the consolidated financial statements continued
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
3.6 Provisions, contingent liabilities and contingent assets
Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, it is probable
the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount
recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date,
taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are
discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is
recognised as a finance cost.
3.7 Foreign currency translation
a. Functional and presentation currency
Items included in the financial statements of the Group are measured in Australian dollars, being the currency of the primary economic
environment in which the entity operates (‘the functional currency’). The financial statements are presented in Australian dollars.
b. Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets
and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss. They are
deferred in equity if they relate to qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the
net investment in a foreign operation. Foreign exchange gains and losses that relate to borrowings are presented in the statement
of comprehensive income or loss, within finance costs. All other foreign exchange gains and losses are presented in the statement
of comprehensive income or loss on a net basis within other income or other expenses.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date
when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of
the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities such as equities held at fair
value through profit or loss are recognised in profit or loss as part of the fair value gain or loss and translation differences on non-
monetary assets such as equities classified as available-for-sale financial assets are recognised in other comprehensive income.
c. Group companies
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have
a functional currency different from the presentation currency are translated into the presentation currency as follows:
• assets and liabilities for each consolidated statement of financial position presented are translated at the closing rate at the date
of that consolidated statement of financial position
• income and expenses for each consolidated statement of total comprehensive income are translated at average exchange rates
(unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which
case income and expenses are translated at the dates of the transactions), and
• all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings
and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When
a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences
are reclassified to profit or loss, as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition
of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.
3.8 Government grant income (R&D tax incentive income)
Income from government grants are recognised at their fair value where there is a reasonable assurance that the grant will be
received, and the Group will comply with all attached conditions. Income from government grants is recognised in the consolidated
income statement on a systematic basis over the periods in which the entity recognises as expense the related costs for which the
grants are intended to compensate. See further information in significant judgements and estimates.
46
Telix Pharmaceuticals LimitedAnnual Report 3.9 Income tax
The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable
income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences
and to unused tax losses.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not
recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects
neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted
or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset
is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary
differences and losses.
Tax consolidation regime
Telix Pharmaceuticals Limited and its wholly owned Australian resident entities have formed a tax-consolidated group and are
therefore taxed as a single entity. The head entity within the tax-consolidated group is Telix Pharmaceuticals Limited. The Company,
and the members of the tax-consolidated group, recognise their own current tax expense/income and deferred tax assets and
liabilities arising from temporary differences using the ‘standalone taxpayer’ approach by reference to the carrying amounts of assets
and liabilities in the separate financial statements of each entity and the tax values applying under tax consolidation. In addition
to its current and deferred tax balances, the Company also recognises the current tax liabilities (or assets), and the deferred tax
assets arising from unused tax losses and unused tax credits assumed from members of the tax-consolidated group, as part of the
tax-consolidation arrangement. Assets or liabilities arising as part of the tax consolidation arrangement are recognised as current
amounts receivable or payable from the other entities within the tax consolidated group.
3.10 Business combinations
The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments
or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the:
• fair values of the assets transferred;
• liabilities incurred to the former owners of the acquired business;
• equity interests issued by the Group;
• fair value of any asset or liability resulting from a contingent consideration arrangement; and
• fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions,
measured initially at their fair values at the acquisition date. Acquisition-related costs are expensed as incurred. The excess of the
consideration transferred, amount of any non-controlling interest in the acquired entity, and acquisition-date fair value of any previous
equity interest in the acquired entity over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts
are less than the fair value of the net identifiable assets of the subsidiary acquired, the difference is recognised directly in profit or loss
as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present
value as at the date of exchange. The post-tax discount rate used is the entity’s incremental borrowing rate, being the rate at which a
similar borrowing could be obtained from an independent financier under comparable terms and conditions. Contingent consideration
is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value
with changes in fair value recognised in profit or loss.
The acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the
acquisition date. Any gains or losses arising from such remeasurement are recognised in profit or loss. If the initial accounting for a
business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional
amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period
(see below), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that
existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date. The measurement period
is the period from the date of acquisition to the date the Group obtains complete information about facts and circumstances that
existed as of the acquisition date and is subject to a maximum of one year.
47
Telix Pharmaceuticals LimitedAnnual Report Notes to the consolidated financial statements continued
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
3.11 Intangible assets
a. Goodwill
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised, but it is tested for impairment
annually, or more frequently if events or changes in circumstances indicate that it might be impaired and is carried at cost less
accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to
the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those
cash-generating units or group of cash-generating units that are expected to benefit from the business combination in which the
goodwill arose.
b. Patents, trademarks, licenses and customer contracts
Separately acquired trademarks and licenses are shown at historical cost. Trademarks, licenses and customer contracts acquired
in a business combination are recognised at fair value at the acquisition date. They have a finite useful life and are subsequently
carried at cost less accumulated amortisation and impairment losses. The useful of these intangibles assets is 20 years.
c. Intellectual property
Intellectual property has been realised on the acquisition of Therapeia GmbH & Co.KG (Therapeia) (2017), Atlab Pharma SAS (Atlab)
(2018) and Advanced Nuclear Medicine Ingredients SA (ANMI) (2018). The intellectual property associated with the Therapeia and
Atlab acquisitions is recorded as indefinite useful lived assets as it is not yet ready for use. At the point the asset is ready for use, the
useful life will be reassessed as a definite lived asset and amortised over an appropriate period. All assets will be tested annually for
impairment and subsequently carried at cost less accumulated impairment losses and/or accumulated amortisation. The intellectual
property associated with ANMI is recorded with a useful life of seven years and will be amortised over the period. An impairment
trigger assessment will be performed annually.
d. Research and development
Research expenditure on internal projects is recognised as an expense as incurred. Costs incurred on development projects
(relating to the design and testing of new or improved products) are recognised as intangible assets when it is probable that the
project will, after considering its commercial and technical feasibility, be completed and generate future economic benefits and its
costs can be measured reliably. The expenditure that could be recognised comprises all directly attributable costs, including costs
of materials, services, direct labour and an appropriate proportion of overheads. Other expenditures that do not meet these criteria
are recognised as an expense as incurred. As the Group has not met the requirement under the standard to recognise costs in
relation to development as intangible assets, these amounts have been expensed within the financial statements.
3.12 Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are
tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash
inflows from other assets or Groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an
impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
3.13 Property, plant and equipment
All property, plant and equipment is stated at historical cost less accumulated depreciation. Historical cost includes expenditure
that is directly attributable to the acquisition of the items. Cost may also include transfer from equity of any gains or losses on
qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Subsequent costs are included in the
asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits
associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any
component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged
to profit or loss during the reporting period in which they are incurred.
Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated
useful lives. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting
period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater
than its estimate recoverable amount.
48
Telix Pharmaceuticals LimitedAnnual Report The useful lives of assets are as follows:
• Plant and equipment: 3-5 years
• Furniture, fittings and equipment: 3-5 years
• Leased plant and equipment: 3-5 years
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss.
When revalued assets are sold, it is Group policy to transfer any amounts included in other reserves in respect of those assets to
retained earnings.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less any lease incentives received;
• any initial direct costs; and
• restoration costs.
Right-of-use assets are depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. If the group
is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life.
3.14 Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid.
The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current
liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and
subsequently measured at amortised cost using the effective interest method.
3.15 Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit
or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are
recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this
case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the
facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility
to which it relates.
Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to
another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or
loss as other income or finance costs.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at
least 12 months after the reporting period.
3.16 Inventory
Raw materials and stores, work in progress and finished goods
Raw materials and stores, work in progress and finished goods are stated at the lower of cost and net realisable value. Cost
comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter
being allocated on the basis of normal operating capacity. Cost includes the reclassification from equity of any gains or losses on
qualifying cash flow hedges relating to purchases of raw material but excludes borrowing costs. Costs are assigned to individual
items of inventory on the basis of weighted average costs. Costs of purchased inventory are determined after deducting rebates
and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the sale.
49
Telix Pharmaceuticals LimitedAnnual Report
Notes to the consolidated financial statements continued
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
3.17 Employee benefits
Employee benefits are recognised as an expense, unless the cost qualifies to be capitalised as an asset.
a. Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave that are expected to
be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in
respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when
the liabilities are settled. The liabilities are presented as current employee benefit obligations in the statement of financial position.
b. Other long‑term employee benefit obligations
The liabilities for long service leave and annual leave are not expected to be settled wholly within 12 months after the end of the
period in which the employees render the related service. They are therefore measured as the present value of expected future
payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit
credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of
service. Expected future payments are discounted using market yields at the end of the reporting period of high-quality corporate
bonds with terms and currencies that match, as closely as possible, the estimated future cash outflows. Re-measurements as a result
of experience adjustments and changes in actuarial assumptions are recognised in profit or loss. The obligations are presented as
current liabilities in the statement of financial position if the entity does not have an unconditional right to defer settlement for at
least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
c. Share-based payments
Equity-settled share-based compensation benefits are provided to employees. Equity-settled transactions are awards of shares,
options or performance rights over shares, that are provided to employees. The cost of equity-settled transactions is measured at
fair value on grant date. Fair value is determined using the Black-Scholes option pricing model that takes into account the exercise
price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying
share, the expected dividend yield and the risk free interest rate for the term of the option and volatility. No account is taken of
any other vesting conditions.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is treated
as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied during the
vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is
recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is
treated as if they were a modification.
d. Termination benefits
Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or when an
employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits at the earlier
of the following dates:
(i) when the the Group can no longer withdraw the offer of those benefits; and
(ii) when the entity recognises costs for a restructuring that is within the scope of AASB 137 and involves the payment of termination
benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the
number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting
period are discounted to present value.
3.18 Earnings per share
a. Basic earnings per share
Basic earnings per share is calculated by dividing: the profit attributable to owners of the company, excluding any costs of servicing
equity other than ordinary shares, and by the weighted average number of ordinary shares outstanding during the financial period,
adjusted for bonus elements in ordinary shares issued during the period and excluding treasury shares.
b. Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account: the
after-income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and the weighted
average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential
ordinary shares.
50
Telix Pharmaceuticals LimitedAnnual Report 3.19 Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable
from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which
are recoverable from, or payable to the taxation authority, are presented as operating cash flows.
3.20 Revenue recognition
The Group assembles cancer imaging kits to supply hospitals and institutions. Sales are recognised when control of the products
has transferred, being when the products are delivered to the customer. Delivery occurs when the products have been shipped to
the specific location, the risks of obsolescence and loss have been transferred to the customer, parties have accepted the products
in accordance with the sales contract and the acceptance provisions have lapsed. Revenue from these sales is recognised based on
the price specified in the contract, net of the estimated volume discounts. Accumulated experience is used to estimate and provide
for the discounts, using the expected value method, and revenue is only recognised to the extent that it is highly probable that a
significant reversal will not occur. No element of financing is deemed present as the sales are made with a credit term of 30 days,
which is consistent with market practice. The Group’s obligation to replace faulty products under the standard warranty terms is
recognised as a provision. A receivable is recognised when the goods are delivered as this is the point in time that the consideration
is unconditional because only the passage of time is required before the payment is due.
If the collection of revenues is uncertain, the company should either (1) not recognise any revenues as long as the collection
remains uncertain or (2) recognise revenues and an impairment loss in the statement of comprehensive income or loss.
3.21 Receivables
Trade receivables and other receivables are all classified as financial assets held at amortised cost.
a. Trade and other receivables
Trade receivables are recognised initially at the amount of consideration that is unconditional, unless they contain significant
financing components when they are recognised at fair value.
b. Impairment of trade and other receivables
The collectability of trade and other receivables is reviewed on an ongoing basis. Individual debts which are known to be
uncollectible are written off when identified. The Group recognises an impairment provision based upon anticipated lifetime losses
of trade receivables. The anticipated losses are determined with reference to historical loss experience and is regularly reviewed and
updated. They are subsequently measured at amortised cost using the effective interest method, less loss allowance. See note 23.4
for further information about the group’s accounting for trade receivables and description of the group’s impairment policies.
3.22 Leases
There was no adjustment to property, plant and equipment on 1 January 2019 following the adoption of the leasing standard.
The right-of-use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued
lease payments relating to leases recognised in the statement of financial position as at 31 December 2018. There were no onerous
lease contracts that would have required an adjustment to the right-of-use assets at the date of initial application.
From 1 January 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset
is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged
to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for
each period. The right-of-use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.
51
Telix Pharmaceuticals LimitedAnnual Report
Notes to the consolidated financial statements continued
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
3.23 Fair value measurement
Certain judgements and estimates are made in determining the fair values of the financial instruments that are recognised and
measured at fair value in the financial statements. To provide an indication about the reliability of the inputs used in determining
fair value, the Group has classified its financial instruments into the three levels prescribed under the accounting standards. The
different levels have been defined as follows:
• Level 1: fair value of financial instruments traded in active markets is based on quoted market prices at the end of the
reporting period. The quoted market price used for financial assets is the current bid price.
• Level 2: fair value of financial instruments that are not traded in an active market is determined using valuation techniques
which maximize the use of observable market data and rely as little as possible on entity specific estimates. If all significant
inputs required to fair value an instrument are observable, the instrument is included in level 2.
• Level 3: if one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
There were no transfers between level 1, 2 and 3 for recurring fair value measurements during the year. The Group’s policy is to
recognise transfers into and transfers out of fair value hierarchy levels at the end of the reporting period. Certain judgements and
estimates are made in determining the fair values of the financial instruments that are recognised and measured at fair value in
the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Group has
classified its financial instruments into the three levels prescribed under the accounting standards.
3.24 Critical estimates, judgements and errors
Accrued R&D expenditure
As part of the process of preparing our financial statements, the Group is required to estimate its accrued expenses. This process
involves reviewing open contracts and purchase orders, communicating with program directors and managers to identify services
that have already been performed for the Group, estimating the level of services performed with associated costs incurred for the
service for which the Group has not yet been invoiced or otherwise notified of the actual cost. The majority of service providers
invoice the company monthly in arrears for services performed or when contractual milestones are met. The Group estimates
accrued expenses as of each statement of financial position date in the financial statements based on facts and circumstances
known at that time. The Group periodically confirms the accuracy of estimates with the service providers and make adjustments
if necessary. Examples of estimated accrued expenses include fees paid to:
• Contract Research Organisations (CROs) in connection with clinical studies;
• investigative sites in connection with clinical studies;
• vendors in connection with preclinical development activities; and
• vendors related to product manufacturing, process development and distribution of clinical supplies.
Recognition of R&D tax incentive income
The Australian government allows a refundable research and development (R&D) tax incentive to eligible companies with an annual
aggregate turnover of less than $20,000,000. Eligible companies can receive refundable amounts at a rate of 43.5% of their research
and development expenditure. On 3 August 2018 Telix Pharmaceuticals Limited was granted certificates from the Department of
Innovation, Industry and Science (‘Innovation and Science Australia’) for an advance/overseas R&D tax finding providing approval for
activities that are eligible for R&D tax incentive in relation to qualifying expenditure of up to $55,200,000.
The research and development activities have been assessed by management and also by an independent subject matter expert to
determine which areas are eligible under the R&D tax incentive scheme. This analysis includes an assessment of both the domestic
and international spend. For the year ended 31 December 2019 the Group has recognised $11,693,000 (2018: $10,142,000) in the
consolidated statement of comprehensive income or loss.
The Group has recognised $11,326,000 (2018: $7,758,000) of R&D tax incentive receivables which is classified as a current asset as
it is expected to be received in the next 12 months. $Nil has been classified as non-current (2018: $1,136,000).
Contingent consideration liability
The Group has identified the contingent consideration liability as a balance requiring estimates and significant judgements. These
estimates and judgements have been outlined in note 20.
52
Telix Pharmaceuticals LimitedAnnual Report
Finalisation of purchase price allocation of intellectual property (ANMI)
The Company appointed an independent external valuation expert to assist in the finalisation of the purchase price allocation and
goodwill impairment testing for the ANMI acquisition as at 24 December 2018.
This model contained key assumptions including, sales volumes, price per unit, margin, cost to achieve regulatory approval,
probability of success and risk adjusted post-tax discount rates. Further detail has been provided in note 24.
Impairment assessment – carrying value of goodwill and intangible assets
Since its inception Telix has completed three acquisitions: Therapaeia (2017), Atlab (2018) and ANMI (2018).
The assessment of impairment of these has required estimates and judgements to be made. The inputs for these have been
outlined in note 16.
4. REVENUE
Revenue from contracts with customers recognised at a point in time
Total revenue from continuing operations
5. RESEARCH AND DEVELOPMENT COSTS
Preclinical
Clinical
Manufacturing
Other research and development related costs
2019
$’000
3,485
3,485
2019
$’000
1,000
4,384
11,705
4,073
21,162
2018
$’000
195
195
2018
$’000
1,793
2,959
12,029
1,911
18,692
Manufacturing costs primarily relate to technical transfer and scale-up from research and development stage facilities and production
runs to clinical stage, good manufacturing practice production.
Telix utilised five outsourced sites for manufacturing during 2019 for the provision of clinical grade investigative products for Phase I-III
clinical studies. Work also commenced on scale up activities for the eventual commercial supply of our products including the TLX 250
diagnostic product.
6. ADMINISTRATION AND CORPORATE COSTS
Insurance
Professional fees
Training and compliance
Travel costs
Marketing and sponsorship
Other administration
2019
$’000
658
4,213
617
593
312
433
2018
$’000
478
2,083
546
578
72
489
6,826
4,246
53
Telix Pharmaceuticals LimitedAnnual Report Notes to the consolidated financial statements continued
7. EMPLOYMENT COSTS
Salaries and wages
Superannuation
Non-executive directors’ fees
Share based payment and incentives
8. DEPRECIATION AND AMORTISATION
Depreciation
Amortisation of intangible assets(i)
(i) Includes amortisation of intangible assets acquired in business combinations (see note 24) $3,830,000 (2018: $Nil).
9. FINANCE COSTS
Bank fees
Interest expense(i)
(i) Includes interest expense in the unwinding of discount on contingent consideration liability of $2,271,000 (2018: $Nil).
10. OTHER INCOME AND EXPENSES
Research and development tax incentive income
Realised currency loss
Unrealised currency (gain)/loss
Interest income
Other income
2019
$’000
6,572
222
393
1,787
8,974
2019
$’000
323
3,913
4,236
2019
$’000
21
2,387
2,408
2018
$’000
3,276
193
300
1,128
4,897
2018
$’000
-
7
7
2018
$’000
12
17
29
2019
$’000
2018
$’000
(11,693)
(10,142)
66
387
(98)
(204)
16
(1,503)
(333)
-
(11,542)
(11,962)
54
Telix Pharmaceuticals LimitedAnnual Report 11. INCOME TAX BENEFIT
11.1 Income tax benefit
Deferred tax benefit
Total income tax benefit
11.2 Numerical reconciliation of prima facie tax payable to income tax benefit
Loss from continuing operations before income tax benefit
Prima-facie tax at a rate of 27.5% (2018: 27.5%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
R&D tax incentive credit
Eligible expenses claimed under R&D tax incentive
Non-deductible interest
Employee option plan
Deductible transaction costs on share issues
Sundry items
Foreign exchange translation loss/(gain)
Current year tax losses not recognised
Adjustment for current tax of prior periods
Impact of change in tax rates
Difference in overseas tax rates
Provisions recognised in international jurisdictions
Previously unrecognised tax losses
Income tax benefit
11.3 Tax losses
Unused tax losses for which no deferred tax asset has been recognised:
Potential tax benefit (presented net)
2019
$’000
(3,255)
(3,255)
2018
$’000
(1,884)
(1,884)
2019
$’000
2018
$’000
(31,122)
(15,714)
(8,559)
(4,321)
(3,216)
7,161
625
349
(293)
34
107
(3,792)
1,071
(343)
(272)
-
81
-
(2,789)
5,627
-
196
(217)
64
(413)
(1,853)
689
-
-
(36)
-
(684)
(3,255)
(1,884)
2019
$’000
2018
$’000
1,760
689
The unused tax losses for which no deferred tax asset has been recognised were incurred by overseas subsidiaries that are not
likely to generate taxable income in the foreseeable future.
55
Telix Pharmaceuticals LimitedAnnual Report Notes to the consolidated financial statements continued
12. FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Financial assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Financial liabilities
Trade and other payables
Borrowings
Lease liabilities
Government grant liability
Contingent consideration liability
12.1 Cash and cash equivalents
Cash on hand
2019
$’000
2018
$’000
Note
12.1
12.2
12.3
44,598
12,071
1,468
58,137
12.4
9,218
18
761
15.2
1,370
24
20
650
16,441
28,440
25,771
8,436
1,007
35,214
6,893
1,729
-
-
10,592
19,214
2019
$’000
2018
$’000
44,598
25,771
(i) Reconciliation to cash flow statement: The above figures agree with the amount of cash shown in the statement of cash flows at the end of the
financial year.
(ii) Classification as cash equivalents: Term deposits are presented as cash equivalents if they have a maturity of three months or less from the date
of acquisition.
56
Telix Pharmaceuticals LimitedAnnual Report 12.2 Trade and other receivables
Trade receivables
R&D tax incentive receivable
2019
$’000
745
11,326
12,071
2018
$’000
678
7,758
8,436
Research and development activities have been assessed by the Group and by an independent subject matter expert to determine
which areas are likely to be eligible under the R&D tax incentive scheme. This assessment includes a review of both domestic and
international spend. For the year ended 31 December 2019 the Group has recognised a total current receivable of $11,326,000
(2018: $7,758,000) and a non current receivable of $Nil (2018: $1,136,000). The R&D tax incentive receivable has been determined
based on a combination of eligible domestic and international expenditure of $26,881,000 (2018: $20,473,000) at a rate of
43.5 cents tax incentive rebate per eligible R&D dollar spent. The credit risk associated with this receivable is low.
12.3 Other current assets
GST receivables
Other receivables
Prepayments
12.4 Trade and other payables
Trade creditors
Other creditors and accruals
Payroll liabilities
2019
$’000
264
674
530
2018
$’000
154
380
473
1,468
1,007
2019
$’000
6,964
1,801
453
9,218
2018
$’000
3,248
3,160
485
6,893
The carrying amounts of trade and other payables are assumed to be the same as their fair values, due to their short-term nature.
57
Telix Pharmaceuticals LimitedAnnual Report Notes to the consolidated financial statements continued
13. DEFERRED TAX ASSETS AND LIABILITIES
13.1 Deferred tax assets
The balance comprises temporary differences attributable to:
Tax losses
Lease liability
Total deferred tax assets
Set-off of deferred tax liabilities pursuant to set-off provisions
Net deferred tax assets
Deferred tax assets movements
The balance comprises temporary differences attributable to:
Balance at 1 January 2018
(Charged)/credited:
to profit and loss
Balance at 31 December 2018
Adjustment on adoption of AASB 16
Balance at 1 January 2019
(Charged)/credited:
to profit and loss
Balance at 31 December 2019
13.2 Deferred tax liabilities
The balance comprises temporary differences attributable to:
Intangible assets
Right-of-use assets
Total deferred tax liabilities
Set-off of deferred tax assets pursuant to set-off provisions
Net deferred tax liabilities
Tax losses
$’000
-
1,884
1,884
-
1,884
2,180
4,064
2019
$’000
4,064
411
4,475
(4,475)
-
Lease
liability
$’000
-
-
-
147
147
264
411
2019
$’000
7,241
404
7,645
(4,475)
3,170
2018
$’000
1,884
-
1,884
(1,884)
-
Total
$’000
-
1,884
1,884
147
2,031
2,444
4,475
2018
$’000
6,258
-
6,258
(1,884)
4,374
58
Telix Pharmaceuticals LimitedAnnual Report Deferred tax liabilities movements
The balance comprises temporary differences attributable to:
Intangible
assets
$’000
Right-of-use
asset
$’000
Balance at 1 January 2018
Charged/(credited):
acquisition of subsidiary
Balance at 31 December 2018
Adjustment on adoption of AASB 16
Balance at 1 January 2019
Charged/(credited):
to profit and loss
directly to equity
finalisation of subsidiary acquisition accounting purchased in prior year
Balance at 31 December 2019
14. INVENTORY
Raw materials and stores
Work in progress
Finished goods
332
5,926
6,258
-
6,258
(1,149)
15
2,117
7,241
-
-
-
147
147
257
-
-
404
2019
$’000
84
412
46
542
Total
$’000
332
5,926
6,258
147
6,405
(892)
15
2,117
7,645
2018
$’000
80
510
53
643
59
Telix Pharmaceuticals LimitedAnnual Report Notes to the consolidated financial statements continued
15. PROPERTY, PLANT AND EQUIPMENT
15.1 Property, plant and equipment
At 31 December 2018
Balance at 1 January 2018
Disposals
Acquisition of subsidiary (note 24)
Balance at 31 December 2018
Year ended 31 December 2018
Cost
Accumulated depreciation
Net book amount
At 31 December 2019
Balance at 1 January 2019
Adoption of AASB 16
Additions
Depreciation charge
Balance at 31 December 2019
Year ended 31 December 2019
Cost
Accumulated depreciation
Net book amount
Plant and
equipment
$’000
Furniture,
fittings and
equipment
$’000
Leasehold
improvements
$’000
Right-of-use
assets
$’000
Total
$’000
5
(5)
170
170
170
-
170
-
-
21
21
21
-
21
-
-
35
35
35
-
35
-
-
-
-
-
-
-
Plant and
equipment
$’000
Furniture,
fittings and
equipment
$’000
Leasehold
improvements
$’000
Right-of-use
assets
$’000
170
-
42
(35)
177
212
(35)
177
21
-
172
(29)
164
193
(29)
164
35
-
189
(13)
211
224
(13)
211
-
490
1,103
(246)
1,347
1,593
(246)
1,347
5
(5)
226
226
226
-
226
Total
$’000
226
490
1,506
(323)
1,899
2,222
(323)
1,899
60
Telix Pharmaceuticals LimitedAnnual Report 15.2 Lease liabilities
As explained in note 3.2 d.2. and 3.22, the impact of the change in accounting policy is included in the net carrying amount relating to
leases below:
The statement of financial position shows the following amounts relating to leases:
Right-of-use assets
Properties
Motor vehicles
Total right-of-use-assets
Lease liabilities
Current
Non-current
31 December
2019
$’000
1 January
2019
$’000
1,039
308
1,347
2019
$’000
21
1,349
1,370
2019
$’000
168
78
246
2019
$’000
26
21
47
217
273
490
2018
$’000
-
-
-
2018
$’000
-
-
-
2018
$’000
-
-
-
Additions to the right-of-use assets during the 2019 financial year were $1,103,000.
The statement of comprehensive income or loss shows the following amounts relating to leases:
Depreciation charge on right-of-use assets
Properties
Motor vehicles
Interest expense relating to leases
Properties
Motor vehicles
The total cash outflow for leases in 2019 was $271,000. This is made up of $224,000 principal and $47,000 interest payments.
61
Telix Pharmaceuticals LimitedAnnual Report
Notes to the consolidated financial statements continued
Goodwill
$’000
Intellectual
property
$’000
Patents
$’000
Total
$’000
332
-
-
2,808
3,140
3,140
-
1,108
13,440
-
21,547
36,095
36,095
-
3,140
36,095
3,140
36,095
-
1,084
-
4,224
4,224
-
4,224
-
5,262
(3,830)
37,527
41,357
(3,830)
37,527
68
155
(7)
-
216
226
(10)
216
216
65
-
(84)
197
291
(94)
197
2019
$’000
26,870
13,440
1,441
197
1,508
13,595
(7)
24,355
39,451
39,461
(10)
39,451
39,451
65
6,346
(3,914)
41,948
45,872
(3,924)
41,948
2018
$’000
24,354
13,440
1,441
216
41,948
39,451
16. INTANGIBLE ASSETS
At 31 December 2018
Balance at 1 January 2018
Additions (note 24)
Amortisation charge
Acquisition of subsidiary (note 24)
Balance at 31 December 2018
Cost
Accumulated amortisation and impairment
Net book amount
At 31 December 2019
Balance at 1 January 2019
Additions
Adjustments on acquisition of subsidiaries (note 24)
Amortisation charge
Balance at 31 December 2019
Cost
Accumulated amortisation
Net book amount
The allocation of intangible assets to each cash-generating unit (CGU) is summarised below:
CGU
illumet®
TLX591-t
TLX101
Patents
Entity name
ANMI
Atlab
Therapeia
Corporate
62
Telix Pharmaceuticals LimitedAnnual Report Impairment test for goodwill and indefinite life intangible assets
Since its inception Telix has completed three acquisitions: Therapeia (2017), Atlab (2018) and ANMI (2018). See accounting policy
note 3.11 for amortisation methods and useful life of intangible assets.
Therapeia: Goodwill and indefinite life intangible assets, being intellectual property were acquired as part of the asset purchase
of Therapeia. On 31 December 2019, the Directors used a fair value less costs to sell approach to assess the carrying value of the
associated goodwill and intangible assets. No impairment was recognised by the Group.
Atlab: Indefinite life intangible assets, being intellectual property, were acquired as part of the asset purchase with Atlab on
11 September 2018. On 31 December 2019, the Group used a fair value less costs to sell approach to assess the carrying value
of the associated goodwill and intangible assets. No impairment was recognised by the Group.
ANMI: Goodwill and definite life intangible assets, being intellectual property, were acquired as part of the acquisition of ANMI. At
31 December 2019, the Directors used a fair value less costs to sell approach to assess the carrying value of the associated goodwill
and intangible assets. No impairment was recognised by the Group.
The Group has identified the estimate of the recoverable amount as a significant judgement for the year ended 31 December 2019.
In determining the recoverable amount for the four CGU’s listed above, the Group has used discounted cash flow forecasts and the
following key assumptions:
• Risk adjusted post-tax discount rate – 15.7%
• Regulatory/marketing authorisation approval dates
• Expected sales volumes
• Net sales price per unit
• Approval for marketing authorisation probability success factor
• Costs of disposal were assumed to be immaterial at 31 December 2019.
The Group has considered reasonable possible changes in the key assumptions and has not identified any instances that could
cause the carrying amount of the intangible assets at 31 December 2019 to exceed its recoverable amount.
17. NON-CURRENT TRADE AND OTHER RECEIVABLES
Deposits
Research and development incentive receivable
18. BORROWINGS
Current borrowings
Unsecured
Non-current borrowings
Unsecured
2019
$’000
82
-
82
2019
$’000
469
469
292
292
2018
$’000
39
1,136
1,175
2018
$’000
1,133
1,133
596
596
63
Telix Pharmaceuticals LimitedAnnual Report Notes to the consolidated financial statements continued
18. BORROWINGS continued
All borrowings outstanding at 31 December 2019 are in relation to the ANMI and Atlab entities and have arisen as a result of these
acquisitions by the Group. All ANMI borrowings are commercial in nature, Atlab borrowings are with a French government authority
as a development loan. Details of the borrowings are as follows:
Lenders
Commercial loan
Development loan(i)
Development loan(i)
Development loan(i)
Development loan(i)
Development loan(i)
Loan
balance
$’000
Due <1
year
$’000
Due >1
year
$’000
Maturity
date
50
121
14
189
172
215
761
37
48
12
120
112
140
469
13
73
30/04/2021
31/05/2022
2
28/02/2021
30/09/2021
30/09/2021
30/06/2021
69
60
75
292
(i) Development loans are provided by local and national government bodies to support the industry in which they operate in their jurisdictions. All
loans are denominated in Euros and have been translated to Australian dollars at the exchange rate current at 31 December 2019.
• Fair value: For all borrowings, the fair values are not materially different to their carrying amounts, since the interest payable on
those borrowings is either close to current market rates or the borrowings are of a short-term nature.
• Capital risk management: Capital is defined as the combination of shareholders’ equity, reserves and net debt. The key objective
of the Group when managing its capital is to safeguard its ability to continue as a going concern, so that the Group can continue
to provide benefits for stakeholders and maintain an optimal capital and funding structure. The aim of the Group’s capital
management framework is to maintain, monitor and secure access to future funding arrangements to finance the necessary
research and development activities being performed by the Group. Consistent with others in the industry, the Group monitors
capital on the basis of the following gearing ratio: Debt as divided by Equity. At 31 December 2019 the Group’s on-balance sheet
gearing and leverage ratio was 1.3% for 2019 and 3.3% for 2018.
• Reconciliation of liabilities arising from financing activities:
Opening
balance
$’000
Net cash
inflow/
(outflow)
$’000
Acquisition of
subsidiaries
$’000
Other
non-cash
movements
$’000
Closing
balance
$’000
For the year ended 31 December 2018
Borrowings
Lease liabilities
For the year ended 31 December 2019
Borrowings
Lease liabilities
345
-
345
1,704
25
1,729
(869)
-
(869)
(943)
224
(719)
2,228
25
2,253
-
-
-
19. PROVISIONS
Annual leave
Bonus
64
-
-
-
-
1,121
1,121
2019
$’000
388
529
917
1,704
25
1,729
761
1,370
2,131
2018
$’000
108
108
216
Telix Pharmaceuticals LimitedAnnual Report 20. CONTINGENT CONSIDERATION LIABILITY
The Group acquired ANMI on 24 December 2018. The Group is liable for future variable payments which are calculated based on
the percentage of net sales for five years following the achievement of market authorisation of the product. The percentage of net
sales varies depending on the net sales achieved in Europe and the United States. The Group also holds an option to buy-out the
remaining future variable payments in the third year following the achievement of market authorisation, if specified sales thresholds
are met. The Group calculated a preliminary fair value assessment of contingent consideration liability for the business combination
of $10,592,000 that was disclosed in the 31 December 2018 Annual Report. As part of the Group’s finalisation of the purchase price
allocation accounting (note 24) the valuation of the contingent consideration was adjusted to $14,170,000.
Finalised fair value at acquisition date - 24 December 2018 (note 24)
Unwind of discount
Closing balance – 31 December 2019
2019
$’000
14,170
2,271
16,441
2018
$’000
10,592
-
10,592
The Group has determined that the estimates associated with the valuation of the contingent consideration liability as at 31 December
2019 are significant estimates. The Group has adopted a process to value the contingent consideration liability with the assistance
of an independent valuation expert. The contingent consideration liability has been valued using a discounted cash flow model that
utilises certain unobservable level 3 inputs. These key assumptions include risk adjusted post-tax discount rate (15.7%), market
authorisation date, expected sales volume over the forecast period, net sales price per unit and approval for marketing authorisation
probability success factor. The following table summarises the quantitative information about these level 3 inputs, including the impact
of sensitivities from reasonable possible changes where applicable:
Unobservable input
Methodology
Contingent consideration valuation
(31 December 2019)
Risk adjusted post-tax
discount rate
The post-tax discount rate used in the valuation
has been determined based on required rates of
returns of listed companies in the biotechnology
industry (having regards to their stage of
development, size and risk adjustments).
A 0.5% increase in the post-tax discount rate
would decrease the contingent consideration
liability by 1.52% and decreasing the post-
tax discount rate by 0.5% would increase the
contingent consideration liability by 1.55%
Market
authorisation date
This assumption is based on the estimated
time to achieve marketing authorisaton.
Expected sales
volumes
This is determined through assumptions on
target market population, penetration and
growth rates in the United States and Europe.
Net sales price per unit
The sales price per unit is estimated based on
comparable products currently in the market.
A 6 month delay in achieving market
authorisation would decrease the contingent
consideration liability by 2.06%
A 10% increase in the market population would
increase the contingent consideration liability by
6.88% and a 10% decrease in market population
would decrease the contingent consideration
liability by 6.88%
A 10% increase in the net sales price per unit
would increase the contingent consideration
liability by 6.88% and 10% decrease in net sales
price per unit would decrease the contingent
consideration liability by 6.88%
Approval for marketing
authorisation probability
success factor
This assumption is based on management’s
estimate for achieving regulatory approval and
is determined through benchmarking of historic
approval rates.
Not applicable.
65
Telix Pharmaceuticals LimitedAnnual Report Notes to the consolidated financial statements continued
21. EQUITY
21.1 Share capital
Movements in shares on issue
As at 1 January
Shares issued Atlab acquisition(i)
Shares issued ANMI acquisition(ii)
2019
Number
2019
$’000
2018
Number
218,365,836
72,053 197,437,500
-
-
-
-
14,837,531
6,090,805
Shares issued through private placement(iii)
30,770,000
40,001
Shares issued through share purchase plan(iv)
Shares issued through options(v)
Less transaction costs
As at 31 December
3,846,128
298,035
-
5,000
253
(1,364)
-
-
-
-
253,279,999
115,943 218,365,836
72,053
2018
$’000
55,561
12,612
3,880
-
-
-
-
(i) On 11 September 2018, Telix completed the acquisition of Atlab. The consideration for the acquisition comprised $12,612,000 in Telix shares at a
fair value of shares on the execution date of $0.85 per share (14,837,531 Telix shares) and in warrants over Telix shares at a fair value of $184,000
(780,923 warrants). The warrants have an expiry date of 11 September 2022 and an exercise price of $1.34 per warrant.
(ii) On 24 December 2018, Telix completed the acquisition of ANMI. The upfront consideration value of $3,880,000 in Telix shares at a fair value of
shares on the execution date of $0.637 per share (6,090,805 Telix shares), in addition to cash consideration of €1,700,000 ($2,739,000) and the
fair value of contingent consideration of $10,592,000.
(iii) On 24 July 2019, 30,770,000 fully paid shares were issued further to a private placement announced on 17 July 2019. Shares were issued at
$1.30 per share to raise $40,001,000 before costs.
(iv) On 22 August 2019, 3,846,128 fully paid ordinary shares were issued further to the Share Purchase Plan (SPP) announced on 17 July 2019 to raise
a total amount of $5,000,000 before costs. The SPP enabled the existing eligible shareholder to purchase up to $15,000 of shares at $1.30 per
share, without brokerage fees.
(v) Options exercised during the current financial year through the employee share scheme resulted in 298,035 shares being issued at a price
of $253,000.
The weighted average ordinary shares for the period 1 January 2019 to 31 December 2019 is 233,437,000 (2018: 202,124,000).
The Company does not have a limited amount of authorised capital.
Rights applying to securities:
(i) Ordinary shares: Ordinary shares entitle the holder to participate in dividends, and to share in the proceeds of winding up the
Company in proportion to the number of and amounts paid on the shares held.
(ii) Options and warrants: Holders of Options and Warrants have no voting rights. Information relating to the Company’s Employee
Incentive Plan (EIP), including details of Options issued, exercised and lapsed during the financial year, is set out in note 26.
21.2 Share-based payments reserve
Movements
As at 1 January
Options issued prior year
Options issued during the year
Warrants issued during the year
Options exercised during the year
Options or warrants lapsed during the year
As at 31 December
66
2019
Number
’000
11,155
-
8,555
-
(298)
(817)
2019
$’000
1,005
752
517
-
-
-
2018
Number
’000
6,624
-
3,950
781
-
(200)
2018
$’000
109
-
712
184
-
-
18,595
2,274
11,155
1,005
Telix Pharmaceuticals LimitedAnnual Report 22. CASH FLOW INFORMATION
22.1 Reconciliation of loss after income tax to net cash used in operating activities
Operating loss after income tax
Adjustments for
Depreciation / amortisation
Interest on contingent consideration liability
Income tax benefit
Share based payments
Foreign exchange (gains)/losses
Change in assets and liabilities
(Increase)/decrease in inventory
(Increase)/decrease in other current assets
(Increase)/decrease in other non-current assets
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade creditors
Increase/(decrease) in provisions
Net cash used in operating activities
Note
8
20
11
26
10
2019
$’000
2018
$’000
(27,867)
(13,830)
4,236
2,271
7
-
(3,255)
(1,884)
1,269
374
101
(461)
(43)
(3,635)
2,975
702
711
(1,487)
-
(560)
(1,139)
(7,220)
4,437
216
(23,333)
(20,749)
23. FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The overall risk management
program focuses on the unpredictability of markets and seeks to minimise potential adverse effects on the financial performance
of the Group. The Group uses different methods to measure different types of risk to which it is exposed.
23.1 Interest rate risk
The majority of the Group’s borrowings have fixed interest rates, and therefore the Group is not exposed to any significant interest
rate risk.
23.2 Price risk
The Group is not exposed to any significant price risk as contracts are in place to meet current estimated material requirements.
23.3 Foreign currency risk
Foreign currency risk is the risk of fluctuation in fair value or future cash flows of a financial instrument as a result of changes
in foreign exchange rates. The Group has certain clinical and regulatory activities conducted internationally. The main currency
exposure to the Group is research and development activities which are occurring in Europe, the United States of America, Japan
and Australia. As a result of these activities, the Group has foreign currency liabilities in Euro (EUR) and United States Dollars (USD).
These foreign currency balances give to a currency risk, which is the risk of the exchange rate moving, in either direction, or the
impact it may have on the Group’s financial performance.
Telix has a policy of holding foreign currency reserves to cover a projected 12 month contract spend.
The major foreign currency exposure is in USD. This is as a result of cash funds held and both receivable and payable contracts
entered into in this currency. The Group maintains foreign currency bank accounts denominated in USD in order to minimise foreign
currency risk exposure. The Group had a deficit of foreign currency receivables over payables of $6,558,000 at 31 December 2019.
The Group’s exposure to the risk of changes in foreign exchange rates also relates to the Group’s net investments in foreign
subsidiaries, which predominantly include denominations in EUR and USD, however given the level of current investments foreign
subsidiaries, the impact of this limited.
67
Telix Pharmaceuticals LimitedAnnual Report Annual Report
Notes to the consolidated financial statements continued
23. FINANCIAL RISK MANAGEMENT continued
The Group manages the currency risk by evaluating the trend of foreign currency rates to the Australian dollar and making decisions
as to the levels to hold in each currency by assessing its future activities which will likely be incurred in those currencies.
As at 31 December 2019, the Group held 48.3% (2018: 28.5%) of its cash in Australian dollars, 48.1% (2018: 62.13%) in United States
dollars, 2.9% (2018: 8.88%) in EUR and 0.7% (2018: 0.48%) in Japanese Yen (JPY).
The balances held at 31 December 2019 that give rise to currency risk exposure are presented in Australian dollars, together with
a sensitivity analysis which assesses the impact that a change of +/- 10% in the exchange rate as of 31 December 2019 would have
on the Group’s reporting profit/(loss) after income tax and/or equity balance.
As at 31 December 2018
Bank accounts – USD
Bank accounts – EUR
Bank accounts – JPY
Trade and other payables – USD
Trade and other payables – EUR
Borrowings – EUR
Trade and other receivables – USD
Trade and other receivables – EUR
As at 31 December 2019
Bank accounts – USD
Bank accounts – EUR
Bank accounts – JPY
Trade and other payables – USD
Trade and other payables – EUR
Trade and other payables – JPY
Government grant liability – AUD
Borrowings – EUR
Trade and other receivables – USD
Trade and other receivables – EUR
23.4 Credit risk
Foreign
currency
balance held
$’000 AUD
+10%
Profit/(loss)
$’000 AUD
-10%
Profit/(loss)
$’000 AUD
16,048
(1,459)
1,783
2,268
124
(2,952)
(2,086)
(1,729)
872
188
Foreign
currency
balance held
$’000 AUD
21,464
1,290
325
(3,883)
(1,927)
(224)
(650)
(769)
55
838
(206)
(11)
268
190
118
(17)
(79)
252
14
(328)
(232)
(144)
21
97
+10%
Profit/(loss)
$’000 AUD
-10%
Profit/(loss)
$’000 AUD
(1,951)
2,385
(117)
(30)
353
175
20
59
70
(5)
(76)
143
36
(431)
(215)
(25)
(72)
(85)
6
93
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.
Given the absence of loan receivables, the Group’s exposure to credit risk is limited to trade receivables. The Group obtains
guarantees where appropriate to mitigate credit risk.
The Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss
allowance for all trade receivables.
To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the
days past due. The expected loss rates are based on historical payment profiles of sales and the corresponding historical credit
losses experienced. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic
factors affecting the ability of the customers to settle the receivables. As at the 31 December 2019, the expected credit losses are
$Nil (2018: $Nil). The following tables sets out the ageing of trade receivables, according to their due date:
68
Telix Pharmaceuticals Limited Aged trade receivables
Gross carrying amount
30 days
60 days
90 days
120 days
Total
23.5 Liquidity risk
2019
$’000
471
122
62
90
745
2018
$’000
477
12
103
86
678
The Group is exposed to liquidity and funding risk from operations and from external borrowings, where the risk is that the Group
may not be able to refinance debt obligations or meet other cash outflow obligations when required. Vigilant liquidity risk management
requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents). The Group manages liquidity risk by
maintaining adequate cash reserves by continuously monitoring actual and forecast cash flows and matching the maturity profiles
of financial assets and liabilities.
Remaining contractual maturities: The following tables detail the consolidated entity’s remaining contractual maturity for its financial
instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest
date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as
remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
As at 31 December 2018
Non-derivatives
Trade payables
Borrowings
Contingent consideration liability
Total non-derivatives
As at 31 December 2019
Non-derivatives
Trade payables
Borrowings
Government grant liability
Contingent consideration liability
Total non-derivatives
1-6 months
$’000
6-12
months
$’000
1-5
years
$’000
Over
5 years
$’000
6,893
566
-
7,459
-
566
-
566
-
596
10,592
11,188
-
-
-
-
1-6 months
$’000
6-12
months
$’000
1-5
years
$’000
Over 5
years
$’000
9,218
234
-
-
-
234
-
-
9,452
234
-
293
650
16,441
17,384
-
-
-
-
-
Total
$’000
6,893
1,728
10,592
19,213
Total
$’000
9,218
761
650
16,441
27,070
For the year ended 31 December 2019, the Group has incurred a total comprehensive loss after income tax of $27,867,000 (2018:
$13,830,000) and net cash outflows from operations of $23,333,000 (2018: 20,749,000). As at 31 December 2019, the Group held
total cash and cash equivalents $44,598,000 (2018: $25,771,000). The Group is a development stage biotechnology company and
as such expects to be utilising cash reserves until its research activities are commercialised.
In FY19 the Group raised $40,001,000 by issue of fully paid shares and another $5,000,000 via Share Purchase Plan. Additional
shares issued via exercise of employee share plan of $253,000. The Directors are satisfied that there is sufficient working capital
to support the committed research activities over the coming 12 months and the Group has the ability to realise its assets and pay
its liabilities and commitments in the normal course of business. Accordingly, the Directors have prepared the financial report on
a going concern basis.
69
Telix Pharmaceuticals LimitedAnnual Report Notes to the consolidated financial statements continued
24. BUSINESS COMBINATIONS
Advanced Nuclear Medicine Ingredients SA (ANMI)
On 24 December 2018, Telix Pharmaceuticals acquired 100% of the issued share capital of ANMI. ANMI is a pharmaceutical
company developing innovative radiopharmaceutical solutions and a global service provider in the nuclear medicine field, located in
Liege, Belgium. ANMI has developed innovative solutions to facilitate the scalable synthesis of theranostic radiopharmaceuticals and
to ease their daily production in hospitals and radiopharmacies. ANMI’s vision is focused on increasing patient access to new highly
specific theranostic radiopharmaceuticals through streamlined and cost-effective production processes. ANMI develops innovative
solutions in the manufacture and packaging of therapeutic products to enable fast, easy preparation and use in hospitals and the
radio-pharmacy setting.
As permitted under Australian Accounting Standards, the Group finalised its assessment of purchase consideration, its assessment
of the fair value of net assets acquired and goodwill. This process, resulted in a $3,578,000 increase in the fair value of purchase
consideration, a $5,262,000 increase in intellectual property, a $2,118,000 increase in deferred tax liabilities, the recognition of
$650,000 of government grant liabilities, and a $1,084,000 increase in goodwill.
Purchase consideration
Cash paid
Contingent consideration
Equity consideration
Total purchase consideration
Provisional
fair value
$’000
Adjustments
to provisional
fair value
$’000
Final fair
value
$’000
2,739
10,592
3,880
17,211
-
3,578
-
3,578
2,739
14,170
3,880
20,789
The fair value of the 6,090,805 shares issued as part of the consideration paid for ANMI ($3,880,000) was based on the published
share price on 24 December 2018 of $0.637 per share.
Cash
Trade and other receivables
Inventories
Property, plant and equipment
Intangible assets: intellectual property
Trade and other payables
Government grant liability
Borrowings
Deferred tax liability
Total purchase consideration
Add: Goodwill
Net assets acquired
Provisional
fair value
$’000
Adjustments
to provisional
fair value
$’000
Final fair
value
$’000
46
877
643
226
21,547
(1,225)
-
(1,786)
(5,925)
14,403
2,808
17,211
-
-
-
-
5,262
-
(650)
-
(2,118)
2,494
1,084
3,578
46
877
643
226
26,809
(1,225)
(650)
(1,786)
(8,043)
16,897
3,892
20,789
Intellectual property and contingent consideration liability
The Group has determined that the estimates associated with the valuation of the contingent consideration liability and the valuation
of intellectual property for the purposes of the finalisation of the purchase price allocation are significant estimates. The Group has
adopted a process to value the intellectual property and contingent consideration liability with the assistance of an independent
valuation expert. Both the contingent consideration liability and the intellectual property have been valued using a discounted cash
flow model that utilises certain unobservable level 3 inputs. These key assumptions include risk adjusted post-tax discount rate (15.7%),
market authorisation date and expected sales volume over the forecast period, net sales price per unit and approval for marketing
authorisation probability success factor.
70
Telix Pharmaceuticals LimitedAnnual Report The following table summarises the quantitative information about these level 3 inputs, including the impact of sensitivities from
reasonable possible changes where applicable:
Unobservable
input
Risk adjusted post-
tax discount rate
Methodology
The post-tax discount rate
used in the valuation has been
determined based on required
rates of returns of listed
companies in the biotechnology
industry (having regards to their
stage of development, size and
risk adjustments).
Intellectual property
valuation (24 December 2018)
Contingent consideration
valuation (24 December 2018)
An increase in the post-tax discount
rate by 0.5% would decrease the fair
value by 1.88% and a decrease in the
post-tax discount rate by 0.5% would
increase the fair value by 1.92%
Market
authorisation date
This assumption is based on
the estimated time to achieve
marketing authorisaton.
A 6 month delay in the market
authorisation date would decrease
the fair value by 0.5%
Expected sales
volumes
This is determined through
assumptions on target market
population, penetration and
growth rates in the United
States and Europe.
A 10% increase in the market
population would increase the fair
value by 8.34% and a 10% decrease
in the market population would
decrease the fair value by 8.34%
Net sales price per
unit
The sales price per unit is
estimated based on
comparable products
currently in the market.
A 10% increase is the net sales price
per unit would increase the fair value
by 8.55% and a decrease in the net
sales price by 10% per unit would
decrease the fair value by 8.55%
An increase in the post-tax discount
rate by 0.5% would decrease the
contingent consideration liability by
1.95% and a decrease in the post-tax
discount rate by 0.5% would increase
the contingent consideration liability
by 2.0%
A 6 month delay in the market
authorisation date would decrease
the contingent consideration liability
by 2.06%
A 10% increase in the market
population would increase the
contingent consideration liability by
6.88% and a 10% decrease in the
market population would decrease
the contingent consideration liability
by 6.88%
A 10% increase is the net sales price
per unit would increase the contingent
consideration liability by 6.88% and
decrease in the net sales price by
10% would decrease the contingent
consideration liability by 6.88%
Approval for
marketing
authorisation
probability factor
This assumption is based on
management’s estimate for
achieving regulatory approval
and is determined through
benchmarking of historic
approval rates.
Not applicable.
Not applicable.
Government grant liability
In the finalisation of the fair value of acquired assets and liabilities, the Group identified grants received from the Walloon regional
government in Belgium. These grants meet the definition of a financial liability as defined in AASB 9 Financial Instruments and are
required to be recognised at fair value through profit and loss.
Prior to the acquisition, ANMI had received the grants as part of the research phase of its product’s life cycle. The grants are
repayable to the Walloon government based on a split between fixed and variable repayments. The fixed proportion is based on
contractual cash flows agreed with the Walloon government. The variable cash flows are based on a fixed percentage of future sales
and are capped at an agreed upon level.
The Group has measured the liability at its fair value as at acquisition date. This has been calculated through a discounted cashflow
model that takes into consideration future sales and contractual fixed cash flows. The Group has estimated that the full variable
repayments will be made up to the pre-agreed capped amount. The key inputs into this calculation are the risk adjusted post-tax
discount rate (15.7%), the expected sales volumes and the net sales price per unit. These assumptions are consistent with those
utilised by the Group in the calculation of the contingent consideration liability and intellectual property valuation.
Acquisitions
There were no acquisitions within the year ended 31 December 2019. There were no changes to the fair value of net assets acquired
in the purchase of Atlab that occurred in the year ended 31 December 2018.
71
Telix Pharmaceuticals LimitedAnnual Report Notes to the consolidated financial statements continued
25. CONTINGENT LIABILITIES AND CONTINGENT ASSETS
On 3 October 2019, the Company announced it had entered into a conditional purchase agreement to acquire a licensed
radiopharmaceutical production facility in Seneffe, Belgium. Ownership of the site is expected to deliver a range of commercial benefits
to Telix including a Class IIA licence, enabling Telix to manufacture a broad range of diagnostic and therapeutic radiopharmaceuticals;
the expansion of Telix’s existing product R&D and commercial manufacturing footprint in Belgium; a fully-licensed production facility
strategically located in western Europe with excellent logistics and ready access to key commercial territories; and the capability to
produce certain isotopes at the site in the future (if required), to protect and augment Telix’s core supply chain. Subject to several
closing conditions related to attaining the requisite regulatory approvals in Belgium, the Company acquired the site for a nominal cash
sum in addition to assuming the future decommissioning liability associated with the site. This liability is currently estimated to be up to
€5.2M over the operating lifetime of the site, with certain downside cost and risk mitigations in place with relevant government agencies
as part of the proposed transaction structure. The transaction is anticipated to complete before 31 March 2020. The Group had no
other contingent liabilities or assets at 31 December 2019 (2018: $Nil).
26. SHARE-BASED PAYMENTS
26.1 Equity Incentive Plan and Options issued to Non-Executive Directors
The Equity Incentive Plan (EIP) was established to allow the Board of Telix to make Offers to Eligible Employees to acquire securities in
the Company and to otherwise incentivise employees. ‘Eligible Employees’ includes full time, part time or casual employees of a Group
Company, a Non-Executive Director of a Group Company, a Contractor, or any other person who is declared by the Board to be eligible.
The Board may, from time to time and in its absolute discretion, invite Eligible Employees to participate in a grant of Incentive Securities,
which may comprise Rights, Options, and/or Restricted Shares, Vesting of Incentive Securities under the EIP is subject to any vesting or
performance conditions determined by the Board and specified in the Offer document. Options are normally granted under the EIP for
no consideration and carry no dividend or voting rights. When exercised, each Option is convertible into one Share.
Non-Executive Directors are able to participate in the Equity Incentive Plan, under which equity may be issued subject to Shareholder
approval. Options are however normally issued to Non-Executive Directors not as an ‘incentive’ under the EIP but as a means of
cost-effective consideration for agreeing to join the Board. The details of Options on issue to individual Directors can be found in
the Remuneration Report for the year ended 31 December 2019. For the purposes of this table and to illustrate the total number
of Options on issue under the rules of the EIP, all Options issued to Non-Executive Directors, Executive Directors, employees and
contractors are included.
As at 1 January
Granted during the year
Exercised during the year
Lapsed/forfeited during the year
As at 31 December
Vested and exercisable at 31 December
* WAEP – weighted average exercise price.
2019
Number
’000
10,374
8,555
(298)
(817)
17,814
4,662
2019
WAEP*
$0.85
$1.33
$0.85
$0.92
$1.08
$0.85
2018
Number
’000
6,624
3,950
-
(200)
10,374
2,206
2018
WAEP*
$0.85
$0.85
-
$0.85
$0.85
$0.85
72
Telix Pharmaceuticals LimitedAnnual Report
Details of Options issued under the EIP outstanding at the end of the year:
Grant
date
Vesting
date
Expiry
date
Exercise
price
Options
on issue
as at
1 January
2019
’000
Issued
during
the year
’000
Vested
during
the year
’000
Exercised
during
the year
’000
Lapsed/
forfeited
during
the year
’000
Options
on issue
31 December
2019
’000
15 October
2017
15 October
2018
14 October
2021
15 October
2017
15 October
2019
14 October
2021
15 October
2017
15 October
2020
14 October
2021
11 June
2018
11 June
2018
11 June
2018
11 June
2019
11 June
2020
11 June
2021
10 June
2022
10 June
2022
10 June
2022
0.85
2,206
0.85
2,206
0.85
2,213
0.85
1,115
0.85
1,315
0.85
1,319
-
-
-
-
-
-
24 January
2019
24 January
2022
23 January
2023
4 November
2019
4 November
2022
3 November
2023
1.09
2.30
-
-
6,845
1,710
-
(165)
2,206
-
-
-
-
-
-
2,041
2,206
2,213
1,115
(133)
(567)
415
-
-
-
-
-
-
-
-
-
-
1,315
1,319
(250)
6,595
-
1,710
Total
10,374
8,555
3,321
(298)
(817)
17,814
a. Fair value of options granted
The assessed fair value of grant options issued in January and November 2019 was $0.234 and $0.4781 respectively (2018: $0.227).
The fair value at grant date is independently determined using the Black Scholes Model. The model inputs for options granted during
the year ended 31 December 2019 are:
Consideration
Exercise price
Grant date
Expiry date
Term
Share price at grant date
Volatility
Dividend yield
Risk-free rate
January 2019
November 2019
$Nil
$1.09
$Nil
$2.30
2018
$Nil
$0.85
24 January 2019
4 November 2019
11 June 2018
23 January 2023
3 November 2023
10 June 2022
4 years
$0.76
52%
0.00%
1.79%
4 years
$1.60
52%
0.00%
0.85%
4 years
$0.66
52%
0.00%
2.29%
b. Expense arising from share-based payments transactions
Total expense arising from share-based payments transactions recognised during the year as part of employee benefit expense are
as follows:
Options issued under EIP
Total
2019
$’000
1,269
1,269
2018
$’000
712
712
73
Telix Pharmaceuticals LimitedAnnual Report Notes to the consolidated financial statements continued
26. SHARE-BASED PAYMENTS continued
26.2 Warrants
On 11 September 2018, Telix completed the acquisition of Atlab. The consideration for the acquisition comprised $12,612,000 in
Telix shares at a fair value of shares on the execution date of $0.85 per share (14,837,531 Telix shares) and in warrants over Telix
shares at a fair value of $184,000 (780,923 warrants). The warrants have an expiry date of 11 September 2022 and an exercise price
of $1.34 per warrant.
As at 1 January
Granted during the year
As at 31 December
* WAEP – weighted average exercise price.
2019
Number
781
-
781
2019
WAEP*
$1.34
-
$1.34
2018
Number
2018
WAEP*
-
781
781
-
$1.34
$1.34
a. Fair value of warrants granted
There were no warrants issued during the current financial year. At 31 December 2019, the assessed fair value of warrants granted
during the previous financial year is $0.236 (2018: $0.236) per warrant. The fair value at grant date is independently determined
using the Black Scholes Model. The model inputs for options granted during the year ended 31 December 2018 are:
Consideration
Exercise price
Grant date
Expiry date
Term
Share price at grant date
Volatility
Dividend yield
Risk-free rate
27. COMMITMENTS
2018
$’000
$Nil
$1.34
11 September 2018
10 September 2022
4 years
$0.87
49%
0.00%
2.08%
At 31 December 2019 and at the date of this Report, the Group had commitments against existing R&D and clinical development
related contracts. R&D commitments in future years are expected, specifically with relation to manufacturing agreements.
At 31 December 2018
Operating lease commitments
R&D manufacturing commitments
At 31 December 2019
Operating lease commitments
R&D manufacturing commitments
74
Due <1 year
$’000
Due >1 year
$’000
62
11,068
11,130
17
16,962
16,979
-
3,249
3,249
-
96
96
Telix Pharmaceuticals LimitedAnnual Report 28. RELATED PARTY TRANSACTIONS
28.1 Key management personnel compensation
Short-term employee benefits
Superannuation entitlements
Share-based payments
28.2 Transactions with other related parties
2019
$
2018
$
1,303,375
1,054,064
83,884
67,331
379,128
257,935
1,766,387
1,379,330
2019
$
2018
$
Purchases of various goods and services from entities controlled by key management personnel(i)
2,048,381
2,624,927
2,048,381
2,624,927
(i) ABX CRO is a clinical research organisation (CRO) that specialises in radiopharmaceutical product development. Telix has entered into a master
services agreement with ABX CRO for the provision of clinical and analytical services for its programs. Director and Chief Medical Advisor,
Dr Andreas Kluge, is the principal owner and Geschäftsführer (Managing Director) of ABX CRO. Amount outstanding at 31 December 2019
was $332,163 (2018: $411,432).
28.3 Loans from related parties
As at 1 January
Loans repayments made
2019
$
-
-
-
2018
$
345,333
(345,333)
-
Upon the acquisition of Therapeia, the Group took on an existing loan by ABX-CRO to Therapeia. This loan from ABX-CRO has
been repaid by Telix. Director and Chief Medical Advisor, Dr Andreas Kluge, is the principal owner and Geschäftsführer (Managing
Director) of ABX-CRO.
75
Telix Pharmaceuticals LimitedAnnual Report Notes to the consolidated financial statements continued
28. RELATED PARTY TRANSACTIONS continued
28.4 Interests in other entities
The Group’s principal subsidiaries at 31 December 2019 are set out below. Unless otherwise stated, they have share capital
consisting solely of ordinary shares that are held directly by the Group, and the proportion of ownership interests held equals
the voting rights held by the Group. The country of incorporation or registration is also the principal place of business.
Place of
business/
country of
incorporation
Ownership
interest held
by the Group
%
Australia
Australia
Australia
USA
England
Singapore
Germany
Germany
Germany
Japan
Belgium
France
Belgium
Principal
activities
Employee Share Trust
Holding company
Clinical R&D
Clinical R&D
Clinical R&D
Clinical R&D
Clinical R&D
Clinical R&D
Clinical R&D
Clinical R&D
Clinical R&D
Clinical R&D
100
100
100
100
100
100
100
100
100
100
100
100
100 Research and production
Name of entity
Telix Pharmaceuticals (EST) Pty Ltd Employee Share Trust
Telix International Pty Ltd
Telix Pharmaceuticals (ANZ) Pty Ltd
Telix Pharmaceuticals (US) Inc
Telix Life Sciences (UK) Ltd
Telix Pharmaceuticals (Singapore) Pte Ltd
Telix Pharmaceuticals Holdings (Germany) GmbH
Telix Pharmaceuticals (Germany) GmbH
Therapeia GmbH & Co.KG
Telix Pharma Japan KK
Telix Pharmaceuticals (Belgium) SPRL
Atlab Pharma SAS
Advanced Nuclear Medicine Ingredients SA
76
Telix Pharmaceuticals LimitedAnnual Report
29. PARENT ENTITY FINANCIAL INFORMATION
The financial information for the parent entity has been prepared on the same basis as the consolidated financial statements. The
individual financial statements for the parent entity show the following aggregate amounts:
Statement of financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Reserves
Issued capital
Other reserve
Accumulated losses
Total equity
Loss for the year
Total comprehensive loss for the year
30. REMUNERATION OF AUDITOR
PricewaterhouseCoopers Australia
Audit or review of financial statements
Other advisory services
Non PricewaterhouseCoopers audit firms
Audit or review of financial statements
Other advisory services
2019
$’000
2018
$’000
50,061
27,658
77,719
6,577
-
6,577
71,142
57,778
3,618
61,396
7,904
-
7,904
53,492
115,943
72,237
2,274
820
(47,075)
(19,565)
71,142
(27,289)
(27,289)
53,492
(13,227)
(13,227)
2019
$
2018
$
256,500
170,000
5,500
29,290
262,000
199,290
2019
$
12,000
-
12,000
2018
$
-
-
-
77
Telix Pharmaceuticals LimitedAnnual Report Notes to the consolidated financial statements continued
31. EARNINGS PER SHARE
31.1 Basic earnings per share
Basic loss per share from continuing operations attributable to the ordinary equity
holders of the Company
2019
Cents
(11.94)
2018
Cents
(6.84)
Total basic loss per share attributable to the ordinary equity holders of the Company
(11.94)
(6.84)
31.2 Diluted earnings per share
Diluted loss per share from continuing operations attributable to the ordinary equity
holders of the Company
2019
Cents
(11.94)
2018
Cents
(6.84)
Total basic loss per share attributable to the ordinary equity holders of the Company
(11.94)
(6.84)
31.3 Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in calculating basic
loss per share
2019
Number
’000
2018
Number
’000
233,437
202,124
32. EVENTS OCCURRING AFTER THE REPORTING PERIOD
On 13 January 2020, the Company issued 3,555,000 unlisted share options to employees and consultants to the Company. Options
have a four-year term, with an expiry date of 12 January 2024. The exercise price of $2.23 per option is a 43% premium to the five-
day volume weighted average closing price prior to the day of issue ($1.56). Options remain unvested for a three year period, and
‘cliff vest’ on 24 January 2022.
On 23 January 2020, the Company announced that the US Food and Drug Administration had approved the ZIRCON study for
recruitment of American patients. The receipt of the IND notice of allowance enables patient recruitment to commence in the
US after 30 days.
Other than the matters referred to above, there were no subsequent events that required adjustment to or disclosure in the
Directors’ Report or the Consolidated Financial Statements of the Company for the year ended 31 December 2019.
78
Telix Pharmaceuticals LimitedAnnual Report
Directors’ declaration
for the year ended 31 December 2019
In the opinion of the Directors:
(a) the financial statements and notes of the Group are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 31 December 2019 and of its performance for the financial
year ended on that date, and
(ii) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
(b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in note 3.2; and
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
This declaration has been made after receiving the declarations required to be made to the Directors in accordance with section
295A of the Corporations Act 2001 for the financial year ended 31 December 2019 by the Chief Executive Officer and Chief Financial
Officer and as recommended under the ASX Corporate Governance Council’s Corporate Governance Principles.
Signed in Melbourne on 24 February 2020
On behalf of the Board
Kevin McCann AO
Chairman
Christian Behrenbruch
Managing Director and
Group Chief Executive Officer
79
Telix Pharmaceuticals LimitedAnnual Report Independent auditor’s report
giving a true and fair view of the Group's financial position as at 31 December 2019 and of its
financial performance for the year then ended
giving a true and fair view of the Group's financial position as at 31 December 2019 and of its
financial performance for the year then ended
complying with Australian Accounting Standards and the Corporations Regulations 2001.
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Independent auditor’s report
Independent auditor’s report
To the members of Telix Pharmaceuticals Limited
To the members of Telix Pharmaceuticals Limited
Report on the audit of the financial report
Report on the audit of the financial report
Our opinion
Our opinion
In our opinion:
In our opinion:
The accompanying financial report of Telix Pharmaceuticals Limited (the Company) and its controlled
entities (together the Group) is in accordance with the Corporations Act 2001, including:
The accompanying financial report of Telix Pharmaceuticals Limited (the Company) and its controlled
entities (together the Group) is in accordance with the Corporations Act 2001, including:
(a)
(a)
(b)
(b)
What we have audited
The Group financial report comprises:
What we have audited
The Group financial report comprises:
•
•
•
•
•
•
•
•
•
•
•
•
Basis for opinion
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
report section of our report.
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Independence
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
We are independent of the Group in accordance with the auditor independence requirements of the
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
fulfilled our other ethical responsibilities in accordance with the Code.
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
the consolidated statement of financial position as at 31 December 2019
the consolidated statement of financial position as at 31 December 2019
the consolidated statement of comprehensive income or loss for the year then ended
the consolidated statement of comprehensive income or loss for the year then ended
the consolidated statement of changes in equity for the year then ended
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the consolidated statement of cash flows for the year then ended
the notes to the consolidated financial statements, which include a summary of significant
accounting policies
the notes to the consolidated financial statements, which include a summary of significant
accounting policies
the directors’ declaration.
the directors’ declaration.
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
PricewaterhouseCoopers, ABN 52 780 433 757
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Liability limited by a scheme approved under Professional Standards Legislation.
80
80
80
Telix Pharmaceuticals LimitedAnnual Report Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to provide an opinion on the financial report as a whole, taking into
account the geographic and management structure of the Group, its accounting processes and controls
and the industry in which it operates.
Materiality
Audit scope
Key audit matters
•
For the purpose of our audit
we used overall Group
materiality of $1.5 million,
which represents
approximately 5% of the
Group’s loss before tax.
• We applied this threshold,
together with qualitative
considerations, to determine
the scope of our audit and the
nature, timing and extent of
our audit procedures and to
evaluate the effect of
misstatements on the financial
report as a whole.
•
Our audit focused on where
the Group made subjective
judgements; for example,
significant accounting
estimates involving
assumptions and inherently
uncertain future events.
• We performed an audit of the
financial information of the
parent company, Telix
Pharmaceuticals Limited given
its financial significance to the
Group. The parent company
holds the largest share of the
Group’s total assets and losses.
• We chose Group loss before tax
because, in our view, it is the
benchmark against which the
performance of the Group is
most commonly measured.
• We utilised a 5% threshold
• We also performed further
audit procedures at a Group
level, including over business
combinations, impairment
assessments and consolidation
of the Group’s reporting units.
•
Amongst other relevant topics,
we communicated the following
key audit matters to the Audit
and Risk Management
Committee:
−− Finalisation of the purchase
price allocation for
acquisition accounting of
ANMI SA
−− Valuation of contingent
consideration
−− Impairment assessment for
goodwill and intangible
assets
−− Research and development
tax incentive.
•
These are further described in
the Key audit matters section of
our report.
81
81
Telix Pharmaceuticals LimitedAnnual Report Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to provide an opinion on the financial report as a whole, taking into
account the geographic and management structure of the Group, its accounting processes and controls
and the industry in which it operates.
Independent auditor’s report continued
Materiality
Audit scope
Key audit matters
•
For the purpose of our audit
we used overall Group
materiality of $1.5 million,
which represents
approximately 5% of the
Group’s loss before tax.
• We applied this threshold,
together with qualitative
considerations, to determine
the scope of our audit and the
nature, timing and extent of
our audit procedures and to
evaluate the effect of
misstatements on the financial
report as a whole.
•
Our audit focused on where
the Group made subjective
based on our professional
judgements; for example,
judgement, noting it is within
significant accounting
the range of commonly
estimates involving
acceptable thresholds.
assumptions and inherently
uncertain future events.
• We performed an audit of the
financial information of the
parent company, Telix
Pharmaceuticals Limited given
its financial significance to the
Group. The parent company
holds the largest share of the
Group’s total assets and losses.
• We chose Group loss before tax
because, in our view, it is the
benchmark against which the
performance of the Group is
most commonly measured.
• We utilised a 5% threshold
• We also performed further
audit procedures at a Group
level, including over business
combinations, impairment
assessments and consolidation
of the Group’s reporting units.
•
•
•
• Where audit work was
consideration
Amongst other relevant topics,
we communicated the following
key audit matters to the Audit
performed by an auditor
and Risk Management
operating under our
Committee:
instruction (component
auditor), we determined the
−− Finalisation of the purchase
level of involvement we needed
price allocation for
to have in their audit work to
acquisition accounting of
be able to conclude whether
ANMI SA
sufficient and appropriate
−− Valuation of contingent
audit evidence had been
obtained as a basis for our
−− Impairment assessment for
opinion. This included active
goodwill and intangible
dialogue throughout the year
assets
through phone calls,
−− Research and development
discussions and written
instructions.
These are further described in
Component auditors
the Key audit matters section of
performed an audit of
our report.
Advanced Nuclear Medicine
Ingredients SA (ANMI) given
the nature and risk profile of
the entity and being the largest
revenue contributor to the
Group.
tax incentive.
• We performed specific risk
81
focused audit procedures on
selected balances and
transactions arising within
Telix Pharmaceuticals (US)
Inc, Telix Pharmaceuticals
(Belgium) SPRL and Telix
Pharma Japan KK. We also
performed analytical
procedures over the financial
information of all other entities
within the Group.
82
82
Telix Pharmaceuticals LimitedAnnual Report Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context.
Key audit matter
How our audit addressed the key audit matter
Our audit procedures to assess the finalisation of the
purchase price allocation of the ANMI acquisition
included assessing the key changes to the preliminary
fair value of material assets and liabilities identified in
the previous year. This included:
-
-
-
-
-
-
evaluating the Group’s valuation methodology
against the requirements of Australian
Accounting Standards with the assistance of
PwC valuation experts
comparing the key inputs and assumptions
underpinning the valuation of intangible
assets and contingent consideration liability to
available source data
assessing the mathematical accuracy of the
valuations
assessing whether changes to key assumptions
as part of the finalisation of the purchase price
allocation qualify as measurement period
adjustments
comparing the discount rates used to our view
of an acceptable range using independent
external market data
considering the adequacy of associated
disclosures in the financial report in light of
the requirements of the Australian Accounting
Standards.
Finalisation of the purchase price allocation of
acquisition accounting for ANMI SA
(Refer to note 24)
The Group acquired Advanced Nuclear Medicine
Ingredients SA (ANMI) on 24 December 2018.
Following the presentation of a preliminary assessment
of the fair values of acquired assets and liabilities at 31
December 2018, the Group finalised the purchase price
allocation of acquired assets and liabilities during the
year ended 31 December 2019.
There are complexities and a high degree of judgement
involved in determining the fair value of assets and
liabilities acquired, particularly relating to the
recognition of intangible assets including intellectual
property.
Contingent consideration arises as part of the cost of
acquisition as the Group is liable for future variable
payments which are calculated based on the percentage
of net sales for a specified period of time following
regulatory approval, as discussed in note 20 of the
financial statements.
The Group was assisted by an expert in determining the
fair value of intellectual property and contingent
consideration at acquisition date. The key assumptions
used in the calculations included the associated market
population and penetration over the forecast period,
net sales price per unit, timing and probability of
regulatory approval and the discount rate applied to
forecast cash flows.
This is a key audit matter due to the:
-
financial significance of the acquisition
purchase price (fair value of consideration of
83
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Telix Pharmaceuticals LimitedAnnual Report Independent auditor’s report continued
Key audit matter
How our audit addressed the key audit matter
-
-
-
$20.8 million), goodwill ($3.9 million) and
intangible assets ($26.8 million) recognised
financial significance of the contingent
consideration liability (fair value of $14.2
million)
complexities and judgement required by the
Group to determine the fair value of assets
and liabilities acquired and the contingent
consideration liability
the judgement required by the Group when
determining the treatment of changes to
assumptions as those that qualify as a
measurement period adjustment.
Valuation of contingent consideration
(Refer to note 20) $16.4 million
Our audit procedures to assess the Group’s valuation of
contingent consideration as 31 December 2019
included, amongst others:
The Group accounts for the contingent consideration
that arose as part of the cost of acquisition of ANMI at
fair value at each balance sheet date.
The initial valuation of the liability was performed as
part of the finalisation of the purchase price allocation.
The Group was assisted by an expert in determining the
fair value as at the acquisition date.
The Group have remeasured this liability to reflect
post-acquisition changes in circumstances and
assumptions in the fair value as at 31 December 2019.
This is a key audit matter due to:
-
-
-
-
the financial significance of the contingent
consideration liability (fair value $16.4
million)
complexities and judgement required by the
Group to determine the fair value the liability
the judgement required by the Group when
determining the treatment of changes to
assumptions as those that qualify as a
measurement period adjustment
the judgement exercised by the Group in
calculating and applying a discount rate to the
cash flow model used to calculate the fair
value of the contingent consideration liability.
-
-
-
-
-
-
-
evaluating the Group’s valuation methodology
against the requirements of Australian
Accounting Standards
assessing the mathematical accuracy of the
valuation
comparing the key inputs and assumptions
underpinning the valuation to available source
data
assessing whether changes to key assumptions
as part of the finalisation of the purchase price
allocation qualify as measurement period
adjustments
performing sensitivity analysis over key
assumptions in order to assess the potential
impact of a range possible outcomes
comparing the discount rates used to our view
of an acceptable range using independent
external market data
considering the adequacy of associated
disclosures in the financial report in light of
the requirements of the Australian Accounting
Standards.
84
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Telix Pharmaceuticals LimitedAnnual Report Key audit matter
How our audit addressed the key audit matter
Impairment assessment for goodwill and
intangible assets
(Refer to note 16) $41.9 million
Our audit procedures over the Group’s impairment
assessments of goodwill and intangible assets included,
amongst others:
The Group has recognised $4.2 million of goodwill and
$37.5 million of other intangible assets as at 31
December 2019. These assets are predominately
divided amongst the illumet ($26.8 million), TLX 591-t
($13.4 million) and TLX101 ($1.4 million) cash-
generating units (CGUs).
In accordance with Australian Auditing Standards, the
Group is required to test goodwill and indefinite lived
intangible assets for impairment annually and consider
definite lived intangibles for impairment indicators.
We considered the impairment assessment of goodwill
and intangible assets to be a key audit matter due to:
-
-
-
the financial significance of the balances
the judgement exercised by the Group in
calculating the recoverable amount of each
CGU including estimating the timing of
receiving product regulatory approvals and
associated commercialisation timelines,
market penetration, price per unit and costs
required to reach regulatory approval
the judgement exercised by the Group in
calculating and applying a discount rate to the
impairment model.
In addition, due to the nature and stage of development
of the business, each CGU continues to generate
negative cash flows in the current financial year.
-
-
-
-
-
-
-
-
assessing the mathematical accuracy of key
formulae in the impairment model
comparing key assumptions used within the
impairment models to Board approved
budgets and other evidence obtained
throughout the course of the audit
for TLX 591-t and TLX 101, comparing actual
performance of the CGUs to the Group’s prior
year forecasts to assess budgeting accuracy
comparing the key inputs and assumptions
underpinning the impairment model to
available source data
comparing the discount rates used to our view
of an acceptable range using independent
external market data
performing sensitivity analysis over key
assumptions in the impairment models in
order to assess the potential impact of a range
possible outcomes
comparing the valuation of goodwill and
intangible assets as per the Group’s
impairment model to external data sources
including broker report valuations
considering the adequacy of associated
disclosures in the financial report in light of
the requirements of the Australian Accounting
Standards.
Research and development tax incentive
(Refer to note 10) $11.7 million
The Group’s qualifying research and development
(R&D) activities are eligible for a refundable tax offset
under an Australian Government tax incentive scheme.
The Group has assessed these activities and related
expenditure to determine its eligibility under the
incentive scheme for a refundable tax offset. The R&D
tax incentive income recognised in the consolidated
statement of comprehensive income or loss was $11.7
Our audit procedures, amongst others, to assess the
Group’s estimate of the R&D tax incentive receivable as
at 31 December 2019 and income recognised in the
consolidated statement of comprehensive income or
loss included:
-
-
assessing the nature of the expenses and the
Group’s assumptions on the eligibility of
employee costs against the eligibility criteria
of the R&D tax incentive programme
comparing the prior year receivable recorded
in the financial statements at 31 December
85
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Telix Pharmaceuticals LimitedAnnual Report Independent auditor’s report continued
Key audit matter
How our audit addressed the key audit matter
2018 to the amount of cash received from the
Australian Tax Office (ATO) after lodgement
of the 2018 R&D tax incentive claim to assess
historical accuracy of the Group’s estimate
agreeing a sample of the eligible expenditure
in the Group’s calculation of the R&D tax
incentive receivable to the general ledger or
other underlying accounting records
obtaining copies of correspondence between
the Group and their expert and agreeing the
advice to the R&D tax incentive calculation
assessing the classification of the R&D tax
incentive in the financial statements in light of
the requirements of Australian Accounting
Standards.
-
-
-
million and the R&D tax incentive receivable as at 31
December 2019 was $11.3 million.
The Group makes a number of judgements and
estimates in determining the eligibility of claimable
expenses, including the eligibility of employee costs.
The Group was assisted by an expert to assist with the
review of the eligibility of expenses underlying the
Group’s claim and with the lodgement of the R&D
refund application.
This is a key audit matter due to:
-
-
the financial significance of the amount
recognised as income during the year and the
amount receivable as at 31 December 2019
the degree of judgement and interpretation of
the R&D tax legislation required by the Group
to assess the eligibility of the incurred R&D
expenditures under the scheme.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 31 December 2019 but does not include
the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
86
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Telix Pharmaceuticals LimitedAnnual Report Key audit matter
How our audit addressed the key audit matter
million and the R&D tax incentive receivable as at 31
2018 to the amount of cash received from the
December 2019 was $11.3 million.
The Group makes a number of judgements and
Australian Tax Office (ATO) after lodgement
of the 2018 R&D tax incentive claim to assess
historical accuracy of the Group’s estimate
estimates in determining the eligibility of claimable
agreeing a sample of the eligible expenditure
expenses, including the eligibility of employee costs.
in the Group’s calculation of the R&D tax
The Group was assisted by an expert to assist with the
incentive receivable to the general ledger or
review of the eligibility of expenses underlying the
Group’s claim and with the lodgement of the R&D
refund application.
This is a key audit matter due to:
other underlying accounting records
obtaining copies of correspondence between
the Group and their expert and agreeing the
advice to the R&D tax incentive calculation
assessing the classification of the R&D tax
-
-
-
the financial significance of the amount
incentive in the financial statements in light of
recognised as income during the year and the
the requirements of Australian Accounting
amount receivable as at 31 December 2019
Standards.
-
-
the degree of judgement and interpretation of
the R&D tax legislation required by the Group
to assess the eligibility of the incurred R&D
expenditures under the scheme.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 31 December 2019 but does not include
the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
86
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 23 to 32 of the directors’ report for the
year ended 31 December 2019.
In our opinion, the remuneration report of Telix Pharmaceuticals Limited for the year ended 31
December 2019 complies with section 300A of the Corporations Act 2001.
87
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Telix Pharmaceuticals LimitedAnnual Report Independent auditor’s report continued
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Jon Roberts
Partner
Melbourne
24 February 2020
88
88
Telix Pharmaceuticals LimitedAnnual Report Shareholder information
for the year ended 31 December 2019
Telix Pharmaceuticals Limited
ACN 616 620 369
Registered office
Suite 401, 55 Flemington Road
North Melbourne, VIC 3051
W telixpharma.com
Share registry
Shareholder information in relation to shareholding or
share transfer can be obtained by contacting the Company’s
share registry:
Link Market Services
Locked Bag A14
Sydney South NSW 1235
T 1300 554 474
F (02) 9287 0303
E registrars@linkmarketservices.com.au
W linkmarketservices.com.au
For all correspondence to the share registry, please provide
your Security-holder Reference Number (SRN) or Holder
Identification Number (HIN).
Change of address
Changes to your address can be updated online at
www.linkmarketservices.com.au or by obtaining a Change
of Address Form from the Company’s share registry. CHESS
sponsored investors must change their address details via
their broker.
Annual General Meeting
The Annual General Meeting is anticipated to be held
at 11.30am, Tuesday 12 May 2020 at The Larwill Studio,
48 Flemington Road, Parkville VIC 3052.
Annual Report mailing list
All shareholders are entitled to receive the Annual Report. In
addition, shareholders may nominate not to receive an Annual
Report by advising the share registry in writing, by fax, or by
email, quoting their SRN/HIN.
Securities exchange listing
Telix Pharmaceuticals’ shares are listed on the Australian
Securities Exchange and trade under the ASX code TLX. The
securities of the Company are traded on the ASX under CHESS
(Clearing House Electronic Sub-register System).
ASX shareholder disclosures
The following additional information is required by the
Australian Securities Exchange in respect of listed public
companies. The information is current as at 24 January 2020.
89
Telix Pharmaceuticals LimitedAnnual Report Shareholder information continued
for the year ended 31 December 2019
Total securities on issue
Fully paid ordinary shares
Options and warrants to acquire shares
Total
Distribution of equity securities – ordinary shares
Securities
(listed)
253,279,999
Securities
(unlisted)
-
-
22,350,088
253,279,999
22,350,088
Range
100,001 and over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Unmarketable parcels
Voting rights
Securities
219,086,350
28,787,421
3,263,820
1,894,126
248,282
253,279,999
-
% No. of holders
86.50
11.37
1.29
0.75
0.09
100.00
-
179
877
416
665
410
2,547
-
%
7.03
34.43
16.33
26.11
16.10
100.00
-
Shareholders in Telix Pharmaceuticals Limited have a right to attend and vote at General Meetings. At a General Meeting, individual
shareholders may vote in person or by proxy. On a show of hands every member present in person or by proxy shall have one vote.
Upon a poll each share shall have one vote. All quoted and unquoted share options, and convertible notes, have no voting rights.
A copy of the Constitution is available at https://telixpharma.com/investors/#corporate-governance.
Substantial shareholder
Gnosis Verwaltungsgesellschaft m.b.H
Elk River Holdings Pty Ltd as trustee for The Behrenbruch Family Trust
FIL Investment Management (Hong Kong) Limited
Share buy-back
There is no current or planned buy-back of the Company’s shares.
Statement in accordance with ASX Listing Rule 4.10.19
Securities
24,675,000
24,675,000
19,743,750
%
9.74
9.74
7.93
The Company confirms that it has used the cash and assets in a form readily convertible to cash at the time of admission in a way
consistent with its business objectives.
90
Telix Pharmaceuticals LimitedAnnual Report Twenty largest shareholders - ordinary shares
Rank Name
1
2
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
GNOSIS VERWALTUNGSGESELLSCHAFTM B H
ELK RIVER HOLDINGS PTY LTD
BNP PARIBAS NOMS PTY LTD
DALE LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
THE ONCIDIUM FOUNDATION
CITICORP NOMINEES PTY LIMITED
UV-CAP GMBH & CO KG
UBS NOMINEES PTY LTD
JEAN-MARC LE DOUSSAL
BNP PARIBAS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
UV-CAP GMBH & CO
NATIONAL NOMINEES LIMITED
REMORA CAPITAL
ILUSA SPRL
YELWAC PTY LTD
CYCLOTEK PTY LTD
SARGON CT PTY LTD
MAN HOLDINGS PTY LTD
24 Jan 2020
32,489,522
24,675,000
24,675,000
9,406,521
7,995,600
7,515,730
6,719,898
4,841,331
4,700,000
4,277,983
3,901,554
3,845,417
3,425,710
3,075,000
2,941,405
2,613,163
2,558,138
2,381,804
2,350,000
2,242,500
2,238,750
%IC
12.83
9.74
9.74
3.71
3.16
2.97
2.65
1.91
1.86
1.69
1.54
1.52
1.35
1.21
1.16
1.03
1.01
0.94
0.93
0.89
0.88
Total
Balance of register
Grand total
158,870,026
94,409,973
253,279,999
62.72
37.28
100.00
Twenty largest shareholders - quoted share options
No share options are quoted.
Holders of greater than 20% unquoted securities
No shareholder owns greater than 20% or more of unquoted equity securities (by class) of the Company.
91
Telix Pharmaceuticals LimitedAnnual Report
Corporate directory
Directors
H Kevin McCann AO (Chairman)
Christian Behrenbruch PhD
Andreas Kluge MD PhD
Oliver Buck
Mark Nelson PhD
Jann Skinner
Company Secretary
Melanie Farris
Registered office
Telix Pharmaceuticals Limited
401/ 55 Flemington Road
North Melbourne VIC 3051
info@telixpharma.com
E
W telixpharma.com
Australian Business Number
85 616 620 369
Securities exchange listing
Australian Securities Exchange
ASX Code: TLX
Auditor
PricewaterhouseCoopers
2 Riverside Quay
Southbank VIC 3006
Share registry
Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235
Australia
T 1300 554 474
F (02) 9287 0303
W linkmarketservices.com.au
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Telix Pharmaceuticals LimitedAnnual Report
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Telix Pharmaceuticals LimitedAnnual Report