Telix Pharmaceuticals Ltd — M&A Activity 2018

Nov 25, 2018

Acquisition of ANMI SA

Market Briefing 26 November, 2018

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Liège, Belgium

Summary of acquisition terms

• €3.15m (AUD $5m) Telix shares to ANMI shareholders, at AUD $0.83 per share

• ➢ 46.5% of shares are management shares, escrowed for two years

• ➢ 53.5% of shares are investor shares. 25% of investor shares are escrowed for three months with the remaining 75% escrowed for 12 months from the date of the transaction

• ➢ The shares will be issued to 20 new shareholders. No allotted holder is a substantial holder under the Corporations Act

• €2m (AUD $3.1m) in cash , of which €1.7m is paid as consideration to ANMI shareholders, €300,000 for repayment of a convertible loan from an ANMI investor with a commercial conflict-of-interest with Telix

• Assumption of €0.8m of debt. Non-recourse, low-interest repayable grants and development loans (mostly long-term)

• Earn-out based on product sales for a period of 5 years following first marketing authorization of an ANMI product in either the US or EU

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Background : ANMI-Telix Partnership

• Telix needed a “companion diagnostic” for its prostate therapy program – collaborative partnering identified as optimal solution

• After extensive landscape analysis, Telix elected to focus on[68] GaPSMA both for companion diagnostic and US market opportunities. ANMI selected as the technology partner.

• Decision has been validated by several high-value commercial partnerships in the United States (e.g. Cardinal Health, Endocyte)

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• Outcome : illumet[TM] , a “cold kit” for the rapid, room-temperature preparation of[68] Ga-PSMA-11*

• Outcome : Enables PET imaging doses to be prepared on-demand, anywhere. Proprietary chemistry enables rapid preparation of a patient-ready dose in under 5 minutes

*68Ga-PSMA-11 is an investigational product and has not received marketing authorization in the US or EU

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Q. Why is imaging so important to prostate cancer management? A. Lots of watching and waiting…

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Locally Lymph Node
Local Disease Distant Mets
Advanced Mets
Low Risk Medium Risk High Risk
Active Radical Radical Radical P’tectomy +
Endocrine Tx
Surveillance Prostatectomy Prostatectomy P’tectomy ++ Endocrine Tx
Radical EBRT + EBRT + EBRT + Bone Seeking
EBRT
Prostatectomy Endocrine Tx Endocrine Tx Endocrine Tx Agents
EBRT + LDR EBRT + HDR + EBRT + HDR + Symptom
EBRT Endocrine Tx
Brachytherapy Endocrine Tx Endocrine Tx Oriented Tx
LDR EBRT +
Brachytherapy Endocrine Tx Watchful Watchful Watchful
Active Waiting Waiting Waiting
Surveillance
Watchful
Waiting This treatment matrix illustrates “typical” strategies for
Watchful treating prostate cancer (darker blues illustrate a trend
Waiting toward systemic therapy).
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EBRT = External Beam Radiation Therapy

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68Ga-PSMA-11 imaging with PET is sensitive, correlates with PSA

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A B C
It is possible to image disease with
PSMA, even at very low PSA levels
(= lower tumour burden)
The three panels A)-C) illustrate how
EVERYWHERE
PSMA as a
imaging avidity changes
function of PSA levels (from low to
All of these are
high PSA). patients
imaged post-prostatectomy [1]
A few highly vivid tumours are marked
for noting (red arrows)
tumour load Low Medium High
PSA 4.8ng/ml 454ng/ml 2860ng/ml
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1) Adapted from : Oncotarget . 2017; 8:55094-55103

Two ways to produce PET agents for prostate cancer imaging

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Cyclotrons .[18] F is the most commercially used isotope (2 hour half-life). Very high-scale production but also high infrastructure / operating cost, ageing install base. Scheduled production means less patient flexibility and challenging to deliver product to the “last mile”

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Generators . For PET imaging we use[68] Ge/[68] Ga (gallium) generators. This is a portable radiation source that “lives” in the hospital radiopharmacy and is 6 months or so. replenished every Convenient, dose-on-demand, easy to use. Lower but can be used[68] Ga has a throughput anywhere. short half-life of 68 minutes which means that a dose needs to be prepared very quickly

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illumet TM : a true “shake and shoot” product

68Ga Generator

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The “Kit”

A package containing all the components necessary to attach the radioactivity to a targeting The kit is used at room agent (PSMA-11). temperature (no heating) and takes a few minutes to prepare an injection-ready dose*.

68 – Ga PSMA11

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Up to 4 hours stability

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*68Ga-PSMA-11 is an investigational product and has not received marketing authorization in the US or EU

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Extensive validation

• We have validated illumet with the three leading brands of[68] Ga (gallium) generators used in the United States

• Validation data with IRE, E&Z and ITG generators was provided to the FDA in our Drug Master File (DMF) submission for the product[*]

• Currently validated generators reflect >95% of the install base of[68] Ga generators in the United States – and globally

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• Telix is continuing to validate with other 3[rd] party generators that are starting to become available in the US (i.e. iThemba)

• Since[68] Ga can also be produced via cyclotron, we are also validating the illumet with[68] Ga produced from GE and IBA cyclotrons

• We are amending our FDA DMF to include support for cyclotronproduced gallium – in progress

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*68Ga-PSMA-11 is an investigational product and has not received marketing authorization in the US or EU

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The US market opportunity is significant
•
.
Prostate cancer (PCa) is the most common male cancer in the US [1]
160,000 new cases diagnosed annually in men over 50. Three
million men are living with prostate cancer [2]
•
Imaging will play a role all the way from staging high-risk patients,
through recurrence to monitoring disease in response to therapy
•
Localizing metastatic disease early gives more treatment options but
existing imaging solutions are inadequate
•
A patient who progresses post-prostatectomy will have at least 3
imaging studies over the course of their treatment journey
•
Reimbursement benchmarks for PCa imaging agents are in excess
of USD $3,000 / dose (i.e. Axumin [®] / Blue Earth Diagnostics)
•
PCa imaging is at a USD $500m realizable market opportunity,
dominated by imaging Prostate-Specific Membrane Antigen or
“PSMA” with Positron Emission Tomography (PET) [3]
1) Excluding skin cancer
2) Source : American Cancer Society 9
3) Jadvar et al. J Nucl Med February 1, 2018 vol. 59 no. 2 228-229
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Going beyond the US

• US the initial focus – homogenous regulatory landscape ✓ Including reasonable predicates for product reimbursement (e.g. Axumin® / Blue Earth Diagnostics)

• EU + RoW > doubles the market opportunity for[68] Ga-PSMA ✓ Already well accepted in Europe but still a need for a commercially produced product

• ✓ Growing clinical traction in Asia and Latin America

• Telix’s investment in manufacturing scale-up of the illumet[TM] product can support the international market as well as the US

• Global partnership opportunities are enabled by bringing ANMI and Telix together

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Acquisition drivers

• ✓ Significant expansion of near-term revenues outside of the United States for a high-value product

• ✓ Ability to transact globally rather than in a market-segmented fashion

• ✓ Better alignment of US and EU clinical and regulatory activities

• ✓ ANMI has several other pipeline products that are synergistic with Telix’s disease focus areas (i.e. urology)

• ✓ ANMI talent will significantly add to Telix operational capability in Europe

• ✓ Escalating demand for validated prostate cancer assets = defensive measure:

• ➢ particularly in light of Novartis acquisition of Endocyte; and

• ➢ recent competitor failures (Progenics, Theragnostics)

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Near-term financial considerations

• First US sales (Telix) have commenced this quarter (as an investigational product)

• ANMI (ex-US) 9 months YTD sales ~€ 1.5m

• Modest revenues expected prior to US / EU marketing authorizations for compassionate / investigational use

• EBIT from early kit sales expected to cover the basic working capital costs of Telix group

• Telix can direct AUD $2m / annual planned development costs for outsourced development activity to ANMI as an “in-house” process development team

• Back-ended transaction structure means near-term cash flow impact is neutral

• *68Ga-PSMA-11 is an investigational product and has not received marketing authorization in the US or EU

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Upside and synergies

• ✓ ANMI has qualified and established a number of international distribution partnerships – also useful for Telix

• ✓ ANMI has other strategic “cold kit” products in their pipeline that will be disclosed in due course – anticipated positive financial impact within 18 months

• ✓ ANMI team (regulatory, quality, clinical operations, commercial) will support Telix’s broader activity in Europe in a cost-effective way

• ✓ Near-term possibility of marketing authorizations in certain secondary markets also underpin revenue growth in FY19/20 while we complete product development in the US/EU

• Telix will leverage ANMI’s expertise in developing kits to apply similar concepts to Telix’s therapeutic pipeline – particularly Telix’s prostate PSMA therapy program (TLX591)

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Summary

• The acquisition of ANMI builds on an excellent working relationship and a track record of execution

• Clear product, operational and commercial synergies

• Radiopharmaceutical talent acquisition

• Outcome is a stronger, more globally capable “theranostics” company

• Enables the combined company to develop an international strategy for prostate imaging more effectively, including with respect to achieving product marketing authorizations in key commercial territories (US/EU)

• Back-ended deal plus additional near-term revenue potential means cash flow impact is neutral to Telix

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www.telixpharma.com

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