Ann: 1H 2023 Results Presentation, page-103

Operator

00:00

Good day, and thank you for standing by. Welcome to Telix H1 2023 Financial Results and Business Update Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kyahn Williamson, SVP of Investor Relationships and Corporate Communications. Please go ahead.

Kyahn Williamson

Senior Vice President of Corporate Communications & Investor Relations

00:45

Thank you, [ Maggie ], and thank you, everyone, for joining us today. We're here to discuss the half year results lodged with the ASX yesterday evening Australian time. As mentioned, I'm Kyahn Williamson, and I'm joined today by Chris Behrenbruch, our Group CEO and Managing Director; Dr. Colin Hayward, our Group Chief Medical Officer; and Darren Smith, our Group Chief Financial Officer. So today, as usual, we'll be taking you through the presentation that was lodged on the ASX and which you can see on the webcast display here. For those joining by phone, we'll give a verbal queue for each slide change and then open the call up to Q&A. Just move to the next slide, please. I just want to start by making a note. Slide 4, as the remarkable journey we've been on over the past 12 months. At the first half last year, we just launched our product Illuccix, and following this very successful launch, we have -- to the -- and making progress across our therapeutic programs in the clinic. We're really making a meaningful difference in the lives of thousands of patients every week and bringing to fruition our vision to be a global leader in theranostics and precision medicine. It's a strong sense of purpose and patient impact that drives all of us at Telix, but has also underpinned our very rapid transition to a sustainable revenue-generating business. Next slide, please.

Kyahn Williamson

Senior Vice President of Corporate Communications & Investor Relations

02:02

So the results we present today really show strong improvement across all of our key metrics and importantly, show the underlying profitability of the business. We're demonstrating a commitment to cost control, while funding the development of our late-stage programs, including regulatory filings and scale up to support the launch of 2 new diagnostic imaging agents. The significant improvement in our overall net loss position does include a noncash adjustment to provision for future payments based on Illuccix sales, again reflecting that really strong performance, and Darren will talk through that further. Next slide, please. The operational highlights for the half demonstrate that not only are we delivering to the growth strategy that we have laid out for our investors before, but we're laying a foundation for future value creation. Chris and Colin will talk to our outlook for the PSMA-PET imaging market and our lead product Illuccix and the progress we're making on regulatory filings through our brain and renal cancer imaging agents. We've also made some excellent progress across our core therapeutic programs, including ProstACT Global now open for enrollment at our first APAC sites, and the readout from the ProstACT Select study fast approaching. Of course, we continue to drive innovation, and we've added some exciting new aspects to the portfolio through acquisitions during the half. I'd now like to hand over to Darren to talk you through the financial commentary and key results.

Darren Smith

Group Chief Financial Officer

03:24

Thanks, Kyahn. Telix's June 2023 first half financial results present a sound financial position following the commercial launch of Illuccix in April '22 and receiving reimbursement in July '22. Illuccix revenue has had the same growth over the 15-month period since launch in the U.S., which represents 95% of Telix's global revenue, Telix's commercial team with the assistance of our distribution network has driven revenue growth by acquiring new sites and then focusing on improving volumes for existing sites. This has been the key driver to increasing global sales to $220 million for the first half of the year. This is an 820% improvement on the first half of 2022 in which the launch of Illuccix occurred in a very respectable 62% improvement on the prior half. It's also pleasing to note that the Rest of World revenue improved 50% compared to the first half last year. In Europe, we have seen increased kit sales ahead of market approvals. Also, following regulatory approvals of Illuccix in Australia and Canada, we are seeing the early stages of growing acceptance and use of Illuccix in these markets. Telix will continue to pursue opportunities to expand our geographic footprint to assist with growing the top line. Turning to Slide 9. Here, we provide a comparison of the last 3 consecutive halves outlining Telix's improving financial performance over a significant revenue growth period of 15 months following the launch of Illuccix.

Darren Smith

Group Chief Financial Officer

05:27

This has culminated in Telix delivering its first positive half year adjusted EBITDA of $34.7 million, being a $41.7 million improvement on the prior half. On the prior slide, I talked to Telix's revenue performance. Obviously, this has been the key driver to significantly improving the gross margin. It is worth noting that this increase in sales volume is assisting Telix to realize manufacturing efficiencies, improving gross margin as a percentage of revenue from 56% in the launch half to now be 64% this half. Telix manufacturing team will continue to implement incremental improvements in the production of Illuccix. Looking to the expenditure categories of the income statement. It is evident that Telix is actively driving growth on the top line by continuing to invest in building out the infrastructure of the organization. This investment across people, general selling and operational expenditure and the provision of resources and services supporting our current product development activities. Currently, Telix's R&D investment is predominantly focused on delivering 2 new revenue streams by progressing the activities that support the filing of a BLA for the renal cancer diagnostic and the NDA for our brain cancer diagnostic. Looking to the bottom line of the income statement.

Darren Smith

Group Chief Financial Officer

07:09

Telix did report a statutory loss before tax of $12.3 million, being a $58.4 million improvement on the first half of 2022. It is important to note that this statutory loss for the first half includes a $36.6 million noncash remeasurement of provisions. For details of this remeasurement, I would refer you to Note 12 in the interim accounts. But in short, this adjustment reflects the significantly improved performance and outlook for the sales of Illuccix, thus requiring a larger projected earn-out of the acquisition of the product. If not for this adjustment, Telix would have been reporting its first statutory profit before tax of approximately $24 million for the half year. Now turning to Slide 10. Telix continues to demonstrate improving financial metrics, having built out a sustainable business. It can easily be seen in the graph on the right-hand side of the slide that gross margin has improved significantly since the commercial launch being 64% for the first half of '23, reflecting the normalized operating conditions. Also, despite increased investment into SG&A to build out our commercial infrastructure and capabilities as a percentage of revenue, it has reduced dramatically from 166% in the launch half at the beginning of '22, then reducing to 36% in the second half of '22, to now be 26% of revenue in the first half of '23.

Darren Smith

Group Chief Financial Officer

09:02

This, coupled with the improved gross margin, has enabled Telix to self-fund its current research and development pipeline. Now turning to Slide 11, in the adjusted financial metrics of EBITDA and EBITDAR. For these 2 financial measures, I'll refer you to Note 3 of the interim financial reports released last night. But basically, the adjusted EBITDAR graph reflects the operational profit performance of the commercial Illuccix business over the last 3 half periods. Clearly, the strong growth in revenue and improved gross margin and a focus in controlling and reducing expenditure as a percentage of sales has delivered half-on-half improvements of 128% to $82.4 million, representing a 37% return on revenue. The adjusted EBITDA graph simply reflects the Illuccix business performance, less the investment into the development of Telix's pipeline. Again, this measure demonstrates improved earnings performance and the fact that Telix is able to fund its current research and development pipeline through its commercial Illuccix operations. In summary, Telix is financially sound with an improving commercial performance, a growing revenue line and a respectable cash-on-hand balance. This will ensure that we can fund the activities to deliver 2 new revenue streams and progress our ongoing clinical development program. Chris, I'll hand over to you.

Christian Behrenbruch

Co-Founder, MD, Group CEO & Executive Director

10:52

Thanks very much, Kyahn and Darren, and good evening, everyone, from Telix's U.S. headquarters in Indianapolis. If you can move to Slide 13, please. So I'm reliably [ in ] of shareholders that play drinking games every time I use the word, excited, to describe our work at Telix. And I don't know perhaps that explains our share price volatility over the last quarter. But however, it's fair to say that we are delighted with our half year results and the really stellar progress the company has made year-to-date, and I think that's very much reflected in the financial summary that Darren has just presented. This slide summarizes the mission for 2023. As you've just heard from Darren Smith, we had a strong first half of sales, and there's clear evidence that this growth and performance will continue into the second half of the year. And I will talk about Illuccix more specifically in a minute. In terms of preparing for the company's future, we set down really fundamental groundwork this past 6 months or so on our 2 follow-on product submissions, which we are on track to file in the United States in Q4 this year. We've had really good interactions with the regulator, and we believe that we have a clear pathway forward for those 2 products, [Technical Difficulty] revenue streams to significantly diversify in terms of not only the follow-on geographies for Illuccix, and I'll talk a bit more about that in a second, about truly delivering a de-risked multiproduct company.

Christian Behrenbruch

Co-Founder, MD, Group CEO & Executive Director

12:16

The other significant inflection point that's coming is the formal launch of the ProstACT Global Phase 3 trial, as Kyahn mentioned in her opening comments, patients into the study any day now. And the IND package to expand the study into the U.S. is in good shape, with Europe and possibly a few other jurisdictions to follow on next year. We're certainly committed to running that trial as expeditiously as possible. Illuccix has drawn the majority of the attention from investors to date, but the big value creation and valuation uplift, we think, has yet to come and will be the result of becoming a validated multiproduct diagnostic and therapeutic company. As I always like to say, Illuccix is just the beginning. It's the launch pad of the company. The big value, we believe, is in our therapeutic pipeline, and Colin Hayward will discuss our progress in more detail a little bit later in this presentation. If you can move to the next slide, please, Slide 14. So back to Illuccix. You've already had the financial snapshot from Kyahn and Darren that captures most of the high-level information. However, we wanted to elucidate a bit more detail in the really spectacular growth in this business. As you can see, the revenues have grown very rapidly since we got reimbursement in July of last year.

Christian Behrenbruch

Co-Founder, MD, Group CEO & Executive Director

13:34

The second half of last year was our first full reimbursed half, and we are up over 60% for the first half of this year. That is serious to our growth market share. Our growth has come from both new accounts and deeper penetration into existing accounts. We've had very little customer attrition and a whole lot of wins, including some real success stories, capturing major customers from our competition. We believe that the market is buying into our positioning around both supply chain superiority as well as clinical differentiation, which I will talk a bit more about in a moment. The best evidence that I can offer of this is that our customer mix is considerably matured and evolved as we have picked up larger luminary hospital accounts. And we've had a notable uplift in the percentage of doses that are servicing government payouts that's really part of that match [Technical Difficulty]. Clearly, government payers have a different pricing structure than commercial payers, but noting that pricing has overall been very stable in the last 6 months. But there are different contracting pricing tiers between government and commercial payers. So the reason why I outlined this is because notwithstanding the very -- top line -- very strong top line financial growth, revenue top line doesn't actually tell the whole story of just how well we've done.

Christian Behrenbruch

Co-Founder, MD, Group CEO & Executive Director

14:52

In those volume terms, the growth has actually been quite a bit higher. Slide 15, next slide, please. When we launched Illuccix a little over 1 year ago, we launched with the messaging that our last mile strategy of nuclear pharmacy enabled delivery would result in superior uptime and more reliable and flexible scheduling. We've certainly delivered this with a 99% plus customer delivery track record. It's a differentiation that our customers really believe in and they value, and it's an important competitive differentiation going forward as we see other entrants into the PSMA imaging space. We feel very much that we are unique in this differentiation. However, as the market for PSMA imaging matures for the current set of indications, noting that guidelines continue to evolve, and Colin Hayward and I are going to discuss this a little bit more later in the presentation, our competitive marketing strategy is pivoted to focusing on our clinical differentiation. This is not only a message that many of our customers believe in -- from actual firsthand experience, but is backed up by peer-reviewed science and changes in practice guidelines that increasingly spell out this differentiation very unambiguously. There's simply no confusion about this. So our message is simple. Gallium gives more reliable and accurate results at F-18. This is a statement that based on scientific literature and our own clinical experience, we believe is applicable to the entire cloud of F-18 based agents.

Christian Behrenbruch

Co-Founder, MD, Group CEO & Executive Director

16:19

This is an important development for the field, and it's an appropriate development and patients who are not over treated on the basis of false positives. It's a good development for patients. Moving on to next slide, please, Slide 16. The evolution of Illuccix and its message of clinical superiority comes at an important time. We are focused on expanding the global reach of the product beyond Australia, New Zealand, Canada and the United States. We currently have filings and progress in 29 European countries, the U.K., Korea and Brazil, with Japan and China in progress, including a launch of the Phase 3 bridging study in China. It was a bit surprising that we needed to do that, but we think it's a market worth prosecuting. And so, with our partners, Grand Pharma, we're prosecuting that very aggressively. We believe that this will not only help us to diversify our revenue stream for Illuccix, but also there is a significant financial and strategic reward in supporting global pharmaceutical companies that are running [ urology ] trials using PSMA, an increasingly commonplace practice. So we really feel that our mission to delivering our products globally is something that differentiates us from our competition and puts us really in the front line of relationship preference with big pharma. Moving on to Slide 17, please. The Illuccix story doesn't end with the current 3 indications for high-risk men biochemical reoccurrence and patient selection for radionuclide therapy.

Christian Behrenbruch

Co-Founder, MD, Group CEO & Executive Director

17:52

As we rapidly gain clinical experience through a mixture of routine use, investigator-led research and company-sponsored trials, we are also seeing significant guideline evolution happen in parallel. Consequence of this guideline-driven use of PSMA imaging for repeat imaging, patient follow-up and longitudinal assessment of disease progression is that there's a really big explosion in the use of PSMA that we believe will have a pretty nice impact in the relatively near term on the potential addressable market for Illuccix. Moving on to the next slide. Elaborating this a little bit further, you can see on this slide that sort of generally accepted addressable market that is associated with the current product label scope. The guideline evolution largely related to a fairly sensible patient management and well-established clinical [Technical Difficulty] significantly extends the potential market from about USD 1.5 billion to USD 1.6 billion to well over [ USD 2.3 billion ] for the U.S. market, and I think with a similar growth and opportunity on a scaled basis globally. This bodes well for the continued growth of our business over the next couple of years. There's a lot more happening clinically down the road. And I will now hand over to Colin Hayward, Telix's Chief Medical Officer, to give you some key insights. Colin, over to you.

Colin Hayward

Group Chief Medical Officer

19:17

Thanks, Chris. If we could go to Slide 19, then beyond those areas where we just highlighted that Illuccix has been used and the guidelines, which are rapidly moving have been shown to use. There's a large number of other areas for potential for Illuccix and PSMA imaging. If we look right at the beginning of that patient journey for patients who have a potential diagnosis of prostate cancer, monitoring those patients and having a virtual biopsy by imaging, and I'll go into some of the data that shows this and potentially opening up the active surveillance population to benefit from Illuccix. Surgical planning, we've already seen data published on this in terms of being able to minimize the surgery and maximize the side effect profile so that patients really can preserve their neurovascular bundles post surgery. And talking of treatment planning, it's not just surgery, it also goes into some of those bigger studies from the early to late disease studies where PSMA-PET is being used not only to detect part of the entry of those studies, a bit like the [indiscernible] study, but also continuing to monitor their response and progression at regular intervals after they are being entered into the study.

Colin Hayward

Group Chief Medical Officer

20:37

In fact, in that study, PSMA-PET imaging is the primary endpoint. In addition to therapeutics, surgery, we also have radiation therapy, and PSMA-PET imaging is being used to guide radiation therapy in a number of areas, including our collaboration with RefleXion. And of course, PSMA isn't just prostate specific. There is expression in the neovasculature of other tumors as well. And so there is potential to extend into non prostatic disease such as hepatocellular carcinoma, for example. And if we go to Slide 20, people are seeing the application in their daily management of patients. People are really seeing [ that's ] urologists, oncologists. And so that's why we're seeing this rapid transition, this rapid uptake in guidelines and expansion in guidelines. And if we see this PSA graph that we like to show as part of the prostate journey, those dark blue indications are -- there are current indications, but we can see we're going from the very beginning of a diagnosis for monitoring active surveillance all the way to monitoring response to radioligand therapy. There's potential to be used all the way through that patient journey, and the data is there.

Colin Hayward

Group Chief Medical Officer

21:53

And if we go to Slide 21, we can see this 291 patient study, the primary study out of Australia leading to a second primary 2 study. Really, these are patients who are planned for a biopsy. They haven't yet had a biopsy, but they're imaged with Gallium PSMA and then they have a biopsy. And we can see how well that image correlates to the presence of disease and being able to identify patients who have clinically significant disease or not, is a real opportunity to not only add information to existing MRIs, but potentially to avoid biopsies for patients in the future. And if we go to Slide 22, we know that working with leading-edge technology providers like uEXPLORER, we can see that we can image very quickly, but also image very small disease. So not only are we detecting disease with a very high sensitivity, we're able to increase the number of patients that are going through the scanner as well. And if we go to Slide 23, we can see a holistic overview in urological oncology, which I'll just turn over to Chris again, just to comment on.

Christian Behrenbruch

Co-Founder, MD, Group CEO & Executive Director

23:10

Yes. Thanks, Colin. I appreciate it. Great summary and also a nice reminder really of how aligned and integrated our products are from a continuum perspective. This is really nicely illustrated in this graphic showing our end-to-end commitment from initial diagnosis and staging through intervention and into providing decision support for metastatic disease. We believe with our product portfolio and key bolt-on acquisitions, acquisition for AI and LifePoint for intraoperative solutions, Telix can become a one-stop shop for urology and really claim our market share. And this commitment to urology is well recognized by our customer based who value this vision as much as we believe in it. Colin, back to [ you ] [Technical Difficulty] around the development programs.

Colin Hayward

Group Chief Medical Officer

24:09

Perfect. So let's skip Slide 24, that's an introduction, and go to Slide 25. It's the product line overview, which you're all familiar with. But I want to just reinforce not only that commitment to GU oncology and the rare disease, the often indications in terms of glioblastoma and bone marrow conditioning, but also just to emphasize for each of those diagnostics as a therapeutic that's advancing, and we have some real significant intangible advancement in each one of those therapies and seeing ourselves as a therapeutic company now. If we go to Slide 26, I'll talk you through some of the clinical development highlights within there. Let's talk about the CA9 program, obviously, with girentuximab based on the excellent results of the ZIRCON study. Well, we have some imaging studies with ZIRDOSE expanding the regional application of ZIRCON girentuximab. But also the OPALESCENCE and STARBURST studies, which are imaging studies, but will show the expansion of CA9 as a potential therapeutic target in multiple indications. The OPALESCENCE study is in triple-negative breast cancer study. The data for this has been submitted to the next San Antonio Breast Cancer Conference. So looking forward to hear whether that has accepted or not.

Colin Hayward

Group Chief Medical Officer

25:29

But the therapeutic ones that are ongoing here, the STARSTRUCK study, the first patient in has occurred there. This is the combination with peposertib, the Merck KGaA agent, a DNA damage repair inhibitor in both a renal cancer and a pan-tumor CA9 expressing set. The STARLITE study site too is recruiting. It's in its final dose escalation cohort. And the STARLITE-1 study is really exciting. It's in that first-line renal cancer in combination with the checkpoint inhibitor nivolumab, but also with cabozantinib as well. Let's talk about prostate cancer therapy and where we've advanced there. We have the ProstACT SELECT study 30 patients have been dosed fully there now, and we're having a readout of that in the last quarter of this year. And as Kyahn touched on, the ProstACT GLOBAL Phase 3 study will be open -- is open, in fact, and dosing imminently in Australia and New Zealand with progress to the GLOBAL U.S. IND. And so Glioma mainly in terms of the therapeutic studies here moving forward. We have the IPAX-2 patients have been recruited for this in this second dose escalation Phase 1. Reminder that this is in earlier disease stage in the original IPAX study.

Colin Hayward

Group Chief Medical Officer

26:51

It's in that postsurgical population. And the following up with the IPAX-Linz investigator study, which is recruiting extremely well is in the recurrent setting. And IPAX China, again, is another therapeutic study in start-up as we speak and looking forward to announcing the first patient very soon. And just to touch on some of that bone marrow conditioning with TLX66 and other rare disease where we have the olaratumab. This is the acquisition from Lilly, the proof-of-concept study looking to progress to the first in-human studies later this year. We're making good progress there. And then also preparing our Australia site for a Phase 2 study of TLX66 in AML as well as launching the investigator study in pediatric leukemias in the U.K. If we go to Slide 27, I just want to go back. I did briefly mention the ZIRCON study and the fantastic and unprecedented results really in terms of sensitivity, specificity, and a reminder in terms of the consistency of that reading. We're making progress there with the regulators having had that initial meeting with the FDA and continuing to, based on their feedback, progress with the regulatory submission. Part of our prelaunch [ tactics ] is the expanded access program, making headway in Europe and the U.S.

Colin Hayward

Group Chief Medical Officer

28:18

And the most recent data -- I wouldn't be the Chief Medical Officer if I couldn't just present the data that was at the most recent Congress, right. And at the SNMMI very pleased to see that some of this data on extra renal lesions. Some patients had the option of the investigator,. were allowed to have full body scans, and a number of those were detected to have extra renal lesions even in this very early renal mass disease. And that certainly supports the feedback that we're hearing and the potential clinical utility in terms of monitoring patients with high-risk disease, all the way like PSMA to detecting metastatic disease in the long term and potentially response to therapies. If we go to Slide 28, I touched on the ProstACT SELECT study. What was this all about? Well, look, it's a study really looking at the tumor targeting of gallium PSMA to lutetium PSMA, gallium PSMA being a small molecule, lutetium rosopatamab, TLX591, an antibody. So showing that we can utilize the pair -- the theranostic pair for patient selection as well as determining that whole body dosimetry for TLX591 and really showing that tumor targeting of the antibody.

Colin Hayward

Group Chief Medical Officer

29:38

Because if we go to Slide 29, we know that small molecules leave the body very quickly. We know with small module therapeutics, something like 70% of the activity is lost within that first 12 hours here. You can see that gallium PSMA image on the far left. And on the far right or even the 5 images after that are all SPECT images of a patient who's been dosed with the TLX591 lutetium PSMA antibody. And you can see that there's very good correlation on those tumors. So those little black dots all over that patient's skeletal system, in particular tumors from the prostate cancer. And you can see that even 2 weeks out, there's still activity within each of those tumor sites. And that's what makes -- using this as an antibody approach very exciting for me. You can also see if you're really good at analyzing images, that there's no salivary gland uptake of the antibody as well. And so that's going to get over that salivary gland toxicity that we see potentially. So on that, with that exciting data, I hand back to Chris to summarize.

Christian Behrenbruch

Co-Founder, MD, Group CEO & Executive Director

30:58

Thanks, Colin. Hopefully, that overview gives shareholders a perspective on the depth of our clinical activity. We are making excellent progress, and we're very fortunate to enjoy a high degree of opinion leader engagement around our programs, as Colin has suggested. We're also grateful to the amazing patients that have supported these programs to generate this exciting impressive data. So to summarize where we're at in the year and to provide insights into [Technical Difficulty] slide provides a comprehensive snapshot of what 2023 is about. It's gratifying to see that at halfway through the year we're also about halfway through our goals for the year, including some pretty big accomplishments in terms of core objectives, but also some pretty [Technical Difficulty] as well. The second half of the year we'll continue to see revenue growth through a deep new customer pipeline as well as both the continued operationalization of our clinical trials and the 2 new drug approvals that are pending out of [ 4 ] -- or 2 new drugs submissions that are pending. I'm looking forward to coming back to you in 6 months' time and showing a full [Technical Difficulty]. And on that basis, I will now hand it over to questions.

Q&A section

Operator

32:44

[Operator Instructions] Our first question is from David Stanton from Jefferies.

David Stanton

Analyst

32:56

Look, mine are basically for Darren, if that's okay. I wonder if you could give us an update on expected R&D spend in F '23 -- in F '24 is the first question, please?

Darren Smith

Group Chief Financial Officer

33:10

David, I think as we reported back in [Technical Difficulty].

Christian Behrenbruch

Co-Founder, MD, Group CEO & Executive Director

33:26

Darren, you're breaking up. Your audio is not very clear. David, I'm not sure what's happened to Darren's audio. Maybe while he's working out his head items on 2024 yet, although we've always said that our R&D expenditure will be consistent and in line with our ability to grow the business. We -- I think the expenditure in the first half is in line with our prior guidance of around $100 million of R&D. We have incurred a bit more expense, as Darren said in his comments around manufacturing scale-up and readiness for the BLA and the NDA submission, but we see that as commercial prelaunch expense. We don't see that as R&D. But in terms of real R&D expenditure, that means clinical trials and outsourced R&D, it's in line with prior guidance.

David Stanton

Analyst

34:26

And second and last question, again, if Darren is there, that'd be great. But if it's not, we can take it offline. But second half management and admin expenses, should we think that, that's basically in line with first half? Because if that's the case, we're going to see some decent operating leverage in the second half if growth continues.

Christian Behrenbruch

Co-Founder, MD, Group CEO & Executive Director

34:44

Are you there, Darren?

Darren Smith

Group Chief Financial Officer

34:45

Yes, I'm back online.

Christian Behrenbruch

Co-Founder, MD, Group CEO & Executive Director

34:47

Well, then I'll let you answer that one.

Darren Smith

Group Chief Financial Officer

34:50

So what we are expecting, obviously, we still need to continue to progress the development of the organization. So we will have further expenditure. We also do need to prepare for the launch of 250-CDx and the 101 as we progress through those regulatory approvals. So we need to be ready for that. So we will continue to invest, let's say, before the curve. And however, I still believe that there is leverage within the balance sheet. But at this point in time, given the development activity we need to [ do ], if you focus more on the percentage of revenue as opposed to the actual absolute dollar, that would be more appropriate.

Christian Behrenbruch

Co-Founder, MD, Group CEO & Executive Director

35:45

Yes. I mean -- maybe if I could add to that. I mean, I think, yes, we will continue to prepare for market launch, but that's a -- as we've talked about in the past, that's -- maybe that's a 10%, 15% increase in cost. That's not a [ sudden ] doubling down of costs. So it is incremental. Also, we've got this onetime effect that we talked about and that impacted our profitability in this quarter. But clearly, going forward, we've got a much better understanding of what the growth curve looks like.

Operator

36:32

[Operator Instructions] I will now hand back to Kyahn. Thank you.

Kyahn Williamson

Senior Vice President of Corporate Communications & Investor Relations

36:47

Thanks. We just have a couple of final questions coming through. A question from [ Crystal Collin ]. Why have you commenced enrollment of the ProstACT GLOBAL study before finalizing the protocol with the FDA?

Christian Behrenbruch

Co-Founder, MD, Group CEO & Executive Director

37:03

I mean, I don't know if you want to take that, Colin. We have actually had multiple interactions with the FDA. So we are working on the basis of a single harmonized protocol. So I'm not quite sure I fully understand the question. But just to be clear, we do have a finalized protocol. It's the same protocol that's being used in all jurisdictions. Colin, do you want to add anything to that?

Colin Hayward

Group Chief Medical Officer

37:24

No. I think we've been pretty clear in our pathway for the protocol [Indiscernible] very much, the SELECT protocol in terms of that. So it's clear in terms of the patient population we're going. There's clear precedent in other Nutrition PSMA agents, but also in other therapeutics as well coming into this area. So I think we're fairly clear and have got some great feedback over the last months and years from the FDA.

Christian Behrenbruch

Co-Founder, MD, Group CEO & Executive Director

37:53

Yes.

Kyahn Williamson

Senior Vice President of Corporate Communications & Investor Relations

37:56

And just one more question. With the data on Slide 21, are there any plans to use this to expand indication for Illuccix? Question for Colin.

Colin Hayward

Group Chief Medical Officer

38:09

So let me just -- yes, so the Slide 21 is the primary data. This is generated not from our research, but there's certainly a group that we would love to collaborate with and expand. And this is clearly indicative data that we can use Illuccix as PSMA imaging in the active surveillance setting.

Christian Behrenbruch

Co-Founder, MD, Group CEO & Executive Director

38:40

Kyahn, do we have any other questions online?

Kyahn Williamson

Senior Vice President of Corporate Communications & Investor Relations

38:43

One final question. Is there any update on the launch [ feat ] for Illuccix in Europe?

Christian Behrenbruch

Co-Founder, MD, Group CEO & Executive Director

38:52

Yes, I'm happy to answer that question. So all of our submissions have been received and validated by the European competent authorities that we've submitted to on the decentralized submission. So that's 19 countries. So we're just [Technical Difficulty] Q&A backwards and forwards on the package. Obviously, most of those regulators have seen the package before. So I think that we feel that we've got a pretty good handle on where things lie. That Q&A will go backwards and forwards on various clock stops between now and the end of the year and into the early part [Technical Difficulty]. But right now, it's really that submission is just progressing as expected. We've indicated that we're expecting to get approval in Europe towards the back end of the first half of next year. And that remains on track as far as we can see today. It's been quite a straightforward process so far.

Kyahn Williamson

Senior Vice President of Corporate Communications & Investor Relations

39:54

Thank you. So we have no further questions. I'll hand back over to you, Chris for some closing remarks.

Christian Behrenbruch

Co-Founder, MD, Group CEO & Executive Director

40:01

Well, great. I think just to keep it succinct. We appreciate everybody's time. A lot of new data presented in this half year update. So hopefully, the progress that's being made clinically is very evident. The expansion and the opportunity for Illuccix continues to grow. So this is something that we're focused on in terms of label expansion and the opportunity to develop new indications for the product. And overall, the field is really going gangbusters at the moment. So it's a very interesting time to be involved in the theranostic space and clearly, a lot of commercial potential for our pipeline. And so very delighted with the results, and thank you for your time and attention today.

Operator

40:49

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