Directors' report

This Directors' report is presented by the Board of Directors of Telix Pharmaceuticals Limited, together with the Group’s Financial report, for the financial year ended 31 December 2023.

Directors

At the date of this report, the Directors in office are:

• H Kevin McCann – appointed 17 September 2017

• Christian Behrenbruch – appointed 3 January 2017

• Andreas Kluge – appointed 2 June 2020²

• Mark Nelson – appointed 17 September 2017

• Tiffany Olson – appointed 31 March 2022

• Jann Skinner – appointed 19 June 2018

Information about Directors’ qualifications, skills and experience, specific Telix responsibilities, and other external appointments is outlined in the Governance section of this Annual Report.

Meetings and attendance

The following table documents Directors’ meetings, including meetings of standing Board Committees, held during the financial year ended 31 December 2023, and the number of meetings attended by each Director. All Directors are welcome to attend Committee meetings even if they are not members.

Directors' interests in the securities of Telix

The relevant interests of each Director in the share capital of Telix as at the date of this report are as follows:

Details are set out in the Remuneration report of this Annual Report.

Company Secretary

Genevieve Ryan BSc (Hons), LLB (Hons) (Monash), FGIA, FCG

Ms Ryan was appointed Company Secretary effective 5 December 2022. She has 18 years’ experience in legal and governance roles, including with ASX-200 companies. Previously she was General Counsel – Governance, Corporate and Commercial at Orora Limited, and Senior Legal Counsel and Alternate Company Secretary at Australian Pharmaceutical Industries Limited (acquired by Wesfarmers Limited). Ms Ryan began her career as a lawyer with law firm Ashurst (formerly Blake Dawson).

Principal activities of the Company in the year under review

Telix was incorporated on 3 January 2017 and listed on the Australian Securities Exchange on 15 November 2017. It is a commercial-stage biopharmaceutical company focused on the development and commercialisation of diagnostic and therapeutic radiopharmaceuticals and associated medical devices. Headquartered in Melbourne, Australia with operations in the U.S., Europe (Belgium and Switzerland) and Japan, Telix is developing an extensive portfolio of highly differentiated assets in both large oncology indications and rare diseases, with high unmet medical need.

Telix’s activities during the year were principally directed to further advancing its standing as a globally recognised theranostics company through commercialising and developing the therapeutic and imaging products in its core pipeline across five key disease areas:

• TLX591 / TLX591-CDx (Illuccix®): treatment and diagnosis of metastatic castrate-resistant prostate cancer

• TLX250 / TLX250-CDx (Zircaix™¹): treatment and diagnosis of kidney (renal) cancer

• TLX101 / TLX101-CDx (Pixclara™¹): treatment and diagnosis of glioblastoma (brain cancer)

• TLX300 / TLX300-CDx: treatment and diagnosis of soft tissue sarcoma, and

• TLX66 / TLX66-CDx (Scintimun®): bone marrow conditioning and rare diseases.

Review of operations, likely developments and expected results

A review of the Group’s operations for the financial year ended 31 December 2023 can be found in the Operating and financial review section of this Annual Report.

The Group expects total revenue for the year ended 31 December 2024 to be in the range of $675,000,000 to $705,000,000 (US$445,000,000 to US$465,000,000 at current exchange rates), representing an approximate 35-40% increase compared to the prior year. Revenue guidance is based on worldwide sales of Illuccix with potential upside from Zircaix™¹ and Pixclara,™¹. Guidance will be updated throughout the year, as appropriate, to reflect product approvals.

The Group expects additional investment in R&D of 40% to 50% (compared with 2023), including both external and internal costs funded by operating cash flow and broadly in line with revenue growth. R&D investment activity is expected to include validation of commercial manufacturing and market launch activities in preparation for approval of Zircaix™¹ (kidney cancer imaging) and Pixclara™¹ (glioma imaging), a fully operationalised Phase III therapy trial in prostate cancer (ProstACT GLOBAL) and initiation of additional therapeutic clinical trials, including manufacturing activity, across the broader pipeline. R&D investment also includes indication expansion and life-cycle management of Illuccix®.

Certain information regarding developments in operations in future years and expected results is excluded because it is likely to result in material prejudice to the Group.

State of affairs

There have been no significant changes in the state of affairs of the Group during the financial year ended 31 December 2023 other than as disclosed in this Annual Report.

Events subsequent to the end of the financial year

On 5 January 2024 Telix announced that it is considering an initial public offering (IPO) of American Depositary Shares (ADSs) representing its ordinary shares in the U.S. and listing on the Nasdaq Global Market (Nasdaq). Telix’s ordinary shares will remain listed on the Australian Securities Exchange. The number of ADSs that may be offered, the number of underlying ordinary shares that may be issued, the price for such instruments and the timing of the offering have not yet been finalised. No final decision has been made in respect of the offering or Nasdaq listing and there can be no assurance as to the occurrence, timing, pricing and/or completion of such an offering or listing.

On 8 February 2024 Telix entered into an agreement to acquire QSAM Biosciences, Inc. (QSAM), a U.S. based company developing therapeutic radiopharmaceuticals for primary and metastatic bone cancer. The purchase price comprises $50,800,000 (US$33,100,000) upfront, which is payable in the form of 4,369,914 Telix ordinary shares (subject to certain adjustments at completion) and performance rights, that represent the right of the holders to receive contingent payments up to $138,000,000 (US$90,000,000) in aggregate. The contingent payments are payable in cash and/or in ordinary shares, upon achievement of certain clinical and commercial milestones. Completion of the transaction is subject to customary conditions, including approval of QSAM’s shareholders and regulatory approvals.

There were no other subsequent events that required adjustment to or disclosure in the Directors’ report or the Financial statements of the Company for the year ended 31 December 2023.

Dividend

No dividend was declared or paid during the year. Telix did not return capital to any of its shareholders during the year.

Issue of unlisted equity securities

Unlisted ordinary shares under options or rights issued during the year were as follows:

Unlisted share options or rights do not allow the holder to participate in any share or rights issue of the Company. Shares to be allocated to employees following vesting of options or rights are held in the Telix Employee Share Trust. Performance Share Appreciation Rights and other rights were issued to employees in line with Telix's Equity Incentive Plan rules. More information can be found in the Remuneration report. For details of all unlisted equity incentives on issue, refer to note 28 of the Financial report.

Performance Rights were issued to Lightpoint Medical Limited as part of the acquisition of Lightpoint Medical's RGS business, assets and operations. Refer to note 19 and note 27.3 of the Financial report for further details.

Shares issued on exercise of options and lapse of options

Ordinary shares of Telix issued during the financial year ended 31 December 2023 on the exercise of options granted over unissued shares and lapse of options were as follows:

• a total of 3,878,633 fully paid ordinary shares were issued upon exercise of 4,523,958 unlisted share options, and

• a total of 1,823,703 share options lapsed unexercised. These options lapsed in accordance with the terms of their grant.

Since the end of the financial year ended 31 December 2023 and the date of this report, 255,589 shares have been issued from the exercise of 325,000 options under Telix’s Equity Incentive Plan.

Regulatory and environmental matters

Telix’s operations are subject to national and international legislation, and Telix is required to carry out its activities in accordance with applicable environmental and human safety regulations in each of its operating jurisdictions, including but not limited to Australia, Belgium and the U.S..

Telix conducts its activities at TMS in accordance with applicable environmental regulations, including regular inspections by the Belgian Federal Agency for Nuclear Control (FANC). In 2022, TMS received updated authorisations from FANC, aligned with the scope of Telix operations, and Telix is complying with its obligations under these licences and existing Belgian regulation. In December 2022, TMS was granted an updated operation authorisation and environmental permit from FANC, valid until 7 October 2042.

Following the 31 December 2022 acquisition of Optimal Tracers in California, U.S. and integration into Telix operations, Telix conducts its activities at Optimal Tracers in accordance with applicable environmental regulations, including inspections by relevant authorities as required.

There were no known non-compliance issues with environmental and human safety regulations during the year.

Information about Telix’s sustainability program, including for environmental matters, is detailed in the Sustainability section of this Annual Report.

Beyond these matters, Telix is unaware of any regulatory and environmental matters applying to the Group's operating activities that require disclosure.

Indemnification

Indemnification of officers

Under Telix's Constitution, Telix has entered into agreements with each person who is, or has been, an officer of the Company. This includes the Directors in office at the date of this report, the Company Secretary and other executive officers, indemnifying them against any liability to any person other than Telix, or a related body corporate, that may arise from their acting as officers of the Company, notwithstanding that they may have ceased to hold office. There is an exception where the liability arises out of conduct involving a lack of good faith or is otherwise prohibited by law. During and since the end of the financial year ended 31 December 2023, Telix has paid or agreed to pay the premiums for an insurance policy to insure current and previous Directors and other executive officers against certain liabilities incurred in that capacity. Due to the confidentiality obligations and undertakings set out in these agreements, no further details regarding premiums paid, or the terms of the agreements, can be disclosed. No indemnity payment has been made under any document referred to above during or since the financial year ended 31 December 2023.

Indemnification of auditors

To the extent permitted by law, Telix 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 end of the financial year.

Auditor independence and non-audit services

Telix may decide to employ its auditor on assignments additional to statutory audit duties where the auditor’s expertise and experience with the Group are important.

Details of amounts paid or payable to Telix’s auditor, PricewaterhouseCoopers, for non-audit services provided during the year are set out in note 34 of the Financial report. The Directors, in accordance with advice received from the Audit and Risk Committee, are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 for the following reasons:

• the Audit and Risk Committee has reviewed all non-audit services to confirm they do not affect the impartiality and objectivity of the auditor, and

• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, including reviewing or auditing the auditor’s work, acting in a management or decision-making capacity for Telix, acting as an advocate for Telix, or jointly sharing the economic risks and rewards.

A copy of the auditor’s independence declaration, as required under section 307C of the Corporations Act 2001, is included in this Report.

Rounding

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 are rounded off in accordance with the instrument to the nearest thousand dollars or, in certain cases, to the nearest dollar.

Corporate governance

Telix complies with all relevant recommendations outlined in the fourth edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations. An overview of Telix's corporate governance practices is included in the Governance section of this Annual Report. The full Corporate Governance Statement is available at www.telixpharma.com/investor-centre/corporate-governance

1. Trade name subject to regulatory approval.
2. Trade name subject to regulatory approval.