Contingent consideration

12 Months Ended

Dec. 31, 2024

27.	Contingent consideration

	ANMI			TheraPharm			OptimalTracers			IsoTherapeutics		ARTMS		Total
		A$’000			A$’000			A$’000			A$’000		A$’000		A$’000
Balance at January 1, 2024		90,493			2,178			83			-		-		92,754
Remeasurement of contingent consideration		11,062			-			-			-		-		11,062
Unwind of discount		12,005			295			-			-		2,078		14,378
Charged to profit or loss		23,067			295			-			-		2,078		25,440
Exchange differences		3,895			265			(10	)		410		1,519		6,079
Acquisition of businesses		-			-			-			7,662		22,492		30,154
Amounts adjusted to intangible assets		-			1,579			-			-		-		1,579
Payments for contingent consideration		(39,657	)		-			(33	)		-		-		(39,690	)
Balance at December 31, 2024		77,798			4,317			40			8,072		26,089		116,316
Current		77,798			-			40			8,072		-		85,910
Non-current		-			4,317			-			-		26,089		30,406
Total contingent consideration		77,798			4,317			40			8,072		26,089		116,316

Balance at January 1, 2023		62,541			1,690			718			-		-		64,949
Remeasurement of contingent consideration		34,275			-			-			-		-		34,275
Unwind of discount		11,033			278			83			-		-		11,394
Charged to profit or loss		45,308			278			83			-		-		45,669
Exchange differences		410			(279	)		(46	)		-		-		85
Amounts adjusted to intangible assets		-			489			(672	)		-		-		(183	)
Payments for contingent consideration		(17,766	)		-			-			-		-		(17,766	)
Balance at December 31, 2023		90,493			2,178			83			-		-		92,754
Current		37,070			-			83			-		-		37,153
Non-current		53,423			2,178			-			-		-		55,601
Total contingent consideration		90,493			2,178			83			-		-		92,754

27.1 Telix Innovations (formerly ANMI)

The Group acquired ANMI on December 24, 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 marketing authorization of the product.

The percentage of net sales varies depending on the net sales achieved in the United States and the rest of the world. The Group also holds an option to buy-out the remaining future variable payments in the third year following the achievement of marketing authorization, if specified sales thresholds are met.

As at consolidated statement of financial position date, the Group has remeasured the contingent consideration to its fair value. The remeasurement is as a result of changes to the key assumptions such as risk adjusted post-tax discount rate, expected sales volumes and net sales price per unit.

The contingent consideration liability has been valued using a discounted cash flow model that utilizes certain unobservable level 3 inputs. These key assumptions include expected sales volumes over the forecast period and net sales price per unit.

The following table summarizes the quantitative information about these assumptions, including the impact of sensitivities from reasonably possible changes where applicable:

Contingent consideration valuation

Unobservable input	Methodology	December 31, 2024
Expected sales volumes	This is determined using actual sales volumes for 2024 and forecasting sales volumes for 2025 and beyond for each region.	A 10% increase / decrease in sales volumes across all regions would increase / decrease the contingent consideration by $1,815,000.
Net sales price per unit	This is determined using actual sales prices for 2024 and forecasting sales prices for 2025 and beyond for each region.	A 10% increase / decrease in net sales price per unit across all regions would increase / decrease the contingent consideration by $1,815,000.

27.2 Telix Switzerland (formerly TheraPharm)

Telix acquired TheraPharm on December 14, 2020. Part of the consideration for the acquisition was in the form of future payments contingent on certain milestones. These are:

•

€5,000,000 cash payment upon successful completion of a Phase 3 pivotal registration trial

•

€5,000,000 cash payment upon achievement of marketing authorization in Europe or the United States, whichever approval comes first, and

•

5% of net sales for the first three years following marketing authorization in Europe or the United States, whichever approval comes first.

The valuation of the contingent consideration has been performed utilizing a discounted cash flow model that uses certain unobservable assumptions. These key assumptions include risk adjusted post-tax discount rate of 12.5% (2023: 13.0%), marketing authorization date, expected sales volumes over the forecast period, net sales price per unit and approval for marketing authorization probability success factor.

The following table summarizes the quantitative information about these assumptions, including the impact of sensitivities from reasonably possible changes where applicable:

Contingent consideration valuation

Unobservable input	Methodology	December 31, 2024
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 / decrease in the post-tax discount rate would decrease / increase the contingent consideration by $79,000.
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 / decrease in the sales volumes would increase / decrease the contingent consideration by $109,000.
Net sales price per unit	The net sales price per unit is estimated based on comparable products currently in the market.	A 10% increase / decrease in the net sales price per unit would increase / decrease the contingent consideration by $112,000.
Approval for marketing authorization probability success factor	This assumption is based on management’s estimate for achieving regulatory approval and is determined through benchmarking of historic approval rates.	An increase / decrease in the probability of success factor by 10% would increase / decrease the contingent consideration by $1,476,000.

27.3 IsoTherapeutics

The Group acquired IsoTherapeutics on April 9, 2024. The Group is liable for $7,662,000 which is payable in cash for performance-related milestone payments that are subject to meeting milestone conditions within twelve months of closing. Subsequent to December 31, 2024, the milestone conditions were satisfied and the associated liability settled.

27.4 ARTMS

Telix acquired ARTMS on April 11, 2024. Part of the consideration for the acquisition included US$24.5 million (approximately AU$37.0 million) in contingent future earn-out payments which is payable in cash following achievement of certain clinical or commercial milestones. All earn-outs which have not otherwise expired will terminate on the 10 year anniversary of completion.

In addition to the above, the contingent consideration includes future royalty payments for a low single to low double-digit percentage of net sales of ARTMS products or Telix products.

The contingent consideration liability has been valued using a discounted cash flow model that utilizes certain unobservable level 3 inputs. These key assumptions include risk adjusted post-tax discount rate at acquisition of 15.0%, FDA approval dates, expected sales volume over the forecast period and net sales price per unit and a probability success factor in relation to ARTMS achieving its clinical or commercial milestones.

The following table summarizes the quantitative information about these assumptions, including the impact of sensitivities from reasonably possible changes where applicable:

Contingent consideration valuation

Unobservable input	Methodology	December 31, 2024
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 / decrease in the post-tax discount rate would decrease / increase the contingent consideration by $235,000.
Expected sales volumes - ARTMS and Telix products	This is determined through assumptions on target market population, penetration and growth rates in the United States and Europe.	A 10.0% increase / decrease in the sales volumes would increase / decrease the contingent consideration by $1,083,000.
Net sales price per unit	The net sales price per unit is estimated based on comparable products currently in the market.	A 10.0% increase / decrease in the net sales price per unit would increase / decrease the contingent consideration by $1,020,000 across the different royalties.
Milestone achievement probability of success factor	This assumption is based on management’s estimate for achieving the clinical or commercial milestones.	An increase / decrease in the probability of success factor by 10% would increase / decrease the contingent consideration by $2,709,000.