LNTH - NASDAQ

Good morning. Welcome to the Lantheus Second Quarter 2020 Financial Results Conference Call. This is your operator for today's call. [Operator Instructions] This call is being recorded for replay purposes. A replay of the webcast will be available in the Investors section of the company's website approximately 2 hours after the completion of the call and will be archived for at least 30 days. I will now turn the call over to your host for today, Mark Kinarney, Vice President of the Investor Relations. Mark?

Thank you. Good morning, and welcome to today's call. With me are Mary Anne Heino, our CEO; Paul Blanchfield, our President; and Bob Marshall, our Chief Financial Officer. Mary Anne will begin the call with introductory remarks and then turn the call over to Paul to provide a strategic and operational update. Bob will cover our financial results and provide updated guidance. Mary Anne will provide closing remarks, and then we will open the call for Q&A. This morning, we issued a press release, which was furnished to the Securities and Exchange Commission under Form 8-K reporting our second quarter 2023 results. The release and today's slide presentation are in the Investors section of our website at lantheus.com. I would like to remind you that any comments made during our call today could include forward-looking statements. Actual results may differ materially from these statements due to a variety of risks and uncertainties. Please note that we assume no obligation to update our commentary or any forward-looking statements, except as required by applicable law even if actual results or future expectations change materially. Please refer to our SEC filings for a detailed discussion of these risks and uncertainties. Discussions during this call will also include certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures is also included on the Investors section of our website. It is my question to now turn the call over to our CEO, Mary Anne.

Thank you, Mark, and good morning to everyone. I am so pleased to share that Lantheus delivered yet another solid quarter. with reported revenue of $321.7 million, up 44% year-over-year. We continue to focus on our commitment to innovation and operational excellence and ultimately, to making a meaningful difference in patients' lives. In fact, in the first half of 2023, we impacted a life of more than 3 million patients. Outside the U.S., we are pleased to note that our PSMA PET imaging agent will soon be available to prostate cancer patients in Europe. Curium, our European partner, announced last week that they have received marketing authorization for Phil Cary from the European Commission. Lantheus has been a recognized leader in nuclear medicine for more than 65 years -- and we believe our differentiated capabilities uniquely support our position as the leading radiopharmaceutical focused company. Our expertise and commitment to bringing unique products have differentiated clinical value or why we are the clear market leader with both PS&A with clarify and with our ultrasound-enhancing agent DEFINITY. It's a defining time for our industry as the renaissance underway in radiopharmaceuticals was clearly evident at the recent Society of Nuclear Medicine and Molecular Imaging, or SNMMI, annual meeting. The breadth of attendees from across medical specialties and the increased focus on radiopharmaceuticals, including diagnostics, biomarkers and therapeutics speaks to the increased adoption and importance of these innovative products to the health care community. RD's expertise in radiopharmaceuticals and our proven ability to successfully commercialize products have made us the partner of choice in this space and enabled us to expand our pipeline with late-stage radio therapeutic candidates. This includes PNT2002 for prostate cancer and PNT2003 for neuroendocrine tumors. We also have earlier-stage assets, such as MK-6240, our F-18 labeled PET diagnostic imaging agent targeting tau-tangles for Alzheimer's disease and our novel fibroblast activation protein alpha or fat imaging agent, which recently entered the clinic. It's an exciting time to be in radiopharmaceuticals and as the leading radiopharmaceutical focused company, we are committed to advancing our portfolio of leading products and late-stage product candidates to deliver better patient outcomes for those we serve. Before I turn the call over to Paul, I would like to take a minute to note recent development in the PSMA PET imaging class, including the recent approval of an additional F-18 based agent. We believe the health care community is well served to have a broad set of choices available. We're also confident that PSMA PET with PYLARIFY offers clear clinical and commercial differentiation. Clinically, PYLARIFY offers the best combination of both isotope and F-18 and our unique and very PSMA targeting ligand. It's important to note that each of the approved F-18 PSMA agents are new chemical entities with unique pharmacokinetics as well as corresponding pharmacodynamic profiles. We believe the clinical value of PYLARIFY was well demonstrated in our pivotal trial. These trials for PYLARIFY, CONDOR and OSPREY, both demonstrated high predictive value, positive predictive value which, by definition, part leads to a low rate of false positive. Additionally, it is worth noting that the newly approved F-18 PSMA agent in the US includes an explicit warning and precaution in its label that recommends because of the associated risk of false positive interpretation that health care professionals should consider multidisciplinary consultation and histopathological confirmation or biopsy when clinical decision-making hinges on uptake only in the prostate and/or prostate bed region or only on uptake interpreted as borderline in patients with suspected recurrence. We believe the advantages of PSMA pet with PYLARIFY are clear, robust and well documented in scientific literature and/or package insert. With that, I'll now turn the call over to Paul to provide a strategic and operational update.

Thank you, Mary Anne, and good morning, everyone. Leading the way for Lantheus is PYLARIFY, which delivered sales of $210.5 million, representing 61.7% year-over-year growth and approximately 8% sequential growth from the first quarter of 2023, with the vast majority of our sequential growth driven by our existing accounts. We believe PSMA with PYLARIFY offers sustainable competitive advantages that will enable it to remain the number one PSMA PET imaging agent, even with the approval of additional competing agents. PYLARIFY’s clinical differentiation includes being the only PSMA PET imaging agent to have measured change in intended patient management for 99% of enrolled patients in a registrational biochemical recurrence or BCR study with results having been published in a peer-reviewed scientific journal. Our pivotal Phase III CONDOR study demonstrated that nearly two-thirds of BCR patients with negative or equivocal conventional imaging results at inclusion had a change in intended management after being scanned with PYLARIFY. PYLARIFY also demonstrated high to very high intern and intra-reader agreement which we believe provides confidence in the consistent interpretation of PSMA PET with PYLARIFY scans. Scientific literature broadly supports F18s image clarity advantages versus other isotopes used in PSMA PET imaging. Our pivotal studies scientific research, KOL feedback and guidelines, all demonstrates the differentiated clinical value of PSMA PET with PYLARIFY. PYLARIFY also has the largest dedicated commercial team and significant adoption as demonstrated by the more than 200,000 PYLARIFY scans performed since launch. Broad payer access, including transitional pass-through status, a geographically diverse multi-partner PMF supply network, including both commercial and academic partners and sustain supply reliability. Finally, PYLARIFY has a nearly two-hour half-life versus 68 minutes for Gallium 68 products, which we believe offers more flexible dose administration advantages for imaging centers and the patients they serve. There have been promising developments in the reimbursement landscape as the Centers for Medicaid and Medicare Services, or CMS, recently requested public comments our proposed hospital outpatient prospective payment system. CMS put forth several proposals, including for radiopharmaceuticals for the first time since 2008, separate payment for radiopharmaceutical diagnostics, following expiration of transitional pass-through status. We are working with our industry partners and other stakeholders to strongly advocate that CMS adopt this important proposal, while simultaneously working with Congress to pass the FIND Act to ensure that patients maintain access to innovative diagnostic radiopharmaceuticals, including PYLARIFY. We are positive about the future and the impact we continue to have on men living with prostate cancer. In our microbubble business, DEFINITY maintained its strong momentum with second quarter sales of $70.5 million, up 13.2% year-over-year, and remain the clear market leader in the U.S. ultrasound-enhancing agent market. Contributing to year-over-year growth was an increase in overall health system procedure volume as patients as visits continued to rebound in this post-pandemic environment. We expect these trends, combined with our continued focus on educational programs and promotional efforts to help sustain our momentum in the second half of the year. As Mary Anne mentioned, we have continued to expand our portfolio and pipeline, including PSMA targeted radio therapeutics. To realize this potential, we continue to work closely with our partner, POINT Biopharma to progress PNT2002 across R&D, supply chain, manufacturing and commercial readiness. We received fast track designation from the FDA in April and expect to read out top line data from SPLASH, the Phase 3 registrational trial later this year. SPLASH is designed to evaluate the efficacy and safety of PNT2002 in patients with metastatic castrate-resistant prostate cancer who have progressed following treatment with an androgen receptor pathway inhibitor, or ARPI. The study has three phases: dosimetry, randomized treatment and long-term follow-up. SPLASH commenced with a 27 patient safety and dosimetry leader, after which patients were randomized 2:1 to receive either PNT2002 or the alternate ARPI therapies like abiraterone or enzalutamide. In total, 412 patients were randomized. The primary endpoint is radiographic or imaging-based progression-free survival as assessed by blinded independent central review. At the time of primary endpoint analysis, we will also perform an interim analysis on overall survival, which could provide important information for our future discussions, with the FDA. As is custom in long-term oncology studies, final overall survival analysis will be performed when data have matured sufficiently. When we announced our collaboration with Point in November, we estimated a US total addressable market for PSMA radiopharmaceuticals of $3.5 billion. With the approved PSMA radiotherapy set to exceed $1 billion in sales this year, even amidst supply disruptions, we believe this market could be larger. Needless to say, we look forward to progressing PNT2002 for men with prostate cancer and to sharing top line data in the second half of this year. I'm pleased to note that this quarter, we completed our integration of Servo Technologies and its asset MK6240, a clinical-stage pet imaging agent for Alzheimer's disease which is already being used as a biomarker in more than 60 clinical trials. CAF imaging has the potential to play an important role in patient staging and patient selection for future treatments. We are particularly encouraged by the proposed guidelines from the Alzheimer's Association and the National Institute on Aging for diagnosis and staging of Alzheimer's disease that incorporates how pet as well as the approval and regulatory submission of new therapies, such as lecanemab and donanemab. We look forward to sharing more progress on MK6240 and its potential in the future. We have also progressed our novel FAP alpha-targeted copper 64 label PET imaging agent. In collaboration with Ratio Therapeutics, we initiated a Phase I study evaluating the pharmacokinetics, biodistribution and radiation dosimetry in adult healthy volunteers. FAP is over expressed in the tumor micro environment specifically in cancer-associated fibroblasts, which are believed to modulate tumor progression and immune response. The ubiquitous expression of fat across nearly all epithelial-derived cancers, paired with the low expression in normal tissues, makes it a unique target to focus on for tumor imaging for a wide variety of cancers, including breast, pancreatic, lung and stomach cancer. Following the completion of the healthy volunteer study, we plan to progress to a Phase I study in cancer patients. I will now turn the call over to Bob for a financial update.

Thank you, Paul, and good morning. I will provide highlights of the second quarter financials, focusing on adjusted results unless otherwise noted. Net revenue for the second quarter was $321.7 million, an increase of $98 million or 43.8% over the prior year period. Earnings per share for the second quarter were $1.54, an increase of $0.66 or 73.8% over the prior year. Turning now to the details, beginning with radiopharmaceutical oncology. The category contributed revenue of $211.3 million of sales, up 61.1% over the prior year with Polar delivering $210.5 million of sales, up 61.7% over the year-over-year. Precision Diagnostics recorded $97.6 million, up 12% from the prior year quarter. Sales of DEFINITY were $70.5 million, 13.2% higher as compared to the prior year quarter. TechneLite revenue was $21.6 million, up 11.1% from the prior year due to mainly to the realization of opportunistic sales in the quarter. Lastly, strategic partnerships and other revenue was $12.8 million, driven primarily by MK-6240 and the RELISTOR royalty. As was noted in this morning's RELISTOR press release, we sold our rights to the RELISTOR quarterly net sales royalty stream, though we have retained the rights to any future potential milestone payments. I will provide some additional details just ahead of our updated guidance discussion. Gross profit margin for the second quarter was 69.6% and an increase of 359 basis points over the second quarter 2022 results on a similar basis. As has been the case in recent quarters, the increase is due mainly to favorable volume and product mix led by PYLARIFY and DEFINITY, but also lower logistics expenses, partially offset by generally higher overhead costs. Operating expenses were 345 basis points favorable over the prior year at 22.9% of revenue, which was in line with our previously guided expense levels. As was noted last quarter, we continue to invest in sales and marketing efforts with an expansion of our PYLARIFY sales force intended to support and expand adoption, which demonstrates our confidence in the underlying PSMA PET imaging market. Within G&A and R&D, while the ERP implementation and advancement of our pipeline continue, we are also investing in infrastructure to support PYLARIFY’s growth in addition to activities associated with the point and MK-6240 programs. Operating profit for the quarter was $150.1 million, an increase of 69.4% over the same period prior year. Total adjustments in the quarter totaled $25.9 million before taxes. Of this amount, $12.7 million and $12.4 million of expense are associated with non-cash stock and incentive plans and acquired intangible amortization, respectively. Also during the quarter, we reduced our net contingent liability accrual by $7.6 million and recorded a fixed asset impairment of $6 million. The remainder is related to acquisition and other non-recurring expenses. Our effective tax rate was 26.7% in the quarter. The resulting reported net income for the second quarter was $94.1 million and net income of $19.6 million on an adjusted basis, an increase of 74.3% over the prior year quarter. GAAP fully diluted earnings per share were $1.33 and $1.54 on an adjusted basis, an increase of 73.8% over the prior year quarter. Now turning to cash flow. Second quarter operating cash flow was a use of $32.3 million as compared to cash provided of $72.6 million in Q2 2022. Capital expenditures totaled $10.7 million, in line with expectations. Free cash flow, which we define as operating cash flow less capital expenditures, was a use of $43 million a decrease of $111.2 million from the prior year period. During the quarter, the company satisfied its obligation under the contingent value rights issued in the Progenics acquisition by paying $99.6 million, broken down between operating cash flows of $95.9 million and the balance within financing cash flows. Additionally, the company remitted both Q1 and Q2 tax payments in April and June, respectively, totaling $44.5 million. Cash and cash equivalents, net of restricted cash stood at $414.1 million at quarter end. We continue to have access to our $350 million undrawn bank revolver and are comfortable with our very strong liquidity position. Before turning to guidance, I would like to provide some additional details regarding the sale of the RELISTOR royalty stream. lantheus retains the right to any future milestone payments and received an initial cash payment of approximately $98 million before tax in exchange for royalties. This action will result in a reduction of approximately $13 million of revenue and approximately $0.14 of earnings per share, both split equally between the third and fourth quarters of this year. Strategically, we believe this unlocks significant value today, as we focus on our core businesses defined Follow disease to deliver better patient outcomes. Turning now to our guidance for the third quarter and updated guidance for the full year, which incorporates the financial impact of the RELISTOR divestiture. We forecast revenue to be in the range of $310 million to $315 million for the third quarter of 2023, an increase of approximately 30% and 32% over the third quarter of 2022. We are updating our full year view to take into consideration second quarter performance as well as the sale of RELISTOR royalty stream. Therefore, we now forecast full year revenue to be in a range of $1.245 billion to $1.27 billion from the prior range of $1.23 billion to $1.27 billion. The implied PYLARIFY full year rate is now $835 million to $860 million, up from the prior range of $820 million to $860 million. We expect DEFINITY to continue its momentum and also expect MK-6240 to now contribute $15 million of full year revenues rather than the prior guide of $10 million. Turning now to earnings. Adjusted EPS should be in the range of $1.30 to $1.35 for the third quarter as we continue to invest in additional sales and marketing efforts as well as infrastructure to support company growth. We now expect adjusted full year EPS to be in the range of $5.60 to $5.70 per share versus the prior range of $5.45 to $5.70. With that, let me turn the call back over to Mary Anne.

Thank you, Bob. In closing, the second quarter was yet another solid quarter, anchored by our market-leading product, PYLARIFY and DEFINITY. Our commitment to execution and excellence are the cornerstones on which we operate. At Lantheus, we are driven by our purpose to Find, Fight and Follow disease to deliver better patient outcomes. We believe that radio pharmaceuticals present significant potential, both diagnostically and therapeutically in what has become a modernized approach to personalized medicine. You see if a patient is avid for the target, you treat the disease at the target, and then you monitor patient response via imaging. By investing in innovative diagnostics and therapeutics, we are positioning Lantheus to remain the leading radiopharmacy focused company. Products with sustainable advantages, such as PYLARIFY and DEFINITY have been the key to our long-standing success, and we are proud to be able to equip healthcare professionals with the tools they need to make a significant difference in the lives of patients. With that, Bob, Paul and I are now ready to take your questions. Operator, please go ahead.

Thank you. [Operator Instructions] Your first question is comes from the line of Roanna Ruiz from Leerink Partners. Your line is open.

Hi, morning, everyone.

Good morning, Roanna.

Good morning. So I wanted to ask about your guidance raise first off. What are the main drivers behind that? And could you talk a bit about your level of confidence in reaching possibly the high end of that range?

So I'll start and then people can contribute. So yes, you've noted the fact that, I guess, by removing the RELISTOR royalty stream out of the back half of the year, that -- and keeping our top end from the prior guide, that is effectively the raise that we're trying to point you to. Where it's coming from, obviously, is an outperformance in Q2. We're really pleased that it was broad-based across all three of the categories. And as we look to the future, we have a lot of confidence. And that was one of the reasons that we did raise the bottom end of the clarify range up more than double the -- over the beat of what we had provided this guidance in the prior quarter. So from there, those are, I think, the main drivers of the revenue guidance performance. And if you look at the EPS part of it, it's similar. I mean the performance on EPS is also an accumulation of our outperformance in Q2, which then allows us to continue to invest in the business, which I think continues to demonstrate our confidence in driving growth.

Maybe I'll just add. Bob, I’m very much agree with that. I think we're pleased with the continued adoption, specifically of PYLARIFY including its position as the number one PSMA PET imaging agent. We believe it is clinically and commercially differentiated. Obviously, we are cognizant that we have new competition over the last couple of weeks. That's been expected. And indeed, we believe that physicians in prostate cancer patients are well served to have a broad set of choices available. The additional voice and awareness will help promote the overall benefit of PSMA PET for prostate cancer patients. And as the clear market leader, we believe that we can benefit from that. We do believe our product is clinically and commercially differentiated. It is obviously a dynamic market, but we remain confident about the potential for PYLARIFY and the overall PSMA PET imaging category.

Roanna, I'll just add one sort of two comments here that I'd like everyone to hear, and the first is our confidence. And as Bob said, effectively by having to remove RELISTOR revenue and the associated EPS in the back half of the year, that is an effect a raise to what our prime guidance was. And you also see our bottom guidance coming up. And this, I think, relates to my second point. First, we are incredibly confident in and what we are accomplishing in the market here. And we're very also pleased to see the markets rebound, especially the return of significant patient volume to the DEFINITY market. But the second thing that we are really attending to as a team is trying to be tighter in the guidance that we offer you so that you have more -- you have better line of sight to what we're anticipating for the business and you can build your models about that. So I'd say that's the other concerted effort that you see with the guidance that we offered here.

All right. Thank you. And for your next question, it comes from the line of Yuan

Good morning, and thank you for taking my questions. So my first one is, we saw the commercial loan for another F 18 based PSMA PET imaging agent Posluma at SNMMI Conference and thank you for hosting me at your training session during the conference. Investors have been asking us about the difference between PYLARIFY and this new one Posluma. For these two molecules, can you please comment on the clinical data presented so far between these two? Is there any clinically meaningful difference, understand they are not compared in the same trial? Then I have a quick follow-up. Thank you.

No, thank you for the question. I guess, I'll take this first. First, let me say, I know there's been a lot of chatter from the market about the F-18 product being alike, and it's interesting at this time, and I'll comment. But I really wish the more of the chatter was about what we're doing for patients and what PSMA had imaging represents an innovation to the prostate cancer treating community. It's interesting about this feedback because it seems that the generation of it is from one of the gallium PSMA agent offers into the marketplace, and that makes it fairly ironic, and I'll explain why. The two commercially available gallium PSMA agents in the US, both employed a 505(b)(2) regulatory approach to seek approval. Essentially, they referenced the safety and efficacy data generated by UCLA and UCSF and then settlement and completed a bridging PK study to demonstrate their equivalency to those academic products. In direct contrast the two F 18 PSMA agents employed a 505(b)1 recap or an NDA application in which essentially you must demonstrate that you were uniquely different from any other approved agents. The two of 18 approved actions do share a common isotope F 18. And I think as we noted in our comments, it's well supported with an abundance of scientific literature that F 18 generated images are clearer than those generated by gallium. The two F 18 agents are uniquely different in the PSMA targeting ligand that is attached to the F 18 isotope. And that conveys into important PK and PK differences which we feel are well documented in the reported results of our two pivotal trials. In both those trials, we reported very high positive predictive value, which, again, as I noted earlier, correlates to low – low positive rates in the trial. So again, I think somewhat ironically, it'd be much more credible to say that the gallium PSMA agents in the US are like, and the F 18 agents in the US are uniquely different. We can go into more scientific discussion of the actual results of trials, but I think those are all well published. The pivotal trials are well published in peer-reviewed journals. And so they are there available for direct comparison.

Got it. Thanks for the clarification. Well, we also heard comments from the other earnings calls that there are adjustments or changes in practice guidelines that do not favor F 18-based PSMA PET agents related to false positive rates, particularly in bone leading -- can you clarify if you have seen such changes and we will appreciate any extra color?

Again, this is one I'm almost going to label as desperately seeking science because in looking at those comments, what we've come to appreciate is that the guidelines that are being referenced are the European guidelines. PYLARIFY was just approved in the European Commission, but is not yet included any guidelines. Those guidelines referenced the only PSMA – F 18 PSMA agents that is approved in Europe, which is an agent that is not approved in the US nor under development in the US facility. Why those guidelines would be referenced when you have such outstanding exemplary guidelines in the US with the NCCN, SNMMI and AUA is somewhat bewildering to us. And I will -- I tend to confirm to you fully set those guidelines, the US-based guidelines from those exuberate agencies have not changed their stance on PYLARIFY and its value in being used in PSMA PET imaging and in patient selection for PSMA-based therapeutics.

Thank you. And for your next question. It comes from the line of Anthony Petrone from Mizuho Americas. Anthony, your line is open. Please ask your question.

Good morning, Anthony. Anthony?

Once again, Anthony Petrone from Mizuho Americas. Your line is open. Please ask your question.

Kyle, why don't we move forward and we can come back to Anthony?

Yes, sure. No worries. One moment for your next question. And your next question comes from the line of Richard Newitter from Truist Securities. Your line is open.

Hi. Thanks for taking the questions. So I wanted to maybe just start off on PYLARIFY. Any color that you can give on how sales and performance tracked throughout the quarter and maybe even into the early part of 3Q? And specifically, did you see any changes or do you see the new competitor -- the new F competitor show up at all later in the Q2?

Thanks for the question. I think we're confident in the trajectory that we saw over the course of the second quarter, which was in line with our overall expectations. As Bob had noted in the last quarter, we do see impacts from the holidays. So in the second quarter, it would be Memorial Day. We see natural impacts than we would expect over July 4 and then the future Labor Day, Thanksgiving and Christmas. But overall, we're very comfortable with the trends we saw. We're not going to comment on what we've seen in the third quarter to date, other than Bob reiterating the guidance and raising what we saw and expect in the second half of the year. So overall, we remain confident. As I said earlier in my prepared remarks, we expected an additional competitor to come on board. We are very comfortable with our market-leading position as the number one PSMA pet indigene aged. We are very pleased with the overall growth of the market that is now annualizing and our estimates of approximately $1.2 billion -- and that's versus the TAM that we shared back in January and noted there could be upside of $1.6 billion. So we still are very pleased with the uptake of Polarify, the uptake of the overall market. and where we're going to go going forward.

And Rich, this is Mary. I'm just going to add what I say, if each time on these calls, I would like everyone to appreciate and something that we're thrilled there. But we are still in a launch here -- this is a brand-new market, a brand-new category, and we continue to be incredibly confident in what we see as a potential growth. As Paul mentioned, we're already dollarizing at $1.2 billion. We see literally a TAM of $1.6 billion, and we see upside on that based on, again, evolving physician intent to use these products in their management, their diagnosis and management of prostate cancer

All right. Thank you. One moment for your next question. And for your next question, it comes from the line of Matt Taylor from Jeffries. Matt, your line is now open.

Hi. Thank you for taking the question. Good morning.

Good morning, Matt.

Good morning. So I wanted to see if you could comment a little bit further on some of the reimbursement developments that you talked about with CMS asking for public commentary and the Find Act is kind of running in parallel -- maybe you could discuss some of the potential outcomes that you see there. Could you help us understand the timing of when some of these things had happened and maybe which of those you view as most likely?

Thanks for the question, Matt. So I think we were obviously pleased as we mentioned in our prepared remarks that CMS released their proposed OPPS rules for the calendar year 2024 in the middle of July, in those proposed rules for the first time since 2008 or 15 years, they included proposed rules, five of them, that it would adjust the reimbursement for innovative radiopharmaceutical diagnostics and two of which would dramatically change the current transitional pass-through payment status effectively as they proposed potentially beginning next year. And so we're naturally very pleased that CMS has heard the need for continued patient access to these innovative radiopharmaceutical diagnostics and we are working with stakeholders as well as members across the industry to submit comments and to help CMS understand the importance of specifically a number of their proposed rules, which could go into effect in calendar year 2024. Generally speaking, CMS finalizes its rules for the upcoming year in the early December, late November time frame, after which -- before which they receive comments. And so we're obviously working with them and our industry partners to ensure that they understand the importance and are optimistic that those could go into effect in next year. That said, we've always said we have a multi-pronged approach. And so we are also supporting the FIND Act, both in the House and in the Senate. The FIND Act was reintroduced in the house on February 27. It has 34 co-sponsors, including bipartisan support as the co-sponsors. It was also referenced in a recent House Energy and Commerce Committee meeting on July 18, where there were several members made comments about the importance of supporting the FIND Act. And then it was introduced in the Senate on May 9 and also has a bipartisan sponsorship. And so we're naturally hopeful that the FIND Act will be included in a legislative hearing this fall and being passed in due course. But as we said, we have a multi-pronged strategy, both through CMS and through the FIND Act as well as other commercial strategies to minimize the potential impact on pass-through and most importantly, ensure that prostate cancer patients continue to have access to innovative radiopharmaceuticals diagnostics, including clarify the market-leading agent

Thank you. As to your next question, it comes from the line of Anthony Petrone from Mizuho Americas. Anthony, your line is now open.

Thanks, and good morning, everyone. Congrats on the strong quarter here. Maybe just high level on looking at the PSMA prostate cancer testing landscape and just in terms of share as we go forward here, we do have the third competitor in the US market. Maybe just thoughts on how share is going to trend now with three options in the marketplace? And then one quick follow-up will be on Europe. Just a recap on how we should be thinking about the rollout of PolariPy in Europe? There's fewer pet facilities, but yet there's a higher incidence of prostate cancer, so how should we be thinking about the rollout in Europe? And I have one quick follow-up.

Anthony, I'm going to start by -- I'll speak to what our expectations are from a share perspective. The share is a fixed pool, it's 100%. So the only thing you know for sure is that any participants have to share that number. What we're really confident about is that we will remain a demanding leader in this marketplace from a market share perspective. For this quarter, we were reporting approximately 70% is our estimated share. And again, I need to be clear about that because there is no -- unlike the pharmaceutical industry, there is no third-party here that explicitly and very carefully follow and track market share. So we do have to estimate it. But our estimate is, again, 70% of the market, and we continue to be the market leader, and we will continue to be the market leader, which is a really great place to be. And your Europe question, it's not one that we will answer specifically this time, although I really appreciate your comments about the infrastructure of PMS being less, but yet the incidence and prevalence for gentlemen prostate cancer being higher. What I will say is, we're really confident with our partner, Curium, is the leading PMS provider. They have the largest network of PMS throughout Europe. And so that's, as you know, from our launch, that's an important, important access point that really once you have the infrastructure, then you can drive the demand. But it will be our partner doing that, so it would be really early in probably, I would say, inappropriate this time for us to offer any projections there.

Thank you. One moment for your next question. And for your next question is come from the line of Justin Walsh from Jones Trading. Just your line is now open.

LNTH1363S is still early, but I was wondering if you can comment on the potential advantages and disadvantages of copper 64 pet compared with fluorine 18 pet imaging. And sort of related to that, why use copper for targeting fat and flooring for PSMA? And is there some concern that the future entrance of copper-based PSMA agents could pressure clarify down the road? Thanks.

I'm going to comment to your question generally, and then we can absolutely jump deeper into the science on, but I think what you're seeing here for the larger marketplace is the intent to deploy a variety of isotopes and then exploit, what are the individual differences between the different 64 is a really good into for pet. It has a short positron range, which is just a little bit longer than F18 and the longer half-life. So remember, with the positron range, that's where you get clarity of image. So it has -- it's a little bit longer than that they see but not noticeably. So you get that nice clear image. But with a longer half-life really distinct commercial advantages about how to distribute your product. And so I will say copper production has a long way to go in terms of scale-up. Cerium is the only company that we're aware with a commercial copper 64 products in the U.S., which is close to that's an orphan indication. So the overall value moving that's available that is probably lower. But again, I would point you to what we're seeing in the larger marketplace. And this goes to some of the outputs as well as some of the other isotopes. The intent within radiopharmaceuticals to employ and deploy these isotopes across a variety of imaging and therapeutic products that really make for me, as I said earlier, my really personalized medicine. And so that's kind of our stance. I won't do a direct comparison at 18 comp other than what I just talked to you about the positron range and then the half-life. But really, you always have to think about the full product. What is the isotopes. What is the ligand or other being plated or conjugated and look at the total value being offered by that product.

All right. Thank you. And for your next question comes from the line of Larry Solow from CJS. Larry, your line is open. Please ask your question.

Great. Good morning. Just a clarification first and then a question. So your guidance essentially is on 45, 570 to $574 584, right? -- apples for apples, including real store.

Yeah. It's $0.14 impact in the back half of the year. So it was a $50 to $70 million. So yes, that would be the equivalent would be -- that would have been the equivalent yes, but or don't include

Absolutely. Okay. Just a question on -- just a follow-up on just on adoption trends. As you go forward and more recently, are you -- is it more expansion on existing doctors you're getting new doctors scans averages are they continuing to go upwards. And then also in terms of -- are you seeing more penetration for initial staging of high-risk patients or suspected by recurrent is there a different pay or you have better penetration?

Larry, that was about 25 questions in one. I'm going to turn it to Paul.

Thank you. Larry, good morning. Thanks for the question. I think where we see PYLARIFY and really the added penetration, I think this has really followed a trend that we had expected. If we go back to what we talked about last year, we were really about adding additional accounts, and those were metrics that we shared as we were having more imaging centers, whether they be government facilities, hospitals or freestanding imaging centers, adopt PYLARIFY and be able to offer it to their referring physicians. I think what we've seen over the last couple of months and certainly in the second quarter was the -- there's only so many accounts we're going to be adding. And so our real focus has been driving adoption and raising awareness amongst referring physicians. That does include new physicians that have not yet adopted PSMA PET imaging, including with PYLARIFY. But I would say it's increasingly ensuring those physicians understand the breadth of patients with which they can prescribe and the benefits of PSMA pad with PYLARIFY. Naturally, the recurrent setting, where we had a previous conventional imaging pet imaging agent approved in that setting was an early adopter. I think we've seen increased adoption in the initial staging and going down from high -- very high risk to high risk to intermediate unfavorable, as we would expect in a launch. And then naturally, with Pluvicto being approved last year, we've also seen a like minor some scans to support that patient selection. So, I think things are generally following the trend that we would expect where that existing account growth or the activation of referral physicians has really been a key focus of ours. And as Bob mentioned, we've made investments in our sales and marketing demand-generating activities, which we think is appropriate given where we are, but also demonstrates the confidence in the growth potential to not only continue to grow this $1.2 billion category, but also expand what the potential is as guidelines and medical practice continues to evolve.

That was about 23 of 25 question.

Thank you. And for the next question, it comes from the line of David Turkaly from JMP Securities. David, your line is open.

Hey good morning. Just looking at slide seven in the deck, and you talked a lot about the commercial and clinical differentiation on PYLARIFY, but we look at the warnings and precautions in the commentary there, and I really just have to get your thoughts on do docs -- what do you assume that they're going to look at that and change their practice, or do you have any precedent to look at where there was something like that clinically or a different label that actually impacted practice? Or do you feel like the docs are going to heed these warnings, or is it something that -- any thoughts that you have on sort of what impact that might have would be great.

Yeah. I think it's a really bear question, and I'll answer it this way. We are absolutely committed as we always have then as a company to operating within our kind of field of play, which is the United States reg market is your package insert your label. That is the basis for your right for promotion, the basis for your right for shares, especially from a commercial perspective, from sharing clinical data about your products, and we are incredibly committed to that. I think your comment about will doctors really changed their mind based on a single part of the label. I don't think so. I think what's much more relevant here, is the clinical experience that physicians already have with PYLARIFY. We've been in the market is now over two years. And I think by any means measurable, and you would call this a blockbuster launch. And I say that -- I'm proud to say that, but I'm much more proud about, why that happened? That happened, because the level of innovation that was represented by PSMA imaging, was correlated and matched by our commercial execution, the excellence with which we brought this product to physicians and to the market. So I think that is really going to be much more the basis of how physicians choose going forward. What products to use when scanning their patients? When it is relevant to necessary, they do refer back to packet inserts to make sure that they're own practices kind of in line with that. We bought particular attention to it today, only because we've been offered significant for back about the attempt to make a claim about F 18 agents in general being alike, and we wanted to clarify where the products are different. And as I said, most distinctively, they're different in that they're both their unique new chemical entities that both follow different paths to approval based on the construct of the isotope and the ligand that attached to it.

And I would just add, I do think these matters in the marketplace. I think clinical and commercial differentiation is important. We saw that with our early commercial competitor, where they were approved about six months after us. And if you look at the relative share position, those clinical and commercial differentiators do play out. We welcome, as we expected additional competition with another F 18 agent, but as a fourth-to-market agent, where PYLARIFY has a significant market leadership where over 200,000 patients have been scanned, where this has been used in over 1,000 imaging centers that we've shared. We think we have a market-leading position with sustainable clinical and commercial advantages that will enable us to remain the market leader for many years to come.

Thank you. And we have a follow-up question from Richard Newitter from Truist Securities. Richard, your line is open.

Hi. Thanks for taking my follow-up. I also have two quick ones here. Mary Anne, you had mentioned something about a slight change to your guidance, I think, either philosophy with this updated guide, can you just refresh us on what that meant with a narrower band? And then just the second question is on, the SPLASH trial. You're going to have Novartis PSMA 4 trial probably read out before or around the same time. Investors are naturally going to ask or try to compare between those trials. So Paul or anything you can say about differences between those trials that you'd highlight as people try to compare them. Is that fair? And what do you think would be a reasonable way to compare the PFS primary endpoint? Thanks.

Welcome. So I'll take on your first question, Rich, with kind of what I was trying to convey. I think we have been -- again, we have been through a pandemic and then through a launch, we have not -- we have had our guidance more reflects a wider range just because of the uncertainty of what was going on in the market when it points during the launch. You just -- you know your products going well, you just don't know exactly where it's going. We feel now, and this is what you're seeing in our guidance is somewhat of a tightening of the range or confidence in having better line of sight to what our products do. And it's at both ends and DEFINITY, we're now confident that patient volume is coming back into that market. So the market now represents again the opportunity that it had before the pandemic, and so we have better line of sight in forecasting there. But we also built as a company based on what has been our long-standing pattern of feeding and raising on guidance that it was also fair to our analyst community to try to give a tighter view as to where we think we're heading.

Yes, and probably add here. Yes, Rich, and I don't want you to take the impression that this is new. I actually made those kinds of comments that we were taking that kind of a shift in the new just as Mary Anne has outlined over the last couple of quarters. So we're kind of continuing the trend here of what we had kind of came into the 2023 fiscal year with that kind of a view as we had continued to gain knowledge with a couple of years of experience under our belt, we can see things like holiday schedules and so forth that start to outlined a clearer pattern for us to be able to give, we think, intelligent and guidance ranges.

And to your second question, Rich, about the SPLASH, you are so right that people will be incredibly eager to compare not only the trial design, but the trial results when you talk about PSMAfore and then SPLASH. And you're also correct our market intelligence would also suggest that the PSMAfore data will read out at ESMO, which will precede what we believe what is -- what will be the release and the availability of the SPLASH data. I won't use this time here to try to compare actual trial designs. What I will say that is important is that both PSMAfore and SPLASH are in the same patient population, which is the pre-chemo population. And the -- any comparison to-date has been between the SPLASH dosimetry data, the lead-in data and the VISION trial data, which really are a different patient population. So we'll wait to see. I think the important outcomes that will be looked at will, of course, be radiographic screen progression and then OS. OS data will also trail a little bit because by definition, we have to let that data mature a bit. But I can assure you, there will be lots of discussions about these data, and there'll be many players in the marketplace who will want to understand how the data are different and what they say. I will say, in general, though, and this is something you've heard us say before that from a radiopharmaceutical perspective, One of the things that we see as an absolute constant in this market is the willingness to embrace additional products just because of the supply chains associated with these projects and like and products and like, there is more so than I'd say in other non-radiopharmaceutical categories a willingness for physicians and the desire of physicians have access to more than one type of product. And we think that will be very positive for PNT2002 and PNT2003.

Thank you. One more for your next question. We have a follow-up question from Roanna Ruiz of Leerink Partners. Roanna, your line is open.

Great. Thanks for taking the follow-up. So I wanted to check in about your contracts with the large PMF networks for a second. Like how long do some of these last? And can you remind us, are you planning to add new ones in the near term or revamp some contracts? And could they help guarantee some exclusivity in terms of holding majority preferred morning time manufacturing positions for PYLARIFY and things like that?

Thanks, Roanna. I appreciate the question. So as we've shared in the past, we have a multichannel PMF strategy across the US. We're currently working with 47 PMFs, up almost 75% year-over-year and are able to offer PYLARIFY, it's a little over 95% of the US population just based on drive times and where we do those. A number of our PMF contracts, we've shared publicly go out a number of years, including the 2027 and beyond. We are not exclusive to any individual PMF chain, although some of our partners are exclusive to us. We have been working for this for a number of years to ensure that PYLARIFY is remaining accessible, including in those predetermined manufacturing time slots that we've continued to work through and optimize as medical practice has become more clear. And so we feel very comfortable in our PMF position to be able to continue to provide the market-leading product at the times and days in which our customers require it. We do naturally continue to work with our PMF partners to expand redundancy to create more supply. And we really think that's a unique value proposition that is not replicated by any other PSMA imaging agent, including recently approved F-18 competitors.