Q2 2021 Lantheus Holdings Inc Earnings Call
Ladies and gentlemen, and today's conference is scheduled to begin shortly please continue to standby and thank you for your patience.
Once again today's conference is scheduled to begin shortly please go and thank you to standby and we thank you for your patience.
[music].
Good morning.
And ladies and gentlemen, welcome to the Atlantis Holdings second quarter 2021 financial results Conference call.
Just to show up on your for today's call. Please note that all lines have been placed on mute to prevent any background noise. This call is being recorded for replay purposes and replay of the webcast will be available and you'd be investing.
And of the company's website approximately 2 hours after the completion of the call and it will be archived for 30 days.
And our surgical over to your host for today, Mark and Arnie Senior director of Investor Relations Mark.
Thank you and good morning, welcome to the last year's Holdings second quarter 2000.
Second 1 financial results conference call.
With me on todays call are Mary Anne Heino, and our President and CEO, Bob Marshall, Our Chief Financial Officer, and Paul Blanchfield, Our Chief commercial officer.
Maryann will begin the call with introductory remarks, and then turn the call over to Paul to give an update on the Polaris by commercial.
20th.
Maryann will return to give a business update and then Bob will cover our financial results and updated guidance.
Maryann will conclude the call with 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.
And reporting our second quarter 2021 results.
You can find the release and the investors section of our website Atlantica is dot com.
For those of you not on the webcast you can find the slide presentation and the investors section of our website under the presentations tab.
Before we get started I would like to remind.
Remind you that our comments during this call will include forward looking statements actual results may differ materially from those indicated by forward looking statements due to a variety of risks and uncertainties.
In particular, the impact of COVID-19 on our business results and outlook continues to be our best estimate based on currently.
Available information.
Please note that we assume no obligation to update these 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.
Also discussions during the call we'll incur.
On crude certain non-GAAP financial measures reconciliation of these measures to the most directly comparable GAAP financial measures is also included and the investors section of our website.
With that it is my pleasure to now turn the call over to Mary Anne.
Thank you Mark and good morning, everyone joining us on today's call I'm pleased to report.
Currently a fifth and second quarter was a successful and productive 1 during the quarter, we announced the FDA approval and commenced the commercial launch of <unk>. The first and only commercially available PSNH pet imaging agent for prostate cancer definitive performed well and has maintained its market leadership with more than 80% share.
Share of the U S ultrasound enhancing agent market and.
<unk> sales significantly increased and taken a light delivered stable revenue sequentially. We are committed to building on this positive momentum and delivering value for shareholders.
Before I turn the call over to Paul for an update on a per life I launch I would like to provide.
And on why we believe <unk> is an important addition to the treatment of prostate cancer on.
On may 26th the FDA approved clarify on.
Fluorine 18 label prostate specific membrane antigen or <unk> targeted posited emission tomography or pet imaging agent.
Polaris Identa.
Identifies PSNH and the protein expressed on the surface of prostate cancer cells in men with respect and metastasis, who are candidates for initial definitive therapy and door with respected recurrence of prostate cancer.
Slide 7 highlights the time points, where Polaris I received approval by the FDA.
Starting with the Purple box initial staging describes patients who are candidates for initial definitive therapy and are suspected to have metastasis. While approximately 248000 men are diagnosed annually with prostate cancer. Currently we believe there are approximately 40000 men in this category who maybe.
Both the Polaris eye scans based on suspected and metastasis.
And as shown on the 2 blue boxes. There were approximately 105020.5000 men, respectively, who may have a suspected recurrence of prostate cancer as indicated by rising prostate specific antigen or Psa.
These patients are also candidates for our Polaris I scan based on our awarded indication as.
As you can see overall, a prostate cancer patients' journey from last 15 years or more and is marked by frequent interactions with the physician to determined and treatment course.
We believe Polaris <unk> offers a number of advantages.
L. A as a diagnostic agent first it is a pet modality, which offer several advantages versus current conventional imaging modalities Polaris and <unk> demonstrated a high detection rate of metastatic disease, even in patients with low PSA levels and was not limited by the size of lymph nodes with respect to detection of note.
<unk> vs and visualized.
Pacifists, where C T or bone scan could not as was demonstrated in our phase III Condor study.
Another advantage of Polaris Sai is that it works by binding to P. S. N E. A protein that is over expressed on the surface of more than 90% of primary.
And the static prostate cancer cells.
This enables the reader of a Polaris I'd pet scan to detect the presence and location of prostate cancer cells with greater sensitivity versus imaging modalities that are not specific to Pee SMA.
The third advantage is that Polaris is radio labeled with F 18.
The attribute of F 18 contribute to high quality clear detailed and reproducible images for prostate cancer disease monitoring.
Production of the F 18 isotope at Tech manufacturing facilities, our Pms offers high batch capacity and F. Eighteens 110 minute half life allows broad geographic distribution.
Houston and clinical flexibility and administration.
Finally, a distinct advantage of Polaris Sai will have is that the proprietary patent protected artificial intelligence and medical device software. We have developed to assist physicians with the reading of Polaris eye scans, a promise and place deep learning to quantify and automate.
And the reading of Florida Phi images.
And he promised is designed to provide enhanced consistency and quantitative analysis and precise anatomical context and can enable quantitative reported collectively these benefits potentially contribute to increased reader efficiency and reproducibility of P. S.
<unk> C T image assessments.
Importantly for the manage of prostate cancer. The data from our studies demonstrated Polaris is more likely than conventional imaging to detect the spread of disease and providing more accurate and potentially earlier detection of disease, which we believe will empower doctors along with patients.
<unk> and their families to make more informed decisions about how to treat their prostate cancer.
Based on the data from our clinical trials. We believe <unk> may also have an important role and the clinical development of product candidates for prostate cancer treatment as an important biomarker.
For these clinical applications I went for tubular.
Clarify by its compounding piece of bolus, Scott F 18 or P whale.
Along with our current and phase 2 trial for a 10.95 product candidate P. Y L. Is also included and several ongoing clinical trials for other prostate cancer therapeutics to assess P. SMA expression with leading companies such as buyer Regeneron and <unk> Biopharma.
Pharma.
Before I turn the call over to Paul to provide details on the per 5 clarify launch to date I would like to share with you and image from our Condor trial. This and it shows a 71 year old patient with it bleeds and score of 4 plus 3 and history of radical prostatectomy and external beam radiation therapy and clinical results.
<unk> on an accident pet C T scan, which is the image shown on the right side of this slide.
This same patient was and image with clarify.
And the Polaris high image identified let's common iliac lesions and multiple retro parents and Eagle's tower Perry aortic lymph node regions, which were later confirmed to be prostate cancer by biopsy.
Similar to the results found here clarify similarly demonstrated higher clarity results versus other forms of conventional imaging and our phase III Condor study as well as and other studies.
We are extremely excited about the potential of clarifying now I'll turn the call over to Paul.
Thank you Mary Ann and good morning.
Morning, everyone. It's a pleasure to be here to share our launch progress to date and our plans to maximize the potential of Polaris and <unk> to benefit the U S prostate cancer community, our customers and shareholders.
And the 2 months since the Fda's approval of clarify we have seen strong patient customer.
Health care provider interest and the approval was covered by multiple national and local media outlets.
While today I will not present product specific sales data or current projections for Polaris Sai I we.
We'll share that post approval Polaris <unk> has been used to image patients at freestanding imaging centers hospitals.
And from and facilities with most of these sites already imaging multiple patients.
We are tracking these usage metrics closely and are pleased with the breadth of interest and recurrence of ordering that we are experiencing.
Our manufacturing network now encompasses 12 P. M. S that have been activated to date include.
And the 3 largest metropolitan areas and the U S, New York, Los Angeles, and San Diego, and Chicago, as well as select locations and the southeast and Midwest, the southwest and the northwest.
We expect Polaris high availability to continue to expand across the U S.
Over the remainder of the year.
With broad nationwide availability by year end.
While we are discussing the scope of our Pms network. It is important to add debt, we have diversified our national manufacturing network across multiple partners and are confident that our network will be able to manufacturer Polaris Sai.
And at scale.
F 18 is a well understood cyclotron manufactured isotope and pet manufacturing and pet imaging facilities have significant experience working with F 18.
Indeed.
<unk> is the radio isotope used and almost 2 million doses of STG on.
Basis, and we have contracted with our Pms partners to ensure adequate supply to meet the Polaris high demand.
As our Pms network expands we are also investing and our commercial infrastructure, including hiring and training a dedicated field sales team supported by pillar.
On an annualized specific contracting specialists and other home office resources as well as a market access team.
We believe our commercial footprint combined with the resources of our manufacturing partners will help imaging centers and prescribing physicians better access and realize the benefits of Polaris.
<unk>, which include the advantages of pet imaging. The F 18 radio isotope PSM, a targeting and eventually incorporation of our proprietary artificial intelligence into reading scans.
All of which should make Polaris <unk>, a best in class imaging agent for men with prostate cancer.
Last.
Lastly, a word about patient access.
Our market access team has been laying the groundwork for reimbursement coverage with both governmental and commercial payers.
We remain on track with our internal timelines for obtaining appropriate coding pass through status and progress with commercial payers related to.
Ensure appropriate coverage and payment.
This coordination with our Pms partners commercial teams and commercial and government payers is critical to ensure we make Polaris Sai broadly available to the U S prostate cancer community and ensure that patients and facilities can be adequately reimbursed.
And covered for the use of this important agent.
We believe <unk> will make a significant contribution to the identification and treatment of prostate cancer potentially impacting millions of men over the lifecycle of the product.
I'll now turn the call back to Marianne.
Thank you Paul.
Now I will review other commercial.
Initial products and product candidates and our portfolio starting with the affinity.
And I will speak to the actual revenue results as compared to the prior quarter and prior year, but I'm pleased to report that during the second quarter the affinity demand exceeded pre COVID-19 levels.
And I'll still very much dependent on geography and customers over 50 percentage.
And divide affinity sales teams' promotional efforts are now in person up from approximately 10% at the start of the year our.
Our sales representatives have looked forward to re engaging in person with their customers.
These positive trends combined with our market, leading and stable share position and resulted in definitive returning to strong revenue growth.
Growth as we approach the 20th anniversary of definitive FDA approval at the end of this month, we believe the market opportunity for this agent remains significant and we anticipate definitive sales will continue to deliver sustainable growth.
Moving to its address we are pleased to see sales growing and with increased accessibility.
To customers, we've begun introducing changes to our customer approach, which we believe will optimize and vendors availability and the only approved treatment for pheochromocytoma and Paragon Gliomas.
Several new centers of excellence have chosen to make his debt available to their patients and we have launched a new peer to peer education campaign to increase.
Awareness of et cetera, and its value to patients I am pleased to report that the percentage of as Edgar patients now completing the second dose of therapy is up significantly from last year. This is important because and the long term follow up of the pivotal trial for etc. The overall survival for patients who received 2 doses.
Increased more than twice as long as patients who received only a single dose.
In June we hired Kate Holland, as Vice President Radiopharmaceutical therapy oncology.
And this new role he will lead both the sales and marketing teams for etc.
Changes, how broad leadership roles across commercial functions and.
With Visa's, most recently with harmony Biosciences, and CSL Behring.
We're excited to have paid on board and we're confident that her leadership will contribute positively to our growth plans for etc.
Moving on to our pipeline I'll discuss 10.95, our idea and 131 P SMA targeted therapeutic product candidate.
And rare and treatment of metastatic castrate resistant prostate cancer or and see RPC, Inc.
And arrow, our multicenter phase 2 trial designed as a proof of concept study for <unk> and 95 and NCR P. C. We are studying the combination of $2.95, and <unk> in patients who have PSNH avid disease.
And then go therapy naive and 2 have progressed on abiraterone and.
P S and 8 avidity is determined by a P. While scan in this study.
The primary endpoint is PSA response rate and secondary endpoints include radiographic response progression free survival and overall survival, we plan to enroll approximately 1.
Our 10 and 20 patients in the study.
We now have 25 clinical sites actively recruiting across the U S and Canada and patient enrollment is progressing as planned we will use our data from this proof of concept study to determine the next steps and our clinical development plan for 10.95.
I'll now turn the call over to Bob for a financial up.
100, and thank you Mary Ann and good morning, everyone I will provide highlights for the second quarter financials, focusing on adjusted results unless otherwise noted.
Turning to the quarter revenue for the second quarter was $101.1 million and increase of 53, 1% over the prior year quarter, a comparison and that includes the full impact on run rate.
Revenues from the prior year of the COVID-19, pandemic and our now divested Puerto Rico operation as well as the partial contribution from the <unk> portfolio, namely Relistor.
Beginning with precision diagnostics revenue of $94 million was 43, 6% higher from the prior year quarter.
Sales.
And with the affinity net of rebates and allowances.
$59.8 million 61, 2% higher as compared to the prior year quarter, driven by sequentially higher volumes techno light net revenue was $23.8 million up 27, 3% from the prior year quarter on solid volumes.
<unk> supported by opportunistic generator sales.
Within other precision diagnostics as you know and its performance has continued at similar levels to the previous sequential 4 quarters.
Radiopharmaceutical oncology contributed $2.8 million of sales up 28, 8% from the prior year quarter.
Mainly 2 promising and solid performance from etc, offset in part by the loss of revenue tied to the strategic divestiture of the Puerto Rico operation.
As a reminder, in addition to his edra Polaris <unk> and quadrant reside within this revenue category.
Lastly, strategic partnerships and other revenue was $7.9 million.
And driven primarily by the Relistor royalty also during the quarter. We completed the sale of C. R. E. T O a cardiac artificial intelligence software solution to a strategic partner for the Japanese market.
Gross profit margin for the second quarter was 52, 6% and increased from 41, 7%.
Percent posted and the second quarter of 2020 on a similar basis. The increase is due mainly to the impact of COVID-19, and the prior year comparison and the current year favorable product mix led by definitive volumes was partially offset by new and expanded manufacturing footprint acquired with <unk> on a year over year comparable basis.
As well as <unk>.
Increased moly distribution and logistics costs due to the COVID-19 pandemic.
Operating expenses were 12, 7% unfavorable to the prior year at 42.4 per cent of net revenue driven primarily by the continued annualized <unk> expenses from <unk> offset in part by synergy achievement.
And commercial efforts for definitive and the investments and Polaris high commercialization as well as the continued progress on our 10.95 Aero clinical study accounted for the increased level of spend from the first quarter. This year.
In line with expectations and.
Additionally, it is also worth noting that the company had an accident and a number of cost savings initiatives and.
And the prior year quarter to counter the impacts of COVID-19 on our financials, which drives some unfavorable <unk> in comparison with spend normalization and the current year.
Operating profit for the quarter was $10.4 million or an increase of 38% over the same period prior year.
Total adjustment.
And the quarter totaled $37.2 million of expense before taxes of this amount $4.6 and $6.1 million of expense is associated with non cash stock and incentive plans.
Well.
And as acquired intangible amortization also in the quarter, we recorded a $25.6 million net expense adjustment.
Contingent assets and liabilities, including the.
Clarify CVR contingent liability, which was the main driver the CVR contingent liability fair value is determined quarterly using a Monte Carlo simulation assumptions and the model include the company's debt current forecast estimate of future volatility and.
<unk> activation of an appropriate discount rate.
The remainder is related to acquisition integration and other nonrecurring expenses, our effective tax rate was 9.9% and the quarter and 27% year to date and reflects the impact of the treatment for the capital gain associated with the divestiture of our Puerto Rico operation and contingency.
And you.
Consideration adjustments. Additionally, in the quarter, we released a portion of our uncertain tax position.
Our UTP provisions based on newly acquired information, which had a modest impact of lowering our effective tax rate.
The resulting reported net income for the second quarter was a loss of 26.
Tangent and $10 million and a profit of $7.8 million on an adjusted basis and increase of 71, 6%.
GAAP fully diluted earnings per share were a loss of 39 cents and a profit of <unk> 11 on an adjusted basis and increase from the prior year of 8.1%, notably the earnings per share for the quarter were based on weighted average.
Average fully diluted shares outstanding debt were approximately 58, 7% higher on a year over year basis due to the <unk> acquisition, which closed last June.
Now turning to cash flow second quarter operating cash flow totaled $25.9 million as compared to a use of $2.2 million and Q2, 2020 capital expenditures totaled 2.
$7 million up slightly from the prior year quarter free cash flow, which we define as operating cash flow less capital expenditures was $23.2 million and increase of $27.6 million over the prior year period cash and cash equivalents net of restricted cash now stands at 91.5 million we continue.
To have access to our 200 million Undrawn bank revolver and are comfortable with our strong liquidity position.
Now turning to guidance for Q3 and the full year.
Forecast revenue to be and a range of <unk> 95 to 100 million for the third quarter of 2021 and increase of approximately 7% and 13% over the third quarter of.
Okay.
And the range takes Polaris I and consideration as well as ongoing strength of definitive and the impact of the recurrent summer seasonality on sales. Additionally, we are updating our full year view.
Due to trends and our underlying core business. Therefore, we now forecast revenue to be and a range of 395 to.
2000, $22 million from the prior range of $390 million to $400 million.
Lastly, during the quarter. It is important to note we made a strategic decision to exit 1 of our tech and white contracts, which carries a $5 million.
Net revenue impact on the second half of this year.
Our revenue forecast for Q3 and full year.
And 400 and this impact into consideration.
Regarding adjusted earnings per share, we remain committed to investing and revenue growth initiatives taken together adjusted EPS should be and a range of 5 to 7 times from the third quarter.
We are raising our full year adjusted EPS to account for relative year to date out.
<unk> pigments offset in part by incremental pipeline assets.
Incremental pipeline investments.
As such we are now we now expect adjusted EPS to be and a range of 38 to 42 cents per share versus the prior range of 36 to 41 cents. This forecast does not include a tax.
Credit, we anticipate applying for as part of COVID-19 related government programs and the near term you can find more information on this topic and our 10-Q filed this morning.
Yeah.
Okay.
With that let me turn the call over to Mary Anne.
Thank you Bob as you can see.
The second quarter, it wasn't successful and productive 1 for lantus with the approval and launch of Polaris High strong definitive performance and continued financial strength informing full year guidance, we are confident about our growth momentum and our ability to deliver shareholder value.
Before I open the call to questions I would like to recognize the progress we've.
We've made not only this quarter, but also year to date all against the uncertain backdrop of continued evolving global pandemic events as.
As always the performance of land. He is made possible only by our committed employees, who continue to work tirelessly to guarantee we best serve our patients health care providers.
Tumors and shareholders, who place their trust in us and I recognize thank and appreciate them for their efforts with that Bob Paul and I are now ready to take your questions. Operator. Please go ahead.
Thank you.
As a reminder to ask a question you will need to press star 1 on your.
Cost on to withdraw your question. Please press the proper husky once again star 1.
Yeah.
And our first question comes from the line of Richard No matter from SVP Leerink. Your line is open.
And thanks for taking the.
Total skins.
I wanted to maybe start off on Polaris high contribution that's anticipated or baked into your outlook for the back half you know if you could just give us a sense as to what your what youre, assuming if anything for it for 3 <unk> contribution.
You know the the consensus.
Just kind of had a <unk>.
2021 are about 5 to 6 million placeholder in there and and in light of the $5 million impact that you mentioned are exiting the pecking away.
Ah contract I'm just.
Curious about the moving parts. There did your you know is that the right placeholder for Polaris Fi.
Or is Polaris and maybe a little little higher now that you have approval and what you see there that that counters that $5 million, that's coming out and tech line. Thanks.
Good morning, Rich and I'm going to let Bob take that 1 where and you know we're not giving specific guidance on product specific guidance on clarified but I'll let.
And some general range there.
Alright, good morning, Rich so as you think about the guidance for Q3 Q4, I think you in and the street generally understand that the launch is just getting underway.
And as such I do think that things have been models appropriately.
<unk> got if you will of the of the tagging on that contract and really is coming from the strength of the underlying business and so what I'm really pointing to there is the affinity is doing extremely well and we're.
And we're very pleased with the progress it's making you.
And as you can see and this morning's results from Q2 on the returning to pre pandemic levels and of.
Make it a little bit of seasonality Q3 is generally going to be our lower sort of sales revenue quarter, but fourth quarter is generally our highest revenue quarter for the for the year. So in the forecast is arc and is already considered Polaris high and then we did have it baked some of it earlier, because we had high confidence.
And approval.
And it went forward, but I do think that what has been sort of modeled.
Feels appropriate as we get this underway and as we have continuously said, we think 2022 is the real sort of takeoff for Polaris Sai.
Okay. That's helpful.
What was the reason for the.
But the contract exit and it technically how do we think about that going forward that just $5 million and kind of goes away forever and a new base and then.
And I'm just curious if not for that would your guidance likely had been $5 million tighter on higher all else equal.
Let me just address so the the 5 million.
And it's across the entirety of the second half rich so it would be sort of think of it evenly spread.
Between Q3, and Q4, but Mary on let me yes.
Address the larger issue and your question and that doesn't go away forever. These contracts are negotiated at this point that almost on an annual basis and that's more about the dynamics in the.
The market.
That we that we see occurring really in the in the radio pharmacy market and.
My stance on this and we chose voluntarily not to enter into what we saw as Innoxious contract. This particular contract and we did that we had a similar situation back in 2015, we took the same.
Same decision and I will say honestly at the time it was a much bigger decision for the company because at that time that contract represented a much more significant piece of business for the company and on a much smaller revenue base and we still took the stand to say that we would not enter into innoxious contract, we don't see it as being healthy from the market and that's the same thing were taken and say, but I would not take it as a.
Permanent decision back in that time frame within a few quarters, we were backing a contracted state full contracted status with them.
And that customer and that's I would say the nature of this market and more than anything else.
Okay, but if that if you don't negotiate something on on terms, you find appropriate and reasonable.
That'll be and.
About $10 million that would theoretically kind of have to come out from whatever.
And 1 was thinking about 'twenty 2 per our prior is that is that right.
I'm not going to agree with that statement and rich because that that means that we would not change the amount of business that we have with the other players and the market and <unk>.
Other players and the market.
And annual and pick up more share of the market and that is that is a fluid event that we see.
Okay.
Helpful and I'll jump back in queue, let others jump index.
Yes.
And our next question and I'll come from the line of Anthony Petrone from Jefferies.
And that might not and is open.
Oh, hi, thank you.
Couple of questions Mary Anne first congratulations on again, a strong year, so far a clarify clearance.
And as would be on the pet manufacturing facility clearances.
I know you had several secured heading into launch and there was more coming.
And so on and the next 6 months, so just kind of looking to get an update there how many will be in place starting in 2022.
And then maybe a bit of and update on the CMS pass through code also and initiatives that are.
Was was evolving into 2020.2.
And then lastly, I'll just throw it and just on the commercial side any updates there on reimbursement for clarify thank you.
Terrific and good morning, Anthony I'm actually going to punt and I'll, let Paul speak to that because he's much closer to it and when you hear me off and some of those facts I, usually get them right and Paul So I'll, let him address him directly thanks.
For the question so I take it in 2 parts. The first part related to the Pms activation and our rollout plans and the second related to our <unk>.
CMS pass throughs, so I'll take the first part as we mentioned we do have 12 pms sites activated across the country, including the 3 largest metropolitan areas of New York Southern.
And California, Los Angeles, as well as Chicago.
We do have plans to roll that out and to expand our commercial footprint across the major football CS and the United States to get to more than and Youll see on clarify dot com more than 30 sites by the end of the year, which would.
Get us to the vast majority of coverage for the U S marketplace by year end.
Which aligns us I segue to the second piece around our pass through status as we have conveyed we do plan to submit our pass through application by September <unk> of this year, which would coincide with activation of pass through for the medical.
Medicare Hospital outpatient setting, which is obviously very important for this patient community to go into effect January and first January 1.2022, which would align with our pms activation coverage to cover the majority of the market and so we feel those 2 are very well synced to support continued growth and clarify.
And think through this year, but as Bob mentioned in 2022.
Yeah.
Thank you very much.
Thank you.
Anything else Anthony.
Just my follow up would be on definitive.
Just in terms of looking.
And yet obviously ESG is there was procedure backlog due to COVID-19. It looks like certainly some of that came back and the quarter.
So maybe just a little bit of update on <unk>.
And echocardiogram landscape.
Is there a way to sort of quantify what the backlog still is it at the moment if there is still work.
And how long of a tailwind is that perhaps into later this year or early into 'twenty 2.
That's a little bit of a tricky question now Anthony because as Bob mentioned this period of the year is usually 1 where we tend to see what we call either seasonality or vacation reality, because you tend to have.
A little bit of a low.
Low and procedures being done because of both patients being on vacation and then staffing on vacation and so now we're trying to kind of say is that not going to happen and our people less likely because of trying to catch up with as you say what is the backlog. So we really won't know the answer to that until we see the data.
In retrospect, because that's something we only see it as in retrospect, non and we can't see it and in real time.
As I said, what we have seen to date is we've seen strong rebound and we are now and at point, where we see definitive performance exceeding for the data we have the affinity performance exceeding pre pandemic levels, we assume that.
That is because the underlying market, which is echo procedures in general that they are they are in fact, what is driving that performance, but again until we see the data and retrospect, we can't confirm that.
Yeah.
Okay.
And our next question comes from the line of Larry Solow from C. S. E. T. S yard. This your line is open.
Thanks, guys.
Just a couple of sort of high level questions and I realize you can't really quantify sales and whatnot, but just on the initial pull RFID sales.
I'm just curious if you have any anecdotal.
Thoughts on Doctor awareness.
Patient awareness.
And as it is the drug came out or was the transfer came out and initial sales can you just give us any feel or they are they going towards docs, who are using a zoom in and are they new docs and.
And any any color on that would be great.
So I think good morning, Mary first good.
Good morning for joining flow as we mentioned we will not be operating.
Civic data on Polaris and <unk> sales like I think and ill.
Let Paul speak to that we were very pleasantly pleasantly.
I wouldn't say surprised but we were we were I'm pleased with the amount of coverage that plus 5 received at lunch and Polk and elaborate a little bit on that yeah, absolutely Marianne and so I think we're incredibly pleased to Polaris high the first and only commercially available FDA approved FDA approved PMA pet imaging agent was picked up by many media outlets across.
Presently and tree.
We have seen as we've mentioned Polaris <unk> ordered at multiple types of centers, whether that's freestanding imaging centers hospitals government facilities. The vast majority of these are already ordering multiple patient up multiple scans and.
So we have seen strong uptake.
I would note that with.
The Con provable, we received activation of 2 specific pms and we've been rolling that out more where we are now up to 12 as of the middle of July.
It is important to note that as I mentioned and building out our commercial infrastructure, we are driving awareness there.
And there was significant media attention physicians and health care immunity.
With the community are certainly aware.
Clarify and what this product could mean to the U S prostate cancer community, but we do have our own dedicated marketing and sales teams that are out there, making sure that physicians health care professionals and imaging centers are aware of the benefits of clarify as maryann.
Noted the 4 major benefits.
Immunity theyre actively ensuring that we're not only making awareness, but building the market to ensure that we have a successful launch this year and in years to come.
And I think we had to be.
Somewhat humble about that we'd like to believe that it's on the tip of everybody's tongue, but this is a classic launch where you have to build awareness.
We're building on TNF network, and but we're also as pulse that building what is.
And the slow and steady awareness of what the benefits of the product or how to use the product where do you use the product. We're confident that that will all come to fruition, but we're taking it very seriously as a very classic launch of what will be a long held.
Product and the market and.
And that's how we're treating it.
Absolutely.
Just in terms of building out your SG&A and infrastructure.
Particularly on the ESG and on the sales and marketing side, obviously, you're on a run rate now and I think like $65 million to $70 million.
And from like $40 million last couple of years.
And as pre <unk>.
Do we.
See significantly more increases and this number I mean it.
Does it go to 100 over the next couple of years or is it just more or less and continue to grow, but maybe not that fast and it.
Qualification that'd be great.
Larry Thanks.
No I can't keep the financials on a very tight fist as Paul would probably attribute to me.
I think what Youre seeing is the ramp that you saw from Q1 to Q2.
How you should sort of think you remember I said think and total opex about $40 million to $45 million and if we get to the back half of the year.
You saw we were at 42.8 for this year and if it is.
This quarter.
Maybe it's a little bit more on <unk>.
And has a lot to do with activities that are also on R&D, but you should expect that we're going to normalize and sort of flattened out very close to where we are at the moment.
And I do not anticipate.
And continued ramp I would expect profitability to sort of.
And really kind of manifest itself as you think in terms of Q4, Q1 Q2 kind of thing.
We're hitting that peak spend.
Level to whereby we can now drive sustainable top line growth. So we've been making the pre investment.
And to help.
Support the commercial teams to support R&D.
Hold back office sort of in check on which is where you see the synergies that we took on.
And that we were then able to sort of reinvest at least in the near term to be able to drive that sustainable growth longer term. So I do think.
Being you know.
And I would expect gross margin to continue to improve but I would also expect to see expenses level out.
Okay, and then just on I noticed in the <unk>.
Q the fair value of the CVR related to pure help clarify actually went up is that strictly primarily.
So it's just a function of you got approval, it's on the market, it's closer to potentially getting some of those.
Hitting some of those thresholds.
Based on that or is there anything else you can discuss on that yeah. So the way you determined that continuing liability in this case fair value.
And you do take on what is the then current internal forecast and.
And and and from that perspective, then you run into Monte Carlo simulation, which hasnt been and volatility assumptions as well as an appropriate discount rate and now it's really kind of and that discount rate where you attribute to.
Did you de risk things like was it was it.
And what are not approved or they're still execution risk and so forth and so on and which I think is also potentially embedded and and the volatility aspect of it. So I think so it is a function of and it's a multifactorial type of output input and then output.
And so on any of the key for people here is 1 it gets determined quarterly.
So as any of these inputs change.
So can then the value of this contingent liability so what what people should not infer this and some sort of long long range forecast or guidance that we're providing but it is.
It is and accounting mechanism that takes all of these different inputs into consideration as we and as we look as we look forward.
Okay, Great fair enough and just last question on definitive and.
Obviously, and you mentioned you know mark opportunity remains significant.
And.
I believe that as we obviously still some noise and whatnot and from Covid.
But hopefully that begins to win continues to win any reason as we settle down and maybe starting from 'twenty to 'twenty 2 the discount definitive won't be returned to a sort of its double digit growth, maybe not that 20% and how to.
No.
The reason, we said over the last few years, but you know double digits is that a fair assumption.
So as I said, we're already exceeding pre pandemic levels. So we're still forming that already matches, what we were seeing pre pandemic and now and I want to make sure where we're being realistic here could you put the range there yourself.
And pre pandemic, we were already.
At 20%, we were double digit as you said, but I think when we were Inc.
Roger and I was rather from the mid teens, yeah teen.
Teen and teen right there and this is something that we that we do on it because of the relevance of definitive to our to our forecast into our revenue. We do report as out of <unk>. So youll see.
Not in any performance exited this quarter, yeah, Larry when I when I look at the 2 year stack, even just for Q2 right that number and so I think what about 17% right and so so it's hard to put that performance. This is where we kind of get the confidence in saying are we back and think identic levels low it sort of looks like that that teens.
And the growth that we would've expected, which even to point Marianne was talking about in terms of backlog and we won't know that for a while but this would imply more of a sort of a normalized market and the environment and I'll say and broken.
Weigh in here as well it is a significant asset for US we have a dedicated business include Paul and team did a great job early on here.
As we do every year and looking at what are the resources and continue to support this asset right.
Right.
I think we remain very optimistic about the affinity future, we're coming up on the 20th anniversary.
Definitive FDA approval at the end of this month, but we believe the market opportunity for this agent remains significant.
<unk> there are still a significant number of suboptimal echos are out on the marketplace that could benefit from the use of and ultrasound enhancing agent and we maintain our 80% market share as the contrast agent of choice and believe that the affinity sales will continue to grow into the future. Our tag line inside is fitted and <unk> 'twenty is the new 5.
Yeah.
Excellent I appreciate all the color guys. Thanks a lot.
Youre welcome.
And our next question comes from the line of Anne Wright from Credit Suisse. Your line is open.
Hi, Thanks, how are you thinking about the potential tailwind from novartis and potential prostate cancer therapeutic.
And could that be meaningful for you and then.
On a second kind of question here just given some of the protocols associated with Biogen Alzheimer's approval could could increase patchy and tied to that provokes that at all represent an opportunity for you as well.
So Eric and good morning, and this is Mary and I think you're you're bringing up a great point.
The larger market and the role of isotopes and the market and pet scanning and the margin certainly the Alzheimer's product speaks to the role of pet scanning and companion diagnostics and the market, which we're thrilled about because that as you know for the future of Atlantis, that's an area that we'd not particularly Alzheimer's, but that's a.
About your area, where we intend to be very strategically involved and that is the use of isotopes and ice took related products in overall treatment diagnostic Lee and therapeutically from for the sticks and specifically for the for.
For the Novartis product.
And while that comes to market and we were also thrilled to see the readout it had and it and the.
Efficacy associated there because we have our own product and a pipeline in similar fashion. We think there again that demonstrates the positive role that companion diagnostics will have and you heard me mention earlier that P. Y L has been chosen as the companion diagnostic with companies such as Regeneron buyer and point out and pharma that.
And really points to the what we are doing with our pharma services group, which is really becoming the partner of choice for a lot of the work that's going on and clinical development, where these types of biomarkers are being used not only to make clinical development and more efficient, but really to ensure that patients are getting drugs with and have a higher likelihood.
We could have been therapeutically valuable to them and that that decision is being made earlier and earlier and clinical development and we're thrilled to be part of that.
Okay, Great and then understand and he could you give us an update on on the competitive landscape, what you're seeing now and in and where market share and it's still roughly in that day.
8 per cent sort of range.
I'm going to let Paul speak to that because he's much closer to it. Thanks parent, yes. So on the competitive dynamics, we still see ourselves as the market leader.
With roughly 80% share of the U S marketplace.
And see continued growth.
Maintain a leadership position.
And remain the.
And I contrast agent of choice across the marketplace and so we remain very pleased after 20 years to still be able to be the preferred partner across echo labs around the country and continue to grow as we support our customers and ensure they understand the benefits that the affinity brings to their practices.
Okay, great. Thank you.
And we do have a follow up question from Richard give it or from SVP Leerink. Your line is open.
Hi, Thank you for taking the follow up and just just because I'm getting asked the question and I'm just going back to what I had asked earlier I want make sure I'm clear.
And the.
On the $5 million impact of technically.
It's spread out evenly roughly between <unk> and <unk> I guess, just if not for that.
Given that you are still raising your full year guidance.
Would your would your guidance have gone up by even more in other words, if not for that and.
Sure.
These facilities and momentum underlying getting baked into your back half guide as continuing and therefore that marginally offsets some of the some of the headwinds that technically creates.
Rich and more or less yes, I mean, it really is sort of ongoing trends that we.
In other words affinity take into account the seasonality of things, but it is what it is making up the difference.
More or less yes, and and you know there are a lot of other.
Pieces and parts.
And that are moving within.
Timing of neuro light and cardio light and so forth and so on and so it is a function of.
On the affinity and the underlying core business, but of course, we have to and take clarify baked into this as well but.
What is and you say what do we have had higher guidance and it would have been marginally different potentially but again, there's also you know and external environment.
And against which we are.
Guidance into that we sell 1 and as you know even and Mark's opening remarks debt.
And having a.
Delta variant that's out there, causing.
A lot of news, but not necessarily headwind. So we were cautious in the way we.
We think about things, but at the same time, we're very confident and our underlying business the core business doing extremely well.
It's embedded and the results you can see it and that's what led us to have the ability to sort of moving our guidance range for the full year.
To account for relative over performance year to date and.
And then of course, where we see that business going on through the balance of this year.
Okay. That's helpful. Thanks, and just 2 other on our.
Product questions on that.
And on Relistor, just first 1 was dead wrong.
Said, you had a lot of a lot of promise and <unk>.
It sounds like Youre really building a stage.
And much steeper, we're setting the stage for a much steeper and.
Sequential ramp and moving through the year into 'twenty, 2 but it is.
And that the right way to think about it and you know.
How much of a contributor should we be thinking about for zebra in 2020, 1 or is this really going to be a 2020.2 product and.
Same thing with Relistor, what's the run rate.
Is that the performance you saw and <unk> kind of sustainable.
And by quarter going forward.
I'll speak to is it your first rich because I do want you to hear when he said promising is the right word to hear here, but I think you need to understand the base when you're talking about steep ramps you need to.
And what we're jumping off from and and I'm I'll jump off from Mike The comments I've made before I've been really clear that we felt.
And it was true we were blocked access to customers really throughout the pandemic with the Xetra because we what we didn't have coming into the pandemic is we didn't.
And have relationships really already built with those customers that was from a just from a.
Our historic perspective that was Atlanta, you didn't kind of on those relationships before the acquisition and they were very I would say kind of young and only forming relationships and Virginia that had so that was really a relationship.
It's fairly shut down by the pandemic and as you heard me say today that is something that now more recently, we've seen accessibility to those customers really start to reopen and so we've been able to begin executing on what we've said all along we would do with the acquisition, which was to really bring change.
And to what the model is of how to interact for that particular asset with the community that of patients and care takers and treaters.
That are necessary to really kind of bring the awareness there and now we're starting to see some results and we're really pleased with what we saw on second quarter and Thats a beginning for us of what we see is what the optimal.
No.
Kind of the optimal promises for that product, but and I need to be really clear. This is not a P. A clarify from magnitude of what's possible here. It is an orphan disease and so the magnitude of what is possible from a revenue perspective is not what we are talking about when we talk about clarifies, but we are as an executive team and as a company.
And we are always committed to optimizing the assets have been entrusted to us and we will do that with a Z or so the promising is the right word ramp is the right word, but I want you from a modeling perspective, especially to think about what the what the base of that ramp is and.
And how to ramp up.
Kate home to great talent and.
To our company I will tell you I've worked with her before and that's why I know she's a great talent there to our company and we are confident that with the also with the team now and with some of the resources. We have that we will be able to do right for his edra and right for the patients that is after treatment I think part of the part of the.
Promising signs we see.
And as I said more treatment centers have now decided to have xetra offerings at their treatment centers, which is also great news for the patients who need it.
And I'm going to let Bob speak to the store, yes. So I mean, 1 just to level set 2 on size and you can look at our radiopharmaceutical oncology, which is where is that.
Interest rates.
From a total car.
Revenue contribution perspective, and it is the main driver of that number which I wish I had noted relative to where we have continuously be able to tell people, what they're pretty steady.
Stream, which has ranged.
Between $45.
$4.5 million and 5 million.
There is we're trending towards the higher end of that range and more recent quarters and we're very pleased with the.
The ongoing contribution but that we're seeing from our partner so and then.
At this juncture.
And we don't control it so we can't sort.
And sort of speak to what the future trends might be but what we're experienced.
And now is very solid and very pleased with it.
Okay. Thank you.
Once again, if you wish to ask a question. Please press star 1 on your phone again star 1.
We show no further questions at this time, ladies and gentlemen, thank you for participating on today's conference. This non cluster program. You may now disconnect and have a wonderful day.
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