Q3 2021 Lantheus Holdings Inc Earnings Call

November 4, 2021

[music].

Good morning, ladies and gentlemen, welcome to the Atlantis Holdings third quarter 2021 financial results Conference call.

As your operator for today's call. Please note that all lines have been placed on mute to prevent any background noise.

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 two hours. After the completion of the call and will be archived for 30 days.

I'll now turn the call over to your host for today, Mark King Arnie Senior director of Investor Relations Mark.

Thank you and good morning, welcome to Atlantis Holdings third quarter 2021 financial results Conference call.

With me on todays call are Mary Anne Heino, 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 provide a commercial update.

<unk> will return to provide 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 reporting our third quarter 2021 results you can find the results you can find the release in the investors section of our website Atlantica is dot com.

For those of you not on the webcast you can find the slide presentation in the investors section of our website under the presentations tab.

Before I get started I would like to 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.

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.

Please refer to our SEC filings for a detailed discussion of these risks and uncertainties.

Also discussions during this call will include certain non-GAAP financial measures.

Reconciliation of these measures to the most directly comparable GAAP financial measures is also included in the investors section of our website.

With that it is my pleasure to now turn the call over to Maryann.

Thank you Mark and good morning, everyone joining us on today's call I Hope all of you are safe and healthy we.

We delivered a strong quarter. Despite a resurgence of COVID-19 infections that impacted elective procedures and hospital access.

Did the impact of certain aspects of our business, which Bob and Paul will discuss and we didn't know and are monitoring across our sites of care. The more recent increasing referenced by analysts covering health care of concern that staffing levels in hospitals.

Past few months have been a period of intense activity and significant progress for Lindsay is across our portfolio.

If anything again delivered solid growth, we are thrilled with the launch and reception to clarify in its first full quarter since approval and believe there is significant momentum heading into the fourth quarter and 2022.

Before I turn the call over to Paul to give an update on our commercial portfolio. Let me update you on select strategic developments since our last call.

We reached an important milestone towards a goal of supplementing definitive supply with our own on campus manufacturing facility by filing a supplemental new drug application or S. N D. A wood the F D a.

S. M. D. A review process is expected to take approximately four months and will require a pre approval inspection before anticipated approval in the first quarter of 2022.

Earlier this year, we successfully manufactured batches of affinity honest manufacturing line that will be commercially sellable upon FDA approval.

Purple Wifi, which we need the first and only commercially available P. S. <unk> targeted pet imaging agent for prostate cancer, we continue to make significant progress on our commercial launch including ongoing investment in our customer facing teams, where we have we believe the largest wholly dedicated P. S need pet sales for.

And market access teams.

We are delighted by the reception to and adoption of Polaris high to date, including interest from institutions.

Physicians patients and patient advocacy groups to this game changing prostate cancer diagnostic even against the backdrop of Covid resurgence and other challenges facing our customers during this period.

We've continued to actively work with our pet manufacturing facilities or Pms Pms channel partners to build out our Polaris five manufacturing and distribution network access across the U S.

As a reminder for over 20 years Pms have been reliably delivering F. D. G. Another F 18, isotopy pet's diagnostic nationwide to imaging centers on a daily basis, and almost 2 million patient procedures per year at D. G is the most widely used diagnostic cancer pet imaging agent in the U S.

Yes.

We are happy with it.

Prudent widescale kit manufacturing and distribution network for clarifying.

P. M S work with imaging centers, they serve to meet the needs of physicians ordering imaging studies for their patients.

I bet you. That's 18 from cycle time production is particularly well suited to the demographic of needs of the prostate cancer community as has already been proven with it used in other cancer types with significant patient populations.

We're trying based manufacturing offers the scale needed to meet customer demand and this can be offered at when every time, a day, whose pet imaging centers needs.

This is in direct comparison to generate or produce products, which are limited by both the quantity and frequency of doses that can be produced at any one time and the limited timeframe during which the produce dose must be delivered and utilized with Polaris Sai the availability and scale offered through the Pms Geographic network, we are building with our.

Combined with F 18, 110 minute half life allows for broad availability across the U S and the flexibility needed for physicians in the prostate cancer patients they treat.

During the quarter, we continued to expand our network in line with our year end goal of broad availability across the U S.

At the start of the third quarter, our network covered approximately 6% of the U S population throughout the quarter, we continually expanded coverage and I am pleased to report that we are now able to serve approximately 70% of the U S population across 20 P. N S. Paul will give you further details on that.

Other aspects of the collateral fine launch shortly.

The advantages of pet imaging N P S make targeting with Polaris I I'll further complemented by clarify AI the branded name for a promise the first and only FDA cleared AI enabled yesterdays digital application.

A lot of Phi AI employees of deep learning algorithm trained.

And al and validated by employing more than 3000 PSNH images.

Lastly, AI offers a standardized platform for physicians and researchers to efficiently consistently and accurately quantify P. S uptake at the lesion level for men with prostate cancer.

We were honored to have been selected to present Polaris I AI at the pre eminent prostate cancer conference. The annual prostate cancer Foundation scientific retreat, which took place last week at the conference we introduced Polaris I AI to prominent researchers and key opinion leaders in the field of prostate cancer since 19 nine.

Three the prostate cancer Foundation has hosted its annual scientific retreat that brings together a diverse researchers in a collaborative one to present and discuss new findings for prostate cancer diagnosis diagnosis prognosis and treatment.

We will be launching clarify AI at the Radiological Society of North America for all SMA meeting later this month and are pleased to report that could be five leading cancer centers are already in the process of adding clarify AI into their prostate cancer diagnostic workflows now I will turn the call over to Paul for a commercial update.

Thank you Mary Ann and good morning, everyone. Our commercial teams have been productive during the third quarter.

I'll start with an update on the Polaris launch as Maryann mentioned, we began the third quarter with two active pms covering approximately 6% of the U S population.

Over the course of the quarter, we activated 16 additional pms cover in major markets, such as New York, Chicago, Los Angeles, San Diego, Houston, and Washington D. C J.

Just this past week, we activated two more pms, which brings us to 20 and added the additional markets of Dallas and Kansas City.

Moreover, we are selectively flying doses into key markets, such as Florida, and Northern California in advance of Pms Activations in those regions.

This enables prostate cancer patients access to Polaris Sai and allows institutions to incorporate Polaris high into their prostate cancer workflow in advance of local pms activation.

We continue to work towards our previously stated goal of broad availability across the U S by year end and ongoing geographic expansion in the first half of 2022.

Yes.

Together with our Pms partners, we have contracted with approximately two thirds of our targeted academic institutions in the U S who treat prostate cancer.

From a demand perspective, we have been happy with the breadth of ordering across our customer base with hospitals, comprising approximately 65% of orders to date independent imaging centers, 20% and government facilities, 15%.

We have been particularly pleased with the adoption by hospitals much of which is in the hospital outpatient setting even prior to pass through payment initiation.

We are also encouraged by the rate of repeat demand with over 80% of customers, having ordered multiple doses today.

Importantly, during the quarter the national comprehensive cancer network or N. CCN included P. S M. A pet imaging and their recently updated guidelines with typically fullest that F. 18 now included in the areas of unfavorable intermediate Hi, Ann.

Very high risk as well as recurrent disease for the management of prostate cancer the.

The N CCN guidelines are widely recognized and used as the standard for clinically clinical policy in oncology by clinicians and payers.

The society for nuclear Medicine, and molecular imaging or S. N and M. I also added P. S M. A pet imaging, including if we fall a stat F 18 to the prostate cancer appropriate use criteria diagnostic guidelines. These guidelines were developed with input from the American College.

Of nuclear Medicine American Urological Association American Society of clinical oncology, the American College of physicians and other key international associations.

We believe this will further facilitate the commercial adoption of Polaris high as it raises awareness in the medical and payer communities a P. S amaze clinical relevance for physicians in diagnosing and choosing treatment options for prostate cancer patients and the potential impact there.

Its novel P. S. <unk> targeted imaging agents can have in the overall treatment plan of men with prostate cancer.

Regarding market access specifically coverage coding and payment we submitted our pass through application to the centers for Medicare and Medicaid services or CMS during the third quarter and we expect pass through payment to go into effect January one 2022, which aligns well.

Well with our stated goal to have broad availability of Polaris <unk> across the U S by the end of 2021.

During the quarter. We also received notification that our fixed fixed code, which enables streamlined billing will be effective as of January one 2022.

We are making progress and coverage of both indications the.

The majority of Medicare administrative contractors or Macs have either paid claims published guidance or have indicated they will cover clarify usage and our approved indications.

Finally, we have seen prior authorizations approved and claims paid by both Medicare advantage and commercial insurers and we continue to work with payers to have formal policies updated during 2022.

We also recently completed the build out of our PMA pet dedicated sales force, which we believe is the largest in the industry as well as our market access team.

We continue to work to meet the needs of the U S prostate cancer community to Pms activation customer contracting and onboarding and appropriate coding coverage and payments.

Switching now to the affinity for third quarter saw a double digit growth year over year in sales.

During the quarter, we did observe an impact to the traditional pattern of echo utilization that we attribute to the resurgence of COVID-19.

We also noted nationwide concern related to medical staffing within hospitals with specific reference to nursing staff late in the third quarter.

Despite these headwinds our overall in person promotion remained above 50% for the quarter, albeit with regional variability and the team continued to drive awareness of the appropriate use of definitive and suboptimal Echocardiograms and we were pleased with being able to deliver another strong quarter of growth for definitive.

<unk>.

Now onto our spec portfolio techno light continue to be a stable contributor to our overall business.

And this quarter, we again benefited from opportunistic sales to answer though.

Ventilation studies, which have yet to return to pre COVID-19 impact levels continued to negatively impact our xenon business.

Now I'll turn the call back to Mary Anne.

Thank you Paul.

Yeah.

Yes.

Moving along to his bedroom the surge of Delta there anything sections in the third quarter created conditions similar.

Similar to those we initially experienced during the height of the pandemic.

The special conditions under which is definitely is administered in the hospital setting and the nature of fever, Pheochromocytoma and parikh anchorwoman disease in patients we have seen instances with treating physicians and patients have chosen to deferred treatment until the infection rates have subsided a patent noted in the early onset of the pandemic.

Access to our commercial and medical Representatives was also limited throughout the third quarter as hospitals, we introduced protocols to these specialty areas again similar to the latter half of 2020.

Despite these challenges our commercial team has been working with academic centers of excellence in key markets across the U S. In preparation for future demand and we have continued to build up the medical team that will interface with stakeholders.

Switching now to R&D.

I am pleased to report we recently completed interim analysis of our ongoing Arrow phase two study of 10 95 P. S. <unk> targeted therapeutics the independent data monitoring Committee has recommended the study continue without modification.

As a reminder, the arrow trial is a multi center randomized open label controlled phase II clinical study evaluating the efficacy and safety of $2 95 in combination with Enzo loopnet compared to end diluting might alone in patients with metastatic castration resistant prostate cancer, who are P. S.

And they added chemotherapy naive and have progressed on abiraterone P.

Yes, Nate ambiguity is determined utilizing clarify.

The primary endpoint and arrow is prostate specific antigen or PSA response rate.

Key secondary endpoints include time to radiographic progression progression free survival and overall survival.

Patients in the Arrow trial are followed for one year after their first treatment for all efficacy endpoints.

Survival and efficacy data are collected for an additional year.

We will continue to update you on the trial as we progress.

I'll turn the call over to Bob for a financial update.

Thank you Mary Ann and good morning, everyone I will provide highlights of the third quarter financials.

Adjusted results unless otherwise noted.

Turning to the quarter revenue for the third quarter was $102 $1 million, an increase of 15, 3% over the prior year quarter comparison includes our now divested Puerto Rico operation.

Now turning to the details beginning with precision diagnostics revenue of $87 $9 million was nine 8% higher over the prior year, Florida.

Its affinity net of rebates and allowances were $57 6 million 14, 5% higher as compared to the prior year quarter amidst the summer surge of the Delta variant of COVID-19 during the quarter, our sales and marketing teams experienced reduced access access to hospitals and those regions impacted more severely by Serge with a slight overall.

Impact on performance.

<unk> revenue was $22 7 million net up seven 4% from the prior year quarter supported by opportunistic generator sales to our partner and so a 3.0 million.

Within other precision diagnostics xenon as performance has continued at similar levels to the previous sequential four quarters Radiopharmaceutical oncology contributed $8 9 million of sales up 167, 6% from the prior year quarter, mainly attributable to the promising early results from our launch of Polaris High as noted.

Paul earlier.

While we remain confident in his address it was down sequentially from Q2 2021 as it is more susceptible to treatment cancellations in the face of Covid infection infection spikes and limitations imposed on hospitals.

For access for Atlanta is representative.

Lastly, strategic partnerships and other revenue was $5 $3 million up two 7% driven primarily by the Relistor royalty.

Gross profit margin for the third quarter was 51% an increase of 270 basis points over the third quarter of 2020 on a similar basis. The increase is due in part to the impact of COVID-19 on cost in the prior year comparison.

Gross profit margin is slightly lower than our expectations for the quarter based on product mix was slightly lower contribution from the affinity as I previously noted.

Well as lower than expected as Ed yourself against the relatively fixed overhead costs at our Somerset manufacturing facility.

Operating expenses were 39 basis points unfavorable to prior year at 42% of net revenue, but within previously guided spending levels within sales and marketing we continue to invest in the Polaris I want with increasing effort around product awareness market access and contracting activities as well as providing support for.

Definitive with a mix of in person and virtual promotional activity.

R&D and G&A together were in line with the prior year spending levels, reflecting permanency of synergy capture together with focused investments in our pipeline and back office functions.

Operating profit for the quarter was $10 $2 million or an increase of 50.2.

2% over the same period prior year total adjustments in the quarter totaled $24 5 million of expense before taxes.

Of this amount $3 nine and $8 4 million of expense is associated with noncash stock and incentive plans.

And acquired intangible amortization, respectively.

Also in the quarter, we recorded a $2 $6 million net expense adjustment to contingent assets and liabilities, including the Polaris CVR contingent liability.

Also during the quarter the company successfully negotiated a sublease arrangement for its one World Trade Center office, one of the final synergy opportunities identified with a pretax acquisition and as such incurred a $9 5 million dollar impairment on the asset group, which is primarily made up of the right of use lease asset for the space. The remainder is related to <unk>.

Acquisition integration and other nonrecurring expenses.

Our effective tax rate was 21, 6% in the quarter during the quarter. We released another portion of our uncertain tax position our U T. P provision dating back to our sales from BMS in 2008 for which we are fully indemnified based on newly acquired information.

I'm Gonna find receivable release flows through other income and expense and the release of the UTP tax reserve through the tax provision as a benefit. The net result does not have an effect on net income.

The resulting reported net income for the third quarter was a loss of $13 4 million and a profit of $5 $7 million on an adjusted basis, an increase of 134, 9%.

GAAP fully diluted earnings per share were a loss of 20.

And a profit of eight times on an adjusted basis, an increase in the prior year of 127, 4%.

Now turning to cash flow third quarter operating cash flow totaled $4 $3 million as compared to $8 6 million in Q3, 2020 capital expenditures totaled $2 4 million down $1 3 million from the prior year quarter free cash flow, which we define as operating cash flow less capital expenditures was $1 $9 million.

Decrease of $2 9 million from the prior year period, one of the drivers of the year over year variance relates to the accounts receivable balance increasing due to ramping clarify sales in the quarter.

And related receipt terms with customers cash.

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.

Turning now to guidance for Q4, and the full year, we forecast revenue could be in a range of $110 million to $115 million for the fourth quarter of 2021, an increase of approximately 17 and 22% over the fourth quarter of 2020 the range takes.

Recent clarify performance into consideration as well as our broadened view of other product contribution against the backdrop of various macro environmental pressures. Therefore, we now forecast full year revenue to be in the approximate range of $405 million to $410 million.

From the prior range of $395 million to $402 million.

Now turning to earnings adjusted EPS should be in a range of 15 to 18 <unk> for the fourth quarter, we are raising our full year adjusted EPS to account for relative performance of Polaris Sai on increasing batch productivity offset in part by incremental impacts from other unfavorable product mix estimates as well as our commitment to invest in revenue growth initiatives.

As we have noted in prior quarters as such we now expect full year adjusted EPS to be in a range of 40 to 40 <unk> per share versus the prior range of 38 to 42 cents.

With that let me turn the call back over to Maryann. Thank you Bob.

Losing we delivered a strong quarter with significant progress across our portfolio. The affinity delivered solid growth. We look at Polaris <unk> first full quarter in the market and see success across all of our objectives and increasing momentum as we move through the fourth quarter and into 2022, we continue to monitor the impact of COVID-19.

Always with first priority to the safety of our employees and their intent to continue to serve our physicians and their patients whose health depends on lantus.

Our shareholders, we continue to commit to the mutually achievable goal of driving sustainable growth across our portfolio of diagnostic and therapeutic solutions, while delivering on our mission to find fight and follow disease to deliver better patient outcomes with that Bob Paul and I are now ready to take your questions. Operator. Please go.

Hey.

Four sites went went live and whether or not there was any stocking in that number on they'll have a couple of follow ups.

So it didn't worry Anthony great to hear you and a couple of corrections and I'm going to turn it over to Bobby <unk> cause he can really speak to this much more clearly, but just to correct. We started the quarter with two pms, but there is Bob and pull both noted we built throughout the quarter and actually ended the quarter with 20 peanuts. So that's why.

One thing that they're both feet too and then as you remember I remember him I'm always teaching you Anthony but no stocking when you were talking about radio likes to talk to remember this is like running through the desert extreme phone there's no talking on these drugs right. There you just in time. So there's no inventory build that these pms cause I'm gonna turn it over to Paul first you can talk about the <unk>.

Quarter, we had would clarify and Bob can bring you up to date, a little bit on the financial.

Thanks answered, yes, we were obviously very pleased with the corner for clarify as I mentioned the both the interest in the reception to the <unk>. After the product we believe their significant momentum heading into the fourth quarter and into 2022, an overall things are on track regarding Pms as you correctly noted we started the.

Quarter July 1st with two Pms over the course of the quarter. We activated 16 additional pms and so ended the quarter with 18, Pms covering roughly two thirds of the U S population and so you can think of that as a Ah phasing, where we added some activated some sites.

In July August and September ending with a T. And then as was recently noted we added two additional sites earlier this week, which brings us to 20 in roughly 70% coverage. So overall, we're very pleased with the reception of the launch thus far as the only commercially approved PSM a pet imaging agent for men.

With prostate cancer I'll turn it over to Bob to answer some of the financial questions. A good morning, Anthony So uhm you right around radiopharmaceutical oncology is a product category. This remind everybody. What's in there. It's you have what is quadrajet or what had been quite dramatic which didn't have sales in the quarter Vedra.

As well as clarify now as I noted in my scripted remarks, Zandra, which had a pretty good Q2, if if we remember, but but I would like to point out just the headwinds we were discussing relative too few definitly is that there is probably even that much more susceptible since it's an inpatient procedure so from that.

[noise] perspective.

Does step down so I think the math, you're doing is is pretty accurate and and from that perspective that is one of the reasons that we created this product categories to be able to give some transparency to these different products that we know will help to drive diversified revenue growth over the long term.

That that's helpful. And then maybe stand corrected there on the active pms in in the quarter C. Exit July wanted to Ya.

Come up to 20 as of November 1st I guess, what was the timing of Activations in.

Sort of just trying to get a sense of.

So sort of how the initial utilization win at some of the sites and I'm sure. It's dispersed bye bye volumes at these sites and then.

Looking ahead to the plan future sites several more coming you know is this expected to these expect it to be.

Ready to go Jen one and then as we look into you know 2022, and perhaps even beyond.

When we look at the short pet pet market for prostate cancer.

They have two solutions here in the marketplace.

How do you think sort of share shakes out over the next couple of years and then I'll have one on just some of the headlines in the quarter.

So just as a reminder, anti there is only one product approved in this category and that is pull out I think the only approved P. S. <unk> pet diagnostic and to your question around Pianette application activation. This is a fluid process and we've kind of been clear that definitely to start that we have a a plan that can can is a continuous rollout you can actually track it.

Because we have our website clarify dot com that is updated not I would not say daily but on it and I'm fairly frequent basis, you can go and look at the show, which pms have been activated and where they are geographically sleep main content on our goal and our goal is to have broad availability across the U S that covers all the major markets.

And until we have that in Polk speakers better than I can we are literally using planes trains and automobiles to even cover those markets that we're not yet N <unk> all to the service of this prostate cancer community, which we feel is really benefited by the availability of clarify so I'll I'll take the call and let him covering with additional remarks.

Yeah no. Thank you Anthony Thank you Marianne so anything I can think Hollywood characterizes as mentioned, we started the quarter with two pms active and they ramped up fairly steeply during the quarter, where we added 12 12 as of August 1st We had 17 as of September 1st and we closed the quarter with 18, and then as I noted add two two more earlier this.

Week. Similarly, we have seen a ramp and clarify adoption when a pms does come on board, we're obviously working with customers to contract and onboard them, but that does take a little bit of time and so we have seen the ramp improve for <unk> over the course of the quarter.

To your point, we are flying doses is Marianne mentioned it to key markets, specifically, Florida in Northern California, where do we do not yet have an active pms, but given the benefits of F 18, and 110 minute half life, we have that availability to be able to bring product in while we work to activate pms to serve those.

<unk> cancer patients, but also to ensure that <unk> is embedded in the prostate cancer workflows of those key institutions. So that does remain an overall priority.

Regarding the ramp going forward, we do focus on having broad availability like note. We are already at 20, Pms and 70% coverage by.

By the end of the year, which coincides well with pass through initiation in a hospital patient pain going live January 1st 2020.

We will continue to add pms to ensure that.

Clarify is available across the country people through the rest of the year as well as into 2022, there's only one I'll make a S. How sure will shake out right, yeah like shaking out at 100 per cent and that four pull out of Fry.

No no.

<unk> stood last questions I'll get in queue here.

You mentioned prior authorizations.

<unk> actually approved and claims are being paid I'm just wondering if it's in the early days, that's covering the cost of of doses for the early adopters here and then and then Marian just on staffing obviously, you've heard a lot about this across this earnings season channel checks. So just from the view of lanthier. So.

On staffing shortages any data points you can share on perhaps fell on his head when will last later into this year and perhaps in the next thanks again, congratulations on a good quarter. Thank Sandy I'm Gonna ask us is that the rest of the folks in the bathroom, but it says on on new because he seemed to have that little bit of background noise and and stamping at the this is it.

Of course, an issue that is so much broader than you know our sites of care and those parts of the hospital or different parts of.

Health care of any season that we call on.

Course, very attuned to it and we were watching it and we hope that if there are into one is.

Our folks being taken care of and we will hope that everyone out there. It's healthy we've seen it uhm impact our business as Bob mentioned in in different ways is vedra as an inpatient treatment and using very specialized resources in the hospital, probably gets impact earliest and most when either hospitals and access or when staff.

Concerns become a concern for the hospital.

Probably seen it Lisa.

<unk> and the ZIP it but I would also say there that are background is also at least you don't have as much experience and understanding what happened but is that you also through cited care perspective has a lot of out of hospital you. Some a lot of the imaging centers are free standing and they're not as dependent on hospital staffing if you're talking about concerns with over.

Real nursing staffing in hospitals, Oh, I'm, sorry, I missed a clarify they're not of course and would Definitly is as Paul mentioned, we have seen or anecdotally heard that there may be some pressure on over a levels of sonographer isn't it something that we're in touch with the American Society Echocardiograms cardiac wimpy about look.

See what are the the overall programs do not inviting where students in so that they have the level is coming out of the program to ensure that on a go forward basis, they're bringing people into these programs, but it's an issue that is that is much larger for the industry that I think we all have to be concerned about and quite frankly it crosses.

Cause it's out of health care and in too many other industries.

Operating a lot of other forums in the Boston area and staffing and the war for talent to our concerns that we all share across many industries.

Anthony maybe to just touch on your market access questions. You did correctly noticed as we noted that we are seeing prior authorizations covered in the commercial landscape I think I would I would highlight is that we are particularly pleased with the uptick in the hospital setting I noted that 65% of our orders to date her in the hospital setting.

That is primarily but not exclusively any hospital outpatient Medicare setting in light of the age of the prostate cancer demographic as well as most of this being outpatient from a pet imaging, we do have coverage.

And the majority of Medicare locations, but that is distinct from a separate payment for the radio isotope and so while the overall scan is being covered hospitals in the Medicare hospital outpatient setting are not yet getting paid for the separate clarify dose and yet we still seen 60% 65% of.

Orders to date coming from the hospital setting.

We believe is building significant momentum as we go into <unk> into the fourth quarter and 2022, specifically January 1st one pastors initiated and there would be a separate payment for clarify in addition to the.

Pet imaging scan.

Thank you very much I'll get that can kick.

Yeah.

Thank you so much your next question from Daniel.

Anthony fee from add VB Nerang, you're lining up.

Hi, good morning, everyone. Thanks, so much for taking the question congrats on a really strong corner.

I wanted to get into guidance, a little bit you're you're raising guidance I just think about 9 million at the mid point you be in the corner by about four and a half million dollars at the mid point.

<unk> just following up on some of the commentary around the headwinds, but also to clarify launch.

Is it safe to assume that at least four and a half of that guidance raises tight you may be a better than expected clarify launch and maybe Alaska you know performance from.

The the hospital procedure tied business, just trying to get a sense of like sort of <unk> and that guidance and how to think about two four and the momentum we're taking into 2022 915.

Okay, great. Good morning, So that's a great question and so.

When I was putting it together cause I was trying to think through how how you guys might model things. So so let me just sort of breakdown, what I was saying.

When you think about DEFINITY when I look at what the street consensus is I would have people moderate what they are thinking about queue for now why is that it's because the.

The access into hospitals.

Both for People's willingness as well as from Ah Ah.

Sales rep ability to get into the hospital and do in person promotion as well as a patient willingness to go into that setting up care, which has always been one of our key tenants to to our guidance.

As that as we've seen the delta variant sort of Wayne a little bit but that doesn't necessarily mean that we think hospitals are going to immediately sort of back off of their current policy and so we think that that can continue into Q4, and so because of that we just want to be take a stance that this is going to have potentially.

And impacting to queue for not we're not talking big significant dollars, but that would have had the street moderate their expectations.

<unk>.

Again for the same reasons that we've been discussing here for over the last moments.

I would expect that or to look a little bit more like Q3, then it didn't like and Q2. So from that perspective. So as you kind of work through then the other products that are similar run rate that we've had.

That should then shake out by math, what we think that Polaris I should do and yes, we should we are expecting.

For it to continue to ramp from where we left off in Q3 and as we progress through queue for <unk>.

<unk>.

The entire difference I would say from from from that our prior guidance taking into consideration. These other adjustments to the other parts of the folio.

Are attributable to <unk>.

Again this is the benefit of having a diversified revenue stream.

That we can continue to demonstrate strong growth and be able to have an opportunity to raise our gardens.

That's super Super helpful. Caller. Thank you for that and then I know you're not gonna give 2022 guidance on this call I I certainly appreciate that but you know just looking at where consensus is purple aerify in 2022 at around 50 million I think it's a pretty wide range <unk>, though from what I can tell I mean, I am maybe you could talk quality.

[noise] Diddley about the launch you're gonna be going into 2022 with with you know.

Most of the of the country covered for my P M S and and.

<unk> perspective, just curious how to think about how reasonable that sort of growth trajectory is typically like to 20 twenty-two even if you could talk qualitatively about the the Ram. Thanks, so much.

I think we can talk qualitatively, we as Bob has already alluded to we will not offer specific product guidance for clarified that you've already touched on some of the important considerations and that is.

Two we will have we anticipate we will have passed through coverage as of January 1st. We will also have our hectic code as of January 1st we we mean on track with our goal with having brought availability, which is R. Pms coverage and as we know mentioned several times, we see great momentum.

Here, we built already what we see is great loyalty with physicians pose mentioned, we've seen lots of repeat usage and already in the markets. We're reserving we've embedded ourselves in many of these markets. We already only approved product. So physicians are really getting great kind of usage experience with clarify in the feedback has just been simply.

Terrific about what this kind of diagnostic does and allows for them in your treatment as they are considering treatment options for patients from the information they get from from a clarify scan. So we really are very optimistic about 2022, and we're going to continue to build outs are the teams that we have and quite frankly the influence.

That we have out in the markets, where we are serving physicians and their patients.

Thank you.

Welcome.

Thank you so much once again did you wish to ask a question. Please press star one and your telephone keypad.

Next question from Laurie Fellow from D. J S Securities. Your line is open.

Good morning, guys.

Thanks for all the color just a couple of follow up on the <unk> sounds like the revenue trends in the interest level are really hard to start how about on the on the on the cost you spoke of.

Like you've completed a good majority of the the commercial infrastructure. There can can you maybe Bob just give us an idea.

He's good sort of base levels in terms of Ah CNA and expenses and then or should we expect significant increases onions wise.

Good morning, Larry So, let's just kind of pick apart and you talked about gross margin to also asked about opex. So from a echo opex burst.

So all year I've been noting that we've been sort of in a range of $40 million to $45 million I don't really necessarily see that ramping that significantly though of course there'll be some annualization as we look into 2022 of the sales team market access teams that we've been adding.

So I would see some there, but there will be other costs that will modest moderate overtime as well I expect to see G&A stay fairly stable and get leverage that as a percentage of revenue.

And then R&D will be very dependent on the.

The different programs that we advance and the different costs associated with that.

Of course, each every dollar that we spend in R&D is one of these kind of phase gate, we're going to be very diligent about the return on that investment so.

From that perspective, I do expect to see leverage in the P&L as we go forward in time.

So from that perspective, and that's not only just for Q4, but also into 2022 or.

With regard to gross margin the beauty of this ramp with with Bellerophon, particularly as you think about the beginning aspects of cute three.

And I'll make up a an example of if you're if you're if you're a batches.

10, or 15 doses and you're selling three you are still having to expand on the entirety of did that entire batch.

But what we've seen throughout the quarter is with.

Really great growth that we've seen obviously are gross margin profile.

Has improved because now I'm being able to use all of those doses being so seldom but my overall costs don't go up from a fixed basis, yes, there are variable cost or east coast, but not to the same extent. So as we go and are able to ramp volume I do expect clarified gross margins to be above the company average.

And so as such it will be more contributory not only from Ah.

From a gross margin perspective, which I would expect to see jump up a bit a little bit here in the fourth quarter and then continue on that path that we have talked about overtime, which is.

Expansion of gross margin over the next number of years by 100 basis points. This is one of those drivers and so.

That will help to drive.

Each of the different operating expense categories as a percentage of revenue to to fall over time to drive that earnings leverage.

What kind of I appreciate the color and just you know I realize the acquisition of junk on so called a couple of years ago, but.

<unk>.

Let me too it was announced a couple of years ago and at that point, you sort of you did sort of accretion targets sort of two years post gross margin targets and I know you haven't specifically updated those numbers, but we still sort of targeting.

Targeting you know or in the range of did you feel like things have changed at all from a high level went up.

Super specific.

So Larry this is Marian good morning.

Just kind of all agree it was a really good decision.

<unk> <unk>.

Argot with our we're on target or ahead of our initial assumptions and it was it was just a really good decision yeah. Let me just tack onto that so yeah, I totally agree with what Mary and I said I mean, our synergy targets, we had all of them.

A year ahead of what we had initially and even capped off today with the announcement of being able to sublease. The one world trade office that was one of the some of the last of the synergy targets that we had in mind and that will start to flow through the piano as well.

But in terms of some of the other goals we remain committed to the.

800 basis points over the next three years and.

That that is achievable.

You have to remember to these goals that we put in place we're done pre COVID-19.

And even throughout this process of closing the deal and a virtual basis, and then achieving these financial targets and getting clarify filed on time getting it launched and expectations.

This is a very.

The deal is working out quite nicely.

Fair enough I appreciate the call it thanks, so much.

Thank you so much once again in order to ask a question. Please press star wanting a telephone.

We show no further questions at this time, ladies and gentlemen, thank you for participating in today's conference. This concludes the program you may disconnect and have a wonderful.

Okay.

[music].

Good morning, ladies and gentlemen, welcome to the Atlantis Holdings third quarter 2021 financial visa.

Conference call.

This is your operator 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, a replay of the webcast will be available in the investors section of the company's website approximately two hours. After the completion of the call and will be archived for 30 days.

I'll turn the call over to your host for today, Mark King Arnie Senior director of Investor Relations Mark.

Thank you and good morning, welcome to Atlantis Holdings third quarter 2021 financial results Conference call.

With me on today's call are Maryann, Henao, 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 provide a commercial update.

This morning, we issued a press release, which was furnished to the Securities and Exchange Commission under form 8-K reporting our third quarter 2021 results.

Can find the results you can find the release in the investors section of our website Atlantica is dot com.