Q1 2022 Lantheus Holdings Inc Earnings Call

April 29, 2022

Good morning, ladies and gentlemen, welcome to the <unk> first quarter 'twenty 'twenty 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.

<unk> of the webcast will be a belden industrial section of the Companys 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's call.

Mark <unk> senior director of Investor Relations Mark.

Thank you and good morning, welcome to <unk> first quarter 2022 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.

Bob will cover our financial results and updated guidance.

Maryann will provide closing remarks, and then we will open the call for Q&A.

This morning, we issued a press release, which was furnished to the Securities and Exchange Commission under form 8-K reporting our first quarter 2022 results.

You can find the release in the investors section of our website Atlantis 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 we get started I would like to remind you that our comments today. 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 hospital staffing levels and 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 will include certain non-GAAP financial measures reconciliation of these measures to the most directly comparable GAAP financial measures is also included on the investors section of our website.

With that it's my pleasure to now turn the call over to Maryann. Thank.

Thank you Mark and good morning to everyone. Joining us I am pleased to say, we are very positive news to share today.

<unk> reported a record quarter led by rapidly increasing Polaris <unk> sales and solid definitive performance, we continue to execute on our strategy to accelerate growth position <unk> as a category leader in the markets in which we compete and pursue our passion to find fight and follow disease to deliver better patient outcomes.

As the year continues we are focused on further establishing Polaris Sai <unk> pet imaging agent of choice in the USA prostate cancer community maintaining market leadership with our Microbubble franchise.

Executing strategic transactions in line with our portfolio objectives, and delivering on our financial objectives, which we believe best enhance shareholder value.

Now take a few minutes to update you on our progress.

It has been an exciting and transformational time for prostate cancer care with advances in technology, and new FDA approvals in both diagnostics and therapeutics.

We will provide further details on the Polaris <unk> launch to date in a few minutes, but I am thrilled that less than one year. After we commenced our launch more than 30000 men have been imaged with Polaris Sai, including more than 20000 in the first quarter of 2022 alone.

This is a testament to the innovation of our <unk> targeted pet imaging agent and our efforts to transform patient management for the U S prostate cancer community.

Now, let me take a few minutes to highlight our recent strategic collaborations with Polaris Sai.

First in March we announced a collaboration or collaboration with Novartis to include Polaris Sai and Theyre planned development programs poor predictor out there recently approved P. SMA targeted therapeutic for metastatic castration resistant prostate cancer.

This collaboration builds on Polaris <unk> inclusion in their expanded access trial flip of litho and directly aligns with our strategy to advance precision medicine in the treatment of cancer by enabling partners to use Polaris Sai and ongoing prostate cancer therapeutic trials.

As part of the agreement with Novartis, we will supply Pollero phy for the selection of patients within their trials and Novartis in turn will provide <unk> with all clarify related clinical imaging data from these trials.

During the quarter. We also entered into two strategic collaborations to advance our artificial intelligence or AI enabled imaging biomarkers for prostate cancer.

In January we announced the collaboration with the prostate cancer clinical trials consortium or PCC Tc a premier Multicenter clinical research organization that specializes in cutting edge prostate cancer research. The intent of this strategic collaboration is to integrate atlantis's AI platform into early phase <unk>.

<unk> studies.

Dan to discovery development and validation of novel AI enabled biomarkers.

And earlier this month, we expanded our collaboration with GE healthcare.

<unk> AI enabled a promise on their latest platform.

As a leading supplier of medical technology equipment GE healthcare is an ideal partner to provide global access to this unique AI platform for prostate cancer.

Turning to the affinity our market, leading ultrasound enhancing agent and our Microbubble franchise sales continued to grow despite widely reported hospital staffing challenges and record high COVID-19 levels early in the quarter. We're pleased to see that the affinity sales have steadily increased since mid January as COVID-19 cases.

And COVID-19 related hospitalizations have subsided.

With the FDA approval in February of our supplemental new drug application for our Bill record base manufacturing facility. We are now producing and distributing definitly manufactured at our on campus facility. In addition to continuing to source from our existing long term contract manufacturer.

The investment in our on campus facility with strategically driven to ensure supply chain redundancy as well as to drive margin expansion over time.

I'll speak briefly to his address before turning over to Paul.

During the first quarter, our team worked with nuclear medicine departments at academic centers of excellence in key markets across the U S. And we are pleased that two additional centers of excellence have joined the network of centers now offering as edge of treatment.

With the COVID-19, pandemic receding and hospital access improving we are optimistic both physicians and patients will consider treatments with the xetra pheochromocytoma empower ganglioma.

Now, let me turn the call over to Paul for a commercial update on our key products.

Thank you maryanne and good morning, everyone.

During the first quarter, our commercial teams continue to execute on our strategy, namely to establish <unk> as the <unk> pet imaging agent of choice in the U S prostate cancer community.

<unk> market leadership, with our Microbubble franchise and deliver on our financial objectives.

Beginning with the Polaris launch, we accelerated our momentum with <unk> sales of $92 8 million.

Compared to $35 4 million in the fourth quarter.

We also continued to invest in the brand across supply contracting market access and customer adoption.

Our supply and capacity investments included the activation of two additional manufacturing facilities or pms during the first quarter, which further expanded our geographic footprint.

We have also identified new pms to supplement our network expand our footprint and provide redundancy and enhanced capacity in existing geographies.

As highlighted last quarter, we continued to expand our capacity at existing pms sites by investing in additional synthesis boxes.

These new boxes allowed us to increase our overall capacity and number of batches produced.

We have also been able to improve our batch efficiency and overall batch size, while still selectively flying doses in advance of local pms activation.

Our broad manufacturing network and increased capacity along with F. Eighteens longer half life allows us to efficiently and continually meet the needs of our customers.

We believe this ability to meet customer demand when combined with <unk> being the first and only commercially available PSM a pet imaging agent for almost 10 months.

Provides us a sustainable first mover advantage.

Within market access both our pass through status with the centers for Medicare and Medicaid services or CMS and our fixed fixed code went into effect January one 2022.

We also continued to make considerable progress with commercial and Medicare advantage plans as well as radiology benefit managers and now believe 90% of covered lives have access to both clarify indications well ahead of what is typically seen at this point in our launch this.

<unk> is an important milestone for clarifying facilitating its placement in the prostate cancer workflow and ensuring that U S. Prostate cancer patients have access to this game changing product.

In addition, the society for nuclear Medicine, and molecular imaging or <unk> recently updated their appropriate use criteria, noting that the PSM a pet imaging, including clarify can be use for patient selection for PSM may targeted radio ligand therapy.

We believe this is an important step to ensure that health care professionals and patients will continue to have access to all approved <unk> pet imaging agents, including Polaris Sai.

Our market access team continues to support our customers and payers on relevant coding coverage and payment related questions.

During the first quarter. We also continued to execute on customer contracting and I am pleased to announce we now have contracts in place with 100% of our targeted U S academic institutions, which treat prostate cancer as well as many community hospitals government facility.

And freestanding imaging centers.

These contracts combined with our demand generating activities have enabled us to expand the breadth and depth of customer adoption.

We have seen significant growth in the hospital outpatient segment following pass through initiation with hospitals, comprising 70% of year to date orders.

Independent imaging centers and government facilities comprised 25% and 5% of year to date orders respectively.

We also remain encouraged by the rate of repeat demand increasing quarter over quarter with over 95% of our customers having ordered multiple doses.

As of the end of the first quarter, almost 700 customers across 45 states and the district of Columbia are actually ordering clarify on a regular basis.

We believe this highlights the impact Polaris <unk> is having on patient care.

And our ability to execute both in demand generation and supply fulfillment.

We believe clarify AI will also have a positive impact on patient care and product sales as it is designed to provide enhanced consistency and quantitative analysis precise anatomical context and can enable quantitative reporting.

Collectively these benefits potentially contribute to increased reader efficiency and reproducibility of <unk> pet Cte image assessments.

We are working with our partners sinter met and have continued to introduce clarify AI at key centers across the country.

Finally, I want to provide an update on the total addressable market for <unk> pet imaging agents.

The recent FDA approval of Novartis <unk> creates a new addressable market for <unk> pet imaging and patient selection for <unk> targeted therapy.

As a result, we updated the U S total addressable market or Tam for all <unk> SMA pet imaging to be around 250000 annual scans, which is an increase of approximately 30000 scans per year for this MCR PC patient population.

The total market opportunity for PMA pet imaging is now approximately $1 1 billion.

Importantly, this Tam may continue to increase as medical practice evolves and as <unk> therapeutics expand into new indications.

We look forward to continuing to be the PSM, a pet imaging agent of choice in this large and dynamic market.

As you can see we continue to execute against our launch priorities and to further establish <unk> as the <unk> pet imaging of choice in the prostate cancer community and we believe we will hold this position even with the recent availability of competitive agents.

Switching now to definitively the first quarter saw continued growth in year over year sales, even amidst hospital staffing shortages and record COVID-19 levels in January we.

We saw steady improvement over the course of the quarter and both in person promotional activity and customer ordering as case counts and hospitalizations decreased and we believe we have strong momentum coming into the second quarter and remainder of the year.

I will now turn the call over to Bob for a financial update.

Thank you Paul and good morning, everyone I will provide highlights of the first quarter financials, focusing on adjusted results unless otherwise noted.

Turning to the quarter revenue for the first quarter was $208 9 million.

An increase of $116 4 million or 125, 8% over the prior year period, earning.

Earnings per share for the first quarter was <unk> 97, an increase of 92 over the prior year quarter.

Before providing further details on these results. It is important to note that within these numbers are the impact of the Novartis agreement outlined in our 10-Q filed this morning.

We recorded revenue of $24 million and earnings per share of approximately <unk> 25 related to this agreement therefore comparable underlying performance due to our prior Q1 guidance is revenue of $184 9 million and earnings per share of approximately 71.

Turning now to the revenue details and beginning with precision diagnostics revenue of $86 $2 million were 100% higher from the prior year quarter sales of definitive net of rebates and allowances were $58 3 million.

Four 2% higher as compared to the prior year quarter and ahead of our previously disclosed expectations.

<unk> net revenue was $22 6 million down <unk>, 9% from the prior year quarter due primarily to the exited contract mid last year with an approximate $2 $5 million per quarter impact offset in part by opportunistic sales in the quarter.

Radiopharmaceutical oncology contributed $94 1 million of sales up significantly due to the continued rapid ramp in sales of clarify as described by Paul.

This result also includes a sequentially higher contribution from etc up 96, 1% over the prior year, which benefited from deferred procedures from Q4 last year as well as expanded sites of care.

Lastly, strategic partnerships and other revenue was $28 $6 million driven.

Driven primarily by the Novartis agreement noted earlier, followed by the Relistor royalty.

The Novartis agreement has been deemed licensing revenue in the quarter for accounting purposes, and can be can be considered a one time event.

Gross profit margin for the first quarter was 67% an increase of approximately 1670 basis points from the first quarter of 2021 on a similar basis. If we exclude the novartis contribution gross profit margin would have been 62, 7% or better by approximately 1240 basis.

<unk> from 53% in the prior year the.

The increase is due mainly to favorable product mix led by Polaris <unk> Infinity offset in part by increased supply chain and logistics costs.

Operating expenses as a percentage of revenue were 1497 basis points favorable from 45% in the prior year to 25, 5%, excluding the novartis impact on revenue.

Primarily by operating leverage while investing for sustainable growth in both sales and marketing and R&D.

Within G&A the company has initiated investment in our new ERP platform to drive workflow efficiencies as we grow.

Operating profit for the quarter was $92 $7 million or an increase of $83 7 million or 927, 3% over the same period prior year.

Total adjustments in the quarter totaled $33 8 million before taxes of this amount five six and $8 3 million of expense is associated with noncash stock and incentive plans and acquired intangible amortization, respectively. Also in the quarter, we expensed $18 4 million of net contingent liabilities of which.

$18 5 million is related to clarify <unk> or contingent value rights there.

The remainder is related to acquisition integration and other nonrecurring expenses, our effective tax rate was 26% in the quarter.

The resulting reported net income for the first quarter was $43 million and $67 8 million on an adjusted basis, an increase of 34% and $64 5 million respectively. GAAP fully diluted earnings per share were <unk> 61, and <unk> 97 on an adjusted basis, an increase from the prior year of 48 and <unk> 92.

Respectively.

As noted early.

Excluding the approximate 25% impact of these figures due to the Novartis agreement earnings would have been 36% and 71 on a GAAP and adjusted basis respectively.

Now turning to cash flow first quarter operating cash flow totaled $10 3 million as compared to $9 8 million in Q1, 2021 capital expenditures totaled $3 2 million up slightly from the prior year quarter free cash flow, which we define as operating cash flow less capital expenditures was $7 1 million a decrease.

Zero point $2 million from the prior year period, as we look forward to the balance of the year. We would begin we would expect to begin generating significant free cash flows is month over month ramping of Polaris high accounts receivables mature into cash receipts cash and cash equivalents net of restricted cash now stand at 105.

$4 million.

We continue to have access to our $200 million.

Undrawn bank revolver and are comfortable with our strong liquidity position.

Turning now to our guidance for Q2, and the full year, we forecast revenues to be in a range of $200 million to $215 million for the second quarter of 2022, an increase of approximately <unk> 98, and 113% over the second quarter of 2021.

We are updating our full year view to take into consideration actual Q1 performance as well as quarter end exit rates for Polaris Sai.

Therefore, we now forecast full year revenue to be in a range of $800 million to $835 million from the prior year from the prior range of $685 million to $710 million. This updated range includes not only recognize revenue from Novartis of 24 million recorded in the first quarter, but also the continued.

The option of Polaris High, which we now model at 385% to 420.

$420 million for the full year.

Our increased estimates or clarify encompasses our expectations of consistent performance amidst the competition as well as the continuation of progressive market penetration.

Turning now to earnings adjusted EPS should be in a range of <unk> 67 to 73 for the second quarter, we are raising our full year adjusted EPS to account for a relative Q1 outperformance as well as the incremental contribution from higher clarify revenue expectations and the adjusted EPS impact of the Novartis agreement of approximately 25.

We now expect adjusted EPS to be in a range of $2 90 to $3 15 per share versus the prior range of $1 95 to $2 <unk>.

With that let me turn the call back over to Maryann. Thank you Bob in closing I'd like to leave you with a few key takeaways first and notably I would like to recognize the first quarter of 2022 was a record period for Lantus for both revenue and earnings.

Performance was driven primarily by <unk> with its strong adoption by the medical community as a true innovation in the management of patients with prostate cancer.

We are fully committed in our efforts to further solidify clarify as the PSNH agent of choice with healthcare providers and the patients they serve.

Second the affinity steady recovery throughout the quarter and momentum moving forward gives us confidence in the continued growth and contribution of our Microbubble franchise.

Finally, it is strategically important that we continue to advance our portfolio objectives and this was an active quarter for us with the progress made towards that objective.

Look forward to sharing more information with you about these initiatives throughout the year.

Before we open the call to questions I would like to take a moment to highlight two recent additions wanted Atlantis Board and went to my leadership team in March we were thrilled to welcome Minnie Baylor Henry to the land These board of directors.

He has a stellar life science resume with regulatory affairs expertise. She is a proven business leader and will be a great add to the current complement of expertise represented by the directors on <unk> Board.

Earlier this month I added Dr. John <unk> to my leadership team as the interim Chief Medical Officer with.

With more than 30 years of industry experience, including previous positions at GE healthcare, Pfizer buyer and Merck Serono, John Claude will play a critical role in helping execute our strategic vision to find fight and follow disease to better deliver patient outcomes.

With that Bob Paul and I are now ready to take your questions. Operator. Please go ahead.

Thank you, ladies and gentlemen, if <unk> like to ask a question at this time you will need to press. The Star then one.

Telephonics.

Yes.

Now first question coming from the lineup with <unk> with Cowen Your line is open.

Hi, Thank you.

Hi.

Thank you guys.

And congrats.

Fantastic quarter here.

Maybe maybe just to start off on the guidance, which increased significantly I was I was.

Hoping Bob Maryanne.

Can you can you talk to us a little bit about your approach to how you arrived at that number wise.

Roughly $400 million at the midpoint I suppose at why is that the right number and then specifically if you could talk to kind of what would get you to the high end of the room.

What factors would get you to the low end is there any contemplation.

The expanded Tam and penetration into the therapeutic use it contemplated in this guidance range and how do we think about kind of the cadence through the year.

My estimate is.

There's about $300 million.

Polaris high revenue the spread between the remaining quarters do we just evenly spread that out how should we think about that thanks.

So I'll start rich and then Bob can get more detailed with numbers, but I think you've touched on some of that this is this is a range. We are still in the launch with thrilled with what we're seeing and we're still monitoring and kind of getting our own feedback from the market as to how they're adopting clarify all signs yugo.

And so we continue to monitor that and that is what has led us to as you noted increased the Tam along with some of the market event. The approval predictor was certainly a factor there, but the other factors are the events. The anecdotal events, we see in the market around the adoption of Polaris and the intent to use further.

So I won't I won't.

<unk> dive into the financial pool until you got to deal with your model, but I am not sure I would evenly spread that $300 million over the next three quarters, but I'll, let I'll, let Bob jump in there. Good morning, Rich. So I guess my scripted remarks were somewhat purposeful in how I laid out the the comments one we continue to look at exit rates in terms of.

Where we were.

By month this is a a.

By month ramp every month seems to be just that much better than the last.

But we are sitting here at the.

And at the end of April there's still many more months to go so as we thought about.

Going forward.

I use the words that we encompass expectations for consistent performance. So in other words, if we were to continue to because of competition that we're able to sort of continue to deliver.

What we have already managed to do.

Knowing that we will continue to add pms throughout the balance of the year.

That would get you towards the low end of the range. If you were to we see continued market penetration. So I E. As we think through Qs two three and four yes. I mean, the implications are that Q2 was higher than what was in Q1 just by the math.

And then I would expect the second half too.

As we said either be consistent with the first half or or can continue to grow in the same fashion that we've seen thus far.

Thing from a full year perspective, which is not a Polaris I think just keep in mind that the full year number now takes into consideration that $24 million from the Novartis agreement. So as you think through your model. That's a one time number but that's embedded in that 800 to 835 number as well.

Okay, but importantly, not embedded in the Polaris high number.

No.

Yes.

Thanks for that very helpful color, there and I think Marianne you suggested that.

There was some incremental contribution.

Host to predict Doe approval contemplated in that guide or you're assuming that you will have access to that market well congratulations on the.

<unk>.

And then excuse me.

Hi.

Update there, but are you assuming some contribution and use on that part of the market.

What im really comfortable saying that we're very comfortable that clarify any other PMA agents will holistically be included in consideration for <unk> targeted therapeutics. The Sn as you note and as we noted in our remarks, the <unk> guidelines have already come out with that and we expect <unk> to also update their guidelines.

<unk>.

Briefly within a short period, and we believe that the that both those set the guidelines as well as practice, we will consider the PSN.

Imaging agents holistically, when considering patient selection for pieces to make targeted therapeutics, but I did I did not meant to infer that that our guide or our numbers. Specifically include contribution from that we increase the Tam the total addressable market for consideration, but I wasn't trying to infer that we specifically include.

The contribution from that in our updated numbers.

Got it and if I could just squeeze one more any timing or updates on some of these.

Clinical collaboration efforts with Novartis that you highlighted.

Upfront.

Anything that we can expect in 2022 or updates.

That would be helpful. Thank you.

Those are all of those will fall under normally when we referred to clarify that we referred to <unk>.

<unk>, because we try to differentiate clinical use versus commercial use.

But those.

We mentioned I'm not sure if the scripted remarks here, but we certainly have been.

Transparent about that at this point for <unk> is well established for used in all late stage clinical PMA targeted therapeutic trials that are being conducted in the market and so that will be a source of volume, but again that is not really what's driving our revenue guidance. Our revenue drivers are being driven by the commercial up.

Take for medical use.

Thank you congrats.

Thanks.

And our next question coming from the line of Danielle <unk> with SBB Leerink. Your line is open.

Hey, good morning, everyone. Thanks, so much for taking the question and I will echo Rich's sentiments congrats on another amazing quarter.

I guess one question I had.

<unk> is as we look ahead to that May 17th Analyst day, not asking you to really front run, but maryann if theres any way you could preview what we.

We should expect to be hearing is it really about what we know is in the existing.

Product portfolio or are we going to talk about sort of what's next beyond the current clarify indication any color on what we might hear on May 17th and then I have one follow up.

Sure and good morning, Danielle may.

<unk> is going to be very exciting day, and it's our intent to really take the audience through our rationale for <unk> as we call them that radio ligand therapies, and really kind of help everyone understand how these products, whether it's diagnostics leader therapeutically are truly being embraced now in life Sciences and how.

As a company land to get the strategy is to be forefront in that is it really.

Exciting time for health care, we've seen that now we have our first approval with Novartis is approval of predictable that is the first of what will be the knock on the therapeutic side. We have the approval of clarify from last year, which I think really speaks to we believe the uptake of pillar of ice speaks to the how welcome. This innovation is.

In prostate cancer and there is more to come and so that's what we're hoping among other topics that you are hoping the investor day will really help shed some light on for our analysts and the investors who will share the day with us.

That's great and I guess, just my follow up was going to be on the Tam based on your guidance youre going to be at somewhere around 35, 40% penetrated 40% of the 900, but obviously less of the of the 1.1 dollars 1 billion. So.

What's next for clarify I guess stay tuned for May 17.

I would I would stay tuned and keep that.

Really eager to come.

Okay got it and then I just have one definitive question I'm not sure. If you guys have given this color in the past, but any way you can find no. This is not a ton, but any way you could quantify as best you can sort of what you do.

<unk>.

<unk> is and has been on that product and what we should be thinking for steady state growth. Once we're sort of let's call. It more in the rearview rearview mirror here. Thanks, Tom.

Good morning, So I'll start and then I'll kick it over to Paul.

So from a just from a from a numbers perspective, the growth rate of four point to encompasses.

Early impact in the quarter.

And in fact, it was maybe even slightly less like I said, then we expected.

My prior guidance was that it would be flat based on what we were seeing but we saw some robust rebounding in.

In volumes as we went through <unk>.

So.

Of note, even though I didn't state it specifically our view a definitive for the full year.

Remains intact in the sense that we would still be expecting but I think I. Previously noted this high single digit low double digit growth.

What that then means is that as we go through Q2, three and four.

We're going to be at robust rates too.

Lift up from where we are here in Q1, so we remain very confident about.

Its current trajectory Paul Yeah, Thanks, Bob and thanks Danielle.

Bob mentioned, we did see steady improvement over the course of the quarter. If we look at Covid case counts and hospitalizations. We were at all time highs in January which impacted our ability to be in hospitals and physicians offices promoting and detailing the product as we saw cases and hospitalizations reduce over the course of the quarter. We in turn saw.

Increased promotional activity, meaning in person activity and we saw greater utilization.

In our customer base, and we would expect that to continue as counts remained low and hospitalizations remained low.

Actually we continue to monitoring the overall staffing situation, but we believe we have significant momentum coming into the second quarter.

Thank you.

And our next question coming from the line of Zachary <unk> with Jefferies. Your line is open.

Hey, good morning, Thanks for taking the question and congrats on another great quarter.

Just on the competitive landscape for clarify.

There is two other products coming to market.

In the second half can you just speak to how we should think about the second half of the year with these products come to the market.

So Jack good morning, this is Marion.

I'll start and then we can turn it over to Bob wherever we think the question goes best we welcome competition into the market.

We've seen with the Tim This is a large market. It's a growing market. There is still awareness to be built out there around the availability of PSNH pet imaging patients so for us it is.

Almost in that sense, good news to have others out there, helping us with creating that awareness, having said that we are absolutely confident that we will remain the leading PSNH pet imaging agent of choice and it's our intent to have that be clear not only to the market, but in the reserves that were continued to post with that I'll turn it over to Paul for additional comments there. Thanks Marion.

I think I would echo what Maryann said right.

I'm thrilled to be the first commercially available P. SMA imaging agent for almost 10 months.

We remain focused on execution of clarify and we've always contemplated that we would have competition.

We do think that given that PMA pet imaging is a relatively new modality for U S. Prostate cancer patients, having additional voice out in the marketplace to raise awareness is a good thing to enhance the market and to raise awareness.

The recent two competitive approvals represent the third and the fourth gallium based PMA pet imaging agent and we remain confident that as the only <unk> approved isotope for PMA pet imaging with a significant distribution and scale advantage that better match marketplace dynamics that.

We're going to be able to continue to lead going forward. So we welcome the continued interest.

Also incredibly excited about expanding therapeutic options and in turn diagnostic opportunities and continue to remain confident that we can remain the PMA pet imaging of choice in the community.

That's helpful.

One more just on the Pms.

You ended last year with 80% of the country covered and I think you are moving away from talking about that number.

The comment now that.

The percentage of the country that is covered will that growth will slow, but the more high density population areas you will continue to add additional.

Cyclotron to drive increased cash usage.

<unk>.

Yes, I can take that so we will continue to add PFF coverage to expand our geographic coverage.

That said right we already have the vast majority of the U S covered as I think I highlighted Polaris <unk> patients have and continue to be treated in 45 patients. In addition to the district of Columbia, and so we have a significant distribution network that already covers there I think when combined with our market.

Access progress, where 90% of covered lives have access to Polaris high we remain focus on continuing to add new customers and we do that on a regular basis, but ensuring that we also increased the breadth and depth of the penetration going forward. So I think it's right to say that we will add capacity, we will add redundancy.

And we will continue to focus on adding and supporting new customers and using clarify.

Okay, that's really helpful and if I could sneak one more in just on can you give some comments on clarify.

And the U S landscape.

Timeline potentially looks like I know it's through partnership.

Does that get easier partnership Purion as our partner in the EU, which is the other major medical market here for <unk> imaging agents I can't offer specific timelines as because I can't speak for the company that can say they are phase III.

With the product and I can say confidently that their intent is to bring it to market.

The EU there is appreciation in the EU for <unk> based pet imaging agents and in fact as folks may remember from our comments before launch the guidelines in Europe actually reflected before the guidelines in the U S. The guidelines in Europe reflected the preference for PMMA based pet imaging agents over other modalities as you prefer.

Third modalities to use in the diagnosis and management of prostate cancer patients. So we'll look we support our partners will look forward to that but I can offer a specific timeline for them.

Thanks for taking the questions and congrats on the quarter.

Thank you.

And our next question coming from the line of Larry Solow with CJS Securities. Your line is open.

Great. Thanks, and congrats I'll, let me Echo my congratulations.

The first question I have just on.

A quick follow up on <unk>.

Competitive landscape.

I don't know how well you can answer this question but.

You feel like you are taking most of your your your get your market share gains today from <unk>. The other pet imaging agent or were you also.

Perhaps taking some share from more traditional cat scans ultrasound.

Doesn't seem like the gallium based are having much.

I don't know if <unk> really been on the market, even though a couple have been approved.

I guess my second part of that question is.

As we look out competition, maybe we will have to come from the <unk> side, what is the sort of near as competition.

<unk> and her team.

Based agents.

Larry doing it's Marianne just so it's clear for everyone. When we talked about the 10 and we talk about those whether we're talking about scans or patients that is across all modalities. So inclusive of historically, what modalities have been used to image prostate cancer patients. When we look at the success that we've had with.

Polaris Sai I think it's fair to say that Polaris Sai has been used instead of all of those modalities now to what specific extent.

For each of them I can't quantify but what if.

Look adjusting uptake and the intent of physicians I think it's fair to say that if you compare to the other modalities that had been previously used to image prostate cancer.

Clarify has taken share have we wanted to kind of describe it from all of them.

Okay, I think if I were to expand on yes, I'd, probably want to add a comment there.

We think of this as taking share from previous non PSA modalities, specifically in the recurrent population right and so I think we're taking share from all of those modalities as well as.

Non PMA pet imaging that you referenced but I think importantly, the metastatic indication as a new indication.

Four.

The marketplace within pet imaging that we received last May and so this has been about taking share, but most importantly about expanding the marketplace and as you can see the total addressable market continues to increase.

As the PSM agent of choice, we continued to take share as well as to build the marketplace to stress the advantages of this important modality and clarify specifically.

Got it.

My second part of that sort of along with the question because it does seem like the <unk>.

<unk> is superior so perhaps a gallon.

The supply issues.

The sort of at least in the near term seem to be on the.

Back burner, there, but perhaps another 18 Caribbean.

And compete better with you guys.

Can you do you have just a brief sort of.

Outlook on when some of those.

Competition could potentially enter the market.

Sure and your comments are well noted there Larry.

There is another that we are aware of another F 18 based product under development to our knowledge. It is still in its phase III program.

Which is completed it will require submission to the FDA, we would not anticipate it would be.

It would be offered priority review since that is for the novel entrants into the category, which is what we were offered.

So from a timeline perspective, I don't think we anticipated all that we would see that agent anytime in 2022 at least.

Okay I've got.

A question for Bob just on the guidance.

The split hairs, because obviously great outlook at all.

On the Q2 guidance specifically.

If we just compare sequentially.

Sort of strip out the strategic 24 million that you mentioned from Novartis you kind of did like 180, I think 184, you said, so I'll say 185, and 70, Stan just to use round numbers and your your guidance next quarter is like mid point is what 207 and 70.

Or is there any reason.

It looks like margin going down a little bit as a higher cost or anything or how should I kind of decide for that.

That's a great question Larry.

It's actually slightly higher costs in the opex aspect of things so one.

We're letting Paul have.

Funds too.

You mentioned that.

Collaborations.

<unk> that we have that those expenses start to really kind of be in Q2.

Our ERP investments that is more ramping here in Q2 as well so.

The gross margin number that we provided.

Is sustainable and so as you think as you go forward from modeling than that that you should see that.

Drop through continuing particularly as we see definitive <unk>.

Both continuing to grow according to our expectations, but we will have slightly higher levels of investment and that was purposeful and we thought that was important to help to continue to drive for growth during the year, but also to set ourselves up for.

Technology advancements that we think can drive more workflow efficiencies for the company longer term.

Absolutely, yes, it sounds like discretionary investments to drive future growth that makes 100%.

Just last question any update on definitive in terms of.

The room temperature or the in house manufacturing I know, you've I think sold a little bit of both.

I don't expect you to give quarterly updates every quarter, but anything you could mention on those too.

So as I offered in my remarks, Larry we now are shipping.

From our on campus facilities, so our supply chain for <unk>.

<unk> I'll say original formulation.

Is now sourced both from our Billerica facility as well as from our long standing contract manufacturer.

Our perspective.

I've noted somewhat continuously it's not our intent to break out the two formulations and offer information on specifics to that.

Our offering is out to our customers for choice of formulation, we are continuing to execute that we our customers and as I said, we'll leave it to their choice.

Don't anticipate at any point in the future we will be offering detailed information on the split of use of those products in the marketplace.

Understood Fair enough okay, great. Thanks, I appreciate all the color.

Welcome Larry.

And as a reminder to ask a question. Please press star one.

Follow up question from Rich <unk> with Jefferies. Your line is open.

Hi, Thanks for taking the follow up I, just wanted to ask on pricing for Polaris.

Is that all coming in as expected.

Or can you comment there at all and then also just on legislated sorry, just let US both right now just on legislation, but I belief is sitting in Congress right now the kind of act for potentially amending or modifying transitional pass through for radio pharmaceuticals.

Any updates or views on prospects for that kind of moving through.

Thanks.

So I will say pricing is.

Is where we expect it to be as you know, we don't speak to pricing, specifically, but I will I am okay with sharing that it is where we expect it to be on the find act I like the kind that we could certainly would be.

But it's the actual name is defined deck continues to move forward, we continue to add support.

We work with our accuracy to AD supported we continue to see progress there.

Paul do you want to add any additional comments on specifics with that yes.

Thanks. Thanks for the question. This is an active source of involvement for our government Affairs organization. As you may be aware. The find act has now been introduced on the floor of both the house and the Senate with significant bipartisan support and sponsorship.

And so we are hopeful.

That this will become law in the coming months or year, and then that would have a notable impact on the pass through dynamic to ensure that CMS continues to reimburse for innovative radiopharmaceuticals going forward.

Thanks, actually if I could just follow up on that Paul So, let's just say it goes through.

Traditional pass through has done away with.

What is what are the mechanics of what that does and how that impacts price and what it does for you in the market.

Sure No. It's a great question, we are going to be talking more about this on investor day, but let me provide some more information here first and foremost I think it's important to understand that pass through as a payment dynamic only applies to traditional Medicare payment in the hospital outpatient segment and so that really is a must.

<unk> of the patient population that is being treated for prostate cancer. When you think about the number of commercial payers. When you think about alternative sites of care, whether theyre government facilities or whether they are freestanding imaging centers and when you also note the increasing share that Medicare advantage is having and we've seen that rise and expect in the coming years to be almost.

50%, so the patient population that actually.

In their site of care and through their insurers.

Minority, it's around a quarter of the population and so I don't want to overstate the importance, but what I do think is important is if defined act is passed then at the end of the 36 month or three year, if you will clock.

Then there is not a payment adjusting this does not impact coverage in any way. This is strictly a Medicare hospital outpatient payment from CMS for traditional Medicare that would impact payments to hospitals, and so I'm not going to speak about the specific financials of a hospital system, but the passage of the fine.

<unk> could positively influenced their desire to continue to use novel Radiopharmaceuticals, even after pass through and in the current cost structure.

Okay. Thanks.

Okay.

And again as a reminder to ask a question. Please press star one.

I am showing no further questions in queue I'll turn the call back to Martin for any closing remarks.

Yes. Thank you everyone for joining us on today's call I would like to remind you that we will be webcasting, our inaugural Investor day on may 17th.

Remember that the <unk> management team, including myself as well as key opinion leaders will provide what we will see is an in depth review of our prostate cancer and micro bubble franchises as well as our overall business and financial strategy.

Okay.

And I think that concludes our remarks for today.

Thank you, ladies and gentlemen that does conclude our conference for today. Thank you for your participation you may now disconnect.

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Good morning, ladies and gentlemen, welcome to <unk> first quarter financial results Conference call. This is your operator for today's call. Please note 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 investor real section of the Companys 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's call.

Mark <unk> senior director of Investor Relations Mark.

Thank you and good morning, welcome to <unk> first quarter 2022 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.

Bob will cover our financial results and updated guidance.

Maryann will provide closing remarks, and then we will open the call for Q&A.

This morning, we issued a press release, which was furnished to the Securities and Exchange Commission under form 8-K reporting our first quarter 2022 results.

You can find the release in the investors section of our website at <unk> Dot com.