Q3 2022 Lantheus Holdings Inc Earnings Call
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Okay.
Good morning, and welcome to the last year's third quarter 2022 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.
Replay purposes.
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 will be archived for at least 30 days I will now turn the call over to our host for today, Mr. Mark Carney Vice President of Investor Relations.
Okay.
Thank you and good morning, welcome to Lantus is third quarter 2022 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 operating officer.
Maryann will begin the call with introductory remarks, and then turn the call over to Paul for an operational update.
Bob will cover our financial results and updated guidance then we will open the call for Q&A and finally, Maryann will provide closing remarks.
This morning, we issued a press release, which was furnished to the Securities Exchange Commission under form 8-K reporting our third quarter 2022 results.
Can find or at least in the investors section of our website Atlanta stockpile.
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. 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.
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 risks and uncertainties.
Also discussions during 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's my pleasure to now turn the call over to Maryann.
Thank you Mark and good morning to everyone. Joining us we delivered an exceptional third quarter as we continue to find fight and follow disease to deliver better patient outcomes.
Our strategy to accelerate growth and diversify our portfolio and revenue streams, which we outlined at the beginning of this year is succeeding.
I am pleased to note, we reported revenue of $239 $3 million up more than a 134% year over year I'll take a few minutes now to highlight some of our recent progress across our portfolio.
Almost 18 months into our launch we are thrilled that Polaris is firmly established as the leading P. SMA pet imaging agent.
We are particularly proud of the difference that is making but the U S prostate cancer community.
With commanding market leadership and continued growth of the overall market. Our business has continued to grow even amid increasing competition.
We believe we will see continued growth as more patients and healthcare professionals become aware of the benefits of P. S pet imaging and Polaris I in particular.
Since our last call. We further expanded our U S footprint with additional sites activated for a pet manufacturing facility or Pms partners, increasing our overall capacity and adding redundancy.
Our European partner Curium is making progress with their efforts to bring our product to market as the first commercially available at 18 based P. S make pet imaging agent in Europe , having filed their marketing authorization application with the European Medicines Agency in June .
Last month <unk> presented top line results from their pivotal phase III Python clinical trial at the European Society for nuclear Medicine or E. A N N.
Trial enrolled prostate cancer patients with biochemical recurrence, who underwent definitive radical prostatectomy external beam radiotherapy or brachiate therapy the.
The clinical trial results highlighted that before people start at 18 showed a significantly higher detection rate as compared with 18 of floral court lien and had a higher impact unintended patient management.
We're excited that we are one step closer to our leading U S. F 18 based P. S may pet imaging agent, making a difference to the European prostate cancer community.
We were also in attendance at E N N with several presentations on a promise which is branded as Polaris by AI in the U S of note in the top rated oral presentation. We reviewed the results from our retrospective analysis using a promise to evaluate P estimate Pete pet scans pre and post androgens.
Depravation therapy of men with treatment naive castration sensitive prostate cancer there.
The results demonstrated that a change in automated PSA scores in bone in lymph nodes is strongly associated with PSA response.
<unk> has also indicated that a quantitative automated P. S. M. A score they assess treatment response in bone, which is not feasible with conventional imaging.
We are pleased to share that we signed an agreement with Siemens health in years to integrate a promise into the latest software for the Companys workstations in the U S and Europe .
Through this collaboration along with our collaboration with GE healthcare that we announced earlier this year, our AI technology can be broadly distributed and integrated into the leading workstation systems that facilitate the nuclear medicine clinical workflow across the majority of pet sites in the U S and Europe .
Switching now to our Microbubble portfolio in our 'twenty second year since launch I am proud to say definitively remains the most chosen most studied and most trusted diagnostic ultrasound enhancing agent in the U S. We have continued to grow our franchise and our sustaining our 80 plus percent share of the market.
With respect to a key partnership in September GE healthcare, our partner for the product candidates with period as announced at the Aurora Phase III pivotal trial met its co primary endpoints for both sensitivity and specificity for detecting coronary artery disease or C. A D. The most common form of heart disease.
And the leading cause of death globally. The trial also met its key secondary endpoint demonstrating higher diagnostic efficacy corporate peer does pet as compared with spect myocardial perfusion imaging or MPI. The predominant procedure used in nuclear cardiology today.
In the U S. There are approximately 6 million MPI procedures performed each year.
The phase III open label study, which enrolled over 600 patients across sites in the U S Europe , and Canada assess the diagnostic efficacy of <unk> in detecting C. A D with invasive coronary angiography as the standard of truth.
If reported period as it approved given the advantages of the F. 18 isotope. This product would have broad available distribution and also be suitable for exercise stress testing, which is challenging with the currently available cardiac pet radio tracer.
Under the terms of our agreement with GE healthcare, we are eligible to receive up to $60 million in regulatory and sales milestone payments.
Double digit royalties on U S sales and mid single digit royalties on sales outside the U S.
Now, let me turn the call over to Paul for an operational update on our business.
Good morning, everyone. As Maryann noted, we continued to execute on our strategy during the quarter, specifically for clarify and definitive which I'll highlight now.
I am pleased to announce the Polaris high the U S market leader in P. SMA targeted pet imaging generated net sales of $143 $8 million and we used in over 30000 patient scans during the quarter.
Our success derives from significant unmet need innovation and execution.
Prostate cancer is one of the leading causes of death for men and conventional imaging does not offer sufficient sensitivity or specificity to adequately identify metastatic disease.
Polaris <unk> innovation is its ability as a P. SMA pet imaging agent to selectively bind to prostate cancer cells.
In fact, <unk> binds to over 90% of prostate cancer cells, which in turn allows physicians to identify the location and extent of disease.
In our clinical trial, two thirds of men had a change in their intended treatment plan based on their clarify image demonstrating that these new insights are actionable by Hcp's.
And finally execution since we acquired <unk>.
The team successfully gained FDA priority review, which accelerated our time to approval and secured widespread reimbursement established manufacturing and distribution capabilities at scale built a commercial infrastructure to support a best in class launch that has already impacted the lives of over.
90000 men to date.
Since the beginning of the third quarter, we further expanded clarifies a U S footprint with new Pms, including the first academic pms to self self supply clarify.
Increased capacity at existing sites.
Added redundancy in key geographic areas broadened our customer base and made progress with clarify AI.
Our new Pms include Somerset, New Jersey, Nashville, Denver, Birmingham, and most recently Davenport, Iowa, and Salt Lake City.
These new Pms enhance our capacity in the New York City Metro area, and Tennessee markets and expand our footprint into Colorado, Alabama, and know, Iowa and Utah.
We have now successfully serve patients in 46 of the 48 contiguous states and the district of Columbia.
As I mentioned last quarter, we modified our existing agreement with a key pms partner to double the number of their pms locations manufacturing clarify and extend the agreement to 2027.
By the end of 2023, we expect our existing Pms network to increase by over 50% further enhancing capacity and redundancy.
In turn our customer base continues to grow.
We have been pleased with the rate of adoption and note that more than 1000 customers have now ordered clarify with 97% of them being repeat customers.
Our promotional efforts are increasingly focused on ensuring that referring hcp's, namely urologists and medical oncologists and radiation oncologists are aware of the benefits that <unk> can offer the U S prostate cancer community.
And market access we continue to make progress and are pleased that now five of seven Medicare administrative contractors or Macs have confirmed an agnostic approach to patient selection for P. SMA targeted radio ligand therapy, such as <unk>.
Meaning any approved P SMA pet agent, including clarify can be used.
Finally, we established a European collaboration with curium for the commercialization of a promise as they anticipate approval for <unk> in Europe in mid 2023.
Turning now to definitive.
<unk> market, leading ultrasound enhancing agent sales for the third quarter were $60 7 million.
Up five 4% from the prior year period.
We continue to grow the franchise and maintain market leadership, even amidst staffing challenges and a decrease in referring physician patient visits that continues to impact the broader healthcare market, including Echocardiographer.
I'll now turn it over to Bob.
Thank you Paul and good morning, everyone I will provide highlights of the third quarter financials, focusing on adjusted results unless otherwise noted.
Turning to the quarter revenue for the third quarter was $239 3 million an increase of 134, 4% over the prior year period earnings per share for the third quarter was 99%.
An increase of approximately 91 over the prior year.
Now I will turn to the details beginning with precision diagnostics revenue of $89 million increased one 3% over the prior year quarter sales at affinity net of rebates and allowances were $60 7 million and five 4% higher as compared to the prior year quarter and in line with prior expectations for the third quarter.
<unk> net revenue was $22 1 million down two 6% or about $590000 from the prior year and included a modest amount of opportunistic sales as guided on our last earnings call.
I would like to note, we have exited our gallium gallium businesses effective at the end of the third quarter as capital expenditures necessary to keep our facilities current do not meet our internal return internal return hurdle metrics given the declining market opportunity for these two products.
Year to date sales totaled approximately $2 $3 million and have been reported within other precision diagnostics.
Radiopharmaceutical oncology contributed $144 7 million of sales up significantly due to the exceptional performance of Polaris Sai.
This result also includes an incremental contribution from etcetera.
Lastly, strategic partnerships and other revenue was $5 6 million in the quarter.
Gross profit margin for the third quarter was 66, 2% an increase of 16, 1% over the third quarter of 2021 as a result of 51%.
As has been the case in recent quarters. The increase is due mainly to a favorable product mix led by <unk> and affinity offset in part by expenses associated with expanding rpms.
Their network for increased redundancy and capacity for Polaris high.
Operating expenses were 16, 7% and favorable from 42% in the prior year to 23, 4% of net revenue in the current quarter overall operating expenses are in line with our expectations with continued focus on driving Polaris high awareness amongst the referring physician community.
Increased in person commercial activities in support of commercial products and attendances at Congresses, as well as focused investment and business development activities and our ERP program.
And as a note we expect to transition our ERP program from a discovery phase to implementation beginning now in the fourth quarter amongst other investments, which you expect will incrementally add to our current opex run rate.
Operating profit for the quarter was $102 $2 million or an increase of $92 million or 904, 1% over the same period prior year.
Total adjustments in the quarter was $16 5 million before taxes of this amount eight one and $8 3 million of expense is associated with noncash stock and incentive plans and acquired intangible amortization, respectively. The remainder is related to net changes in our contingent receivables and liabilities as well as acquisition.
<unk> integration and other nonrecurring expenses.
Our effective tax rate was 29% in the quarter. This rate includes a higher blended state tax provision rate due to muscle clarify is geographic mix offset in part by the impact stemming from the resolution of certain of our state tax utp's in the quarter.
The resulting net reported net income for the third quarter was $61 2 million and $77 million on an adjusted basis, an increase of $74 6 million and 65 million respectively.
GAAP fully diluted earnings per share were <unk> 86, and <unk> 99 on an adjusted basis, an increase from the prior year of $1 six and <unk> 91, respectively.
Now turning to cash flow third part third quarter operating cash flow totaled $93 6 million as compared to $4 3 million in Q3 of 2021 cat.
Capital expenditures totaled $6 1 million up $3 7 million over the prior year quarter free cash flow, which we define as operating cash flow less capital expenditures was.
It was a record $87 5 million, an increase of 85.6 million over the prior year period.
Year to date free cash flow has totaled $162 8 million cash and cash equivalents net of restricted cash now stands at $257 3 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 updated guidance for the full year and Q4, we now forecast full year revenue to be in a range of 915 to 919 from the prior range of $885 million to $905 million. This implies a fourth quarter range of $243 $247 million as a reminder, this <unk>.
<unk> full year range includes the recognize revenue from <unk>.
Novartis of $24 million, which was recorded in the first quarter.
Turning now to earnings and keeping with the fourth quarter adjusted EPS should be in a range of 95 to <unk> 98.
Taken together with the increased revenue expectation and year to date earnings performance, we are raising our full year adjusted EPS to be in a range of $3 80 to $3 83.
Our share versus the prior range of $3 50 to $3 60.
With that Maryann, Paul and I will now take your questions. Operator. Please go ahead.
Yes.
Thank you.
At this time, we will conduct a question and answer session. As a reminder to ask a question.
You will need to press star one on your telephone keypad and wait for your name to be announced please standby.
The first questioner.
One moment please.
Our first question comes from the line of Romano, who as with F.
Securities Go ahead please.
Great. Thanks, good morning, everyone.
Good morning.
Good morning.
Quick question about your over 1000 customers, who are ordering clarify maybe could you just elaborate a bit on what the breakdown is between large institutions versus smaller imaging clinics. Just curious how that demographic is evolving over time for Polaris Sai.
Yes, I can take that so thank you for the thank you for the question. So the 1000 customer.
Customers.
I have ordered to date, we've certainly seen a mix of what that looks like I think historically when we look at the concentration overall of our business it remains somewhat comparable.
While many are familiar with the 80 20 rule, where 80% of business is driven by 20% of accounts, we actually have a broader usage across our business, 80% of our businesses within about 35% of our accounts and that those larger accounts are a mix of large academic hospitals freestanding imaging centers as well as government facilities.
The overall breakdown across hospitals across government facilities and independent imaging centers has stayed relatively stable as we've continued to add imaging centers overtime and I think I would add as I've mentioned in the past, where we have certainly added customers from an imaging center perspective going from 300.
Roughly at the end of last year to 900 at the end of the second quarter and they were now 1000, the future growth as we've said in the past will increasingly come from activating the referring physician community, specifically urologists medical oncologists and radiation oncologists.
To raise awareness of <unk> pet imaging and clarify specifically.
Got it Super helpful and you sort of started to answer My next question I was curious how are you thinking about the future growth trajectory of clarify like going into 2023.
Do you expect as you start to see get more of.
Of how clarify growth goes of year over year.
Well I think first and foremost we're obviously incredibly pleased with the impact of clarify has had on the U S. Prostate cancer community, we take great Pride in 90000 patients having spent scanned since launch and that impact. We think can continue to grow there is still significant room to be able to educate.
Additional referring physicians on the benefits the Polaris <unk> SMA pet imaging can bring to their customer base. There are still imaging centers to add but we don't expect that number to increase at the same rate as we've seen in the past, but overall, we're incredibly excited about where we have gone to date and even more so with the potential to continue to bring.
Polaris five to the U S prostate cancer community in the future.
Interesting, yes Super helpful and last question from me I know you have a new competitive entrant in the market I'm curious if anecdotally your field force is hearing anything in terms of competitive dynamics are.
In terms of strategies that you might use to protect clarify.
So I'll start there and then Paul can jump in and Bob as well.
We are we are very comfortable with our position as the most chosen and the leading PSA pet imaging agent.
We absolutely expect that to continue so it's not we're not in protective mode with our business. We're in growth mode and so we continue to open and as Paul alluded to there is there is demand to be unlocked among the physician generating would generate the request for these exams community and Thats, where we will stay focused as a as a market.
We continue to see this market be.
Larger and larger as physicians understand how they want to embrace Polaris <unk> for utilization and so we are fully in growth mode and don't feel that it's.
Any way to define what kind of strategy at this time all of our operations is being protective Paul do you want to add your Marion I think thats, 100% accurate I mean, I think we're incredibly excited with the growth not only of clarify, but if the overall market.
If we look at.
What our competitor is published for their sales in the second quarter combined with ours the market on an annualized basis with north of $500 million and with our third quarter results and what we've seen them the annualized market for <unk> imaging in the US was already now over $700 million just one quarter later and so as Maryann mentioned we are at.
Absolutely and growth mode. We have expected competition from the very beginning we think overall it has helped raise awareness across the marketplace a PMA pet imaging in the role. This can play in the prostate cancer community and we've obviously been very pleased with our results, but also recognize that there is a role for.
For competition.
They have had some success specifically in geographies, where we are still ramping up capacity and.
And redundancies there are some centers that have their own gallium generators that are going to want to provide self supply which is entirely appropriate and then theres also customers that are going to want dual supply. Unlike a small molecule or a biological.
Area. This product is made on a daily basis across the country and so we've also seen that but we are really focused on growing the overall market and are incredibly pleased not only with the impact we've had on the community to date, but where we see going forward to continue to have that ability to grow this franchise.
Sounds good thanks for the clarification.
Our next question comes from the line of Larry Solow with CJS Securities Larry Please stand by while I open up your lines.
Just a quick question a follow up on the <unk> can you maybe just any color on it.
You said you went from 900 closer to a thousand.
Usage sure ranges.
Varying degrees.
I assume in terms of the doctors and clinics that are penetrated.
Or that are using it there is still a lot of room for growth in terms of within those clinics is that a fair statement.
Good morning, Larry This is Marion I'll start and then I'm going to turn it over to Paul I think it's very fair to say that current utilization of clarify reflects the communities and how prostate cancer is treated and I think Paul was trying to describe that as well im talking about the mix of our customers and where they exist we exist.
Everywhere, where prostate cancer is being treated and as you mentioned there is we are still at the what will be the beginning I'd say.
Of what full utilization will be as physicians not only gain access and familiarity with the product. But then also decide themselves how they want to embrace this product.
Better management of prostate cancer disease.
Larry I think the question is fundamentally.
We are still incredibly excited at the growth prospects of Polaris Sai there.
There are only so many centers in the U S with U S with Pep CP centers, we've seen that number that have been using Polaris high grow as we've mentioned through 300 to now 1000.
But that number isn't going to continue to grow at the same rates, we've seen up we've penetrated the vast vast majority of imaging centers across the country that now have access to and are ordering Polaris high where the growth will come from is now activating those urologists and medical oncologists and radiation oncologists.
We're not early adopters to help them understand the benefits of prescribing <unk> for those patients and then those referring physicians in turn request scans from their imaging centers and so we're still very excited at the potential we still think there's significant room for opportunity and for growth.
To reach a significant number of patients that are still not receiving.
Yes, Thanks Scott.
But the growth is going to come more and more volume.
Everyone. We just had a significant echo feedback on our lines apologize if that was also true.
Translated to all of our participants, but it seems to have quieted now.
Paul is just completing his comments talking about the growth in the future for Polaris I will also come from activating more patient pools as we engage with those physicians who are generating demand for currently for imaging done with conventional approaches which will we believe will translate over to the SMA pet based imaging.
Yes.
Great. If you could just talk.
Quick follow up just Maria on the on the <unk>.
Pass through status I think technically.
So I think it is set to expire at the end of 'twenty four.
Can you just.
I think I know this came up at the at your Analyst day, typically just given sort of a couple of minutes discussing that and your confidence that it won't.
Necessarily impact pricing.
Once that expires.
Absolutely Larry So as you correctly noted.
Pass through status under the current under the current administration pass through status will end at the end of 2024 for Polaris by having been in place for three years.
Piece that we are that we are educating is as well as we can to our audience about pass through is understanding for what sites of care and what patient pools pass through applies.
<unk> is only an administered benefit the pricing schema or traditional Medicare patients treated in the hospital outpatient setting and what we continue to see is migration of imaging out of the hospital outpatient center and a decreasing pool of patients who.
Our insured under the traditional Medicare benefit so both of those factors, especially in combination.
Result in a smaller pool of patients who are essentially covered bypass would be covered by pass through especially as we get out to the end of 2024 now. We also believe that the physician adoption of <unk> and physician satisfaction with the results, they're seeing with our images will also.
Ill call it a stickiness or we could call it product loyalty to Polaris <unk>, even in a post pass through period and finally, we still are very carefully monitoring a piece of legislation called defined act, which the purpose of is to eliminate what is currently the pass through price.
<unk> schema for Radiopharmaceuticals and certain other products, but here specific to radiopharmaceuticals, which means that we would have permanent.
I will say.
What we would say is more fair reimbursement levels for complex Radiopharmaceuticals, Paul do you want to add anything no I think very well said Brian .
Great. Thanks, So much just last question just for Bob Real quick just on the operating expenses look like.
It kind of trended down sequentially was there anything timing related there SG&A was a little lower R&D a little lower.
Or is that just sort of moving around from quarter to quarter.
It's just moving around a little bit quarter to quarter, Larry If I just look sequentially, it's pretty much in line on an on average basis.
You do get puts and takes during the during the year I am trying to signal that out for the fourth quarter, particularly when I think about our ERP program. There are certain operating expenses associated with getting that program off the ground.
<unk> been doing a lot of discovery work and that implementation.
Phasing starts now here in the fourth quarter, So I do expect it to be incrementally higher.
We are doing and I don't mean tens of millions I'm talking.
Small small numbers.
But we are also using this opportunity to.
To advance work in sales and marketing if you will around market research as we know as we really kind of dive into.
The different markets in which we're playing particularly in the prostate cancer arena. So.
Thanks for the question.
Great I appreciate all the color. Thank you.
Our next question.
Will come from the line of Mr. Anthony Petrone with Mizuho Group Anthony will you. Please stand by while I open up your line.
Yes.
Hello.
Yes.
Be open.
Okay, great. Thank you.
Come back to a couple on clarify a stay on the <unk>.
Sites at.
At the end of Q and across 46 States just wondering Paul when we think about the actual number of sites out there in the United States.
What is that number so are we kind of at the upper bound just in terms of sites and.
Then when you think about penetration into the site certainly the growth.
Going forward would be getting additional physicians trained and prescribing <unk>. So when you think about the penetration level at sites on a physician level, where is that number on average.
Across the 1000 and I'll have a couple of follow ups.
Yes, thanks for the thanks for the question. So I think when we think of the total number of sites.
<unk> is probably the best source kind of look to I will note that the number is not exact because many centers around the country have mobile sites that may have a mobile camera, one or two days a week, but when you think of kind of full cameras on an annualized basis.
Anywhere in that 2000, plus or minus range I think we've naturally focused on the big centers and so when we think about growth from 1000, we think that number will continue to grow but at a decreasing rate there are certainly.
<unk> centres in geographies, where we are still to open additional pms.
If you refer to clarify dot com, you can see where our pms coverages, we still do have some areas to build in as we add additional capacity across the country in those areas and those are where we'd really add Pepsi T centers, but to your point the bulk of the growth is going to come from driving more volume through those existing centers and that comes from activating.
<unk>.
The urologist and oncologist or not early adopters that have not been excited for years and expecting PMA pet imaging, but as an example in urology.
The.
Initial staging.
Indication, we were the first commercial pet agent in prostate to have that indication. So that's a market we're still very much building.
Pet agents were not necessarily used in that space before and so your community neurologist Youre large urology group practices. There is still a tremendous amount of education to have there to be able to activate them to ensure that all appropriate candidates are being prescribed clarify and so we haven't put a number on it but we're incredibly excited for the future.
And see continued growth for Polaris high as we continue to activate those marketplaces.
And just to follow up on competition.
Blue Earth out there.
Spotlight results at Astro and it seems a little bit more comparable.
Then the gallium 68.
<unk> SMA pet imaging agent just wondering how you think the competitive dynamic shifts when we have a similar agent come on market.
Any thoughts there.
I'm very confident that especially with the P. M. F networks that we've set up that <unk> will remain the market, leading and commanding leader in this P. M. S. A base market and that will be true. After the introduction of another F 18 based P. S M. A pet imaging agent to period as and two.
There kind of our our relationship with G health care the market that we look at there is a market that we know very well and that as I mentioned Dizzy M. P. I market. This is the standard of care imaging for coronary artery disease in the United States Health care market now and on an annual basis about 6.1 million proceed.
<unk> that are done and I <unk> I make an analogy here to what we've seen happen with with P. S may base pet imaging with the availability of <unk>. The two academic products and then and closely after <unk>. We've seen I think it's fair to say a wholesale switch from what is used as standard of.
Care imaging for prostate cancer and the part of that is the incredible specificity sensitivity and clarity of the images that can be produced with the combination of an F 18 isotope and then the modality of pet imaging. The same is true with cardiac imaging currently we've been in this market for over.
40 years cardiac imaging is done with the spec based suspect as modality see the switch to F 18, and F 18 based product with superior does the clarity of images. We we used to describe it is moving from black and White T V to H D or high definition high Def T V. There's just that much more clarity and specificity.
And sensitivity with them do so we very much look forward to our partner G use our partner who will take the lead on that bringing that awareness into the market. Once the product is approved and we're confident that we will see physicians embrace that products in a similar fashion to what we've seen with P. S may be pet imaging.
Maybe I'll go out.
Maybe I'll just ask specifically on the on the Blue Earth and really up 18 competition, one and as I think is Marian audible set greater voice an awareness around Pearce my pet imaging will help grow the overall market. We've seen this grow already we mentioned from a combined annualize north of 500 million in two to to know north of $700 million.
Three two and so we're incredibly excited to continue to grow that overall market I think you're right to note that they've published data on one of their clinical trials, we have not yet seen data on the other trial, but you know regardless of how that plays out. We we do think there's a significant first mover advantage the progress we've made in <unk>.
Contraction with now a thousand sites using clarify the significant progress we've made on market access including pass through and coverage. When we think of of all those pieces put in place as a first mover advantage and then I would also note R. P. M. F network Uhm is already up and is active we have contracts through some.
The major players through 2027 with preferred cyclotron status, making F. A team and so we feel well positioned to continue to be the market leader in what is an ever growing P. S may market with many more patients left to scam going forward. So we're incredibly excited.
Oh that that can cute thanks.
Our next question comes from the line of Mr. Richard New winter with choose please stand by while I open up his nine for him to pose those questions. Please stand by.
Mr <unk>, new winter of choose your line should be open.
Hi, Thanks for taking my questions I I'm not sure if I Miss It did you guys did specific <unk> guidance or update the range there and if so could you provide that.
So rich and we did not give specific but I mean, it is implied when you do the math around around.
Around the guidance that I did give so in the prior guidance range I think we had implied a full year range of about 480 to 500 now that range is now sort of in the five you know and I've refined it there's eight weeks ago in the in the year. If you will to sort of a 513th at five six.
<unk> type range for the full year, which then gives you a Q4 number in the.
You know sort of right around bragging about 150, if you will.
442.
Four Q.
Yeah, Okay, I I guess you know.
Talking about all this capacity coming online and.
You have a bigger user base I guess it it seems like that sequential improvement is not huge but but I guess.
How should we think about that you know it.
And then secondly on that topic, you've talked in the past about getting to capacity for clarify exiting 22, I think in 150 to 200000 dose range, where are you from wrapping up to that level currently where do you think you'll be exiting 22 and is there any reason.
And to think that every you know every unit you can Bruce right now isn't.
Isn't getting us in other words, just a man.
Continuing to outstrip supply.
So reach out I'll start there and then Paul can jump in with some more specific numbers, but to your very last comments last question about you know our comfort level that every dose is getting us just as a reminder, this is a batch manufactured product and so it is possible.
<unk> that you have in certain more I would say more rural geographies, where they're producing a full that as they do with S 18 to make the product, but they don't have four what can often be produced with a batch which could be 20, plus doses the demand for that and that given day. So that is part of our economic scenario built in.
Assumptions and has been as weak and to your other point as we continue to ramp up we're really now from our capacity perspective, we're thrilled with our whole the rollout plan, we had but there are areas, where we continue to add <unk>, especially redundancy some capacity and then redundancy because he's a very large geographic markets and Paul mentioned one.
<unk> the site that we open recently within the Greater New York area that is an area, where we continue to see the opportunity to service more demand with additional capacity Orotundity whichever you want to call. It I'll probably join added yeah. No. Thanks, Marian you know I think to go into your question you know for overall capacity and redundancy.
We continue to increase this right. We noted a new P. M F regions, Colorado, Alabama, Utah in Iowa since the end of the second quarter. We've added now we'd start patients and sites and those market, what we'd been bringing in doses and so it's obviously better for customers, it's better for patients to be able to have local manufacturing there it provides more flexibility.
Not only in terms of the number of doses that we can bring in but the time that we can bring doses and to meet the work flow needs of the pet C. T centers is Maryann mentioned, we've been building redundancy in places like New York City Metro area in in Tennessee, Uhm. We've also invested in the existing sites and so we've been continuing to add traces boxes.
And then there are P. M. S that now have multiple cyclocross and we're able to now run multiple bachelors over the course of the day to truly meet the needs of the customer base. When we think about the overall capacity you're right. We highlighted about 150 to 200000 I would note that on an annualized basis, we're gonna be ahead of that.
By the end of the year based on the capacity and the redundancy, we bill but this is very much a local market dynamics and so.
The.
The national number.
I don't want to call it irrelevant, but it very much matters on our local market there are markets, where we still need to build capacity in the redundancy in there to meet medical practice and how it's evolving we also need to ensure that we continue to grow because we're incredibly excited about the future.
Does that help.
Yes, yes, it does and just maybe the underlying assumptions in the applied for giraffe.
The underlying assumption around demand Richard can you just clarify.
You have that you have an implied died of 150, so maybe just.
Talk to us a little bit about how you arrived at that why is that the right number.
Historically.
<unk> sequentially, you know flat to up slightly I guess.
Is your approach to guidance any different and then what are the key assumptions kind of to get to that level. Thanks.
So I would say our approach to guidance remains consistent I think that's something we've established as a company is to kind of how we choose to communicate on a on a forward basis I <unk> I would also say we're still in a lunch I know it feels like now we've been talking about <unk> for a long time, but we are still in a lunch and so.
I think our numbers are you could say, we we continue to be slightly conservative because we're not <unk>, we're still not fully aware of how large the intent is with the medical community to embrace clarify in across the entire disease spectrum of prostate cancer and that continues to be an opportunity for us at <unk>.
We were gone from a demand generation perspective within our labeled indications, but we also note what the medical community is choosing to do with these products and that's something that Paul has some very specific research ongoing market research on going so we can better understand the community until we do I think you'll continue to see.
See this practice from us which is to have a bracketed implied guidance that for we I would say operationally you've seen as exceed on each of the quarters.
And rich I would just have someone to point out that we are entering the time of the year, where <unk> within a quarter major.
Major holidays.
And you know with a with a prior experience of last year, where we did I believe it's 35 $36 million in the quarter last year. You know this is the first year with a much more expanded network uhm coming into that holiday season. So we want to make sure that we we fully understand how those dynamics work.
In that in that part of the year.
Thank you.
Our next question comes from the line of Mac Taylor Mac.
Police M I Y a open your line up for you to pose a question.
Mr. Taylor would jeffries you're much open.
Thank you can you hear me, Okay, yes, Sir.
Great.
So I wanted to follow up on.
No more about two things one is.
Yeah. When you when you think about the next couple of years I know this is kind of unprecedented lunch.
Maybe you could talk about what you think market growth can be in your ability to grow within that framework you know given somebody advantages that you have the.
The first mover setting up this network et cetera, as you see more competition come online could you give us any any high level customer.
So <unk> you know obviously, we understand that people are interested in how.
How the next year look it looks.
As we as we kind of get to the end parts of this year as.
We think about 2023 2024, we certainly expect healthy growth for the business in its totality and certainly from the contributions that we expect to get from our leading products and clarify infinity. So from from the perspective of of.
Are we going to you know as we think about how <unk>.
Models that we see from a street perspective look we're comfortable that that that we're going to be able to continue to grow this business do so profitably.
And and see our free cash flows and you saw what we did here in the in the third quarter with a record.
Free cash flow number of nearly $90 million that those kinds of numbers are going to continue to to grow and we're gonna be able to you know really.
Really kind of strengthen the position of this company as we think into this you know the near term planning.
Planning horizon that we're we're we're discussing.
I would just add that we're not here to offered annual guidance for 2023. However, if we look at the two major markets. We're in now.
We've repeatedly kind of try to offer here, we see significant continued growth and the P. As in a imaging market not only for the demands of generating that we've already generated for patients for initial staging and for recurrence, but also because of the continued what will be the continued entrance of therapeutic agents is that market.
On the other side and we didn't speak to this significantly today during the call, but definitive Paul did offer that we've seen some I'll say softness N R. The total echocardiographer market, which again historically, we have never tried to influence the total number of Echocardiographer studies done in the United States Medical market.
All of our pointed medical education has always been <unk> of an ultrasound enhancing agent two studies already underway, but we have seen some softness in the total number of Echocardiographer studies based on what we see is decrease percentage of an office visit or cardiology year over year.
<unk> and then kind of continued impact of staffing challenges both at the nursing level and at the Sonography Tech level, if that heals itself coming into the coming year than we would expect to see improved growth rates for <unk> and as a kind of a bear down from the increased net Rebecca studied.
And what will be the increased in and then for you to have an ultrasound enhancing agent.
Mmm.
Thanks for the thoughts there I did I did want to ask you what about you mentioned the cash flow and certainly building a lot of cash.
Can you talk about what you're thinking about doing with that strategically as you.
[noise] Hello pile more on here and what kinds of things could you talk into the portfolio that.
That would be that'd be additive synergistic how do you think about acquisitions.
I'm just gonna start quickly knocked it then it's obviously a question more for Bob but I'd like to say that as a company. We are we see ourselves. So you talk about like what we could talk into our portfolio, we see ourselves as a very very highly chosen and attractive partner for you know companies out.
There that have assets that are looking for that type of relationship and I think what we've demonstrated already with the <unk> acquisition speaks to the kind of talent, we have here and what we do with assets that are brought under our care.
Yeah, and certainly <unk>.
My prepared remarks, I did make the comment that you know in terms of Opex. We are clearly visibly working hard to fill a pipeline of opportunities and if I just go back to our Investor day in terms of what are we interested in doing and we are you know focused on late stage.
Or.
Near commercial stage assets would that are high growth high margin, but what those are likely to do are to leverage our commercial manufacturing supply chain as you know sort of our core capabilities as a company, but we also we make sure we can get robust diligence on these targets and the environment in which their products or product candidates.
Are going to be working in from.
From a financial perspective, obviously, we're looking to sustain double digit growth longterm.
You know and those are the kinds of assets were targeting and looking at to be able to drive that and we're gonna be able to maximize the opportunities to drive profitability.
Margin Decretive, particularly as you think about you know how we have been able to sort of transform the company with the <unk> acquisition to to drive expanding gross margin and EBITDA tight margins. So again I think that we're going to really work hard to be able to achieve these types of of Crichton.
<unk> filling these filling out the metrics that are gonna help drive like I said long term sustainable growth done profitably.
Thanks, and one last one I just wanted to ask about when you look at the.
Dollars per customer this this quarter, but basically the math would be you add a 10% more.
Customers, who depend for some more sale. So it seems that wouldn't <unk> change very much but I don't know dynamics like seasonality or <unk>. If those kind of things play then, but maybe you could talk about.
The expectations for same store sales going forward and and where you think those to go.
Well not that that is a new one I've never seen same store sales apply to radiopharmaceuticals before so congratulations on being unique with your question and I think what this comes back to some of the conversation we've already had in the Q&A here and that is the ability within the <unk> same stories so the significant.
Geography as in the U S to bring in additional capacity and redundancy to penetrate and services market. So from that perspective, it's it's quite friendly it's not something we calculate in the way that you defined it but I think for having asked the question we would say in the larger geographic areas, where again the patient concentration is.
We will consider continue to see improvement in what you're referring to as same store sales yeah, Matt maybe just some added color there and totally understand the question I think the key piece and I'll go back to a bit of information I shared earlier is that about 80% of our business comes from about 35 per cent of our customer base.
<unk> <unk>.
That core customer base hasn't materially changed in terms of the percentage in so.
While we're adding new imaging centers those are by and large smaller imaging centers.
Smaller regional hospitals, the vast majority of large academic centers of significantly sized freestanding imaging centers are are in place and have been in place and so.
I think we're seeing continued growth and that the AD imaging centers are not necessarily a key driver of growth. It really is the volume of the existing sites and that's what we're focused on continuing to grow in your part lab, the same store sales, which I understand.
We're driving more same store sales if you will by activating those referring physicians and that's really going to be driving future growth.
Okay that makes sense. Thank you. Thank you very much.
You're welcome.
Our next call will come from the line of Justin Walsh, What Jones trading Justin Please stand by as an open your line up for you to pose your question.
Justin Your line should be open.
Hi, Thanks for taking the question Uhm. It was great seeing clarify AI showcase that E. A N M. How would you characterize its reception at the meeting and maybe some feedback that you received from users as clarify has continued it's it's rapid market penetration.
Yes. This is Marian and I'll take your question, we were thrilled with the reception at E. I N M. And we think this is very indicative of what's happening practicing medicine and uses of therapies, where the mandate will continue to rise that products that are used have these compliments.
<unk> products associated with them or offerings associated with them that further embellish and further improve the whatever we're gonna save the efficacy of the products and in the case of clarify.
This offers consistent quantification across the important body regions of P. S. A mate imaging and it augments what a physician reader can see and interpret on a screen. So I think it's very much embraced as necessary in complementary and we're doing everything we can to ensure that it's fully integrated so you.
Heard about the additional collaboration that we announced today, which compliments and when we had already announced and what does make this this makes clarify AI essentially ubiquitous alright. So they will beep already present in the workstations that are being used by nuclear medicine physicians and radiologist, who read these images and we think that's an important <unk>.
And that we are absolutely supporting from an adoption perspective, I think we <unk> we also see.
The what is typical and that is from that these products and these additional pieces of software tend to be a brace first in research because that's when you were you really come to fully understand how the the product will play into clinical work flow. So we're really pleased also with the adoption rate we've seen across the major act.
Demick centers in the United States market Uhm, especially for research applications, which will then we believe lead to commercial adoption as well.
Final question will come from the line of beyond Z would be Riley yawn, Please standby S abdomen too.
To open up your line.
Yeah. Your line is open.
I guess I'll be.
The first one today to say congrats on another phone call Sir Thank you for taking our questions.
So first have you heard any stance and shortage of radio imaging technicians in the last called her which might have impacted as a use all clarifying the call at her.
<unk> I'll answer that question and the answer is we have not anecdotally had that feedback but this is not this part of the market, which is pet C. T imaging centers is not one that is as historically familiar to us as echocardiographer sweets and so I think we have we have stronger insight.
Into echocardiographer, because our relationships there have been in place for so long, but so I cannot affirm or deny whether there is any staffing shortages at pet <unk> pet C. T imaging centers, we know that among our PNM partners. We've seen very good response and very good very good support there to ensure.
<unk> what they produce can be produced it said to know staffing shortages there.
Got it that's very helpful. I work a second question is on the fifth two clinical trial.
Zero, while the P. T L. One image an agent. So you guys have the first patient those thing may just wanted to <unk> can you provide an update of the trial enrollment and then maybe the timeline to have in the top line data are there.
So you're on at this time I I cannot offer an update on trial enrollment if not we will speak to it as we had significant milestones but at this time, we are only publicly still having reported the first patient in and I would anticipate it will be probably first quarter of 2023, when we next make an update.
On that trial.
That concludes our question and answer session I will now turn the call back over to Mary Anne for her closing remarks.
Thank you everyone for joining us on today's call in closing the third quarter with another strong one for our business is 2022 provides prove that to be a historic ear for Atlantis building.
Building on more than 65 years of life changing science, we continue to innovate deliver on what matters for health care professionals and patients I'm extremely proud of the results Atlantes team has delivered their hard work focus and dedication to our patients and our corporate strategy are evident in the results we outlined today.
It comes to a close we continued to be driven by our purpose to find fight and file a disease to deliver better patient outcomes. Thanks, everyone.
This concludes the Messiest third quarter earnings call you may now disconnect.
[noise].
And we are now back in.
Great. Thank you very much thanks for <unk>.
Have a great day.
The conference will begin shortly to raise your hand during <unk> you can dial star one one.
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