Q4 2022 Lantheus Holdings Inc Earnings Call

February 23, 2023

The conference will begin shortly.

And the lower your hand during Q&A, you can dial star one one [noise].

[music].

Good morning, ladies and gentlemen, and welcome to the last year's fourth quarter and full year 2022 financial results Conference call. This is Joan operator for today's call. Please note that all the lines have been placed on mute to prevent any background noise. This call is recorded for replay purposes, a replay of.

The webcast will be available in the investors section of the company's website approximately two hours. After the completion of the call and will be archived for at least 30 days now I'll turn the call over to your house Mark.

<unk>, Vice President of Investor Relations Mark.

Thank you and good morning, welcome to lay off this is fourth quarter and full year of 2022 were.

Financial results conference call.

With me on today's caller, Marianne Henao, our president and CEO , Bob Marshall, Our Chief Financial Officer.

Blanchfield, our chief operating officer.

<unk> will begin the call with introductory remarks, and then turn the call over to Paul to provide an operational update Bob will cover our financial results and provide 2000 twenty-three guidance Marianne 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 fourth quarter and full year of 2022 results.

Can find the release and the investors section of our website Atlantis Dot com.

For those of you not on the webcast that you can find the slide presentation on the investors section of our website under the presentation staff.

Before I get started I would like to remind you that our comments during this.

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 were future expectations change materially. Please.

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

Also discussions during this call will include certain non-GAAP financial measures reconcile a 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 is my pleasure to now turn the call over to Marianne.

Thank you Mark and good morning to everyone. Joining us on today's call 2022 was a banner year for Landsea, our fourth quarter and full year results that we announced this morning reflect the outstanding work of the nearly 700 employees at lanthier, who have been executing against our strategic plan with.

With disciplined investments and purposeful attention to the markets. We so we had accelerated our growth.

To find our portfolio and continued to position lanzi as as a category leader.

<unk>, we can continue to fulfill our mission to find tightened followed disease to deliver better patient outcomes and I'm incredibly proud that we impacted the lives of more than 6 million patients in 2022 alone.

Our performance in 2022 with simply outstanding with record revenues earnings per share and cash flow.

As a result of value creation at the enterprise level, we were elevated from the S&P small cap 600 to the S&P Midcap 400 index in October .

We continue to be the category leader for both our key products.

Vietnamese pet with clarify solidified exposition.

One P SMA pet agent with commanding market share versus the competition.

Over the course of 2022, we expanded our manufacturing capacity by activating an additional 16 pet manufacturing facilities or pms achieve coverage with over 90% of covered lives, having access to clarify and contracted with 100% of our targeted academic centers to ensure P. Anthony pet with clarify is.

Imaging agent of choice and prostate cancer.

Importantly, we are thrilled to report the estimate pet would clarify was using more than 100000 patients scanned in 2022.

DEFINITY continues to be the number one ultrasound enhance an agent and it's 22nd year on the market.

Last February we received F D. A approval for a supplemental new drug application for our on campus manufacturing facility. This facility provides us with supply chain Optionality and the opportunity for margin expansion as we progressed progressively include inventory from this manufacturing line into our supply chain and again.

Important to our mission defined tightened followed disease in 2022, if any was the agent of choice and approximately 3 million patient Echocardiographer exams.

And the fourth quarter, we announced an additional strategic collaboration in our Microbubble franchise.

Micro bubbles have been instrumental in cardiac imaging for years and now are being used for other applications. Our newest partner So no Sarah a biotechnology company dedicated to treating the root cause of human diseases through genetic therapy will combine it's non viral vector gene therapy delivery technology with our microbubble in several apps.

The cases, we believe microbubble ultrasound enhancing agents have the potential to improve gene therapy treatments by enhancing the delivery of genetic payloads to tissue and we're excited to be part of this important innovative development.

2022 was also an exciting year with respect to building out our portfolio.

We continue to invest in our pipeline and reported progress with two of our product candidates 10, 95 R. P. SMA targeted I 131, prostate cancer therapeutic and M O one or novel imaging agents currently under development for the assessment of PDL, one expression it non small cell lung cancer.

For 10 95, we enrolled the last patient in our Arrow phase two trials for patients with metastatic castration resistant prostate cancer, who will be followed for one year. After their first treatment for all efficacy and points.

For an M O. One we initiated Pelican, a phase two trial and began enrolling patients in may.

In addition to advancing our current pipeline assets, we also expanded our pipeline with strategic and licenses and it recently announced acquisition.

Remember, we license exclusive worldwide right, excluding certain territories for two therapeutic product candidate from point Biopharma PMT 2002, <unk> 2003 at.

As a leader in Radiopharmaceuticals with extensive radio isotopes supply chain and distribution experience.

Established commercial infrastructure and longstanding relationships with relevant healthcare stakeholders in hospitals, we are uniquely positioned to unlock the significant commercial potential of these two product candidates, which we believe will enhance the long term revenue and earnings growth potential for lanthier.

PMT 2002 PSNH target.

<unk> based radio log in therapy for metastatic prostate cancer.

2003 is a somatostatin receptor targeted radio log in therapy with non carrier added to the <unk> the gastro <unk> pancreatic narrow Andrew consumers.

Both are late stage product candidates that if approved will address therapeutic areas and markets with significant unmet need and where lassie is already has a presence.

PMT 2002, broadens land theaters prostate cancer franchise, which is currently anchored by <unk>. The number one to SMA pet imaging agents in the United States.

PMT 2003 will allow us to expand our radiopharmaceutical therapeutic offerings beyond et cetera, the only FDA approved radio log in therapy for pheochromocytoma, empower ganglioma, which are rare here <unk>.

We also recently announced our acquisition of servo technologies.

This acquisition <unk>, our expertise and radiopharmaceutical diagnostics and specifically at 18 pet products and expand our farmer services offerings into Neurodegenerative diseases.

The acid acquired from servo is a novel clinical stage pet imaging agent called encased 62, 40 that targets, how tangled in Alzheimer's disease.

It has the potential to aid in diagnosing staging and informing treatment selection as well as response to therapy for Alzheimer's disease.

Mmk 62, 40 is currently being used in more than 60 academic and industry late stage clinical trials hosted by more than 16 pharmaceutical companies around the world for Alzheimer's disease therapeutic candidate under development.

<unk> goal is to forget M. K 62, 40 for even greater expanded use and global clinical trials and adoption of this agent as the preferred biomarker for identifying the presence of Alzheimer's disease and monitoring its progression and afflicted patient.

Finally in 2022, two of our partners assets reached important milestones or partner Curiam, who is seeking to bring the first commercially available at 18 base PSA make pet imaging agent to Europe , and Jesus submitted their marketing authorization application to the European Medicines agency for approval. This brings a <unk>.

Angel promise of F 18, based peer to make that one step closer for men in Europe .

In addition, last ball, we announced jointly with our partner G E healthcare that the phase three clinical trial of F 18, based pet diagnostic radiopharmaceutical period as the co primary endpoint of specificity and sensitivity for detecting coronary artery disease as well as a key secondary endpoint demonstrating higher.

Gnostic efficacy of flu period, as as compared to spec myocardial profusion imaging as.

As you can see from the highlights I just mentioned, we've made significant process progress on our strategy to accelerate growth diversify our portfolio and physician lanthier as a category leader in the markets in which we compete in 2023, we're committed to continuing to deliver value to our patient customers employees and our.

Shareholders.

With that I'll now turn the call over to Paul print operational update on our key products.

Thank you Marianne and good morning, everyone.

Maryann mentioned 2022 was a Europe significant progress as we solidified <unk> with Polaris five as the market, leading psm's pet diagnostic imaging agent for the U S prostate cancer community.

Our fourth quarter results demonstrated impressive market leadership as well as continued growth of the overall P. SMA pet imaging market.

We are pleased with clarify success and the impact that has made on the lives of men living with prostate cancer.

<unk> generated net sales of 527 $4 million for the full year 2022, with fourth quarter revenues of $166 million up nearly 12% sequentially from the third quarter.

This reflects over 100000 patients scans employing <unk> pet with clarify in 2022.

While much of our effort since law has focused on demand satisfaction, including activating RPM F network and ensuring 90% of covered lives have access to clarify we.

We focused our promotional efforts and the second half of 2022 on driving brand awareness of SMA pet with Bellerophon to the 5000 healthcare professionals that clinically manage the vast majority of prostate cancer patients.

We believe our promotional efforts have been effective as we have delivered sequential quarterly growth nearly 12% with a majority of growth driven by existing accounts.

In addition to strong performance within existing customers, we continue to add new account throughout the quarter.

Overall from a demand perspective, we are pleased with the underlying trends in the range of ordering across both existing and new customers.

Last month, we updated the Tam for Psm's pet imaging agents. After analyzing the results of our completed primary research that was power to be statistically significant and the results of the recently updated seer database.

These changes translate into a Tam of remarked of approximately $1.6 billion up from our prior one $1 billion estimate.

There are two specific areas with revised or updated considerations, namely an increase in incidence and prevalence, which we expect to average 2% to 3% going forward and a revised consideration for the number of scans per patient with suspected recur and for.

Radio Ligon therapy patients selection.

As a result, we now believe the current market potential for Psm's imaging could be up to 350000 annual scans.

Increase from our previous estimate of 250000 annual scale.

To support the demand for clarify we continued to expand our PM F network with 37 activated sites at the end of 2022 up from 21 site at the end of 2021.

These additional manufacturing facility provide geographic breath out the door time flexibility and added optionality to our existing network <unk>.

These additions as well as operational enhancements, we made in 2022, such as adding additional symphysis boxes enabled us to continue to serve our customers on time in full at a rate of 98% for the second half of 2022.

We believe this demonstrates our operational excellence that we strive to deliver to all of our customers.

We continue to be excited about the launch and reception appears to mate with clarify to date and believe there is significant potential for us to grow the market and ensure Polaris five remains the number one P. SMA pet imaging agent in the U S prostate cancer community.

Switching to our Microbubble business 2022 was a year in which we were able to grow DEFINITY and remain the number one ultrasound enhancing agent while navigating market dynamics are.

Our drivers of success continued to be our clinical differentiation distribution model supporting data and publications and dedicated sales team.

We grew our DEFINITY business more than 7% in the fourth quarter, while maintaining greater than 80% share of the U S ultrasound enhancing agent market.

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 fourth quarter and full year financials, focusing on adjusted results unless otherwise noted.

Turning to the quarter revenue for the fourth quarter was $263 $2 million, an increase of $103, 1% over the prior year quarter revenue for the full year was $935 $1 million, an increase of $119, 90% over the prior year period and as a reminder, this full year number includes a 2004.

Million dollars settlement with Novartis in Q1 2022.

Now turning to the details beginning with precision diagnostics revenue of $94 $4 million was 8.4% higher from the prior year quarter sales.

Sales of DEFINITY net of rebates and allowances were 63.6 million seven 3% higher as compared to the prior year quarter affinity closed out 2022, which $245 million of net sales an increase of 5.3% over the prior year <unk>.

Secondly, net revenue was $24.7 million or $12, 2% from the prior year quarter due to approximately $5.5 million, an opportunistic sales stemming from competitive supply chain challenges. During 2022 total opportunistic sales contributor approximately $10.7 million a technologist full year 80.

Eight 9 million dollar performance, which was down 2.7% from the prior year.

As a reminder, and for modeling purposes, and two 2023, we exited R. Kelly I'm in gallium businesses at the beginning of the excuse me at the end of the third quarter total 2022 sales for these products were $2.3 million, which will not repeat in 2023.

Radiopharmaceutical oncology contributed $161 million of sales in the quarter up 352.8% from the prior year.

<unk> will to the continued sequential and year over year growth of clarify sales of 166 million in the quarter as noted by fall earlier full year sales totaled $527 $4 million, a <unk> contributed 0.9 million in the quarter and for $1 million on the full year flat with 2021.

Lastly, strategic partnerships and other revenue was $7.2 million up 5.8% from the prior year quarter, driven primarily by the Relistor royalty.

For the full year, including the settlement with Novartis revenue was $46 $9 million gross profit margin for the fourth quarter was 66.8% an increase of 10.2 percentage points.

Over the fourth quarter of 2021 on a similar basis gross profit margin increased potentially from the third quarter unfavorable product mix from <unk> Definitly and tech your life.

<unk> expenses at 21.2% of net revenue, where $13 five percentage points favorable over the prior year rate of 34.7% in within previously guidance spending levels increases in sales and marketing research and development reflect the investment and head count support ongoing commercial as well as medical efforts and a dish.

Than to increases in market research travel and sales operations activities.

G&A improved 439 basis points as a percentage of revenue in the quarter, while investing in Europe , TRP project, which remains on target.

Other income and expense at $4 million of expense as a result of net interest expense and the release of a portion of our uncertain texts positions are utp's offsets.

In part by the settlement of our interest rates interest rate swap, which resulted in the $5.5 million gain op.

Operating profit for the quarter was $119.8 million or an increase of 325% over the.

Over the same period prior years.

Total adjustments in the quarter totaled $292 million of expense before taxes of this amount 818 $3 million of expense is associated with non-cash stock an incentive plans and acquired intangible amortization, respectively also when the quarter we expenditures.

R&D relating to the license agreements with point Biopharma together with $5.9 million of related costs to consummate the agreements.

Further the company reduced contingent receivables by $8.2 million, an increase contingent liabilities by $1.1 million in the quarter. The remainder is related to acquisition integration and other nonrecurring expenses.

Effective tax rate was 16.6% in the quarter during the quarter based on newly acquired information, we released to other income as an expense and through the tax provision at the benefit another portion of our UTP provisions dating back to our 2008 sale from BMS for which we are fully indemnified the.

The net result does not influenced net income, but does distort the underlying effective tax rate or ETR for the period.

The full year ETR was $24 4%.

The resulting reported net income from the fourth quarter with the loss of $119 $2 million and a profit of $96 $6 million on and adjusted basis, an increase of 464% over the prior year period gap.

Fully diluted earnings per share for the fourth quarter was a loss of one dollar and 74 cents.

And a profit of $1.37 on and adjusted basis and increase from the prior year of 450.8 per cent on a full year basis gap fully diluted earnings per share where profit of 40.

And a profit of $4.22 on and adjusted basis, an increase of 755.1% over the prior year.

Now turning to cash flow fourth quarter operating cash flow totaled $105 $4 million as compared to $13 $9 million in Q4, 2021 capital expenditures totaled four 7 million essentially flat with the prior year quarter.

Free cash flow, which we defined as operating cash flow less capital expenditures was $100.6 million, an increase of $91.3 million.

From the prior year period.

In addition to accelerating free cash flow is driven by significant growth of revenue in a leopard P&L offset in part by prudent investment the company actions several financing activities during the fourth quarter. The company refinanced revolving senior credit facility, increasing the borrowing capacity to $350 million and refinance the remaining.

Term loan a into.

Into a newly issued 575 million of instruments C or net sure settlement convertible notes the notes carrier 262, 5% interest rate coupon with a 42.5% conversion premium.

Together with a concurrent $75 million a share repurchase the effective interest rate remains below current rover right that capital market options to a share price above $100 also during the quarter. The company paid biopharma $260 million in accordance with the license agreements for <unk> to <unk>.

Three two product candidates that we believe will help sustain double digit top line growth in the mid to long term taken together cash and cash equivalents net a restricted cash now stand at $415 $7 million, we have access to our new $350 million Undrawn bank revolver and are comfortable with our strong.

Liquidity position.

Now before turning to consolidated guidance for the company I would like to take a moment to reflect on how our latest acquisition of servo and it's radiopharmaceuticals, how diagnostic MK 6200, 40 will impact our financials. We estimate the transaction will contribute approximately 10 million of revenue for our farmers services business book within strategic partnerships and other.

And be neutral adjusted EPS for the full year 2023, we also expect the deal to become accretive to the company beginning next year.

Additionally, I would like to reiterate for year over year compared to purposes that we booked a settlement with Novartis in Q1 of 2022 for 2002 $4 million in revenue and twenty-five adjusted EPS, which will not repeat in 2023.

Turning now to guidance for 2023 full year as well as the first quarter, we expect growth to remain robust with solid double digit growth for clarify supported by mid single digit growth of definitive for the full year, so higher earlier in the year due to favourable prior year comparable.

We forecast clarify to be in a range of 740% to $760 million for the full year taken together with other revenue contributors, we estimate full year revenue to be in a range of $1.14 billion to $1.16 billion, an increase of approximately 22% to 24% over 2022 and 25% to.

<unk>, 2007% accent Novartis settlement.

For modeling purposes gross profit margins should be incrementally ahead of 2022 in conjunction with continued investment in expanding the Pms network with.

We continue we anticipate that are operating expenses will be higher as a percentage of revenue over 2022 at approximately 2004%. This increase incorporates approximately 20% to $25 million of added sales and marketing investment as well as additional funding for research and development associated with.

Both the point Biopharma agreements and collaboration activities and expenses associated with the acquired servo business.

Also the base business will have incremental focused investments, notably within sales and marketing research development to support and fueled the growth of the company is experiencing and expects in the future lastly, within G&A as I have noted over the last year. We are in the implementation phase of our ERP project.

And those expenses are captured in this line item interest expense should be reflective of our now current capital structure and the tax rate with normalized to approximately 27.5%. Therefore for the full year, we expect fully diluted adjusted earnings per share to being a range of $4 and 95 to $5.10 for.

For the first quarter net revenue should be in the range of 280 to 285 million I will not be providing product specific.

Views given that we are two thirds of the way through the quarter, which has informed that this estimate fully diluted adjusted earnings per share should be in the range of $1.28 to one dollar and 32 cents lastly for modeling purposes, depreciation and amortization for full year 2023 should be approximately $12 million and $36 million <unk>.

<unk> generally spread evenly throughout the year fully diluted shares outstanding should be in a range of 70% to $71 million after taking the consideration to share repurchase executed concurrently with the convertible notes offerings.

With that let me turn the call back over to Marianne.

Bob 2022 was a tremendous year atlantean.

We significantly exceeded revenue Meps target for both the quarter and the year.

We firmly established Psm's pet would clarify as the category leader.

We executed M&A activity directly in line with the strategic priorities, we have to ensure continued growth for the company.

And we are also generating the free cash flow and a strong capital structure that insurance, we can fund and can continue to fund our strategic priorities into the future.

We believe our plans for 2023 and beyond will deliver value to our patients the healthcare professionals, we serve and our shareholders.

In closing I'd like to thank each and every one of my employees without whom land is a significant achievement would simply not have been possible.

Commitment Atlantean complete is second to none and they work tirelessly every day to advance our purpose to find site and file a disease to deliver better patient outcome.

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

To ask a question you'll need to press star one why don't you tell us.

A phone to withdraw your question. Please press star one one again, please wait for your name to be announced.

Somehow the Q&A roster.

One moment for our first question.

Our first question comes from Richard Newsletter with tourist your line is open.

Hi, Thanks for taking the question good morning reaction.

Hi, How're you congrats on a great great finish to the year here.

What a couple here first maybe just starting off with the Tam. Thank you for the detail there on on the on what drove the step up from $1.1 billion to $1.6 billion I'm just curious.

Previously it your analysts say you would also identified some increments.

Incremental.

Tam expansion up Judy once you get pre chemo indications for radio like and therapies.

The future. Thank you had quantify that somewhere in the four or $500 million range and I think you had <unk>.

Assumed one scan or one and a half scan for patient there I was just curious does that.

Does that incremental still to the $1.6 billion you updated and is a four to 500 million dollar kind of AD on the right way to think about that.

Given that you are increasing your scans to patient I'm, just trying to get a sense for where the Tam could be headed once we get potential approvals there.

Yeah. Thanks for the quest dominant pop that open.

I had rich.

I'll take that thanks, thanks rich for the questions. So just to recap last year as we highlighted we were at a time of about $1.1 billion, we updated in January to $1.6 billion.

That is only inclusive of current.

Label clinical guidelines as well as what we're seeing in medical practice and the number of scans per patient what we had highlighted last year in may at the Investor Day was an incremental approximately you are correct 100000 scans $4 million to $500 million potential but that was for both the addition of interviews.

Yet favorable in.

The initial education as well as the potential advancement into pre chemo settings. In other words first and second line for patients selection for the prostate cancer community and so that is that's a potential incremental that we would update our Tam accordingly.

Then guidelines were updated or new indications for.

Yes may therapeutics were approved so those are not elusive at this point in the one six and would recognize additional upside as new approvals and indications update in addition to just regular 2% to 3% growth and incidence and prevalence going forward.

Okay, and just to clarify there though.

The scan assumptions to get to that $4 million to $500 million further indications.

I think one or one and a half per patient or thereabouts, just given that you've increased your scan probation assumptions kind of on your existing indications is it fair to assume four to 500 as of Florida that could.

Also be hire more on more scans per patient.

I think it's fair to say that medical practice continues to evolve what we shared last may with.

Certainly based on where medical practice was then in January we didn't come out and update what those numbers would be but we would naturally reassess with appropriate market research guidelines and physician practice to inform what that would it be but I don't think your assumption.

Assumption is incorrect.

Thanks, and then uncle Aerophyte guidance I got $750 million at the mid point for 23, nice healthy double digit growth I'm curious if you could comment a little bit on what your assumptions are for the cadence and sequential improvement moving through the year.

And also if you could comment on where you see market penetration and your share of the market, maybe just based on the $1.6 billion.

As you as you are exiting next year and what what if any <unk>.

Changes in the competitive landscape are factored into that at 750 midpoint.

So rich I'll address that first and then folks can pop in but I think what you are hearing us explain.

There continues to be additional potential in this market not only from new indications, which would be awarded to therapeutic candidates, but also from physician adoption of using clarify make that would clarify either in different areas across what's already within our indications or using it more frequently and we.

We'll just say will continue to update as we credibly have that information to offer but we would fully expect it to continue to expand the tan and that does not include geographic expansion more lifecycle management expanse.

Expansion, which could occur in indications are therapeutic areas outside of prostate cancer and that's something we will also continue to update as as we look throughout the year, but we we I don't want it to leave the impression that we have created a medical practice, we are influencing medical practice by having brought such a strong innovative product to the market, but we are monitoring medical.

Practice to see how they are adopting and embracing it to your question about <unk> for the year as Bob mentioned when he was first offering guidance. This far into the quarter. It's just not appropriate to give any product specific guidance for the rest of the quarter. I think it's fair to say you will continue to see <unk> grow as well as our other products, but at this time.

We would not be offering any specific type.

Type guidance for the product software end of year.

Great if I could just squeeze one last one and thank you for the color of $10 million servo revenues.

Revenues in the guide this year I'm curious, if we should expect or if there is any kind of inflation of revenue contribution from some of your other competitor royalty.

Driven product areas like with her there at <unk> and <unk> and.

<unk> sales in Europe , how should we think about the potential for revenue contribution from those and 23 and is there any assumption of revenue contribution and the guy. Thank you.

Yeah, I'm going to forgive you for the pronunciation and I think if you look at what we've operated general timelines for what would lead to the approval process for some period as you would not anticipate seeing any revenue for that product either book by G healthcare or royalty back to us in 2000 2003, but the rest of what our farmers services.

Partnerships, we do book revenue for the use of the proposed that in clinical trials. So that is relevant up into our clarify numbers. So we're not asking you to try to separated or moderate and for the rest of our partnerships. At this time aside from of course for Lipitor, which is a pure royalty stream, which Bob has been fairly explicit about I would not have you pretense.

Lee or perfectly model any other direct revenue.

Thank you.

One moment for our next question.

Our next question comes from the line is Anthony.

Your line is open.

Thanks, and congratulations on the year and just just a strong buildout going.

Going back years ago, covering the name pre the acquisition of Progenics just to where we are today. So.

Graduations to the team.

Maybe one on the Tam expansion.

Paul $1.6 billion just to follow up towards just questions. When we think about testing intensity. We also picked up that you are seeing some testing intensity actually with hormone therapy, but you also have radio log and therapies in there and I think the number of scans for each therapy, a slightly different so when we think of.

Patients actually going into therapy, and then being monitored clarify how it is that spreads sort of play out is it more intense with radio log in.

How is it with hormone therapy, and then I'll have a couple of thoughts. Thanks.

Sure.

We're going to start and then I'm going to turn to Paul because again I wanted us to continue to be clear in that we are monitoring how the market is embracing these products are indications put aside the ending potential approval of additional radio log in therapy or digital uses and radio against.

<unk> argue indications really do cover the full spectrum of prostate cancer treatment in men. However, what we used for practice guidelines is what the <unk> and <unk> and other similar bodies like that put out in their professional opinion as to how these products should be used any of the your encapsulating. It yourself when you say.

That there seems to be different practice regimen emerging that is so true as physicians continues to learn where the value is prepare for may imaging, specifically for imaging with clarify we expect to see changes there when the medical practice has spoken I'll say loudly enough and has January .

And Ah then those practices get solidified into guidelines, which then become practice practice guidelines for a physician. So it's a bit of a give and take skill for our purposes. We are assuming that support usage within therapies that you mentioned hormone therapy I'm not going to specifically on that but I will say on the approved.

Log in therapy that yes. The date, we are estimated at least one eight <unk> per patient for those patients undergoing those therapies in other parts of our very broad application.

And patients are using annually, but this information continues to evolve because the practice continues to evolve.

Got married maybe I would go out and.

Just to add and agree with everything Marianne said I think what we're letting is maryann mentioned as the market speak we conducted a thorough third party market research to assess how physicians across your.

Oncologist radiation oncologist or assessing the market, how they're using <unk> imaging, specifically pollero thoughts and there are certainly arrange out there.

Depending on how many scans and how this is going to be used whether a course of therapeutic treatment for radio looking therapy. As you mentioned could be four courses are six courses.

Current estimates that we've rolled out after that in but.

But we're still very early in the <unk>.

Realisation of a psm's patent marketplace, where clinical practice is evolving we've only have radio leaking therapy <unk> on the market for less than a year and so there's a number of patients still going through there and medical practice will continue to evolve. What we've said is that we will continue to update the total addressable market when we see guidelines.

Change when we see the FDA grant new indications or where we have enough substantive third party research.

But suffice it to say.

We've already seen the Tam increase significantly to one today and.

And through merely incidence and prevalence to say nothing of additional medical practice guidelines on approvals, we could see that evolve going forward.

Very helpful too quick falls back in so one is just on the competitive landscape, we get we get questions for investors quite often on that maybe just an update.

The competitive dynamics another competitors coming on market later this year, there's two competitors in the market today, how does that play out over time and if you can can you provide any update on the initiative to secure J code.

<unk> going forward again congratulations.

Thanks, Anthony I'll start and then I'll turn it over to Paul again, but I think we've said this before we welcome and we embrace additional competitors into this market. Because this is a new market that needs to be grown and the best way to do that and to have more voice and more activity in the market now having said that I will also say we will continue to hold our commanding presence in the.

Market as the category leader with clarified but the entrance of other products into the market and I'm sure you're referring to the blue and we work.

If a product that may come into the market. Later this year just based on general regulatory timelines, we would look forward to having another player in the market as I said in that in those markets. However, we view it and we view it many different ways, because we are and tend to be very prepared for anything that happens in our market. We intended to remain.

As the commanding leader the clarify in that market, Paul do you want to add there.

Yeah. Thanks, Marian would echo that Anthony I think I think you've seen us.

In the history of Lampi is when we go into a market. We aim to be leaders in that market and we aim to sustain that market leadership.

Clarify I don't think we think that's anything different when we look at the significant first mover advantage in our ability to build out APM F manufacturing network of now 37 with what we believe is third a sustainable advantages inappropriate out the door times geographic breath not to mention 98% on time in full and the second one.

Half of 2022.

Look at the contracting that was able to do in the customers that we've been able to bring on board. We look at our market access coverage of being able to achieve early last year at 90% of covered lives.

Then lastly, I think you're seeing the results of our commercial excellent being out to do.

Go out into the marketplace and to generate demand by educating physicians I think that's really the bread and butter of what <unk> does is incredibly well in these markets.

And so we would expect that to be able to continue and it was Marianne mentioned, we expect and we anticipate competition.

We continue to believe that we can be the leader Mesma pet and we think we saw that continued to play out on the fourth quarter was Marianne mentioned, we had commanding market leadership.

And we would expect that to continue now to your point earlier on the J code comment, which is more of a broader question I presume around pass through.

There's a number of things that we think about with regards to pass through that we are supporting trade associations and the reintroduction in this new Congress and eventual passages, we believe up to find out.

Which would transform the current transitional passport status, we continue to work with CMS and regulators on updating as you mentioned potential J codes and how they interpret the.

Place and really what they group for Pet C. T scans, whether they breakout by different categories are group. It Holistically and then we also believe there's a number of commercial levers available to us not to mention our first mover advantage and so we're working on all of those to ensure that we can continue to expand this market and that we can.

Needed to be leaders for many years to come.

Thank you.

And our next question comes from.

Which SBB security, so let us know open.

Great. Good morning, everyone. So a couple of questions and lines hilarious. Good morning, a couple of questions on clarify wanted to ask about the level of demand driven gross that you saw in fourth quarter, particularly in the segment, where it's used to determine eligibility for <unk> and are you sensing any sort of tents us demand.

Among hospitals getting patients unpredictable that might read through to clarify coming up this year.

Mmm that fall into that.

Happy to Marianne So I think I think two parts to the question, one where we're seeing growth and I think that if you heard me comment the nearly.

Nearly 12% sequential meaning third quarter fourth quarter growth, we saw the majority of that coming from increasing demand generation, that's either additional referrals from existing account.

Or new Hcp's, referring for <unk> scans and so as we've mentioned.

Since really the <unk>.

Middle of last year.

Where we we're adding new accounts, we expect the.

Majority of our growth to come from being able to raise awareness on who the right patient see no types are to receive clarify imaging opt to refer those to the right imaging centers and then for clarify to continue to be the P. SMA at imaging agent of choice.

With regard to.

Could you clarify your second question or apologize.

I was just curious if there's any sort of positive readthrough from demand for the radio lagging therapy protector to requiring scans with clarify.

Oh. Thank you I appreciate the clarification. So I think overall, we see broad growth across both are recurrent indication as well as which would encompass patient selection as those patients are recurrent as well as in the <unk>.

Prior to definitive therapy or initial staging as we sometimes call. It I think we're still at the early stages of perfect they'll coming onto the market you can refer to Novartis is public comment, but when you're back into the number of patients that are being treated with radio ligon therapy as it's approved today.

Versus the total marketplace I still think we're in the single digits.

With regard to the kind of the total market size.

And what we're seeing in realizations and so if I refer you back to what we looked at for our Tam.

Less than 10% of the annual scan potential was antihistamine targeted radio of Lincoln therapy. As it is currently indicated now is that expands.

And to the earlier question into pre chemo or other settings, those populations grow and could have a more meaningful impact but to date I think we view the overall impact of that to be relatively small, but optimistic that it can grow over time.

You have got it Super helpful and looking ahead I just wanted to check are there any seasonality trends or pair dynamics that we should consider for clarify into first quarter and can we make any comparisons to what happened in first quarter last year.

So we have not identified any seasonality associated specifically with clarify it's something that we have talked in the past with about DEFINITY, but that's mainly.

Right now.

That spanned the second and third quarter, but we have not to date and it may be just that we don't have enough of history, yet with the product that we have not identified any seasonality trends.

Okay got it and just wanted to check how you're progressing as well with the expansion of capacity and redundancy for pms across the U S do.

Do you think that you are sort of reaching into areas that really could benefit the most from more <unk> more coverage in the U S.

This is completely purposeful, having already you know use 2000.

Back have a 21 and then hill 2000 2000 to ensure that we had the ideal network to address capacity and demand wherever it was now we get to be selective and look and see where it behooves us behoove the patients and the physicians we serve to have either double down on capacity or to have additional added additional sites or double down and capacity out of.

Single site. This is all tweaking that we will now be doing permanently.

Marian maybe just to add onto that.

And I commented in my prepared remarks, when we look at rpms filled out it's really around three things at this point, it's around geographic breath, and we're serving customers in 4600 50 states. So we feel very good about our geographic breath across the marketplace. There are still a few market.

We've note if you look on the map on clarify dot com central and Northern Florida, We still plan to build out.

<unk> capacity I think the second key pieces around out the door times and this is really as the psm's pet market and specifically pet with clarify scan have grown significantly imaging centers and hospitals are adjusting their we're close to want to lever.

With clarify in the morning, and the afternoon in the late afternoon and so it's also about meeting customers as they continued to evolve and that means given the half life of radio isotopes overall, even with <unk>, having 110 minute half life. We still do have continued tweaking to do out there to continue to meet customers as they are.

Needs evolve in their volume continues to grow and then lastly, it just adds optionality and we think that's incredibly important.

To be able to deliver customers as we've seen already in the second half of 2022 at 98% on time and full we believe that demonstrates that will continue to able to meet the needs of our customers and that's important for us to do growing over time as the overall market and specifically <unk> clarify continue to grow.

Thank you.

One moment for our next question.

And the next question comes from Matt Taylor with Jeffrey to your line is now open.

Good morning, Thanks for taking my question and congrats.

So the first question was I was hoping you might.

Help us think about the euro.

European Sir could you be.

Specific about the number of scans.

Do you think there could be there for psle patent considering differences in prices do you have any estimates for what.

Could be for.

Either.

Good morning that this may I mean, we have not offered any guidance on what would be the European Cam for PSA may pet imaging at this time I think it's fair to say as we get closer to actual entry into the market again, just through our partner curiam that we May then have line of sight to what their expectations are but we are.

Offering that at this time.

Okay.

And then just as a follow up I know you've illustrated a lot of the.

It says that you have with clarify being first mover laying down a lot of this infrastructure.

Like you to address and obviously in a year or so we can have another team.

Agent coming in could you talk about how you think your your moats basically can hold up two additional F. Eighteens competitors what are some of the key things you've already done in that you can do between here and additional competition coming in to solidify that.

So that I was starting again I'll turn it over to Paul but I think we have already seen that to date there is already.

A very prevalent positive physician experience with <unk>.

Huge satisfaction abusing this product because of the images it produces and what it allows for the physician and interpreting a patient's disease that is an experienced that physicians do not give up lately. The example here is definitly, we are getting 22nd year in the market to competitive one competitor right from the start which is essentially GTE healthcare with a <unk>.

That was very similar and yet the patient experience and the patient preference for the past two decades has been definitively that is part of the larger value proposition that we bring to any market research and continue to have the largest dedicated salesforce now it's too in peace may pet imaging as it has been true again, two decades with the <unk>.

Entity and tied to that is customer satisfaction and are intended to ensure that our customers have what they need when they are either performing an ultrasound are now performing.

A pet scan that is something that I think is a strong mode.

I said earlier, we welcome competition. This is a huge market. The best thing that will happen for physicians and patients and to have more noise and voice brought into this market to describe the innovation that is now available with PSM, a pet imaging, but we intend to have that also tied to our strong reputation and the value proposition that we <unk>.

To everything we do.

Thank you maybe argument and Marianne just a bit because agree with everything you said, but I think that's really comes down to west Lanthier does incredibly well these.

These are complicated nuanced markets, we look at the number of Pms, we've been able to build out to meet customer needs with the appropriate out the door time. We've noted previously and reiterate today that we do have through some of our Pms partners preferred out the door times that.

That we have through 2000 2007, we.

We think our access specific on market access and what we've been able to achieve with one of the larger if not the largest market access teams to achieve 90% coverage. We think that takes time and demonstrates our capabilities and skill. We look at contracting with what <unk> has been able to do and reached 100 per cent of academic account.

Quite quickly to be able to serve customers on time in full and then I think about the the differentiated sales and marketing execution, which we really focus on on a daily basis and don't take anything for granted.

Out there driving demand ensuring that physician to understand that differentiated benefits of psm's pet with clarify and we think the amount of repeat ordering that we've seen we think the prevalence of prostate cancer, where patients are going to be coming in we think that provides an opportunity for us to maintain the stickiness and the market leadership going forward.

And then we also think about the clinical profile when.

When we speak to physicians and to not only imaging physicians, but referring physicians and the benefits.

And the change in management, that's happening on a patients level. We believe those are all differentiators that will continue to ensure that we remain the leader going forward naturally there's other opportunities that we have in place.

And we would assess those going forward from a competitive perspective, I am not going to share more about that at this point, but we feel confident in our position going forward.

Thank you and next question.

[noise] moment.

Our next question comes from Larry solo with.

C. S C Js Securities. Your line is now open.

Great. Thanks, good morning, and.

Congratulations on a good year.

And if it is comments on the.

Covering you guys. Since 2018, so it's been a it's been a fun five years and look forward to another fund five years going forward.

I guess the first question that a lot of my questions were answered were just clarify just marketing efforts promotional efforts going forward I know you mentioned building up more timid facilities.

Improving the at that time.

What about just in terms of promotional and spend there you are reaching out of there are still areas local to reach out to more local doctor's a regional daughter's up maybe.

Maybe we're the awareness isn't as great as one might expect just trying to figure out where some spent.

Spending that marketing is going towards.

Good morning, Larry I'm going to turn it over to pull to answer, but then I'm just going to ask a favor after pulling up.

The financial question sitting here, so prepared and none of that in the question I would ask.

Bob.

Hit him up with a financial question, absolutely get ready Bob.

Thanks.

You are quite engineering.

Thanks, Marianne and thanks, Larry.

As I mentioned earlier, we really used the first call. It year to 15 months of launch to ensure that we could satisfy demand through what you highlights and setting up pms to serve the whole marketplace and educating and contracting with imaging centers.

Hospitals to be able to ensure that they could order that they could receive the product and the time frame that we said in the second half of the year in the middle really in the second half of 2022, we shifted our focus from a promotional perspective classic sales and marketing to referring physician to the 5000, plus physicians that make up the.

Pretty of management of prostate cancer patient to ensure they understand the benefits appear to make pet with full aerophyte and while we are very pleased with the results, including the sequential growth of almost 12% quarter over quarter. There are still significant opportunity, we've highlighted a $1.6 billion tan with growth.

Opportunities going forward and if we were to annualize our results as what we've seen with competitive result, it's approximately 50% penetrated as of the fourth quarter and so there are still a significant number of physicians that are not prescribing clarify there are a significant number of physicians, who see prostate cancer patients that are unnecessary.

Using PMMA pedowitz clarify for all of their patients and so this is really as I mentioned before what lanthier, so as well to go out there under the referring community to educate on the benefits of Psm's pet with clarify for what we can do and that's really where we see to continue growth to come and that's what we continue to invest to ensure that we can realize.

And even greater portion of that Pam and remain the market leader maybe on some of the specifics pop I don't know if you have any comments on our overall sales and marketing case, but that's what I would answer.

Nope.

To that so glad Larry throw me a bone.

Maybe just in a litigant such as.

I guess you know they are.

Bringing specified that you mentioned margins will be more flattish this year or maybe even a little bit down.

The sales and marketing expense actually you've done a pretty good job, you're leveraging that you brought down to under 10% I think this quarter.

Does that peace.

Is there a leverage on that going forward.

Oh.

And.

Just a short term thing of twenty-three or as twenty-three and pets are more by investments and.

And point or the other things or is that more.

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