Lantheus Holdings Inc. Q1 2023 Earnings Call
Speaker 1: Welcome to the LAMCIS first quarter 2023 financial results 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.
Speaker 1: This call is being recorded for replay purposes. A replay of the webcast will be available in the investors section of the company's website approximately two hours after the completion of the call and will be archived for at least 30 days. I'll now turn the call over to your host for today, Mark.
Speaker 1: Kinarni, Vice President of Investor Relations. Mark.
Speaker 2: Thank you and good morning. Welcome to Lanthius's first quarter 2023 Financial Results Conference call.
Speaker 2: With me on today's call, Mary and Hano are CEO , Paul Blanchefield are president and Bob Marshall are chief financial officer. Mary and will begin the call with introductory remarks and then turn the call over to Paul to provide a strategic and operational update. Bob will cover our financial results and provide updated guidance.
Speaker 2: Marianne will provide closing remarks and then we will open the call for Q&A.
Speaker 2: This morning we issued a press release which was furnished to the Securities and Exchange Commission under Form 8K, reporting our first quarter 2023 results.
Speaker 2: You can find the release on today's slide presentation in the Investor section of our website at LAMFIAES.com.
Speaker 2: I would like to remind you that any comments made during our call today could include forward-looking statements.
Speaker 2: Actual results meet different materially from those indicated by these statements due to a variety of risks and uncertainties. Please note that we assume no obligation to update our commentary or any forward-looking statements, except as required by applicable law, even if actual results or future expectations change materially.
Speaker 2: Please refer to our SEC filings for a detailed discussion of these risks and uncertainties.
Speaker 2: Discussions during this call will include certain non-GAF financial measures.
Speaker 2: Reconciliation of these measures to the most directly comparable GAAP financial measures is also included on the investor section of our website.
Speaker 2: It is my pleasure to now turn the call over to our CEO , Mary Ann.
Speaker 3: Thank you, Mark, and good morning to everyone joining us. Today, I am pleased to discuss our outstanding first quarter results and update you on the state of our business. During the first quarter of 2023, we generated record results with quarterly revenues of $300 million and adjusted earnings per share of $1.00
Speaker 3: outcomes. Our impressive first quarter growth was led by the continued strong performance of both Pilarify and Definity, which continued to have the leading market share in their respective categories.
Speaker 3: Our market leading commercial portfolio and superior customer experience have been hallmarks of Lantius and will continue to fuel our growth.
Speaker 3: Together, Polaris I and Dacinity have already impacted the lives of tens of millions of patients, created significant shareholder value, and enabled us to invest in our business to continue to expand our portfolio of commercial and clinical stage radiopharmaceutical assets, including the recently completed in-licensing of two late-stage radio stations, the National
Speaker 3: NPNT's 2-0-0-3, including in the clinical, regulatory, and manufacturing programs, as well as advancing commercial readiness.
Speaker 3: Most recently, we were pleased to announce the FDA granted Fast-Track designation to PNT-2002 for the treatment of metastatic castration-resistant prostate cancer, or MCRPC. Fast-Track is a process designed to facilitate the development and expedite the review of new drugs intended to treat serious conditions.
Speaker 3: that's still an unmet medical need.
Speaker 3: We are encouraged by the FDA's decision as every year in the US, approximately 70,000 men are eligible for treatment for MCRPC.
Speaker 3: Importantly, this designation will allow us to work closely with the FDA, along with our partner POINT, to quickly advance the PNT-2002 program, which has the potential to make a meaningful difference for patients who require new treatment options.
Speaker 3: We look forward to sharing our progress, including the anticipated top line data readout for the PNT2002 Flash Trial in the second half of 2023.
Speaker 3: Our most recent acquisition, that of servo technologies, which closed in the first quarter of 2023, added MK6242 to our pipeline of assets.
Speaker 3: MK6242 is a novel clinical stage, second generation pet imaging agent that targets tal tangles in Alzheimer's disease and has the potential to aid in diagnosing and staging Alzheimer's disease as well as guide treatment choices for modifying therapies. Over the last two months, we continue to advance the utilization of MK6242 in clinical development partnership. shoeing.
Speaker 3: MK6240 is currently being used in more than 60 academic and industry late-stage clinical trials for Alzheimer's disease therapeutic candidates under development by more than 16 pharmaceutical companies.
Speaker 3: With the expanding scope and skill of our business, we recently announced the promotions of Paul Blantfield to President and Dan Dizwicki to Chief Administrative Officer. Paul joined Lansing as in 2020 and has been an exemplary leader throughout his tenure, demonstrating strong strategic and leadership skills, most notably with the very successful launch of Polarify. His commitment to excellence and the patience we serve positioned Paul as the ideal
Speaker 3: His contribution has been key and will continue to be invaluable as Lampius continues to grow. In his expanded role, Dan will now oversee several critical functions, including legal, compliance, intellectual property, human resources, and corporate communications.
Speaker 3: Dan will also continue to serve as our General Counsel and Corporate Secretary.
Speaker 3: I will now turn the call over to Paul to share an update on the Lantius Commercial Portfolio Pipeline and Key Strategic Initiatives.
Speaker 2: Thank you, Marianne, and good morning, everyone. I am honored to have the opportunity to take on the President's role and I'm excited about the future of Lantheus and the radio-pharmaceutical industry as a whole.
Speaker 2: According to third-party research reports, the global radio pharmaceutical market is expected to expand from $6 billion in 2021 to over $35 billion by 2031.
Speaker 2: Fueled by the growth of currently approved products, new approvals, both diagnostic and therapeutic, and most notably the increasing number of patients diagnosed and treated with radiopharmaceuticals. Radiopharmaceuticals are on the midst of a renaissance and are considered to be disruptive innovations in cancer therapy.
Speaker 2: Lampius is uniquely positioned to lead and shape this industry going forward. We are one of the largest radiopharmaceutical focus companies in the world and further demonstrate our leadership through our market leading products, diversified pipeline, and our manufacturing, supply chain, and commercial expertise.
Speaker 2: which we've honed over more than 65 years. Our success is exemplified by the recent expansion of our radiopharmaceutical oncology pipeline, a category that showcases truly exciting innovation and growth potential.
Speaker 2: Our point BioFarma partnership puts us on track to potentially launch two additional oncology radio therapeutics in the next few years, and our Mars recent acquisition of Servo and with it, the addition of MK6242 to our pipeline moves us into the Alzheimer's diagnostic market.
Speaker 2: We are excited about the future of the radiopharmaceutical industry.
Speaker 2: Our differentiated capabilities in development, regulatory, commercialization, and reliable supply will enable LAMPheus to continue to lead and most importantly, improve the lives of the patients and families we serve.
Speaker 2: Switching to an operational update, PSMA Pet with Polarify remains firmly established as the Market Leading PSMA Pet Imaging Agent with first quarter sales of $195.5 million.
Speaker 2: representing 110% growth year over year, and 22% sequential growth from the fourth quarter of 2022.
Speaker 2: As we near the second anniversary of Polarify's FDA approval, our key drivers for success continue to be Polarify's innovation in the market, the significant unmet need in the prostate cancer community, and our best in class customer experience.
Speaker 2: The 22% sequential growth was achieved through continued increased penetration in existing accounts driven by our focus on referring physicians and our promotional efforts to increase brand awareness of PSMA PET with Polaris. Also contributing to sequential growth was the addition of new accounts, and the new
Speaker 2: A modest price increase taken at the beginning of 2023 and an additional selling day versus the prior quarter. Over the course of the first quarter, we also continue to increase our capacity and reliability out the door time flexibility and geographic reach.
Speaker 2: including the activation of new pet manufacturing facilities, most notably in Northern Florida, Puerto Rico, and Arkansas.
Speaker 2: For our micro-bubble business, the first quarter sales for Diffinity were $68.8 million, up 18% from the prior year. We are pleased with this solid performance as Diffinity remains the number one choice in the ultrasound enhancing agent market.
Speaker 2: During the quarter, we benefited from an increasing number of patient office visits, which we expect to continue, and the impact of our in-person programs in the second half of 2022.
Speaker 2: We have made inroads in particular with specific accounts that have benefited from our educational and promotional programs. I will now turn the call over to Bob for a financial update. Thank you, Paul. Good morning, everyone. I will provide highlight to the first quarter of financials focusing on the just results on much otherwise noted.
Speaker 4: Turning to the quarter, revenue for the first quarter was $300.8 million in increase of $91.9 million or 44% over the prior year period.
Speaker 4: Earnings per share for the first quarter were $1.47, an increase of $0.50 or 51.3% over the prior year quarter. Earnings per share for the first quarter were $1.47, an increase of $0.50 or 51.3% over
Speaker 4: Now, we'll turn to the details beginning with radio pharmaceutical oncology. The category contributed revenue of $196.2 million a sales, up significantly year over year and meaningfully up sequentially from the fourth quarter due to polarifies continued growth and adoption.
Speaker 4: A Z-dump contributed 0.7 million of sales in the quarter. Precision diagnostics recorded $95.6 million, up 10.9% from the prior year.
Speaker 4: Sales with the affinity net of rebates and allowances were 68.8 million 18% hires compared to the prior year quarter and included a $2 million regulatory milestone payment from our China distribution partner double-crain. Excluding this payment, the affinity grew 14.6% exceeding our initial expectations.
Speaker 4: Tech-Nalight Net Revenue was 21 million, down 7.2% from the prior year quarter, do mainly to a comparison that included opportunistic sales, not repeated in the first quarter of 2023.
Speaker 4: Lastly, strategic partnership and other revenue was $9 million, driven primarily by the Rellistor Royalty, but also included 2.8 million of sales from the newly acquired Tau Imaging BioMarker MK6248.
Speaker 4: As a reminder, the prior year comparable contained the $24 million license revenue from the Vartus, not repeated this year. Gross profit margin for the first quarter was 68.6 percent, an increase of 165 basis points over the first quarter 2022 result on a similar basis.
Speaker 4: As has been the case in recent quarters, the increases due mainly to familial volume and product mix led by polarifying affinity, offset in part by higher material and labor costs.
Speaker 4: Operating expenses were 119 basis points favorable over the prior year at 21.4% of net revenue, which is lower than previously guided, driven by both higher revenue and lower R&D clinical expenditure.
Speaker 4: We continue to invest in sales and marketing efforts with an expansion of our dedicated Polarify Sales Force intended to support and expand Polarify adoption, as well as our ERP project within GNA.
Speaker 4: We'd now like to note that late in the quarter, we decided to discontinue pursuing life cycle management plans for Azebra to change us in the financial business case and the evolved market opportunity, which has now impacted the Azebra book value. Within the reported or GAAP financial s, you will note that we have taken impairment charge for the intangible assets within the Azebra group reflective of the required analysis.
Speaker 4: The currently marketed asset charge of 116.4 million is found within cost of goods sold and the IPR&D asset charge of 15.6 million is embedded within the R&D expense line.
Speaker 4: Operating profit for the quarter was 142 million dollars, an increase of 53.2
Speaker 4: Total adjustments in the quarter totaled 151.3 million before taxes. Of this amount, 9.7 and 11.1 million of expense are associated with non-cash stock and incentive plans and acquired and tangible amortization respectively.
Speaker 4: Also, as I have just mentioned, we recorded an impairment charge for the Azedra intangible asset group for $132.1 million.
Speaker 4: The remainder is related to net contingent liability adjustments, acquisition, and other nonrecurring expenses.
Speaker 4: Our effective tax rate was 27.2% for the quarter. The resulting reported net loss for the first quarter was 2.8 million and net income of $102.2 million on an adjusted basis. An increase of 50.6% over the prior year quarter. Gapfully deleted earnings per share were lost at 4 cents.
Speaker 4: and earnings of $1.47 on an adjusted basis in increase of 51.3% over the prior year quarter. Now turning to cash flow. First quarter operating cash flow totaled $108.5 million as compared to 10.3 million in Q1 2022. Capital expenditures totaled $9.2 million in line with expectations.
Speaker 4: Free cash flow, which we defined as operating cash flow less capital expenditures, was $99.3 million, an increase of $92.3 million over the prior year period.
Speaker 4: During the quarter, we invested $35.3 million, largely to acquire the servo asset.
Speaker 4: Cash and cash equivalents net of restricted cash now stands at $470.9 million. We continue to have access to our $350 million undrawn bank revolver and are comfortable with our very strong liquidity position.
Turning now to our guidance for the second quarter and updated guidance for the full year. We forecast revenue to be in a range of 300 to 310 million for the second quarter of 2023, in increase of approximately 34 and 38.6 percent over the second quarter of 2022. As noted, we are updating our full year view to take into consideration...
first quarter, Polarify and Definitive Performance. And as such, we now expect to be able to grow in high single digits to low double digits on average for the full year, while Polarify will build on its first quarter strength, which we now model at $820 to $860 million.
Therefore, we now forecast full year revenue to be in a range of $1.23 to $1.27 billion from the prior range of $1.14 to $1.16 billion.
Turning now to earnings, adjusted EPS should be in a range of $1.25 to $1.33 for the second quarter. We are raising our full year adjusted EPS to account for the increased revenue estimates.
We now expect adjusted EPS to be in a range of $5.45 to $5.70 per share versus the prior range of $4.95 to $5.10.
Importantly, and for modeling purposes, despite the lower than expected expenses in Q1 due to timing of hiring and activity, we expect operating expenses to be closer to prior guidance, but in a range of 23-24% of net revenue for the balance of the year.
With that, let me turn the call back over to Mary Ann. Thank you, Bob. In summary, the Lantheus team continues to make significant progress towards our vision and strategic goals. Our excellent first quarter performance is a result of our passionate team, who are motivated by our purpose to find, fight, and follow disease to deliver better patient outcomes for the patients and families we serve.
We are proud to be a recognized industry leader as one of the largest radio pharmaceutical focused companies in the world and are positioning ourselves at the forefront of the renaissance of radio pharmaceuticals with both a commercial portfolio and an innovative and high potential pipeline. We look forward to updating you on our efforts and reporting our progress over the coming months.
With that, Bob, Paul, and I are now ready to take your questions.
Operators, please go ahead. Thank you. Thank you for this time. We will conduct a question and answer session. Please limit your questions to one question. You may return to the queue if you wish for additional questions.
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To withdraw your question, please press star 1, 1 again. Please stand by while we compile the Q&A roster.
Our first question comes from the line of Anthony Patrone from Mizzouho Security. Your line is open. Thank you. Thank you.
Good morning, Mary Ann. How are you? Good morning, Paul. Well, thanks. And good morning, Bob. Again, congratulations here. One Q. Another strong result. Paul, I'm intrigued by the PMF comments. Florida Utah sites. You open three new sites, pet manufacturing facilities.
Thanks for the question, Anthony. So as we've highlighted, we do continue to expand our PMF network, where we see the need for expanded geographies as well as additional optionality and flexibility for our customer base.
We have recently expanded more so in Florida, which naturally, given the demographics, is a relatively large market. We have been able to sustainably supply the Florida market through various means in the past, including other PMFs, but the addition of PMFs allows for updated flexibility of out-the-door times.
closer transportation to be able to reach those customers. We have not specifically commented on the number of hospitals in that cashment area, but expanding the PMS network and specifically flexibility and optionality is consistent with our strategy to ensure that we continue to deliver
best in class customer experience to further cement our leadership in the PSMA pet imaging market.
That's helpful and then on guidance here, it looks like. Almost 100M raised for polarity, I guess, 90M. Right at the midpoint, but certainly at the upper end north of 100M.
And by our math, the number on clarify was ahead by 15M. So certainly the outlook is for continued acceleration. And maybe just a little bit on the bridge on that number. Yeah, what is the complexion of price? You mentioned a little bit of a price game here.
Certainly volumes are growing and we have new site activations. So maybe just a little bit on on the bridge on the guidance range for clarify. Thanks again. Congratulations. I'll get back in queue.
So, Anthony, I'll start and then Paul, you can jump in. From the way to think about it is, as we sat here in February and then we're looking ahead, we had an extremely strong march.
And that has helped to inform when I talk about the strength on a look forward basis. When I look at the first half versus second half, it really is a continuation of that strength. But there are a handful of factors. I mean, obviously the price, the modest price increase that Paul has noted, continues to roll through the balance of the year.
But as I look at first half, second half, I'm looking at a sort of a midpoint of sequential growth somewhere in that sort of 10% to, you know, it's high on the high end, something like 16% first half, second half growth. One of the other things I think it's important to note that as we thought about the sequential cadence on the go-forward basis is
in terms of what we've learned in terms of holidays and the doses impacted. In my holiday weeks, I'm talking about things like Memorial Day, July 4th, Labor Day, Thanksgiving, Christmas. Those all do have an impact on weekly doses. But those kinds of numbers have been cooked into the forecast.
Maybe I'll just add, so, you know, I shared in my prepared remarks that 22% sequential growth was primarily achieved through continued increased penetration in existing accounts, which we believe is a result of our activity and promotional efforts within the referring position activity. Also contributing, but to a lesser extent.
was adding new accounts a modest price increase that I mentioned. And while we don't specifically discuss our pricing strategies, I would note that our
onder
Our next question comes from Richard Newider from Truist Securities. Your line is now open. Hi guys, thanks for taking the questions and congrats on another outstanding quarter.
on Polaris, I'll give you a break from that one for a second. Just affinity was a standout this quarter. I appreciate you had maybe the one timer in there, but still back to double, solid double digits. Sounds like you expect that outlook for the year to be improving. Would love to just kind of hear if you think, is this a sustainable.
that we've talked about in the last number of quarters and indeed for the last couple of years have been largely mollified due to improving hospital efficiencies that have enabled them to handle an increase in patient volumes, which we saw in the first quarter, and we would expect that level to be sustained through the remainder of the year. I think in terms of the first quarter,
It's also a very different dynamic than we saw in the last few years, whereas you were called in 2022, umacron was spiking. We saw an impact to patient visits and similar the alpha variant hit in the first quarter of 2021. And so we think we will see continued patient growth.
to be able to support DFINITY's sustained leadership and continued growth going forward. I'll turn it over if Bob wants to add anything. Yeah, Rich, I mean, I would just point out that if you just reflect on last year's performance, where the first half of the year probably, as Paul was noting, was sort of an easier comp, but that was mainly due to COVID concerns in the early part of the year.
and then building on strength, but also importantly, the sales team was able to get more in-person as last year evolved and really driving the different programs to continue to drive growth, adoption, and utilization. So, we came into the year with an expectation that it has been exceeded and they think it's really the...
the benefits of the accumulated sales effort that is now being reflected and that we feel comfortable to point forward to the balance of the year with what I just said in terms of.
high single digit to low double digit on average for the balance of the year. I think, Rich, I'll just add one final comment here. And I think we have seen, and I'm sure you have as well, as the Life Science sector reports their earnings, there has been a consistent theme of patient volumes returning and with that procedures returning. And that is absolutely also true for definitive.
Rona Ruiz from SVB Securities. Your line is now open.
Great, morning everyone. So a quick one from me, Osteris, are there any updates on your scan per patient assumptions for Polarify given the new guidance and where are you seeing the most growth across different Polarify patient segments?
Thanks for the question, Rona. So, as we shared in January , we did provide an update on the total addressable market, or TAM, for PSMA PET imaging agents in prostate cancer, where we updated our 2023 TAM to be approximately 350,000 patients, or 1.6 million patients.
billion dollars. We have not formally updated that number. However, I would note we have seen continued evolution, specifically in guidelines. And so as an example, the American Urology Association recently updated their advanced prostate cancer guidelines with a reference for prostate cancer was 4%.
to monitor patients' progression of disease. In terms of where we are seeing growth, I think we are seeing growth across all patient segments with a specific driven by existing accounts where we've activated referring physicians, both urologists, oncologists, and radiation oncologists to further understand the benefits of PSMA PET with Polaris V.
And in turn, we're seeing them continuing to refer increasing patients to take PSMA PET with Polaris V. I think we had seen a ramp up, I would say at the end of last year and earlier this year, specifically for radioligin therapy patient selection.
Although naturally with Novartis' announcement at the beginning of March that that would not be adding new patients, we have seen some of that growth temper. But overall, we've seen growth across the board. Thank you. One moment while we prepare our next question.
Matt Taylor from Jefferies, your line is now open.
I'm going to start by following up on that thread. So Paul, I was wondering, I know you do a lot of market research and you mentioned the change in the guidelines. One of your key assumptions, and I think the last time I did was...
for recurrent to see 1.7 or so per patient. And I guess with pretty elegant therapy, expected to grow here in the future.
How would you expect the answer patient to evolve in that group and for recurrence now that you've been able to see a little bit more in the real world?
So thanks for the question, Matt. So I think what I would suggest is that as we've shared, we certainly see room for expansion in the total addressable market from a number of pieces, some of which you mentioned. Right? First would be the expansion of medical practice into the frequency of scans as.
Physicians become more comfortable, more patients are regularly scanned with PSMA PET with Polaris and therefore that becomes their new baseline. And so we do see that continue to evolve. I would note it's probably too soon, three or four months after we shared an update to update those numbers from a scanned frequency, but we do see further upside as PSMA PET with Polaris becomes further embedded in the marketplace.
I think the second piece that we've highlighted and you referenced was the addition of radio ligand therapy further upstream into first and second line with potential approvals, including over time PNT 2002, which we're developing together with our partners point.
that would create an additional set of patients who would be need to be assessed for their applicability for radioligin therapy as well as monitored over time. And so we will see that continue to evolve and potentially impact not only the number of patients who could be scanned, but as you know, the frequency of scanning.
And then finally, we also see the potential for further evolution within the staging population, specifically with regard to intermediate favorable, which is not currently in guidelines, but is being explored. And so I think we overall see significant runway.
for the PSMA pet imaging market in the United States and prostate cancer to continue to grow meaningfully over the coming years, and naturally for PSMA pet with Polarified to continue to lead in that space.
Thank you. One moment, will we prepare the next question?ullen????.
Our next question comes from Yuan Zhe from B Riley. Your line is now open.
Good morning. Thank you for taking our questions and congrats for another solid quarter. So in many imaging centers, we can imagine that they are using both Pilarify and competitors Elusix. Can you remind us what's the value proposition of Pilarify versus Elusix?
quarter and estimate what share we believe we had of the marketplace. We believe we do about 75 percent share of the PSMH type imaging marketplace, which I think is testament itself to polarify in the market's choice for what we think is the best product out there for imaging prostate cancer patients. We've talked about this many times about what we see as the chronic cobalt advantages. ejemplo.
of Polaris versus the other available agents. And I think one of the key ones is the choice of isotope. F18 as an isotope is really much better suited to large scale production, which matches the patient population in need here. And I think with the work that we've done to build out our PMS network, we've been able to meet that need, not only geographically, but then out.
the market has spoken about that as well. Great. Thanks for that update. And in the long term, there is a higher growth potential for radio therapeutics than diagnostics. Can you maybe provide us updated results? How lenses want to play in the long term?
do you intend to license more late-stage radiotherapeutic assets? Thank you. I would say we're incredibly excited about the future potential of the radio pharmaceutical market as I shared in my prepared remarks including therapeutics and diagnostics.
We have in development with Point right now two incredibly exciting assets in the therapeutic space, one PNT-2002 for prostate cancer and a second PNT-2003 for neuroendocrine tumors. And so we are already active from a therapeutic perspective. We also look to see that there's significant opportunities in the diagnostics.
in commercial execution, we believe those differentiated capabilities position us incredibly well to continue to lead in radiopharmaceuticals, both in therapeutics and in diagnostics going forward, as we undertake and indeed continue to lead in what it truly is, a renaissance offense of innovation.
I'll just tack on from the perspective from a business development, you know, the company's clearly in a very strong balance sheet liquidity position with nearly half a billion dollars in cash. Access to further liquidity through our credit lines. As well, as relationships that we've built, I mean, the capital markets, the company has stated that we are interested in in finding those assets that.
to drive shareholder value and create and bring to market solutions for patients and caregivers.
Thank you. One moment while we prepare the next question.
Our next question comes from Justin Walsh from Jones Trading. Your line is now open.
Hi, thanks for taking the question. I think the evolving commercial and clinical success of a PSMA targeted therapeutic and diagnostic radiopharmaceuticals is kind of hard to dispute at this point. And it looks like at least one big pharma player is continuing to cite radiopharmaceuticals as a core driver of...
revenue growth with expected proportional investment on their part. So I think at this point, a lot of people are wondering what the next big target is and expecting that it might be something with more pan-cancer expression such as fiberglass activation protein, which I know you guys have a copper PET imaging agent in the pipeline there. Are there specific targets? federal governmentools.gov.nhc. Bengal
that you think are particularly exciting for the next generation of assets in oncology, and how are you positioning yourselves to take as good advantage of that as you seem to have taken on the PSMA targeted side?
Just as always, I think you're very, very well versed on what's happening in this market and very also insightful about where the market is going. We certainly echo your thoughts about what the next large targets might be. Certainly, if we can make contribution to the diagnosis and treatment of breast cancer, I think that would be an exciting, again, and important innovation.
are also early, but we have not released specific information as to what targets we would choose specifically for those two products.
Just a really quick reminder to ask a question. You will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question please press star 1-1 again. To enroll inighter you have to use minimum on hand realise that your past won't come with complete and easy do you? Is that wrong? Yes, I think so. Just interpreters, can I show
One moment, please, while we prepare the next question. Our next question comes from the line of Larry Salo from CJS Securities. Your line is now open. Your line is now open.
Great. Thank you. Good morning, everybody, and congrats on a good start to the year. Just a quick financial question or a couple for Bob. The first margin obviously continues to sort of creep up along with your better mix. How should we kind of view that going forward? I think you hit almost 69% this quarter.
Same respect operating margin, getting some leverage on that on the gross profit there. So operating margin I think was 47% right which was I think significantly higher even than you know last year's average or even even the last couple quarters. How should we kind of look at that going forward? York?
As you go to the balance here, Larry, I mean, I'm calling for a bit more absolute dollars in terms of OPEX. But I'll start with gross margin. Gross margin, as you point out, nearly 69%. That's sustainable at these levels, particularly as you think about some of the investments that we're going to continue to make in terms of, you know, Paul noted that we have –
3 new PMFs that does include work that needs to be done to bring those online as it were. So those expenses will continue to be, we did note earlier this year that we would continue to add PMS to the network. Throughout the balance of this year, so furthering.
that chance to continue to grow gross margin into the future as some of those expenses come off and as the definitive manufacturing facility comes sort of feathered into our overall gross margin story on a go-forward basis.
In terms of OPEX, I've noted before that in our numbers, if you will, for the balance this year, we do have investment relating to our partnership and collaboration with Point. Also now, the expense base that comes with the servo assets in terms of as a farmer services, but also.
the back office and all of the work that it takes to keep that running. April starts sort of where merit kicks in. So you see that from a headcount, just employee based expenses that would continue to grow. But you're right. Our intent is always to lever the P&L. That's something that I talk about often here.
And I think that's something that's important to continue to drive shareholder value, which will translate as we are seeing into free cash flows that continue on a very solid pace.
Thank you. One moment while we prepare the next question. Our next question comes from the line of Dave Turquely from JNP. Your line is now open.
Good morning and congrats. Looking at the updated TAM and the 350K scans that we're targeting for this year, what percent of those do you have covered with the PMS base that you have now? I think you said you added three, but do you need to continue to do that or are you close to having most of the data that you have covered with the PMS base?
geography here online. Thanks for the question, Dave. So what we've said is we can cover the vast majority of the country and indeed we have now served patients in 47 of 50 states. We have not served patients in Alaska or Hawaii given the geographic dynamics.
continues to be at many different hours of the day every day of the week. And so ensuring that we can be able to provide that is really behind our continued approach to expand our PMFs, recognizing that unlike in a small molecule world, we can't build up inventory.
And so radio pharmaceuticals are naturally an incredibly complex supply and manufacturing chain, and it behooves us to continue to ensure that we have best in class customer excellence. And so it is less around...
new geographies that we can't reach, then it is around maximizing the customer experience to ensure that PSMAPet with PlareFi remains the market leader for many years to come.
Thank you. One moment please while we prepare our next question.
Our next question comes from Richard Newider from Truest Securities. Your line is now open.
All right, thanks for the follow up. Just on the ZEDRA.
I'm just curious a little bit more on the decision to end that program there. I'm curious if the PNT-003 asset and what your plans are for that initiative has influenced it at all. And while we're discussing the topic, can you please provide an update on the PNT-003 asset?
and back in with the financial implications of that. But we have not ended the ZEDRA program. We did discontinue a life cycle management program, but ZEDRA is still available commercially for patients with PPGL. And so I'll let Bob fill in in a moment around this financial implications of that.
market data for you to offer for, I'm sorry. You're on the print. I'm sorry. Neuroendocrine tumors, I think Leo left them. I'm getting corrected live in the room here for net neuroendocrine tumors. And I don't have the specific market data here, but as we get closer to that market, we will certainly share that, Pam.
So, Rich, just to follow up on that. So, I mean, it really is about phase gating. If you think about life cycle management or any kind of clinical trial kind of evaluation, you're going to continuously look at the business case. And as we were evolving with the business case, it became apparent to us that the intelligent...
sort of financial decision to make at that point was to discontinue. But as you think about from an accounting perspective, you look at the entire ZEDRA intangible group together. So when you put it all together with an evolving market opportunity, as I noted, it requires that with this new information that you do a study on the impairment. And it just made sense at that juncture after running the business model that we would take the charge.
And so just to be specific, even though, as Mary Ann is pointing out, we are making a ZEDRA continue to manufacture, continue to make it available to patients and caregivers. The currently marketed piece, either words, the ZEDRA commercial asset, intangible asset is what then has been impaired through cost of goods sold.
And then, of course, the lifecycle management aspect of it in terms of what we were carrying on the books for that particular program and potential outcome long term is what is the IPR&D intangible asset that we took through R&D. So I'll just make one other comment there. And you've heard us speak about this, I think, continuously during the pandemic, but it really was.
taken to offset having using hospital resources to offer a treatment such as et cetera. It's not the only type of treatment that was impacted but in this case certainly and we have continuously seen that. We believe in the product. We know what the product is. It still remains the only product indicated with an indication for PPGL in the US market and we think that's an important.
Thank you. One moment while we prepare our last question.
Our last question comes from the line of Moana Reese.
from SVP Securities. Your line is now open. Great. Thanks for taking the follow-up. So I want to check on the second half 23 splash trial readout timeline, see if that affects a possible regulatory submission for the PNT 2002 asset. I was curious, what are your plans on turning around that data quickly and assembling a data filing package?
So they are directly related because it will be those data from the splash trial that will form the basis of the submission, the NDA for PNT 2002. As we mentioned in our prepared remarks, we remain on track. It is our partner, Point BioPharma, who is completing that trial, and they have also publicly said that they expect those data to be available in the second half of 2020.
available to you more frequently so that you're preparing your file and then once you've submitted your trial you have the ability to interact with the FDA more frequently and you can also have what's called a rolling basis for submitting the different components of what will be the total and the application would you get to facilitate and make
prostate cancer. And this is also, I'll just make one final comment about what fast-track designation offers. You get iterative feedback from the SEA, so it's not just waiting for milestones where you get feedback and then you have to, in a kind of a linear way, react to it. You get to again on a rolling basis, interact and ensure that your file meets their expectations.
Ladies and gentlemen, there are no further questions at this time. Thank you for your participation in today's conference. This concludes the program. You may now disconnect and have a wonderful day. Thanks, everyone.
Yes.
I have.