Lantheus Holdings, Inc.

Good morning, ladies and gentlemen. Welcome to the Lantius Holdings first quarter 2021 earnings conference call. This is your operator for today's call. Please note that all lines have been placed on mute to prevent any background noise. This call is being recorded for replay purposes. A replay of the webcast will be available in the investor section of the company's website approximately two hours after the completion of the call and will be archived for 30 days. I'll now turn the call over to your host for today, Mr. Mark Tinarny, Senior Director of Investor Relations. Mark?

Thank you, and good morning. Welcome to Lantheus Holdings' first quarter 2021 financial results conference call. With me on today's call are Marian Haino, our President and CEO, and Bob Marshall, our Chief Financial Officer. Marian will begin with some introductory remarks and a business update and then Bob will cover our financial results. Mary Ann will conclude the call with closing remarks, and then we'll open the call for Q&A. This morning, we issued a press release, which was furnished to the Securities and Exchange Commission under Form 8K, reporting our first quarter 2021 results. You can find the release in the Investors section of our website at lantheus.com. For those of you not on the webcast, you can find the slide presentation in the investor section of our website under the Presentations tab. Before we get started, I'd like to remind you that our comments during this call will include forward-looking statements. Actual results may differ materially from those indicated by forward-looking statements due to a variety of risks and uncertainties. In particular, the continuing impact of COVID-19 on our business results and outlook is a best estimate based on the information available as of today's date. Please note that we assume no obligation to update these forward-looking statements except as required by applicable law, even if actual results or future expectations change materially. Please refer to our SEC filings for a detailed discussion of these risks and uncertainties. Also, discussions during this call will include certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures is also included in the investor section of our website. With that, it is my pleasure to now turn the call over to Mary Ann.

Thank you, Mark. I hope this finds everyone healthy and vaccinated or well on the way to being so. During the first quarter, we continued to successfully execute against our financial and operational strategies. while keeping the safety of Lantheus employees a top priority. And I am pleased to update you on our progress today. As we approach the one year mark of our acquisition of Progenix, I am proud of what our team has accomplished. You may recall, after announcing the transaction, we established a fully dedicated team to oversee the integration effort to achieve identified strategic and financial goals. The execution against these milestones is well advanced. and we have been able to significantly invest in our business while overachieving on the targeted run rate savings. I cannot be more excited about what the future is that we are creating for this company. While Bob will provide more detail later, I want to bring your attention to a change in our reporting segments that begins with this quarter. Going forward, we are changing our reporting segments from U.S. and international to a single reporting segment. Under that single segment, we will be grouping our reported revenue into three categories. The first is precision diagnostics, the second is radiopharmaceutical oncology, and the third is strategic partnerships and other. This better aligns with our corporate strategy and our current product portfolio and pipeline. I will structure my comments to be consistent with this new format. In the first category, precision diagnostics, I will be discussing the following products. DFINITY, Technolite, and Xenon. I'll start with DFINITY. If you recall, during the fourth quarter 2020, we noted that while results in October and November were in line with our expectations, we did see volume decline in non-urgent echocardiography procedures in late December in those geographic regions that experienced resurgence of COVID-19 infections and related hospitalizations. Starting in early February, we began to see recovery. albeit with regional differences across the country. With steadily increasing availability of vaccines to broader segments of the population, we believe healthcare professionals and patients are becoming more comfortable in administering and receiving in-person care. And with that, we believe echocardiography utilization will continue to return to pre-COVID-19 volumes. Throughout the pandemic, we've engaged our DFINITY customers through digital technology. including virtual training programs, as direct promotional access to hospitals has been restricted. In fact, we've conducted a record number of virtual programs in the past year. While virtual engagement continues, hospitals are now allowing in-person visits for our sales professionals in some areas. While in-person activities are highly geographically dependent and still limited, we are encouraged by the trend and, more importantly, the opportunity to engage with our customers in person. Experience gained over the last year with different forms of digital engagement will inform the full promotional mix of our approach to the echocardiography market going forward. We are committed to the echocardiography specialty and believe these investments, complemented by a return to normalized echocardiography levels and utilization dynamics, will drive definitive revenue growth for the balance of 2021 and beyond. Finally, regarding DFINITY, our in-house manufacturing facility project remains on track. We expect to submit the Supplemental New Drug Application, or SNDA, later this year, with an FDA action date anticipated by year end. During the first quarter, we successfully manufactured batches of DFINITY that will be commercially saleable upon FDA approval. Turning to Technolite, the product performed well in Q1, and we continue to see demand build back towards pre-COVID-19 levels. While the business posted flat revenues on a sequential basis, the recent fourth quarter of 2020 included about $1.9 million of opportunistic generator sales to Amstow, which did not repeat to the same magnitude in the first quarter. While international transportation logistics for Inbound Molybdenum 99, or MOLI, supply remained complex, We are hopeful that international flight patterns will return to more normal levels, which will minimize our need to support custom logistics for Mali delivery. Our Xenon business, however, continues to be negatively impacted by limited utilization of in-hospital respiratory inhalation procedures as a result of COVID-19 transmission concerns. As we said previously, we anticipate aerosol-based studies, of which Xenon is one, may continue to be impacted. while hospitals maintain precautionary protocols to prevent possible COVID-19 transmission by patients who may be infected when undergoing aerosol-based procedures. Switching now to discuss our radiopharmaceutical oncology products and product candidates, I will give an update on the following, Azedra, PYL, and 1095, beginning with Azedra. In March, we announced that updated biochemical tumor marker data from our pivotal Phase II trial of Azedra were presented at the Endocrine Society's 2021 Annual Meeting, ENDO 2021. In the trial, Azedra demonstrated reduction in hypersecreted tumor markers in a majority of patients with advanced pheochromocytoma and paraganglioma tumors, or PGL. In addition, the overall tumor biomarker response correlated significantly with both the primary and secondary endpoint responses in the study. underscoring the clinical utility and relevance of this important biochemical marker to evaluate response to therapy and reinforcing the therapeutic benefit of Azedra in patients with these life-threatening tumors. As a reminder, Azedra is the first and only FDA-approved treatment option for patients with advanced or metastatic PPGL. During the quarter, we introduced new marketing initiatives to increase awareness of the disease and treatment options among the referring physicians. We also developed a new medical affairs plan to facilitate peer-to-peer education while also working with centers of excellence to expand availability of this treatment option for patients. To ensure ongoing adequate product supply, we have increased the manufacturing staff at our Somerset facility. We are also constructing an additional manufacturing suite to provide redundancy for Zedra manufacturing as well as increased overall future capacity of our iodine-based products. While it will take some time to complete the qualification and obtain FDA approval of this suite, we believe the sum of these activities will result in ensuring adequate manufacturing capacity for the increased demand we anticipate for Exedra during the balance of the year and moving forward. Turning now to our product pipeline, I will discuss the product candidates highlighted here, beginning with PYL. PYL is the lead candidate in our prostate cancer portfolio. and is a prostate-specific membrane antigen or PSMA-targeted PET imaging agent for prostate cancer. PYL enables clinicians to visualize both bone and soft tissue metastases in patients with locally advanced, recurrent, and or metastatic prostate cancer. The FDA accepted our new drug application for PYL and assigned priority review to the NDA with an action date of May 28, 2021. In March, we announced the publication of the results of both pivotal studies for PYL. The Osprey Phase 2-3 trial results were published in the Journal of Urology, and the Condor Phase 3 trial results have been published in the Journal of Clinical Cancer Research. We believe these data demonstrate PYL's clinical benefit and that PYL has the potential to play an important role in transforming the management of men with high-risk recurrent or metastatic prostate cancer. We are pleased our studies were published in these prestigious journals. With our Purdue for Action date and potential launch later this month, we're very busy with commercial preparation activities. Over the last several months, we have focused our efforts on scaling up our commercial, medical, and manufacturing capabilities in support of PYL. We've added significant talent throughout our organization, including our commercial, medical, supply chain, quality, and technical departments to help facilitate a successful product launch. On the commercial front, we've been pleased with our ability to recruit professionals with strong backgrounds in urology and nuclear medicine to enhance our sales effort. Our senior commercial leaders are in place, as are our salespeople and medical science liaisons in key markets against a hiring plan that matches our anticipated launch timing. For our medical team, in early April, we announced the addition of two top-tier talents, Dr. Bela Dennis and Dr. Irina Sezlenko. Dr. Dennis, a board-certified urologist, and Dr. Kozlenko, board-certified in radiology diagnostics, both come with extensive experience in both clinical practice and industry, and we are thrilled to have them supporting both PYL and the entire Lantheus medical teams. Our timeline supports launching PYL as soon as we receive FDA approval. We are working on site preparedness and activation with our pet manufacturing facility, or PNF, partners, to ensure nationwide product availability by the end of the year. This timing aligns with the expected approval of our pass-through application with the Center for Medicare and Medicaid Services, or CMS, for Medicare coverage in the hospital outpatient setting. We are also engaging with key payers for appropriate reimbursement for patients with commercial insurance, all to optimize initial adoption of PYO by clinicians. The voice of the patient is critical in prostate cancer. and our work with advocacy groups to build awareness of PSMA PET imaging continues. Most notably, our outreach includes working with organizations such as the Prostate Cancer Foundation and Xero, the End of Prostate Cancer, as well as a number of veterans groups. We are greatly encouraged by the interest we have seen from the healthcare and patient communities in recognition of this novel imaging agent. Moving to 1095, our I-9131 PSMA targeted product candidate for the treatment of metastatic castrate-resistant prostate cancer, or MCRPC, in October 2020, we resumed patient enrollment in our Phase II ARROW trial. I am pleased to report that we now have 24 active clinical sites across the U.S. and Canada, and patient enrollment is progressing well. The ARROW trial is designed to evaluate the safety and efficacy of I-131-1095 radiotherapy in combination with enzuzolamide as compared to endothelomide alone in chemotherapy-naive patients with PSMA-avid NCRPC who have progressed on aviraterone. Patient enrollment is progressing as planned, and we are on target with our time milestones for this trial. Now, I will discuss our progress in our strategic partnerships and others business. In late March, we acquired the exclusive worldwide rights to develop, manufacture, and commercialize NTI-1309. an innovative pet oncology imaging agent from Noria Therapeutics. NTI-1309 targets fibroblast activation protein, or FAP, a target with potential broad imaging applicability and targeting implications for precision oncology. FAP is overexpressed in the tumor microenvironment, specifically in tumor-associated fibroblasts, which are believed to modulate tumor progression and immune response. Already a focus of significant research by academics and the pharmaceutical industry, a FAP biomarker has the potential to address unmet medical needs and to impact the clinical management of stromodense tumors, such as breast, colon, lung, and pancreatic cancer, as well as having broad potential to inform diagnosis and staging, to guide patient selection for therapy, and to monitor response to treatment across multiple tumor types. Upon completion of the Phase 1 study, which we believe will start later this year, NTI-1309 will be integrated into Lantheus' portfolio of imaging biomarkers and will be included as part of our offering to academic centers and pharmaceutical companies for use in oncology drug development programs. Under this agreement with Noria, Lantheus also has the option to acquire the therapeutic rights for this agent. We are enthusiastic about this cutting-edge oncology agent while realizing it is early in its development. This partnership is another example of Lantius' commitment to advancing innovative imaging biomarker solutions that find, fight, and follow cancer. In our Microbubble franchise, last week we announced a strategic collaboration which will use our Microbubble with Allegheny Health Network, or AHN's, ultrasound-assisted non-viral gene transfer technology for the development of a proposed treatment for xerostomia. Xerostomia, a lack of saliva production leading to dry mouth, has a variety of causes, including radiotherapy and chemotherapy and certain diseases. It is also a common side effect of ionizing radiation used to treat head and neck cancer. Thousands of cancer patients suffer from radiation-induced xerostomia, which can cause severe oral and dental issues. Once xerostomia begins, it is a permanent condition. We're excited to support AHN in its efforts to progress this innovative development program. Finally, yesterday we announced we received CE Mark clearance for APromise. CE Mark gives APromise approval in Europe, a milestone in the path to potential U.S. approval. APromise is an artificial intelligence-based medical device software that is used in conjunction with individual reader interpretation and enables healthcare professionals and researchers to locate, detect, and quantify disease in whole-body PSMA PET-CT. Our goal is to seek approval for A-Promise in the U.S. and to add this tool to the portfolio of offerings we bring to the prostate cancer treating community. With that, I will conclude my update on key commercial and strategic programs and turn the call over to Bob. Bob?