Lantheus Holdings, Inc.

Good morning. Welcome to the Lanthias First Quarter 2024 Conference Call. All lines have been placed on mute. This call is being recorded and a replay 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 Mark Canarney, Vice President of Investor Relations. Mark?

Thank you. Good morning and welcome to today's call. With me today are Brian Markeson, our CEO, Paul Blanchfield, our President, and Bob Marshall, our CFO. We will begin the call with prepared remarks and then 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 2024 results. The release and today's slide presentation are in the Investors section of our website at lanthias.com. Any comments made during our call could include forward-looking statements. Actual results may differ materially from these statements due to a variety of risks and uncertainties which are detailed in our SEC filings. Please refer to our SEC filings for a detailed discussion of these and uncertainties. Discussions during this call will also include certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures is also included in the Investors section of our website. It is my pleasure to now turn the call over to our CEO, Brian.

Thank you, Mark,

and good morning.

This marks my first earnings call as CEO of Lanthias and I am delighted to be here to lead this incredible team. I began my career as a radiopharmaceutical sales rep and have more than 40 years of experience. Throughout my career, I have successfully led commercial efforts in numerous therapeutic categories, including oncology and immunology across major global markets. Having served most recently as the Chair of the Board and a member of the Board since 2012, I have a deep understanding of Lanthias and the radiopharmaceutical industry and am committed to partnering with our exceptional leadership team to enhance the vision, strategy, and execution necessary to remain the leading radiopharmaceutical focused company. The outstanding start to 2024 underscores this operational excellence and innovation as we once again delivered strong performance and made strategic investments to advance and expand our pipeline. I'm particularly proud that our products were used to impact the of more than 1.6 million patients and their families in the quarter. As we look to the future, Lanthias will continue to be the leading radiopharmaceutical focused company through operational excellence and sustained innovation in diagnostics and therapeutics enhanced by AI while delivering better patient outcomes and value to stakeholders. To realize this, we will maximize the value of our existing portfolio, expand our pipeline and develop expertise through business development and M&A and sustain an attractive financial profile. With that, I'll now turn the call over to Paul to speak about our existing commercial portfolio. I'll then come back and discuss our pipeline.

Thank you, Brian. I'm excited to share details on another successful quarter. Polarify generated net sales of $259 million, up over 32% from the year. Growth was driven by an expanding PSMA PET imaging market and increasing utilization of PSMA PET with Polarify at existing customer sites. We continue to focus on delivering over $1 billion of net sales for Polarify in 2024, making Polarify the first ever PET imaging agent blockbuster and ensuring Polarify is available for patients, continues to grow and remains a clear market leader. As the clear market leader, we help to drive growth of the overall PSMA PET imaging market through continued education on the benefits of PSMA PET with Polarify to the prostate cancer community. We recently launched our new marketing campaign, Let's Be Clear, which highlights our differentiating clinical and commercial value proposition as well as our market leadership as the number one utilized PSMA PET imaging agent. Last year, we expanded our Polarify sales force to educate nuclear medicine departments and freestanding imaging centers as well as referring urologists and oncologists, and we are beginning to see the impact of these efforts. This new campaign and sales force expansion combined with our strategic partnerships enables us to continue to grow the overall market and sustain Polarify brand leadership. Behind all of these efforts is our relentless focus on operational excellence, including reliability, scale, and -the-door time flexibility. Polarify is the only PSMA PET imaging agent that is widely available through a diverse F-18 distributor network, ensuring convenient and reliable supply. We serve patients in all 48 contiguous states as well as Washington, D.C., and Puerto Rico, and in Europe through our partner Curia, supplying a large and growing market. We continue to expand our network with multiple sites activated in the quarter, while also enabling earlier dose delivery times at existing PMS, both of which improve patient access and support the growing demand for Polarify. We continue to actively implement a multifaceted strategy to mitigate the impact of the potential expiry of transitional pass-through payment, or TPT, at the end of 2024. It's important to note that potential expiration of TPT only affects approximately 20% of our Polarify revenue, and we are committed to mitigating the impact for hospitals. In addition, TPT is not a Polarify-specific issue, but rather a class issue. In fact, the products that currently represent approximately 95% of the prostate cancer PSMA PET imaging market all face TPT expiry within nine months of each other. As we mentioned on our last call, we have been entering into long-term strategic partnerships with customers to ensure they continue to have access to Polarify as their PSMA PET agent of choice. We are fiercely committed to ensuring Polarify is available for patients and remains the clear market leader. We also continue to work with the Centers for Medicare and Medicaid Services, or CMS, to create separate payment for radiopharmaceutical diagnostics, while advocating for the FIND Act to ensure health equity for patients seeking access to innovative radiopharmaceutical diagnostics, including Polarify. To further grow the market and support Polarify's long-term growth, we are exploring the clinical utility of Polarify in additional patient populations, including favorable intermediate-risk patients to inform medical guidelines. We have begun enrolling patients in the MIRROR study designed to determine whether PSMA PET imaging with Polarify can detect the presence or absence of additional prostate cancer lesions in patients initially staged as favorable intermediate risk, and importantly, how imaging can change their intended management. We also continue to support investigator-sponsored research with the potential to expand the clinical utility of Polarify. And as we have previously said, we continue to assess additional options to support the life cycle of Polarify, including how to maintain patient access and maximize the value of our entire portfolio, and we'll share more information as appropriate. In our Microbubble business, DFINITY maintained its strong momentum, with first-quarter net sales of approximately $77 million, up 11% -over-year. DFINITY's drivers of success continue to be its clinical and commercial value proposition. Decades of experience in clinical use, supported by our operational excellence and customer education efforts. During the quarter, the FDA approved our supplemental new drug application for DFINITY's use in pediatric patients with suboptimal echoes. The expanded indication is a testament to the product's proven utility across broad patient populations, now including pediatrics. I will now turn the call back to Brian, who will provide some insights into our pipeline.

Thank you, Paul. Within our existing pipeline, we have a number of opportunities that have the potential to significantly impact the lives of patients and our future growth, including PNT 2002, PNT 2003, and MK6240. Each of these assets was acquired or licensed based on our in-depth knowledge of the radiopharmaceutical market and our focused business development and M&A efforts. PNT 2002 is our investigational PSMA-targeted radio ligand therapy for RLT for the treatment of patients with metastatic castration-resistant prostate cancer. In December 2023, we reported that SPLASH, the phase three registrational study, achieved its primary endpoint with a statistically significant 29% reduction in the risk of radiographic progression or death. As we have previously shared, we are awaiting more mature overall survival results as only 46% of protocol-specified target events were reached at the first interim analysis. We will analyze the overall survival data when it has matured to 75% of the protocol-specified events, which our models indicate should occur in the third quarter of this year. PNT 2003, a product candidate for the treatment of neuroendocrine tumors, is currently under FDA review. If approved and pending positive resolution of the HAT-swaxrin litigation, PNT 2003 could launch in 2026, making it the first radio equivalent to lutetium-177 dotatapes. This is already a sizable and growing market, and PNT 2003 would be an additional option for patients and their healthcare providers for the treatment of neuroendocrine tumors. We continue to progress MK6240, our F18-based PET tracer, under development for the detection of tau tangles, which has the potential to be a -in-class agent for staging and monitoring progression of Alzheimer's disease, and leverages our expertise in radiopharmaceutical diagnostics and specifically F18-based PET products. Clinical evidence accumulated over the past five years has shown the value of tau as a prognostic marker for cognition, which is recognized in established research guidelines from the National Institute on Aging and Alzheimer's Disorder and Cancer Association, as well as in their draft clinical guidelines. MK6240, with high affinity and limited off-target binding inside the brain, offers the potential for earlier detection of tau and monitoring for changes in the levels of tau, which has led to its adoption within Alzheimer's disease therapeutic clinical trials. The success of these trials may help inform future use of MK6240, and we look forward to sharing more on the regulatory path for this asset later this year. Earlier this year, we announced our partnership with Perspective Therapeutics, which provides us with the ability to further expand our RLT pipeline with an option to exclusively license VMT-AlphaNet, Perspective's lead-based product candidate for the treatment of neuroendocrine tumors. We see lead 212 as one of the more promising isotopes for alpha therapy, especially when paired with Perspective's proprietary chelator. Perspective expects preliminary results from cohorts 1 and 2 of the ongoing dose escalation phase 1 to a trial in the third quarter. We also can elect to co-develop certain lead 212-based alpha therapies for prostate cancer. Finally, we took an equity position in the company because we believe in their platform. In summary, we have a market-leading commercial portfolio and a growing development portfolio and have fully integrated capabilities to develop, manufacture, and commercialize multiple product candidates. As we look to the future, we will utilize our balance sheet, strong cash flow, and access to capital to execute our financially attractive business development and M&A opportunities that enhance our pipeline and capabilities in areas that we believe best align with our radiopharmaceutical expertise. Finally, we have and will continue to sustain and strengthen our financial profile, investing in our current business to maximize value, while ensuring we have sufficient capacity to invest in long-term growth drivers. This has been a hallmark of Lanthias and something we plan to continue. Naturally, I'm incredibly proud of the Lanthias has accomplished and even more excited about the future. The radiopharmaceutical field offers significant near and long-term potential, and our existing portfolio capabilities and financial discipline position us well to continue to be the leading radiopharmaceutical focused company. I will now

turn the call over to Bob. Thank you, Brian, and good morning, everyone. I will provide highlights of the first quarter 2024 financials, focusing on adjust results with comparisons to the prior quarter, unless otherwise noted. Turning now to the details, consolidated net revenue for the first quarter was $370 million, an increase of 23%. Radiopharmaceutical oncology contributed $259.3 million of sales in the quarter, up 32.1%, attributable to the continued strength of Polarify, with sales of $258.9 million, up .4% year over year and in line with seasonal trends we've noted over the last year. Precision diagnostic revenue of $104.2 million was 9% higher. Highlights include sales of $760 million, a .2% higher, along with tech light revenue of $21.7 million, up 3.5%. Lastly, strategic partnership and other revenue was $6.5 million, down 27.5%, due largely to the prior year comparable, having $6.2 million of Relistware-related royalties not repeated this year. Gross profit margin for the first quarter was 68.8%, an increase of 14 basis points, despite an approximate 70 basis point headwind due to the previously noted Relistore royalty sale mid-last year. The increase is attributable to favorable product mix led by robust volumes of Polarify and Diffinity, along with a streamlined manufacturing footprint, offset in part by higher contracted material and overhead costs and additional PMF network investments. Operating expenses at .8% of net revenue were 538 basis points higher than the prior year rate, but in line with previously guided spending levels. As noted earlier this year, increases in operating expense reflect investments made to support several growth and efficiency initiatives. Notably, we successfully went live with our new ERP system on January 1st, which we supplemented with external help to ensure smooth transition and continuity of our business. Operating profit for the quarter was $155.3 million, for an increase of 9.4%. Other income and expense at $3.9 million of income is a result of net interest income offset in part by interest expense on our existing debt. Total adjustments in the quarter were $12 million of gain before taxes. Of this amount, $15.4 and $9.9 million of expense is associated with non-cash stock and incentive plans and acquired intangible amortization respectively. $21.7 million of IPR&D and transactional expenses relate to the prospective transactions during the quarter, along with a $60.7 million unrealized gain tied to that equity investment, with the remainder relating to acquisition integration other non-recurring expenses. Our effective tax rate was 25.7%. The resulting reported net income the first quarter was $131.1 million and $118.3 million on an adjusted basis, an increase of 15.8%. Gap fully diluted earnings per share for the first quarter were $1.87 and $1.69 on an adjusted basis, an increase of 15.2%. Now turning to cash flow, first quarter operating cash flow totaled $127.2 million, $18.7 million over Q1 last year. Capital expenditures totaled $8.3 million, $900,000 lower than the prior year quarter. Free cash flow, which we define as operating cash flow less capital expenditures, was $119 million, an increase of 19.8%. During the quarter, the company invested $78.3 million in prospective therapeutics alongside a net $20 million to certain rights and options, as well as the sale of our Somerset facility. Taken together, cash and cash equivalents, net of restricted cash now stands at $718.3 million. We have access to our $350 million undrawn bank revolver and are comfortable with our strong liquidity position. Turning now to our updated guidance for the full year 2024, as well as a first look at the second quarter, we are increasing our view for Polarify for the full year as we see clear signals of expansion, brand awareness, and market leadership amidst competitive dynamics. We now forecast Polarify to grow in the -20% range over the full year 2023 result, and as was noted on the last call, sequential growth should follow the seasonal pattern seen in 2023. We remain confident in DFINITY in that it can grow high single digits for the full year on top of last year's mid-teens performance. Other products also remain at our prior expectation levels. Taken together, we estimate full year revenue to be in a range of $1.5 to $1.52 billion, up from the prior estimate of $1.41 to $1.445 billion, an increase of approximately 18 to 20% over 2023, excluding Relastore from the 2023 result. We expect fully diluted adjusted earnings per share to be in a range of $7.00 and $7.20, up from the prior estimate of $6.50 to $6.70. For the second quarter, net revenue should be in a range of $380 to $390 million. Fully diluted adjusted earnings per share should be in a range of $1.81 to $1.86. With that, let me turn the call back over to Brian.

Thank you. In summary, our outstanding first quarter performance is a testament to the dedication of the Lanthias employees. We are actively implementing our strategy to drive both near and long-term growth, prioritizing the advancement expansion of our radiopharmaceutical pipeline while maintaining robust performance. With ample capital and strategic positioning, we're positioned to keep creating value supported by market leading products, including Polarify, which has the potential to be the first PET imaging agent to reach blockbuster status. Throughout 24, we will continue to harness our team's potential to identify, develop, and invest in innovative solutions and leverage our proven operational excellence to serve healthcare professionals and patients. Having been with the company for a number of years before taking over as CEO approximately two months ago, I am more excited than ever about the future at Lanthias. We have a tremendous opportunity to build on our heritage and unrivaled radiopharmaceutical leadership. I want to thank everyone in the Lanthias organization for their ongoing unwavering commitment to our purpose to find, fight, and follow disease to deliver better patient outcomes. And with that, we are now ready to take your questions. Operator, please proceed.

Thank you. As a reminder to ask a question, please press star 1-1 on your telephone and wait for your time to be announced. To withdraw your question, please press star 1-1 again. One question per person, please. Please stand by while we compile the Q&A roster. Our first question comes from the line of Anthony Patrone from Mizuho Financial Group.

Thank you and congrats on the strong quarter here out of the gate for 2024. And again, Brian, welcome and congratulations on taking the CEO role. Maybe start with Polarify here from a three-month perspective in March, but also the guidance. So well beyond our expectations in one queue. And Bob, you mentioned here plus 20% on a much higher base here looking out for the remainder of 2024. So just a little bit on the dynamics in the underlying marketplace. Are you seeing more utilization mostly in the core indications of high-risk and metastatic cancer populations? Or you're actually seeing some usage off-label and earlier indications? And then maybe a little bit on utilization as therapy starts to get going. Is that also a driver? And I'll have a couple of follow-up questions. Thanks.

Yeah, and thanks for the congrats. This is Brian. I'll kick it off and then turn it over to Paul. But I think the short answer on Polarify is we are seeing the use of the brand expand. And most importantly, it's within our existing locations and customer accounts. So I think more referring physicians are getting on the bandwagon. Our commercial team is really expanding the knowledge base that's out there. And we are also seeing through a lot of clinical trial use that people are beginning to look at much earlier settings for Polarify, much like the mirror study. But Paul, you want to add to that?

Thanks, Brian. And thanks, Anthony. If we look at drivers of Polarify in the first quarter, and then Bob can touch a little bit more on the guidance, I would say it's driven by three overall factors. The first is the growth in the overall market. The continued expansion of PSMA TET, particularly among existing prescribers, has been stronger than we anticipated. And market research suggests an increasing scan utilization for BCR patients, as well as for patient selection and monitoring, which is really leading to a larger current addressable market than we initially anticipated at the beginning of the year. As Brian alluded to, the biggest driver of the Polarify growth is really the increasing utilization at existing customers, where we are seeing existing prescribers continue to support and see the brand preference that we see in Polarify. We think this really validates the marketing initiatives, including our new campaign, our 2023 Salesforce expansion, our strategic partnerships with customers, as well as our continued enhancement of our PMF network, which is now up to about 58 sites, including Cal Times available days and new sites. And then lastly, we did take a price increase at the beginning of the year. That had a far lesser impact, but we did take a 6% whack price increase at the beginning of this year. Would reiterate what Brian mentioned around the label. As we've always said, the label for Polarify is incredibly broad, and indeed some of the life cycle management, as noted the Mirror study, is really about addressing guidelines. Given the breadth of the label for risk of metastasis prior to definitive therapy or a rising PSA, there really is a broad population for LAMP-EAS to continue to educate physicians on, and we see those paying rewards from all the investment and maybe on a future-looking guidance basis. I'll let Bob provide some commentary.

Yes. Good morning. I can't really expand much more on that. I guess what I would tell you is that each quarter we evaluate or reevaluate to confirm or dismiss our assumptions. As I said in my prepared remarks, and I think we heard Paul sort of detail that in his as well, is that we see clear signals of market expansion, brand awareness, and market leadership. So from that perspective, we learn from this historic data and we make adjustments to our view of the world. So based on that, we have confidence that we can deliver more than a billion dollars in Polarify sales for the

year.

Thank you. One moment for our next question. Our next question comes from the line of Rowanna Reese from Lerink.

Great. Good morning, everyone. Another one for Polarify. I was curious if your strategic partnerships are already gaining traction. Is that driving your guidance raise? And since you just mentioned net price a little bit, I was curious if that's going to be sustained through the year.

So I'll take that one. So I guess from the strategic partnership, you know, while Europe is a large market, the launch there is getting just getting underway. So from that perspective, the contribution is is de minimis and that the that you know, the guide is really predicated on the US market and in our efforts here in the US. In terms of, you know, the contribution to strategic partnerships using PYL, if you will, within other clinical studies, you know, again, that that number again is not that significant on a grand in the grand scheme of things.

I think Rowanna, the other piece to just think through is the strategic partnerships with our key customers in the US. As part of the broader remarks, we did note we haven't continued to enter into those strategic partnerships with key customers. We began that in 2023. We continue to traction in 2024. That's naturally been one of the drivers. But I would still say, you know, overall, the overall market growth continues to grow. And as the market leader, strategic partnerships are really around solidifying our position and ensuring that Polarify remains the number one PSMA pet imaging agent going forward. I think we are very pleased with our progress overall. But it is one of multiple strategies to ensure that Polarify continues to grow. And we feel comfortable with its competitive position, its clinical and commercial value proposition, and noting that the TPTPs, which drives some of the strategic partnerships, impacts 95% of the approved market currently. And so these products are not interchangeable. Each of them have differentiated clinical and commercial attributes. And we really deeply understand our customer base, including their site of care mix, whether that's hospital, outpatient or otherwise, their payer mix, specifically the Medicare fee for service. And as such, we are able to work with them to mitigate the potential impact of any financial exposure. Given the competitive nature of the business, I'm sure there'll be no more questions. But we don't want to elaborate further at this point.

Thank you. One moment for our next question. Our next question comes from the line of Richard Neuwitter from Truist Securities.

Hi, thanks for taking the questions. And congrats on a great quarter. If Polarify is not blockbuster status yet, I can only imagine what that threshold

looks like.

But maybe just to start off, on the contracting question that Rana just asked, can you give us any sense as to what percentage of the market or the market that would be impacted by transitional pass-through, do you think you can get under some sort of contract or dealt with in your negotiations by the time transitional pass-through expires? Any sense as to where you are today relative to that goal percentage? And then I have one follow-up.

Yeah, so Richard, we have a very strong sense of what the future looks like for Polarify. And I'm going to let Paul elaborate, but our strategic agreements with our customers are multi-year in duration. They've all been in the works for quite some time. And the preparation for this has been, like I said, well underway for a while. But I'll call Blockbuster at a billion dollars this year. So I'll help you out with that one. Paul, go ahead.

Thanks, Richard. I appreciate the congrats. So as we've shared in the past, TPT impacts the intersection of site of care and payer mix, and I alluded to this in responding to Rana, that is really the hospital outpatient setting and the Medicare fee for service. And when you look at that intersection, it really only affects about 20% of Polarify revenues. It is concentrated in the hospital space. And so we've understood this since launch of Polarify on the receipt of TPT. We began entering into long-term, as Brian mentioned, strategic partnerships last year. We are pleased with our progress, and I think we see continued growth in the market. But we really bring a high-touch interaction with our customers. There is significant overlap as we look with DFINITY, which has been on the market for 20 years, many of which we have long-term relationships. And so the amount of interactions that we're having with our customers to understand the impact, to understand their exposure and their sensitivity, we continue to make progress there. We're pleased with the progress. We're obviously not going to share any specifics about where we are in being able to wrap that up, given the competitive nature of the business. But suffice it to say, we continue to be incredibly confident with Polarify's leadership position, even amidst the potential x-ray of pass-through at the end of this year.

Thank you. One moment for our next question. Our next question comes from the line of Larry Salo from CGS, CJS Securities.

Great. Good morning. Thanks. I feel the congratulations and a formal welcome to you, Brian, as well. I guess just sticking with the Polarify theme and the transitional pass-through, can you just, any comments on just the cadence of the year in terms of sales and as we get into the latter part of the year, do you see some impact, right? Some of these centers start preparing as it's hard to switch over a patient during treatment, but do you see some impact from the pass-through ahead of that actual expiration that may be even modest, but some kind of impact, just thoughts on cadence of sales, Polarify, for the year based on that? Thanks.

So Larry, I'll pick up the cadence of sales expectation. I keep referring to the sequential seasonal trends that we've seen over the last year plus where we really do seek sort of, if you think in terms of quarterly splits, we would expect to see Q1 as the highest sequential improvement, then Q4, then Q2, then Q3 in sort of highest to lowest sort of cadence, if you will. But beyond that, I'll let Paul take it from there.

Thanks, Larry. I think, as Bob mentioned, we continue to see that there are natural seasonal impacts when we look at the summer month, physicians and imaging center staff do need to go on vacation, so we do expect some of that. I think overall for the year, the company guided to -20% Polarify growth range with the vast majority of that being volume and a somewhat minor net price impact. Naturally, in the first quarter, we took a 6% price increase at the beginning of this year. We're going to see a little bit more contribution of that now, but as those strategic partnerships further expand, we will see volume be the larger driver, but otherwise I would stick with Bob's overall commentary on the

sequential components.

Thank you. One moment for our next question. Our next question comes from the line of Yuan Zhu from B. Riley.

Good morning. Congrats on another great culture. We heard you and your partners are expanding the availability of Polarify in New York and the Midwest. I'm curious, is this based on your demand forecast or just building extra capacity there to accommodate the customer's request? Thank you.

Thanks, Yuan. So yes, we did expand our PMF network in the first quarter. We now have 58 active PMFs, and we did add four in the quarter in New York, California, Ohio, and in Florida. This is really, in some cases, it is about additional capacity. In many cases, it is really around the right out the door times. Given the overall growth of the PSMA PET imaging market that has been substantial, we are seeing demand go earlier in the day as well as later in the day. While F18 has the longest half-life of an approved PSMA PET imaging agent of 110 minutes, we still need to be able to make product multiple times in the day to continue to serve that increasing demand.

So, in

building out our PMF network, some of it is redundancy and some of it is really around the capacity to fuel growth at existing sites. We want to make sure that we have the right time slots. F18 is a fantastic isotope given the size of the PSMA market with FDG doing approximately 2 million doses, and we can tap into that. There is naturally a role for other agents with shorter half-lives that can be made on a generator specifically at the margins, but we continue to expand our F18 capacity to be able to drive that, and we are seeing the majority of growth from those new activated sites be new physicians and new time slots rather than necessarily cannibalizing existing sites where we

are bringing in product elsewhere.

Thank you. One moment for our next question. Our next question comes from the line of Justin Walsh from Jones Trading.

Hi, thanks for taking the question. It's been great to see your pipeline development continue to expand with the perspective deal here. Where do you see your pipeline developing over time?

Well, I think we see it developing on two fronts. We are going to be highly selective and maintain our leadership in PET imaging. I think that's very clear, and obviously, radio ligand therapy will already be in the space with the point partnership, perspective partnership, so we are definitely going to be spending a lot more time with BD and M&A in radio ligand therapy and

building out the pipeline on that front.

Thank you.

One

moment for our next question. Our next question comes from the line of Andy Shea from William Blair.

Great. Thanks for taking our questions, and congratulations on a beaten race quarter. So a question for you, Brian. In light of several important developments in the past 24, 48 hours, so we saw Mariana getting acquired by Novartis, the complete response recorded by Clarity in prostate cancer. Maybe from the big picture perspective, share your worldview on the radiopharmaceutical field and how pantheas could really play there. Maybe just a quick one related to radiopharm as well. We saw Novartis showing overall survival hazard ratio down to the less of 1.0 range, so does that impact your confidence level heading into the Q3 update? Thank you.

Well, with your last comment first, it certainly is encouraging that the passage of time will see a reduction in the point estimate around overall survival, but look, we await the flip of the cards, if you will, and that's why you do the clinical trial to get the answer. So we're pretty excited about it, but at the same time, the data will tell us what it tells us at the right time. As far as the recent activity in the industry, I think it certainly validates the lantheas platform, if you will, and I think we're seeing a lot of things. I think Novartis is clearly among the big pharma players ahead of the pack. Their investments are fairly deep, fairly broad, and their commitment to radioligand therapy is fairly clear. I think when you look at the other big pharma investments, they seem to be platform acquisitions with one lead asset, and they're hoping that works out, but also a lot of science projects. And I think we're going to be, I think, very selective in what we pick up and what we look at. We have that expertise. We don't platform because we are the platform, and I think just stay tuned and you'll see some activity from us in the near future.

Thank you. One moment for our next question. Our next question comes from the line of Kemp Dolliver from Brookline Capital Markets. Great. Thank you.

Back to Polarify. Given your comments about growth in your business and imaging centers and some of the other initiatives you've undertaken,

has the mix of site administration

changed? That's a great question.

I really appreciate the focus there. Generally speaking, the site mix around hospitals, freestanding imaging centers, and government accounts has not changed materially. We generally view kind of the book of business as being relatively stable with about two-thirds hospitals, a little bit less than a third freestanding imaging centers, and then government facilities, both VA, Walter Reed, and others being in that -single-digit range. So overall, we continue to activate new prescribers, but the largest growth is really just increasing demand and prescriptions being sent to those existing sites, all in a relatively comparable portion. Now, overall, we do see increasing Medicare advantage relative to fee for service, and that's just not necessarily a Polarify trend, but overall kind of a national trend as Medicare Advantage continues to become more important. But the overall site mix is relatively comparable here.

Thank you. One moment for our next question. Our next question comes from the line of Tara Bancroft from TD Cowan.

Hi there. This is Greg speaking on behalf of Tara. So you have a substantial cash balance that should continue to grow with increased revenue year over year. So can you tell us more about your plans for capital allocation, either in terms of R&D, marketing for Polarify, or potential plans for business development? So

I'll take that. This is Bob. Yeah, you know, you're right. You know, we had a record quarter for free cash flow at $118 million, so that was great. But I think what you also saw us do in the quarter is deploy $98 million of that with the perspective transactions. So I think from the perspective of what are we going to do with the money, you know, we constantly, between management and the board, evaluate capital deployment strategies. Clearly, as Brian indicated in his remarks, we're going to be, we are going to be busy on the business development front. But, you know, Paul also noted in internal development, but we also focus on capital structure optimization, and that can include any number of deployment options. But as we think through, you know, the fact that we have this dry powder, it affords us the ability to look at the landscape of business development opportunities to continue to add to the pipeline and be able to do strategically advance important projects internally to solidify our portfolio that sets us up for growth for the long term.

Thank you. One moment for our next question. Our next question comes from the line of Rowanna Reese from Lear Inc. Hey, thanks for taking

the follow up. So I noticed on the call, you also mentioned expanded field force, a new marketing and education campaign. I was curious, within that, what are you doing to help educate new physician targets and new customers who might not yet have the deep experience with Polarify yet, and how can you help drive their use through the year?

Very astute question, Rowanna. We did expand the field force, as we noted last year, to be able to do a call on hospitals, free standing and imaging centers, as well as referring physicians, namely urologists, which is largely in the staging education, and referring oncologists, medical oncologists and radiation oncologists. We do see the vast majority of growth coming from existing prescribers. We do believe we've made significant inroads in continuing to educate physicians on that benefit, but we really do this through an omni-channel approach. That would be levering both our medical team and appropriately at medical congresses where they get called in to answer questions. There continue to be significant publications and discussions. If you look at recent medical congresses, the number of posters that are discussing PSMA, both therapeutically and diagnostically, is significantly grown over the years. And so that first starts from a medical perspective to raise awareness appropriately. And then commercially, our sales teams are in there in accounts, both at treating sites and referring physicians to raise awareness. We continue to gain new data and insights on our prescribing base, which allows us to appropriately target those referring physicians. And then naturally, we do appropriate omni-channel marketing efforts, both in appropriate publications and other awareness, including appropriately within the patient segment. We really are seeing the fruits of that investment play out where we made increasing investments in the middle of last year to really generate demand in addition to just fulfill it. We believe we appropriately invested ahead of the curve, and we believe as the clear market leader and largest voice in the marketplace that we are having a disproportionate impact in driving the overall growth of the PSMA imaging market. And naturally, as the market leader, we take a disproportionate benefit of those gains in the growth.

Thank you. One moment for our next question. Our next question comes from the line of Richard Newwitter from Truist Securities.

Hi.

Excuse me. Thanks for the follow-up here. I just wanted to ask, you mentioned life cycle management on Polarify. You kind of gave us a stay tuned on future indication sets. I'm just wondering what that means and looks like, or if you can elaborate there. And also, I asked this last quarter as well, but a competitor of yours is out there publicly talking about kind of a PSMA PET Diagnostic 2.0 version that could potentially restart the transitional pass-through clock for them while you're still off pass-through and potentially they're still on. I'm just curious, do

you

have any insight on how CMS used that type of effort? And is that something that you had in the works or could potentially replicate if needed? Thank you.

Yeah, Richard. Thanks. A lot of good questions wrapped up into that. And I think we are holding our product improvements, life cycle management strategies fairly close to the vest. Like you, we have listened to what other companies have said about their approach to a 2.0 and pass-through. And we have a particularly good knowledge of what needs to happen in order to make that work. So I'm not sure how much we want to elaborate, but Paul, I think if you want, you can add a little bit there. Thanks, Rich.

You know, we very much understand the pathways that are being discussed out there in the marketplace. We have been aware of them.

We

believe just for context setting to be eligible for a transitional pass-through based on current regulatory pathways and CMS requirements, you do need a new NDA. There are multiple paths to get there. Our team consistently monitors, as Brian mentions, developments in the industry. And we consider multiple options to support our ability to maintain patient access and really maximize the value of the entire portfolio. We don't feel the need to share our internal plans at this point publicly, and we will do so when appropriate. But overall, I think the key message for Polarify right now is that we're focused on delivering over a billion dollars in sales for Polarify this year, making it the first-ever pet imaging blockbuster, executing strategies, including brand awareness, strategic partnerships with key customers that we've talked about, supporting CMS and congressional actions to mitigate that impact, and really expanding the market through our education efforts as well as life cycle management. And we look forward to delivering on those and sharing more about some of the questions you asked when appropriate.

Thank you. One moment for our next question. Our next question comes from the line of Andy Tsai from William Blair.

Okay, thanks for allowing me to ask a second question. So at the risk of sounding like an overly sensitive cell site analyst, you made a very interesting comment on the BD strategy, specifically focusing on radio ligand. I just want to clarify, are you signaling a preference over other modalities such as antibodies or various peptide-based contracts as you survey the landscape?

Well, I mean, I think at Lanthias, we would naturally have a bias. But you know, look, RLTs are coming of age. You know, the ability to target the tumors more effectively with less off-target toxicity is really evolving, but it's just another modality. And you know, if you look at the overall market, it's a small piece of the total cancer market. So you know, it's emerging, it's growing, it's exciting. We're seeing lots of, you know, valuations jump by big pharma paying a lot of attention to the space. So I guess you could say it's validated from that perspective. But I mean, look, the simple truth is, you know, the technology has proved to the point where you can really deliver, you know, a smarter bomb to tumor with less tox to the patient, and they can continue to go on and receive additional lines of therapy. So I think it's exciting, it's evolving, but it is, I can't tell you I have a preference, but I certainly have a bias based on the business I'm in.

Thank you. Ladies and gentlemen, there are no further questions at this time. Thank you for participating in today's conference. This concludes the program. You may disconnect and have a wonderful day.

Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.

Thank you. Thank you. Good morning. Welcome to the Lanthias First Quarter 2024 conference call. All lines have been placed on mute. This call is being recorded and a replay 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 Mark Canarney, Vice President of Investor Relations. Mark.

Thank you. Good morning and welcome to today's call. With me today are Brian Markeson, our CEO, Paul Blanchfield, our President, and Bob Marshall, our CFO. We will begin the call with prepared remarks and then 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 2024 results. The release and today's slide presentation are in the Investors section of our website at lanthias.com. Any comments made during our call could include forward-looking statements. Actual results may differ materially from these statements due to a variety of risks and uncertainties which are detailed in our SEC filings. Please refer to our SEC filings for a detailed discussion of these risks and uncertainties. Discussions during this call include certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures is also included in the Investors section of our website. It is my pleasure to now turn the call over to our CEO, Brian.

Thank you, Mark,

and good morning.

This marks my first earnings call as CEO of Lanthias and I am delighted to be here to lead this incredible team. I began my career as a pharmaceutical sales rep and have more than 40 years of experience. Throughout my career I have successfully led commercial efforts in numerous therapeutic categories including oncology and immunology across major global markets. Having served most recently as the Chair of the Board and a member of the Board since 2012, I have a deep understanding of Lanthias and the radiopharmaceutical industry and am committed to partnering with our exceptional leadership team to enhance the vision, strategy, and execution necessary to remain the leading radiopharmaceutical focused company. The outstanding start to 2024 underscores this operational excellence and innovation as we once again delivered strong performance and made strategic investments to advance and expand our pipeline. I'm particularly proud that our products were used to impact the lives of more than 1.6 million patients and their families in the quarter. As we look to the future, Lanthias will continue to be the leading radiopharmaceutical focused company through operational excellence and sustained innovation in diagnostics and therapeutics enhanced by AI while delivering better patient outcomes and value to stakeholders. To realize this, we will maximize the value of our existing portfolio, expand our pipeline and expertise through business development and M&A, and sustain an attractive financial profile. With that, I'll now turn the call over to Paul to speak about our existing commercial portfolio. I'll then come back and discuss our pipeline.

Thank you, Brian. I'm excited to share details on another successful quarter. Polarify generated net sales of $259 million, up over 32% from the prior year. Growth was driven by an expanding PSMA PET imaging market and increasing utilization of PSMA PET with Polarify at existing customer sites. We continue to focus on delivering over $1 billion of net sales for Polarify in 2024, making Polarify the first ever PET imaging agent blockbuster and ensuring Polarify is available for patients, continues to grow and remains the clear market leader. As the clear market leader, we help to drive growth of the overall PSMA PET imaging market through continued education on the benefits of PSMA PET with Polarify to the prostate cancer community. We recently launched our new marketing campaign, Let's Be Clear, which highlights our differentiating clinical and commercial value proposition, as well as our market leadership as the number one utilized PSMA PET imaging agent. Last year, we expanded our Polarify sales force to educate nuclear medicine departments and freestanding imaging centers, as well as referring urologists and oncologists, and we are beginning to see the impact of these efforts. This new campaign and sales force expansion, combined with our strategic partnerships, enables us to continue to grow the overall market and sustain Polarify brand leadership. Behind all of these efforts is our relentless focus on operational excellence, including reliability, scale, and -the-door time flexibility. Polarify is the only PSMA PET imaging agent that is widely available through a diverse F18 distributor network, ensuring convenient and reliable supply. We serve patients in all 48 contiguous states, as well as Washington, D.C., and Puerto Rico, and in Europe through our partner, Curium, supplying a large and growing market. We continue to expand our network with multiple sites activated in the quarter, while also enabling earlier dose delivery times at existing PMS, both of which improve patient access and support the growing demand for Polarify. We continue to actively implement a multifaceted strategy to mitigate the impact of the potential expiry of transitional pass-through payment, or TPT, at the end of 2024. It's important to note that potential expiration of TPT only affects approximately 20% of our Polarify revenue, and we are committed to mitigating the impact for hospitals. In addition, TPT is not a Polarify specific issue, but rather a class issue. In fact, the products that currently represent approximately 95% of the prostate cancer PSMA PET imaging market all face TPT expiry within nine months of each other. As we mentioned on our last call, we have been entering into long-term strategic partnerships with customers who ensure they continue to have access to Polarify as their PSMA PET agent of choice. We are fiercely committed to ensuring Polarify is available for patients and remains the clear market leader. We also continue to work with the Centers for Medicare and Medicaid Services, or CMS, to create separate payment for radiopharmaceutical diagnostics, while advocating for the FIND Act to ensure health equity for patients seeking access to innovative radiopharmaceutical diagnostics, including Polarify. To further grow the market and support Polarify's long-term growth, we are exploring the clinical utility of Polarify in additional patient populations, including favorable intermediate risk patients to inform medical guidelines. We have begun enrolling patients in the MIRROR study, designed to determine whether PSMA PET imaging with Polarify can detect the presence or absence of additional prostate cancer lesions in patients initially staged as favorable intermediate risk, and importantly, how imaging can change their intended management. We also continue to support investigator-sponsored research with the potential to expand the clinical utility of Polarify. And as we have previously said, we continue to assess additional options to support the life cycle of Polarify, including how to maintain patient access and maximize the value of our entire portfolio, and we'll share more information as appropriate. In our Microbubble business, DFINITY maintained its strong momentum, with first-quarter net sales of approximately $77 million, up 11% -over-year. DFINITY's drivers of success continue to be its commercial value proposition, decades of experience in clinical use, supported by our operational excellence and customer education efforts. During the quarter, the FDA approved our supplemental new drug application for DFINITY's use in pediatric patients with suboptimal ECHOs. The expanded indication is a testament to the product's proven utility across broad patient populations, now including pediatrics. I will now turn the call back to Brian, who will provide some insights into our pipeline.

Thank you, Paul. Within our existing pipeline, we have a number of opportunities that have the potential to significantly impact the lives of patients and our future growth, including PNT 2002, PNT 2003, and MK6240. Each of these assets was acquired or licensed based on our in-depth knowledge of the radiopharmaceutical market and our focused business development and M&A efforts. PNT 2002 is our investigational PSMA targeted radio ligand therapy for RLT for the treatment of patients with metastatic castration resistant prostate cancer. In December 2023, we reported that SPLASH, the phase three registrational study, achieved its primary endpoint with a statistically significant 29% reduction in the risk of radiographic progression or death. As we have previously shared, we are awaiting more mature overall survival results as only 46% of protocol-specified target events were reached at the first interim analysis. We will analyze the overall survival data when it has matured to 75% of the protocol-specified events, which our models indicate should occur in the third quarter of this year. PNT 2003, a product candidate for the treatment of neuroendocrine tumors, is currently under FDA review. If approved and pending positive resolution of the HAT-SWAXREN litigation, PNT 2003 could launch in 2026, making it the first radio equivalent to lutetium 177 dotatate. This is already a sizable and growing market, and PNT 2003 would be an additional option for patients and their healthcare providers for the treatment of neuroendocrine tumors. We continue to progress MK6240, our F18-based PET tracer, under development for the detection of tau tangles, which has the potential to be a -in-class agent for staging and monitoring progression of Alzheimer's disease, and leverages our expertise in radiopharmaceutical diagnostics and specifically F18-based PET products. Clinical evidence accumulated over the past five years has shown the value of tau as a prognostic marker for cognition, which is recognized in established research guidelines from the National Institute on Aging and Alzheimer's as well as in their draft clinical guidelines. MK6240, with high affinity and limited off-target binding inside the brain, offers the potential for earlier detection of tau and monitoring for changes in the levels of tau, which has led to its adoption within Alzheimer's disease therapeutic clinical trials. The success of these trials may help inform future use of MK6240, and we look forward to sharing more on the regulatory path for this asset later this year. Earlier this year, we announced our partnership with Perspective Therapeutics, which provides us with the ability to further expand our RLT pipeline with an option to exclusively license VMT-AlphaNet, Perspective's lead-based product candidate for the treatment of neuroendocrine tumors. We see lead 212 as one of the more promising isotopes for alpha therapy, especially when paired with Perspective's proprietary keylater. Perspective expects preliminary results from cohorts 1 and 2 of the ongoing dose escalation phase 1 to a trial in the third quarter. We also can elect to co-develop certain lead 212-based alpha therapies for prostate cancer. Finally, we took an equity position in the company because we believe in their platform. In summary, we have a market-leading commercial portfolio and a growing development portfolio, and have fully integrated capabilities to develop, manufacture, and commercialize multiple product candidates. As we look to the future, we will utilize our balance sheet, strong cash flow, and access to capital to execute our financially attractive business development and M&A opportunities that enhance our pipeline and capabilities in areas that we believe are best aligned with our radiopharmaceutical expertise. Finally, we have and will continue to sustain and strengthen our financial profile, investing in our current business to maximize value, while ensuring we have sufficient capacity to invest in long-term growth drivers. This has been a hallmark of Lanthias and something we plan to continue. Naturally, I'm incredibly proud of Lanthias has accomplished and even more excited about the future. The radiopharmaceutical field offers significant near and long-term potential, and our existing portfolio capabilities and financial discipline position us well to continue to be the leading radiopharmaceutical focused company.

I will now turn the call over to Bob. Thank you, Brian, and good morning, everyone. I will provide highlights of the first quarter 2024 financials, focusing on adjust results with comparisons to the prior quarter unless otherwise noted. Turning now to the details, consolidated net revenue for the first quarter was $370 million, an increase of 23%. Radiopharmaceutical oncology contributed $259.3 million of sales in the quarter, up 32.1%, attributable to the strength of Polarify, with sales of $258.9 million, up .4% year over year and in line with seasonal trends we've noted over the last year. Precision diagnostic revenue of $104.2 million was 9% higher. Highlights include sales of DFINITY at $76.6 million, .2% higher, along with second-light revenue of $21.7 million, up 3.5%. Lastly, strategic partnership and other revenue was $6.5 million, down 27.5%, due largely to the prior year comparable having $6.2 million of Relistor-related royalties not repeated this year. Gross profit margin for the first quarter was 68.8%, an increase of 14 basis points, despite an approximate 70 basis point headwind due to the previously noted Relistor royalty sale mid-last year. The increase is attributable to favorable product mix led by robust volumes of Polarify and DFINITY, along with a streamlined manufacturing footprint, offset in part by higher contracted material and overhead costs and additional PMF network investments. Operating expenses at .8% of net revenue were 538 basis points higher than prior year rate, but in line with previously guided spending levels. As noted earlier this year, increases in operating expense reflect investments made to support several growth and efficiency initiatives. Notably, we successfully went live with our new ERP system on January 1st, which we supplemented with external help to ensure smooth transition and continuity of our business. Operating profit for the quarter was $155.3 million, or an increase of 9.4%. Other income and expense at $3.9 million of income is a result of net interest income offset in part by interest expense on our existing debt. Total adjustments in the quarter were $12 million of gain before taxes. Of this amount, $15.4 and $9.9 million of expense is associated with non-cash stock and incentive plans and acquired intangible amortization respectively. $21.7 million of IP, R&D and transactional expenses relate to the prospective transactions during the quarter, along with a $60.7 million unrealized gain tied to that equity investment, with the remainder relating to acquisition, integration, other non-recurring expenses. Our effective tax rate was 25.7%. The resulting reported net income for the first quarter was $131.1 million and $118.3 million on an adjusted basis, an increase of 15.8%. Gap fully diluted earnings per share for the first quarter were $1.87 and $1.69 on an adjusted basis, an increase of 15.2%. Now turning to cash flow, first quarter operating cash flow totaled $127.2 million, $18.7 million over Q1 last year. Capital expenditures totaled $8.3 million, $900,000 lower than the prior year quarter. Free cash flow, which we define as operating cash flow less capital expenditures, was $119 million, an increase of 19.8%. During the quarter, the company invested $78.3 million in prospective therapeutics alongside a net $20 million to obtain certain rights and options as well as the sale of our Somerset facility. Taken together, cash and cash equivalents, net of restricted cash now stands at $718.3 million. We have access to our $350 million undrawn bank revolver and are comfortable with our strong liquidity position. Turning now to our updated guidance for the full year 2024 as well as a first look at the second quarter, we are increasing our view for Polarify for the full year as we see clear signals of market expansion, brand awareness, and market leadership amidst competitive dynamics. We now forecast Polarify to grow in the mid 20% range over the full year 2023 result and as was noted on the last call, sequential growth should follow the seasonal pattern seen in 2023. We remain confident in DFINITY and that it can grow high single digits for the full year on top of last year's mid-teens performance. Other products also remain at our prior expectation levels. Taken together, we estimate full year revenue to be in a range of $1.5 to $1.52 billion up from the prior estimate of $1.41 to $1.445 billion, an increase of approximately 18 to 20% over 2023 excluding Relistor from the 2023 result. We expect fully diluted adjusted earnings per share to be in a range of $7.00 and $7.20 up from the prior estimate of $6.50 to $6.70. For the second quarter, net revenue should be in a range of $380 to $390 million, fully diluted adjusted earnings per share should be in a range of $1.81 to $1.86. With that, let me turn the call back over to Brian.

Thank you. In summary, our outstanding first quarter performance is a testament to the dedication of the Lanthias employees. We are actively implementing our strategy to drive both near and long-term growth, prioritizing the advancement expansion of our radiopharmaceutical pipeline while maintaining robust performance. With ample capital and strategic positioning, we're positioned to keep creating value supported by market leading products including Polarify, which has the potential to be the first pet imaging agent to reach blockbuster status. Throughout 24, we will continue to harness our team's potential to identify, develop, and invest in innovative solutions and leverage our proven operational excellence to serve healthcare professionals and patients. Having been with the company for a number of years before taking over as CEO approximately two months ago, I am more excited than ever about the future at Lanthias. We have a tremendous opportunity to build on our heritage and unrivaled radiopharmaceutical leadership. I want to thank everyone in the Lanthias organization for their ongoing unwavering commitment to our purpose to find, fight, and follow disease to deliver better patient outcomes. And with that, we are now ready to take your questions. Operator, please proceed.

Thank you. As a reminder to ask a question, please 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. One question per person, please. Please stand by while we compile the Q&A roster. Our first question comes from the line of Anthony Petrone from Mizuho Financial Group.

Thank you and congrats on the strong quarter here out of the gate for 2024. And again, Brian, welcome and congratulations on taking the CEO role. Maybe to start with Polarify here from a three-month perspective in March, but also the guidance. So well beyond our expectations in one queue. And Bob, you mentioned here plus 20% on a much higher base here looking out for the remainder of 2024. So just a little bit on the dynamics in the underlying marketplace. Are you seeing more utilization mostly in the core indications of high-risk and metastatic cancer populations? Or you're actually seeing some usage off-label in earlier indications? And then maybe a little bit on utilization as therapy starts to get going. Is that also a driver? And I'll have a couple of follow-up questions. Thanks.

Yeah, and thanks for the congrats. This is Brian. I'll kick it off and then turn it over to Paul. But I think the short answer Polarify is we are seeing the use of the brand expand. And most importantly, it's within our existing locations and customer accounts. So I think more referring physicians are getting on the bandwagon. Our commercial team is really expanding the knowledge base that's out there. And we are also seeing through a lot of clinical trial use that people are beginning to look at much earlier settings for Polarify, much like the mirror study. But Paul, you want to add to that?

Thanks, Brian. And thanks, Anthony. If we look at drivers of Polarify in the first quarter, and then Bob can touch a little bit more on the guidance, I would say it's driven by three overall factors. The first is the growth in the overall market. The continued expansion of PSMA PET, particularly among existing prescribers, has been stronger than we anticipated. And market research suggests an increasing scan utilization for BCR patients, as well as for patient selection and monitoring, which is really leading to a larger current addressable market than we initially anticipated at the beginning of the year. As Brian alluded to, the biggest driver of the Polarify growth is really the increasing utilization at existing customers,

where

we are seeing existing prescribers continue to support and see the brand preference that we see in Polarify. We think this really validates the marketing initiatives, including our new campaign, our 2023 Salesforce expansion, our strategic partnerships with customers, as well as our continued enhancement of our PMF network, which is now up to about 58 sites, including Cal Times, available days, and new sites. And then lastly, we did take a price increase at the beginning of the year. That had a far lesser impact, but we did take a 6% whack price increase at the beginning of this year. I would reiterate what Brian mentioned around the label. As we've always said, the label for Polarify is incredibly broad, and indeed some of the life cycle management, as noted in the mirror study, is really about addressing guidelines. Given the breadth of the label for risk of metastasis prior to definitive therapy or a rising PSA, there really is a broad population for LAMP theists to continue to educate physicians on, and we see those paying rewards from all the investment and hard work. Maybe on a future-looking guidance basis, I'll let Bob provide some commentary.

Yes, good morning. I can't really expand much more on that. I guess what I would tell you is that each quarter we evaluate or reevaluate to confirm or dismiss our assumptions. As I said in my prepared remarks, and I think we heard Paul sort of detail that in his well, is that we see clear signals of market expansion, brand awareness, and market leadership. From that perspective, we learn from this historic data, and we make adjustments to our view of the world. Based on that, we have confidence that we can deliver more than a billion dollars in Polarify for the year.

Thank you. One moment for our next question. Our next question comes from the line of Rowanna Reese from Lerink.

Great. Good morning, everyone. Another one for Polarify. I was curious if your strategic partnerships are already gaining traction. Is that driving your guidance raise? And since you just mentioned net price a little bit, I was curious if that's going to be sustained through the year.

I'll take that one. I guess from a strategic partnership, while Europe is a large market, the launch there is just getting underway. From that perspective, the contribution is de minimis, and the guide is really predicated on the US market and in our efforts here in the US. In terms of the contributions to strategic partnerships using PYL, if you will, within other clinical studies, again, that number is not that significant in the grand scheme of things.

I think Rowanna, the other piece to just think through is the strategic partnerships with our key customers in the US. As part of the broader remarks, we did note we haven't continued to enter into those strategic partnerships with key customers. We began that in 2023. We continue to see traction in 2024. That's naturally been one of the drivers. But I would still say, overall, the overall market growth continues to grow. As the market leader, strategic partnerships are really around solidifying our position and ensuring that Polarify remains the number one PSMA pet imaging agent going forward. I think we are very pleased with our progress overall. But it is one of multiple strategies to ensure that Polarify continues to grow. We feel comfortable with its competitive position, its clinical and commercial value proposition, noting that the TPTPs, which drive some of the strategic partnerships, impact 95% of the approved market currently. These products are not interchangeable. Each of them have differentiated clinical and commercial attributes. We really deeply understand our customer base, including their site of care mix, whether that's hospital, outpatient, or otherwise, their payer mix, specifically the Medicare fee for service. As such, we are able to work with them to mitigate the potential impact of any financial exposure. Given the competitive nature of the business, I'm sure there will be no more questions. But we don't want to elaborate further at this point.

Thank you. One moment for our next question. Our next question comes from the line of Richard Newiter from Truist Securities.

Hi. Thanks for taking the questions. And congrats on a great quarter. If Polarify is not blockbuster status yet, I can only imagine what that

threshold looks like.

But maybe just to start off, on the contracting question that Rana just asked, can you give us any sense as to what percentage of the market or the market that would be impacted by transitional pass-through? Do you think you can get under some sort of contract or dealt with in your negotiations by the time transitional pass-through expires? Any sense as to where you are today relative to that goal percentage? And then I have one follow-up.

Yeah. So Richard, we have a very strong sense of what the future looks like for Polarify. And I'm going to let Paul elaborate. But our strategic agreements with our customers are multi-year in duration. They've all been in the works for quite some time. And the preparation for this has been, like I said, well underway for a while. But I'll call blockbuster at a billion dollars this year. So I'll help you out with that one.

Paul, go ahead. Thanks, Richard. I appreciate the congrats. So as we've shared in the past, TPT impacts the intersection of site of care and payer mix. And I alluded to this in responding to Rana. That is really the hospital outpatient setting and the Medicare fee for service. And when you look at that intersection, it really only affects about 20% of Polarify revenues. It is concentrated in the hospital space. And so we've understood this since the launch of Polarify on the receipt of TPT. We began entering into long-term, as Brian mentioned, strategic partnerships last year. We are pleased with our progress. And I think we see continued growth in the market. But we really bring a high-touch interaction with our customers. There's 20 years, many of which we have long-term relationships. And so the amount of interactions that we're having with our customers to understand the impact, to understand their exposure and their sensitivity, we continue to make progress there. We're pleased with the progress. We're obviously not going to share any specifics about where we are in being able to wrap that up, given the competitive nature of the business. But suffice it to say, we continue to incredibly confident with Polarify's leadership position, even amidst the potential expiry of pass-through at the end of this year.

Thank you. One moment for our next question. Our next question comes from the line of Larry Salo from CGS Securities.

Great. Good morning. Thanks. I kill the congratulations and a formal welcome to you, Brian, as well. I guess just sticking with the Polarify theme and the transitional pass-through, can you just any comments on just the cadence of the year in terms of sales? And as we get into the latter part of the year, do you see some impact, right? Some of these centers start preparing as it's hard to switch over a patient during treatment, but do you see some impact from the pass-through ahead of that actual expiration that may be even modest, but some kind of impact? Just thoughts on cadence of sales, Polarify, for the year based on that. Thanks.

So Larry, I'll pick up the cadence of sales expectation. I keep referring to the sequential seasonal trends that we've seen over the last year plus, where we really do seek sort of, if you think in terms of quarterly splits, we would expect to see Q1 as the highest sequential improvement, then Q4, then Q2, then Q3 in sort of highest to lowest sort of cadence, if you will. But beyond that, I'll let Paul take it from there.

Thanks, Larry. I think, as Bob mentioned, we continue to see that there are natural seasonal impacts when we look at the summer month physicians and imaging center staff do need to go on vacation, so we do expect some of that. I think overall for the year, the company guided to -20% Polarify growth range with the vast majority of that being volume and a somewhat minor net price impact. Naturally, in the first quarter, we took a 6% price increase at the beginning of this year. We're going to see a little bit more contribution of that now, but as those strategic partnerships further expand, we will see volume be the larger driver, but otherwise I would stick with Bob's overall commentary

on the sequential components.

Thank you. One moment for our next question. Our next question comes from the line of Yuan Zhu from B. Riley.

Good morning. Congrats on another great culture. We heard you and your partners are expanding the availability of Polarify in New York and the Midwest. I'm curious, is this based on your demand forecast or just building extra capacity there to accommodate the customer's requests? Thank you.

Thanks, Yuan. So yes, we did expand our PMF network in the first quarter. We now have 58 active PMFs and we did add four in the quarter in New York, California, Ohio, and in Florida. This is really, in some cases, it is about additional capacity. In many cases, it is really around the right out the door times. Given the overall growth of the PSMA pet imaging market that has been substantial, we are seeing demand go earlier in the day as well as later in the day. While F18 has the longest half-life of an approved PSMA pet imaging agent of 110 minutes, we still need to be able to make product multiple times in the day to continue to serve that increasing demand.

So, in

building out our PMF network, some of it is redundancy and some of it is really around the capacity to fuel growth at existing sites. We want to make sure that we have the right time slots. F18 is a fantastic isotope given the size of the PSMA market with FDG doing approximately 2 million doses and we can tap into that. There is naturally a role for other agents with shorter half-lives that can be made on a generator specifically at the margins, but we continue to expand our F18 capacity to be able to drive that and we are seeing the majority of growth from those new activated sites be new physicians and new time slots rather than necessarily cannibalizing existing sites where we are bringing in

product elsewhere.

Thank you. One moment for our next question. Our next question comes from the line of Justin Walsh from Jones Trading.

Hi, thanks for taking the question. It's been great to see your pipeline development continue to expand with the perspective deal here. Where do you see your pipeline developing over time?

Well, I think we see it developing on two fronts. We are going to be highly selective and maintain our leadership in PET imaging. I think that's very clear. And obviously, we are already in the space with the point partnership, perspective partnership, so we are definitely going to be spending a lot more time in BD and M&A in radioligand therapy and building

out the pipeline on that front.

Thank you. One moment for our next question. Our next question comes from the line of Andy Shea from William Blair.

Okay, thanks for taking our questions and congratulations on a beaten race quarter. So a question for you, Brian. In light of several important developments in the past 24, 48 hours, right, so we saw Mariana getting acquired by Novaris, the complete response reported by Clarity in prostate cancer. Just maybe from the big picture perspective, share your worldview on the radiopharmaceutical field and how pantheas could really play there. And maybe just a quick one related to radiopharm as well. We saw Novaris showing overall survival hazard ratio down to the less than 1.0 range. So does that impact your confidence level heading into the Q3 update? Thank you.

Well, with your last comment first, it certainly is encouraging that the passage of time will see a reduction in the point estimate around overall survival. But look, we await the flip of the cards, if you will, and that's why you do the clinical trial to get the answer. So we're pretty excited about it, but at the same time, you know, the data will tell us what it tells us at the right time. And as far as the recent activity in the industry, I think it certainly validates the lantheas platform, if you will. You know, and I think we're seeing a lot of things. I think Novaris is clearly among the big pharma players ahead of the pack, right? Their investments are fairly deep, fairly broad, and their commitment to radioligand therapy is fairly clear. I think when you look at the other big pharma investments, they seem to be platform acquisitions with one lead asset, and they're hoping that works out, but also a lot of science projects. And I think we're going to be, I think, very selective in what we pick up and what we look at. We have that expertise. We don't need a platform because we are the platform, and I think just stay tuned and you'll see some activity from us in the near future.

Thank you. One moment for our next question. Our next question comes from the line of Kemp Dolliver from Brookline Capital Markets. Great. Thank you.

Back to Polarify. Given your comments about growth in your business and imaging centers and some of the other initiatives you've undertaken,

has the mix of site administration

changed? That's a great question. I

really appreciate the focus there. Generally speaking, the site mix around hospitals, freestanding imaging centers, and government accounts have not changed materially. We generally view kind of the book of business as being relatively stable with about two-thirds hospitals, a little bit less than a third freestanding imaging centers, and then government facilities, both VA, Walter Reed, and others being in that -single-digit range. So overall, we continue to activate new prescribers, but the largest growth is really just increasing demand and prescriptions being sent to those existing sites, all in a relatively comparable portion. Now, overall, we do see increasing Medicare Advantage relative to fee for service, and that's just not necessarily a Polarify trend, but overall kind of a national trend as Medicare Advantage continues to become more important. But the overall site mix is relatively comparable here.

Thank you. One moment for our next question. Our next question comes from the line of Tara Bancroft from TD Cowan.

Hi there. This is Greg speaking on behalf of Tara. So you have a substantial cash balance that should continue to grow with increased revenue year over year. So can you tell us more about your plans for capital allocation, either in terms of R&D, marketing for Polarify, or potential plans for business development? So

I'll take that. This is Bob. Yeah, you know, you're right. You know, we had a record quarter for free cash flow at $118 million, so that was great. But I think what you also saw us do in the quarter is deploy $98 million of that with the prospective transactions. So I think from the perspective of what are we going to do with the money, you know, we constantly between management and the board evaluate capital deployment strategies. Clearly, as Brian indicated in his remarks, we're going to be we are going to be busy on the business development front. But, you know, Paul also noted in internal development, but we also focus on capital structure optimization, and that can include any number of deployment options. But as we think through, you know, the fact that we have this dry powder, it affords us the ability to look at the landscape of business development opportunities to continue to add to the pipeline and be able to do strategically advance important projects internally to to solidify our portfolio that sets us up for growth through the long term.

Thank you. One moment for our next question. Our next question comes from the line of Rowanna Reese from Lear Inc. Hey,

thanks for taking the follow up. So I noticed on the call you also mentioned expanded field force and new marketing and education campaign. I was curious within that, what are you doing to help educate new physician targets and new customers who might not yet have the deep experience with Polarify yet? And how can you help drive their use through the year?

Very astute question, Rowanna. We did expand the field force, as we noted last year, to be able to on hospitals, freestanding and imaging centers, as well as referring physicians, namely urologists, which is largely in the staging education, and referring oncologists, medical oncologists, and radiation oncologists. We do see the vast majority of growth coming from existing prescribers. We do believe we've made significant inroads in continuing to educate physicians on that benefit, but we really do this through an omni-channel approach. That would be levering both our medical team and appropriately at medical congresses where they get called in to answer questions. There continue to be significant publications and discussions. If you look at recent medical congresses, the number of posters that are discussing PSMA, both therapeutically and diagnostically, is significantly grown over the years. And so that first starts from a medical perspective to raise awareness appropriately. And then commercially, our sales teams are in there in accounts, both at treating sites and referring physicians to raise awareness. We continue to gain new data and insights on our prescribing base, which allows us to appropriately target those referring physicians. And then naturally, we do appropriate omni-channel marketing efforts, both in appropriate publications and other awareness, including appropriately within the patient segment. We really are seeing the fruits of that investment play out, where we made increasing investments in the middle of last year, to really generate demand in addition to just fulfill it. We believe we appropriately invested ahead of the curve, and we believe as the clear market leader and largest voice in the marketplace that we are having a disproportionate impact in driving the overall growth of the PSMA imaging market. And naturally, as the market leader, we take a disproportionate benefit of those gains in the growth.

Thank you. One moment for our next question. Our next question comes from the line of Richard Newwitter from Truist Securities.

Hi. Excuse me.

Thanks for the follow-up here. I just wanted to ask, you mentioned life cycle management on Polarify. You kind of gave us a stay tuned on future indication sets. I'm just wondering what that means and looks like, or if you can elaborate there. And also, I asked this last quarter as well, but a competitor of yours is out there publicly talking about kind of a PSMA PET diagnostic 2.0 version that could potentially restart the transitional pass-through clock for them while you're still off pass-through and potentially they're still on. I'm just curious, do

you

have any insight on how CMS used that type of effort? And is that something that you had in the works or could potentially replicate if needed? Thank you.

Yeah, Richard. Thanks. A lot of good questions wrapped up into that. And I think we are holding our product improvements, life cycle management strategies fairly close to the vest. Like you, we have listened to what other companies have said about their approach to a 2.0 and pass-through and we have a particularly good knowledge of what needs to happen in order to make that work. So I'm not sure how much we want to elaborate, but Paul, I think if you want, you can add a little bit there. Thanks, Rich. You know,

we

very

much understand the pathways that are being discussed out there in the marketplace. We have been aware of them.

We

believe just for context setting to be eligible for transitional pass-through based on current regulatory pathways and CMS requirements, you do need a new NDA. There are multiple paths to get there. Our team consistently monitors, as Brian mentions, developments in the industry and we consider multiple options to support our ability to maintain patient access and really maximize the value of the entire portfolio. We don't feel the need to share our internal plans at this point publicly and we will do so when appropriate. But overall, I think the key message for Polarify right now is that we're focused on delivering over a billion dollars in sales for Polarify this year, making it the first ever pet imaging blockbuster, executing strategies including brand awareness, strategic partnerships with key customers that we've talked about, supporting CMS and congressional actions to mitigate that impact, and really expanding the market through our education efforts as well as life cycle management. And we look forward to delivering on those and sharing more about some of the questions you asked when appropriate.

Thank you. One moment for our next question. Our next question comes from the line of Andy Tsai from William Blair.

Okay, thanks for allowing me to ask a second question. So, at the risk of sounding like an overly sensitive self-signed analyst, you made a very interesting comment on the BD strategy, specifically focusing on radio ligand. I just want to clarify, are you signaling a preference over other modalities such as antibodies or various peptide-based contracts as you survey the landscape?

Well, I think at Lanthias, we would naturally have a bias. But, look, RLTs are coming of age. The ability to target the tumors more effectively with less off-target toxicity is really evolving, but it's just another modality. And if you look at the overall market, it's a small piece of the total cancer market. So, it's emerging, it's growing, it's exciting. We're seeing lots of valuations jump by big pharma paying a lot of attention to the space. So, I guess you could say it's validated from that perspective. But, I mean, look, the simple truth is the technology has proved to the point where you can really deliver a smarter bomb to the tumor with less tox to the patient, and they can continue to go on and receive additional lines of therapy. So, I think it's exciting, it's evolving, but it is, I can't tell you I have a preference, but I certainly have a bias based on the business I'm in.

Thank you. Ladies and gentlemen, there are no further questions at this time. Thank you for participating in today's conference. This concludes the program. You may disconnect, and have a wonderful day.