Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- PYLARIFY generated net sales of $259 million, up over 32% from the prior year, driven by expanding market and increased utilization at customer sites.
- DEFINITY maintained strong momentum with first quarter net sales of approximately $77 million, up 11% year-over-year, supported by its expanded indication for pediatric use.
- Strategic investments in the pipeline and business development, including partnerships like Perspective Therapeutics, enhance Lantheus's radiopharmaceutical capabilities.
- Operational excellence and strategic marketing campaigns have solidified PYLARIFY's position as the market leader in PSMA PET imaging.
- Robust financial performance with a 23% increase in consolidated net revenue to $370 million and significant free cash flow generation.
Negative Points
- Potential expiry of transitional pass-through payment (TPT) at the end of 2024 could impact approximately 20% of PYLARIFY revenue.
- Increased operating expenses, up 538 basis points from the prior year, reflecting investments in growth and efficiency initiatives.
- Dependence on the success of PYLARIFY and DEFINITY, with significant revenue concentration in these products.
- Regulatory and market risks associated with the approval and adoption of new products like PNT2002 and PNT2003.
- Challenges in expanding the clinical utility of PYLARIFY in additional patient populations and navigating complex reimbursement landscapes.
Q & A Highlights
Q: 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 PYLARIFY, here also from a 3-month perspective in March but also the guidance, so well beyond our expectations in 1Q. And Bob, you mentioned here plus 20% on a much higher base year, 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.
A: 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 PYLARIFY 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 PYLARIFY, much like the MIRROR study.
Q: Another one for PYLARIFY. 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.
A: So I'll take that one. So I guess, from a strategic partnership, while Europe is a large market, the launch there is just getting underway. So from that perspective, the contribution is de minimis and that the guide is really predicated on the U.S. market and in our efforts here in the U.S. In terms of the contribution of strategic partnerships using PYL, if you will, within other clinical studies, again, that number, is not that significant in the grand scheme of things.
Q: Congrats on a great quarter. If PYLARIFY 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 Roanna just asked, can you give us any sense as to what percentage of 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? And any sense as to kind of where you are today relative to that goal percentage? And then I have one follow-up.
A: Yes. So Richard, we have a very strong sense of what the future looks like for PYLARIFY. And I'm going to let Paul elaborate, but our strategic agreements with our customers are multiyear 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 $1 billion this year. So I'll help you out with that one.
Q: I'll echo the congratulations and a formal welcome to you, Brian, as well. I guess just sticking with the PYLARIFY theme and the transitional pass-through, 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? As some of these centers start preparing, 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, maybe even modest but some kind of impact? Just thoughts on cadence of sales for PYLARIFY for the year based on that.
A: So Larry, I'll pick up the sort of the cadence of sales expectation. I keep referring to the sort of the sequential seasonal trends that we've seen over the last year plus where we really do see sort of if you think in terms of quarterly splits, we would expect to see Q1 as the highest sequential improvement than Q4, than Q2, than Q3, in sort of highest to lowest sort of cadence, if you will.
Q: Congrats on another great quarter. We heard you and your partners are expanding the availability of PYLARIFY in New York and the Midwest. I'm curious, is it based on your demand forecast or just building actual capacity there to accommodate the customers' request?
A: Thanks, Yuan. So yes, we did expand our PMF network in the first quarter. We now have 58 active PMFs, and we did add 4 in the quarter in New York, California, Ohio and in Florida. 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. And while F 18 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.
Q: 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?
A: Well, I think we see it developing on two fronts. We're going to be highly selective and maintain our leadership in PET imaging. I think that's very clear. And obviously, radioligand therapy, we're already in the space with the POINT partnership, Perspective partnership. So we are definitively going to be spending a lot more time in BD and M&A in radioligand therapy and building out the pipeline on that front.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
