Good afternoon, ladies and gentlemen. Welcome to the Lantheus Holdings Second Quarter 2018 Earnings Conference Call. This is your operator for today's call. Please note that all lines have been placed on mute to prevent any background noise. This call is being recorded for replay purposes. A replay of the audio webcast will be available in the Investor section of the company’s website approximately two hours after completion of the call and will be archived for thirty days. I would now like to turn the call over to your host for today, Meara Murphy, Director of Investor Relations and Corporate Communications.

Good afternoon, everyone, and thank you for joining us for Lantheus Holdings second quarter earnings conference call. With me today are Mary Anne Heino, our President and Chief Executive Officer; and Andrea Sabens, our Vice President of Finance, who will be standing in for Jack Crowley, our Chief Financial Officer, due to a death in his family. Earlier this afternoon, we issued a press release, which was also filed with the Securities and Exchange Commission under Form 8-K, reporting our second quarter results. You can find the release as well as a replay of this call in the Investors section of our website at lantheus.com. Please note that the remarks we make today regarding future expectations, plans and prospects for the company constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, which we disclose in more detail on the Risk Factors section of our annual report filed under Form 10-K with the SEC and available on our website. We remind you that any forward-looking statements represent our views as of today and should not be relied upon as representing our views as of any subsequent date. While we may update any such forward-looking statements in the future, we specifically disclaim any obligation to do so except as otherwise required by applicable law. Also, please note that on today's call, we will reference certain non-GAAP financial measures with respect to our performance. We use these non-GAAP indicators for financial and operational decision-making and as a means to evaluate our performance. Reconciliations to GAAP metrics for EBITDA, adjusted EBITDA, adjusted operating income, adjusted net income, adjusted net income per diluted common share and free cash flow are set forth in our earnings press release. Of particular note, these tables include the reconciliation of our GAAP net income to adjusted EBITDA, a metric we consider to be particularly relevant at this time due to the variability of our technology transfer activities and related costs. Mary Anne will begin her comments today with a high-level overview of Q2, and Andrea will follow with an overview of our financial performance along with Q3 and full year guidance. Mary Anne will then provide updates regarding our corporate growth strategy and program. After their prepared remarks, both Mary Anne and Andrea will take questions. With that, I will turn the call over to Mary Anne.

Thank you, Meara, and good afternoon everyone. Q2 was another solid quarter for us. We met our guidance for revenue and exceeded our guidance for adjusted EBITDA. This year continues to be a period of strategic investment in our business with an eye towards longer-term growth objectives. Our three pronged strategy is to: one, enhance the growth trajectory and profitability of our core microbubble franchise; two, augment and invest in our pipeline with a special focus on emerging technologies; and three, pursue external opportunities that fit with our objective to deliver long-term sustainable growth and profitability. I will discuss each area of our corporate growth strategy after Andrea reviews our Q2 numbers in detail. But first, I want to provide an update regarding one of our nuclear isotope suppliers, NTP, in South Africa. As we previously disclosed, the NTP processing facility has been offline since early June. This has temporarily impacted a portion of our supply of molybdenum-99, or Moly 99, the medical isotopes used in our proven high specific activity TechneLite generators. NTP is working with South African regulators on its remediation efforts. In our latest discussions with our partners of NTP, they suggest they are targeting a mid-August restart of production. While NTP’s outage did impact our Q2 revenue, we were able to source additional Moly 99 from our other suppliers allowing us to mitigate the impact of this shortage and to reaffirm our full year financial guidance. Looking ahead, I would like to note the efforts we are making to further strengthen our Moly 99 supply chain for our proven high specific activity TechneLite generators. Our supply partner ANSTO is near in completion of a project that ANSTO anticipates will significantly increase its Moly 99 production capacity. In addition, our supplier IRE is targeting to complete its conversion to full LEU supply in 2019, which will also bring additional flexibility to our supply chain. Finally another strategic partner of ours is SHINE Technologies, which is well underway with its project to bring domestic supply of Moly 99 to the U.S. marketplace. Pending approval China is expected to initiate commercial supply in 2021 at which time SHINE will fortify our Moly 99 supply chain. I will now turn the call over to Andrea, who is standing in for Jack on today's call to review the Q2 numbers. As mentioned I will back to review our recent progress on our three pronged corporate strategy. Andrea?

Thanks, Mary Anne, and good afternoon everyone. Please note that the tables in today's press release include a reconciliation of our GAAP results to the as adjusted non-GAAP performance I will review in a moment. We exceeded our guidance for adjusted EBITDA and came within the range of our guidance for revenue. The relative outperformance of adjusted EBITDA reflects thoughtful cost management along with the timing impact of some R&D expenses. Digging into the numbers and starting from the top-line, the company delivered $85.6 million in worldwide revenue for the second quarter, compared with $88.8 million in the second quarter of 2017. DEFINITY continued to perform well with worldwide revenues totaling $46.1 million for the quarter, up 15% from Q2 of last year. TechneLite revenue was $23.5 million compared to $26.7 million a year ago, which was primarily a result of the disruption in Moly 99 supply that Mary Anne discussed earlier. Xenon revenue for the quarter was $7.6 million, essentially flat when compared with $7.9 million in the second quarter of 2017. Finally revenue from our other product category was $8.4 million in the second quarter compared with $14.1 million a year ago. As a reminder, last year's other revenue included the $5 million upfront payment received in the second quarter of 2017 from GE Healthcare under the Flurpiridaz F 18 collaboration and license agreement. Our second quarter gross profit margin excluding technology transfer activities was 51.9% compared with 50.3% last year excluding the impact of the GE payment. Operating expenses were $27.9 million for the second quarter a slight decrease as compared to $28.1 million in the second quarter of last year. Operating income for the second quarter of 2018 was $15.9 million, an increase of approximately 22% over last year excluding the GE payment. And adjusted operating…

Thank you, Andrea. I will now provide some updates on our business performance and strategic programs. On July 25th, CMS published its proposed rules for 2019 half procedures. The proposed reimbursement rates for contrast-enhanced echo including procedures with DEFINITY for 2019 are consistent with the current 2018 rates. We are pleased these proposed rates recognize the incremental value that contrast offers in echo procedures when needed. The final CMS half 2019 rules are expected to be published in November. Strategically, we have added to our pattern to state for DEFINITY. In addition to the U.S. patterns already granted through 2037 that coves certain facets of DEFINITY, we were recently a composition of matter patent in the U.S. for our alternative formulation of DEFINITY that will run through 2035. We believe the addition of another formulation to our DEFINITY portfolio will offer customers’ additional flexibility in choosing the formulation that best meets their patient's needs. Next we reached another key milestone in our DEFINITY China program with Double-Crane. Recently enrollment was completed for all needed studies, which includes cardiac, kidney, liver and pharmacokinetics studies. Analysis of the resulting data is in progress and we expect the application for approval to be submitted to the China FDA by the end of this year. As shared previously, we are pursuing a Left Ventricular Ejection Fraction, or LVEF, indication for DEFINITY. We continue to work with the FDA on a special protocol assessment, or SPA, for our LVEF trial design. While the FDA is not completed, we are at the stage of answering routine questions with the FDA. We believe we remain on track to initiate the trial by the end of 2018 and in fact have started trial activities including contracting with both the CRO and core laboratory identifying trial sites and conducting…

[Operator Instructions] Our first question comes from line of Raj Denhoy with Jefferies. Your line is now open.

Raj?

Hi. This is Anthony for Raj. I apologize, Mary Anne. I was muted. Thanks for taking the question. So maybe just start on TechneLite, just a bit like versus our expectations. I'm just trying to get a sense of the price volume dynamics in the quarter. How that played out? And then maybe a related question to that would be looking ahead to the Moly supply agreement with SHINE. I'm just wondering how that plays out as it relates to margins for the radiopharma business and then I have one follow up thanks.

Sure, Anthony, let me answer your first question on TechneLite and that really what the price volume dynamic is for revenue for the quarter. It really is a volume dynamic not a price dynamic. We are essentially fully contracted for sales for TechneLite, so the pricing is set through those contracts. As we noted during the call, the volume deficit we had which led to the revenue deficit is related to NTP being offline since early June. We were able to mitigate a significant portion of that supply outage, but not fully. And that's what's driving the – as you described lighter than anticipated TechneLite revenue. Looking forward to SHINE, as I mentioned on the call, SHINE is a little bit in the future, we anticipate that they can begin commercial supply to us in 2021. I won’t comment now on pricing or margin since it is an event sitting out in our future. I think it's fair to say that we continue to seek ways to not only fortify our supply chain, but to do so in a way that makes it most price efficient for us.

That's helpful and the follow-up again on NTP. Would you assuming the intra quarter orders will sort of shift depending on availability. So do you see pent up demand as NTP comes back on or those orders lost? And then lastly just on F 18, the announcement with GE, the timing there August 2020, is that specifically less demand and then you would get an analysis of the study thereafter? Or are you expecting a final readout sort of August 2020, just the clarification on timing. Thanks again. I'll get back in queue.

Thank you. So let me address first your questions about NTP and pent up demand. Anthony, in this case, there really is no pent up demand because in the case of TechneLite, it's pretty much a moment in time or just in time type of manufacturing and order demand fulfillment. And so, there is no way to catch up on orders lost. During this time, we are very focused on ensuring that our customers receive as much supply as we can offer them and ultimately that patients are not in any way inconvenienced by not having appropriate supply enough to do the patient exam that that supply ultimately satisfies and that’s been a major concern for us. Speaking to – what was the – the other question was on flurpiridaz and on August 2020. That is the last patient out date and of course after that there will have to be analysis of the data that were generated by the trial, which will ultimately fuel and allow completion of the full file for submission to the FDA.

Thanks again.

You’re welcome.

Our next question comes from [indiscernible]. Your line is now open.

Great, thanks. A follow up on TechneLite. I guess could you explain or speak to sort of your thoughts on the competitive landscape for TechneLite and how you envision that sort of evolving in your competitive positioning overall? Thanks.

Yes. First let me say it’s our hope and we support all the efforts to bring additional sources of supply and competitors into the nuclear marketplace. We think it's very healthy for a market that will welcome additional sources of not only supply, but also of additional modalities to the testing that’s done under that specialty. So we are strong supporters of that and we're strong supporter of the medical societies that are involved in that. I think Aaron, what you're referring to with the emerging competitive landscape perhaps are the announcement that were made last quarter by BWXT about their intent to enter the marketplace with a competitive product that would be a competitor to our product, which is TechneLite self-contained proven high specific activity the generator that’s currently in the marketplace. And we feel that we will continue to have the type of product quality and the type of competitive dynamics that will allow us to very successfully complete in that market whether that market changes next year, the year after or several years from now.

Okay, great. And that somewhat of a two part question here, but can you give us an update on the manufacturing initiatives at your facility and then also can you give us an update on M&A pipeline? Could you be in a position to close the deal or two by year end? Thanks.

Sure, so again two very different questions. Our onsite manufacturing project is the installation of a line that will allow us to have an additional source of manufacturing for DEFINITY, so that’s our co-product, not one of our nuclear products. We’re very much on schedule there. I may have described in the previous call, this is the refit of an existing structure on our campus. And so from a timeline perspective, it’s accelerated by the ability to use the existing infrastructure of that building. It's still a project that is certainly year plus in length. We will – as we near completion, we’ll undergo inspection by the FDA and they will give us kind of a more finite time point to point to when we can bring first commercial product into our supply chain for the U.S. market. So that’s our onsite manufacturing project. Your other question about M&A. As I mentioned in the call and I really will not be any more specific, but we are well advanced in our consideration of what types of assets and/or company in their geographies or in there the markets they compete in are the right fit for us. And that really is kind of a multi-pronged approach to improve what our shot on goal will be once we move forward. I will not offer any more detail or will I commit unnecessarily just saying that I expect one of those deals to close next month or by the end of the year. Suffice it to say when it does yield, we'll announce it and then I'll be more than glad to talk about it.

Hey, look forward to it. Thanks.

Our next question comes from Larry Solow with CJS Securities. Your line is now open.

Hi, great. Thanks. Good afternoon. Mary, could you maybe just speak a little bit more to DEFINITY. Any – I assume though but any update on the patent filed and obviously you’re doing a good job building around the estate there with alternative formulations at least and expanding to different potential uses. But just thoughts on sort of – it seems like some of the overhang on the stock is related to the patent situation. And is it just a matter of waiting out a few more quarters? And as we keep – get one more quarter in the book, in the filing, do you think eventually these sorts of fears will vain? Or what are you thoughts on that?

Larry, I think, your thoughts are a perfect example of what we’re facing with the market. And that is – my belief is that many of the analysts to consider us are used to the pharmaceutical market where in fact we’ve seen historically very significant drop in revenue of exclusive product post genericization events with those products. I have offered in earlier calls the consideration that the pattern post genericization for a diagnostic product does not nearer what you see for pharmaceutical product. And there are several reasons for that. In fact we have experienced ourselves because our product Cardiolite, which went generic in 2008 and at that time going generic was the most successful radio pharmaceutical ever commercialized in the U.S. market was a product that’s certainly demonstrated what would be the pent up demand to enter with a generic product. And yet if you compare the genericization pattern of revenue sales and loss for that product, it is strikingly different from what you see post genericization events we've seen with products such as [indiscernible] the other major brands that have been in the pharmaceutical market. I’ll offer two reasons why the diagnostic market and in particular the DEFINITY supply chain is different. And they both have to do with the channel and how the channel is used and accessed. In the case of DEFINITY, our products sold directly from our campus right into echocardiography labs where it is stocked and it is used in fulfillment with a procedure and then build out to Medicare or a third party payer as part of a procedure. That differs in the following two very dramatic ways from a pharmaceutical product. Pharmaceutical products are uniform, and I am going to say universally, but it's not – it's not exclusively distributed from large…

Absolutely. And just tell us the Vialmix, obviously that seems like a big advantage. And how does the patent situation on that come into play? In other words, if somehow generic was able to get in on the composition of matter patent expiration. There wouldn’t be able to – is the Vialmix has a separate patent, does that run out for a much further time that? It seems to an advantage of your products. They wouldn’t I guess have access to a similar type of thing all right.

Well, it’s two reason of following way. The Vialmix is also patented device. It is not in Orange Book listed patent, but it is a USPTO listed patent. And…

Right, right…

And therefore, we would defend those patented aspects of our Vialmix. Any potential generic filer wishing to enter the market would have to do so with their own dedicated apparatus that would have to be also approved as a device through a regulatory process.

Okay, just a couple other follow ups. You mentioned a little bit on the pipeline, DEFINITY trials, the year – by year end start to – I think it looks like it’s a little bit delayed on SPA. Is that going to – is there any particular reason why it’s delayed other than just FDA back and forth. And with that could you necessarily push out some of your R&D expense from 2018 into future years?

So the answer is yes and yes, Larry. It is just a routine back and forth with the FDA. We had assumed earlier in the year that will be completed by mid-year. We’re not. But we do so anticipate we’ll initiate the trial by year-end. Can that cause some expense to float into 2019 from 2018? It’s possible. We have not noted yet that we see any predictable movement of expenses. But I will have a much better line of sight on that as we come closer to year end.

Okay, but there was no real benefit. You’re sort of just spending to date obviously it’s pretty much inline, because it wouldn’t have really accelerated, I guess, until you sort of got closer to the trial start date, right?

Sure, and I will just note for everyone’s awareness. We are seeking an SPA which is a special protocol assessment. That is not required for us to start our trial. We have chosen to have that conversation with the FDA because we feel that aligned more clearly what the expectations are for the outcomes of the trial that then lean towards the FDA saying the basis of this trial is also the basis of approval for the indication.

Right, so, I guess, it sort of sets the goalpost before the game starts if you will. Just one another question. On TechneLite, it sounds like you said but you’re able to secure supply for this quarter. If the NTP is not back up by the August or if that runs into the end of August wherever that might be, is there a potential for some impact – more impact on your sales going forward? I guess that’s still somewhat of an uncertainty?

And so, I do want to clarify, Larry. I hope I did not misspeak. I did not mean to communicate that we had secured another supply…

No, no, you said enough, I said enough, I didn’t say – yeah, that you’re able to, yeah, I am sorry.

We mitigated the absence of NTP as one of our suppliers, we're able to mitigate that amount of value sourcing more from our suppliers. Right now based on our discussions with NTP, they are targeting a mid-August restart. So given that, that's already puts this into the quarter. Yes, I would anticipate that versus what is the normal run rate you have seen in other quarters, there will be still be a slight revenue hit for TechneLite in this quarter. But as you heard Andrea say and as you heard me reaffirm at the end of my comment, we are reaffirming full year guidance and we also look at our guidance for third quarter. And I think, that we're trying to send a message with that as well that at the larger company level with all the puts and takes of our portfolio of products, we feel we can manage what we see is the – is there any remaining issue with TechneLite revenue related to supply outage.

Okay. And then just lastly, any color on the recent departure of – that you have in commercial sales, Tim Healy, I think he left last week? Or that was an 8-K is they any particular reason for that? Was that just agree to disagree he moved on greener pastures, or anything there?

So we did separate, Tim did separate from the company. I will, of course, not comment on employee matters. As Tim was named the executive officer, we did publish make an 8-K announcing the day of his separation from the company. Just for everyone's awareness, my prior role in the company – my initial role in the company was Chief Commercial Officer before becoming Chief Operating Officer. And in the interim, while we do complete our search for a new commercial head, the commercial team will be reporting into me. Not saying they're going to like it, but they will have their but they will have their own boss back.

Got you. Okay, great, thanks very much.

You’re welcome.

Our next question comes from Lei Huang with Wells Fargo. Your line is now open.

Thanks, hi. It’s Lei calling in for Larry. Just to be clear on a NTP and your guidance, your Q3 guidance and your 2018 full year guidance that you maintained that assumes NTP is back online in mid-August, is that right?

No Lei, I did not say I apologize if that’s the inference I gave. What I would like to say is that, we have considered what the impact of any outage could be, but I'm not trying to suggest that we have locked that down to saying that it only includes a considered outage up to the middle of August.

Got it, okay. Alright, so it’s possibly that your guidance assumes, it comes back on line sooner, or later than [indiscernible] you’re saying, here is what you’ve been told, mid-August restart that your guidance may assume something different?

So there’s many scenarios that underlie how – we come to final guidance and it concludes, as I mentioned before, puts and takes across different parts of the product line. And included in that, are considerations for different restart times, full restart times of NTP.

Got it, okay. And then just couple of questions on your guidance. So in first half of the year, it looks like your revenue grew – total revenue grew in the low single digit. It looks like you’re guiding to second half top line growth that's closer to mid or mid-to-high single digit. One, I want to make sure kind of I'm looking at those numbers correctly. And if that is correct, can you just remind us, what drives the faster growth in the second half?

So a couple of things and then I’m going to turnover to Andrea, she can be more numeric with you. But I would remind everyone that this quarter that we're currently in of our – if you look at the pace of our quarters historically, this is a lower quarter for us and we attribute that to essentially, what we call vacationality. So for scheduled procedures, which typically DEFINITY is and for the routine scheduled procedures that nuclear studies typically are and I excluding those are done on emergency or crisis basis, those tend to lag in this full summer months because people postpone having those studies done until everyone's back from vacations. And staff is full back up and so you do normally see that. Having said that, as you mentioned Lei, we do normally see kind of a stronger growth behavior in the latter half of the year, it really then as you can imagine driven by Q4 where we typically see a resurgent of echo studies including those done with DEFINITY and the kind of the recurrent of normally scheduled studies in our nuclear program.

Got it, okay. I guess I was referring to a year-over-year growth. It looks like year-over-year, first half revenue growth was sort of in the low single digit, where as in the back half of the year, if we compare to the prior-year period, it looks like it's closer to – and we say guidance looks like it's implying something closer to mid to mid-high-single digits. So I was looking at year-over-year comparison 2018 versus 2017.

That’s clear. And so then I would say maybe it's – I think what's driving the math there is the fact that we also have TechneLite outage in the first quarter of this year and we don't from a revenue planning perspective, we don't anticipate it's continuing for the balance of the year. So that would have first half 2018 versus first half 2017, looks weaker than second half 2018 versus second half 2017.

Got it, okay. Are there any other factors other than the TechneLite supply issue? Are there any other factors we should consider in the second half that could help growth?

No the only thing I would remind you is that when you're comparing first half 2018 over first half 2017, you should pull the $5 million onetime payment from GE out of 2017 because it was the onetime nonrecurring milestone payment.

Yes, got it. Yes, thanks. And then along the same lines just looking at your adjusted EBITDA margin, it looks like it was in the first half the year, it looks like it was call it around 28%. And then if I look at your full year guidance kind of back into the second half to the second, it looks like it would be slightly lower call it 25%, 26% or so. I want to sure my math is in the ballpark. And two, what's kind of causing that little dip in margin, first half 2018 versus second half 2018?

That’s a very good question, very insightful, Lei. I think what's driving that the most positive contributor to that are the R&D programs, as we had released earlier in the year, we had seem some timing delay on some of those expenses and make have moved into the second half of the year. So there was already R&D expense plans for that period. And in addition, that period is now picking up some of the expense that had been planned earlier in the year, to occur earlier in the year.

Got it, okay. Very helpful. And if I can just squeeze in a couple of questions to Anne on DEFINITY, first, just to be clear and I know you talked about the patent quite a bit, but just to be clear, are you aware of any generic DEFINITY filing at this time?

No. I have not been notified about any generic filing for DEFINITY to this date.

Okay, perfect. And then, the new composition of matter patent you mentioned for the alternative formulation, is there anything else you can share on that at this point, in terms of the new formulation, or at the timeline? I guess we’re typically thinking a composition of patent having to deal with the drug But when you marry that with the term alternative formulation, it's not quite clear what it means.

So we're not trying to be unclear about that. I think the increase and I offered this time which should indicate what we're working on is that we are offering an alternative formulation, so that physicians can choose at their discretion which best meets their needs in the clinic and for their patients. That, from a substance perspective, that doesn't indicated a different substance, it really does speak more to the composition or the packaging that the substance comes in. And that's all I'll share at this point.

Got it, okay. So nothing new you can share at this point in terms of timeline.

I don’t have anything to update on timeline. I will note though just to be clear, that the – a it's an Orange Book of order patents, but it won’t be Orange Book awarded until the product is actually approved. So the patent has been awarded but it will not be Orange Book-listed until the product itself to see alternative formulation is approved by the FDA and then will run out through 2035.

Got it, okay. So the patent had something issues by the U.S. Patent office. Patents has been issued, it will – it will not be re-listed in the Orange Book because the Orange Book list is a listing of patents that are that pertain to approved FDA products and therefore you won’t get the Orange Book listing until the product is approved by the FDA.

Got it. Thank you. Thanks very much Mary. Anne.

You’re welcome Lei.

[Operator Instructions] I’m showing no further question in queue at this time. I would like to turn the call back to Ms. Murphy for closing remarks.

Thank you for joining us today. Please note, we will be presenting at the Wells Fargo Securities 2018 Healthcare Conference on September 5th at Boston. With that we will end today's call.

Thank you, ladies and gentlemen. This concludes today’s conference. Thank you for participating.