Good morning, ladies and gentlemen. And welcome to Lantheus Fourth Quarter Full Year 2021 Financial Results Conference Call. This is your Operator for today's call. Please note that all lines have been placed on mute to prevent any background noise. This call is being recorded for replay purposes. A replay of the webcast will be available in the Investor Section of the company's website, approximately two hours after the completion of the call and will be archived for 30 days. I'll now turn the call over to your host for today, Mark Kinarney, Senior Director of Investor Relations. Mark.

Thank you and good morning. Welcome to Lantheus' fourth quarter and full year 2021 financial results conference call. With me on today's call are Mary Anne Heino, our President and CEO, Bob Marshall, our Chief Financial Officer, and Paul Blanchfield, our Chief Commercial Officer. Mary Anne will begin the call with introductory remarks and then turn the call over to Paul to provide a commercial update. Bob will cover our financial results and provide 2022 financial guidance, and Mary Anne will provide closing remarks, and then we will open the call for Q&A. This morning, we issued a press release, which was furnished to the Securities and Exchange Commission under Form 8-K, reporting our fourth quarter and full year 2021 results. You can find our release in the investor section of our website at lantheus.com. For those of you not on the webcast, you can find the slide presentation on the Investors section of our website under the presentations tab. Before we get started, I would like to remind you that our comments during this call will include forward-looking statements. Actual results may differ materially from those indicated by forward-looking statements due to a variety of risks and uncertainties. In particular, the hospital staffing levels and the impact of COVID-19 on our business results and outlook continues to be a best estimate based on currently available information. Please note that we assume no obligation to update these forward-looking statements, except as required by applicable law, even if actual results or future expectations change materially, please refer to our SEC filings for a detailed discussion of these risks and uncertainties. Also discussions during this call will include certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures is also included on the Investors section of our website. With that it's my pleasure to now turn the call over to Mary Anne.

Thank you, Mark. And good morning to everyone joining us on today's call. I hope all of you are safe and healthy. 2021 was an incredibly exciting and productive year for Lantheus. As you can see from our fourth-quarter and full-year results, we have significantly progressed our strategy to accelerate growth, diversify our portfolio, and physician Lantheus as a category leader in the markets in which we compete 2021 was a year of significant achievement across our portfolio and I'll take a few minutes now to summarize our accomplishments. In our prostate cancer franchise, we launched two products in 2021. First PYLARIFY, which received priority review designation in December 2020 and was approved by the FDA in May as the first commercially available PSMA targeted PET imaging agent for prostate cancer. As a reminder, PYLARIFY is an f-18 labeled PET imaging agent that enables visualization of lymph nodes, bone, and soft tissue metastasis to determine the presence or absence of recurrent mid static PSMA avid prostate cancer. We've been thrilled with the progress of PYLARIFY launch, and I'm excited to announce that fourth quarter sales exceeded $35 million. During the quarter, we made outstanding progress across all our major business drivers, supply, contracting, market, access and customer adoption. We have significant momentum going into 2022 with market access and customer demands, continuing to be key drivers. Paul will give you further details on the launch to-date in a few minutes. Along with our efforts to launch PYLARIFY, we have also partnered with several companies, including Bear, Regeneron, and POINT Biopharma to embed the Simpolo Stat, FAT imaging, which I will refer to, as PYL, into their prostate cancer therapeutic trials to assess PSMA expression. Similarly, we've incorporated PYL into our own PSMA targeted therapeutic arrow phase 2 trial of 1095…

Thank you, Mary Anne. And good morning, everyone. During the fourth quarter, our commercial teams were productive in establishing PYLARIFY as the PSMA PET imaging agent of choice for the U.S. prostate cancer community, and growing DEFINITY while maintaining our market-leading position. Starting with the PYLARIFY launch, as Mary Anne mentioned, during our second full quarter since approval, we made significant progress across our major business drivers, supply, contracting, market access, and customer adoption. This momentum has translated into fourth quarter sales of $36 million and full-year sales of $44 million. We expanded our PET manufacturing facility, or PMF network from 18 to 21 activated sites, which in turn increased geographic coverage for the share of the U.S. population we can reach through this network from 2/3 to now, approximately 80%. We also invested in our capacity at existing PMF sites by adding additional synthesis boxes and securing additional time on cyclotrons, while still selectively flying doses into certain markets, including Florida, Colorado, and Utah, in advance of PMF activation in these remaining regions. This facilitates patients access to PYLARIFY, and it allows institutions to embed PYLARIFY into their prostate cancer workflow. Our broad manufacturing network, and increased capacity along with FA teams longer half-life enables us to deliver doses to adjacent geographies, allowing us to efficiently and continually meet the needs of our customers and we think will prove a competitive advantage when competition becomes available. In 2022, we will continue our efforts to increase PYLARIFY supply through ongoing geographic expansion, as well as increased capacity at existing sites. Regarding market access, specifically coverage coding and payment, our pass-through application to the Centers for Medicare & Medicaid Services or CMS, was granted in November and went into effect January 1st, 2022 transitional pass-through payment status enables traditional Medicare to…

Thank you, Paul. And good morning, everyone. I will provide highlights of the fourth quarter and full-year financials focusing on adjusted results, unless otherwise noted. Turning now to the results. Revenue for the fourth quarter was $129.6 million, an increase of 37.6% over the prior year quarter, a comparison that includes our now divested Puerto Rico operation. On a year-to-date basis, revenue for the full year was $425.2 million, an increase of 25.3% on a similar comparison. Beginning with precision diagnostics. Revenue of $87 million was 0.8% higher for the prior year quarter. Sales of DEFINITY, net of rebates and allowances, were $59.3 million or 6.1% higher as compared to the prior year quarter. DEFINITY closed out 2021 with $232.8 million of net sales, an increase of 18.8% over the prior year. And TechneLite net revenue was $22 million down 1.5% from the prior year quarter due to an exited Radio pharmacy contract, which occurred at the start of Q3 2021, offset in part by opportunistic generator sales to a key partner of $2.2 million. During 2021, opportunistic generator sales contributed a total of $6.1 million of TechneLite total $91.3 million, which was up 7.5% year-over-year. Within other precision diagnostics, Xenon's performance has continued at similar levels, steam throughout 2021 and since the start of the pandemic. Radiopharmaceutical oncology contributed $35.7 million of sales in the quarter, up 1,300% from the prior year quarter. Attributable to you accelerating PYLARIFY sales as noted by Paul earlier. As was the case in Q3, AZEDRA was down sequentially, as usage remains more susceptible to hospital access for both patients and sales representatives during heightened measures to control COVID-19 surges. Lastly, strategic partnerships and other revenue was $6.8 million up 29% in the prior year quarter, driven primarily by the RELISTOR royalty stream. Gross…

Thank you, Bob. In closing, 2021 was marked by the successful launch of PYLARIFY. And another solid year of revenue in market leadership for DEFINITY. We diversified our revenue stream and ended the year with nearly $100 million in cash. In 2021, we executed on our strategy to accelerate growth, diversify our portfolio, and position Lantheus as a category leader in the markets we serve. In 2022, we look to further establish PYLARIFY as the PSMA PET imaging agent of choice in the U.S.. prostate cancer community, maintain market leadership with our micro bubble franchise, execute strategic transactions in line with our portfolio objectives, and deliver on our financial objectives, which we believe will allow us to continue to deliver strong shareholder value. In closing, I would like to thank all Lantheus employees, for their dedication and commitment to our patients and their unfailing passion to our purpose, to find, fight and follow disease. It is their commitment that continues to make what we achieved possible. With that, Bob, Paul, and I, are now ready to take your questions. Operator, please go ahead.

Thank you. [Operator Instructions] Please standby as we compile the Q&A roster. And our first question comes from Danielle Antalffy from SVB Leerink, your line is now open.

Hi, good morning, guys. Thanks so much for taking the question and while on the quarter and guidance, that's amazing. So just curious. I appreciate you're increasing the TAM, number one, just what's the go-to-market if adding intermediate risk patients into the TAM changes that go-to-market strategy sort of what's the confidence that you can capture those patients? And also curious how you're thinking about penetration based on your guidance for PYLARIFY and where that can ultimately go in and how quickly. And then I have one follow-up.

Sure. Good morning Danyal and I am going to turn you over to Paul Blanchfield for that Question-and-Answer.

Thanks so much, Danielle. So as I mentioned, we've obviously been looking at the total addressable market and we've upped our view of that market to 220,000 scans on an annual basis. We've upped that based on, as I mentioned, the label that we have for the risk of metastases prior to definitive therapy, as well as guidelines for SNMMI and the NCCN, which have combined with medical practice, expanding how physicians and payers are looking at the use of PYLARIFY for the risk of metastasis to not just very high, but too high as well as intermediate. And so from a go-to-market model, we have always been viewed as looking at both the nuclear market as well as the referring physician market, meaning those that are actually doing the treating and the referring physicians that are writing the prescription. And so, it doesn't necessarily change our go-to-market model. But we will see that continued investment, as I highlighted, an expanded partnership with Palette Life Sciences, who will focus on in addition to our efforts, as well as that of our PMF partners to promote PYLARIFY in the referring physician space. And so it doesn't change our view of the market other than we believe it to be larger, but our go-to-market model remains consistent and we remain incredibly focused on promoting PYLARIFY to both the nuclear Imaging physicians, as well as referring physicians, and ensuring that our first and only commercially available PSMA PET imaging agent remains the product of choice.

Got it. Sorry. Go ahead.

I said with regard to the total addressable market, we obviously mentioned that it's north of $900 million with the guidance that Bob preferred view, we can do the math on what penetration that would be today, but we continue to see growth into this market going forward.

Got it. I'm sorry to interrupt you. So, just a follow-up question on that and that's related to competition and what you're seeing there I mean, seems a little silly to ask the question based on your guidance. But just any early indications on how the competition is impacting your PYLARIFY adoption?Thank you so much.

Absolutely. Well, today, we do remain the only commercially available PSMA PET imaging agent in the marketplace. We have contemplated competition. We are very well aware of competition that has been factored into our guidance. But currently we remain focused on maximizing the potential of PYLARIFY, both today and in the future to our promotional efforts through the launch of now, our AI, as we talked about in the fall. And so that's been factored into our progress to date and to our guidance going forward. But we remain focused on ensuring that PYLARIFY remains the best in class and preferred PSMA agent of choice

Thank you.

And thank you. And our next question comes from Zach Wiener from Jefferies. Your line is now open.

Hey, thanks for taking the question and congrats on a blow-away quarter year. I just have a few -- first on the PMF site cadence through the quarter and then expectations through 2022, where do you expect to get as the new year progresses? And then one, just if you could give some color on margin benefits from PYLARIFY, and then also from bringing the DEFINITY manufacturing in-house. The spread between the two. Thanks.,

Good morning. Thanks for your question. I think on your question around PMF, we've kind of talked from the start of the launch that this is a continual build-out that we will continue to focus on. Paul referenced what progress we made through year-end. And as he also referenced, we will continue to build out our PMF network to satisfy our needs in the marketplace, and that happens two ways. We look to continually add PMFs and then at the PMFs that we're already using, we add additional capacity by building in additional, what we call synthesis boxes, which are literally the manufacturing boxes in which PYLARIFY is made. So it's a great way to add additional capacity where you already are in addition to adding additional PMF s into our sites. As Paul mentioned in his comments, we're already covering approximately 90% of the U.S. and he mentioned the couple of different geographic regions where we are still flying doses into, and that we will additionally cover -- oh, I'm sorry, 80%. I over spoke there a little bit there. Correcting me in real time here. And as we look out across the rest of 2022, we'll continue to take that number higher to those areas that we can cover. So it is a continual build out and we'll keep you updated across the year. Bob and Paul, do you want to add any comments on to that?

No, Mary Anne, I think it's a build out. It's rolling out additional PMF, but it's also expanding capacity of those as we highlighted. So we're comfortable with our supply position, but continue to build that capacity, as the first and only commercially available agent.

I apologize. I think it was the contracting figure that was the 90% target that we had reached.

So, on that with regard to gross margin contribution, it is clearly being driven by PYLARIFY just sort of recap a handful over the numbers that we had. In the quarter gross margin was 56.5% and we were at 52.7% for the full-year. So you can see that as PYLARIFY is ramping, that clearly, it is one of the single largest drivers in the quarter of that ramp, which is also what informs our 2022 gross margin model. Now, with regard to what drives in -- what continues to drive it, I've always sort of mentioned it would come from a handful of things. It would come from continued DEFINITY growth. It would come from ramping PYLARIFY, which clearly you can see. We have good confidence, as we look forward with regard to our on-campus manufacturing facility in terms of Genesis, early days, in terms of rolling out product, it will be a contributor. As we go further into the future this is about dual supply, so we will be working inventory in and amongst the product that we have also getting from our partner at JHS. So that contribution will be a slower contributor, but still will be there as we look to leverage that investment.

That's helpful. And then one more, just on DEFINITY room temperature. Going forward, I guess in 2022, where do you expect the mix to be between the legacy product and RT version? And is there any margin benefits to RT or ASP increase to the RT versus the legacy product? Thanks for taking the question.

You're welcome, Zach. And we've never spoken to an intentional mix of the two products or trying to create an intentional mix out in the marketplace. Our strategy with adding the two formulations has always been one of customer choice and offering customer choice. Because as the market leader we feel that's important. There isn't competitive product out there that has a room temperature formulation. And so we brought RT to market to make sure that we could cover choice in the market. We also felt that was important because from again, from a customer perspective, in our partnerships and in the partnerships that we have of these, in those cases, the product is typically part of a complex product kit and we felt it was important to have a room temperature formulation available as part of a complex product kit. But we have never had as a strategy, had it as part of our strategy to force product into the market in any percentage. So you'll never hear us speaking to that and we don't also speak to any margin benefit or pricing difference between the two products, so that is not a strategy of ours either.

Understood, thank you.

Thank you? And our next question comes from Lawrence Solow from CJS Securities. Your line is now open.

Great, awesome. Thank you very much. Congratulations, really, really strong start for PYLARIFY good start. Just a couple of follow-ups on DEFINITY. It sounds like sluggishness seems pretty temporary. I suppose related to stamping, which I think the staffing as she was kinda really gotten crazy early in the quarter, but it seems to have calm down. So hopefully, I think we could get a rebound depending. It doesn't sound like anything has changed for your longer-term outlook, you still think it's low double-digit kind of grower. And is that a fair statement?

As Bob? Good morning. Yes. Our guidance does contemplate the DEFINITY opportunity as being what we've always expected to be. This is why say that it's trying to give you a range that incorporates the early quarter Q1 read so that spillover of what had been Delta and then Omicron and the related impacts in the early part of the quarter. And then as we would then see it then kind of recapture it's trajectory into the -- in Q2, Q3, Q4 as we look forward. So no, we still firmly believe in the opportunity maybe as DEFINITY, we are market leader and we intend to continue to invest to drive that market share and protect it.

Right. And on the Genesis on e-health product. I think, all along that was going to be able to dual source in the beginning or for a while. And it sounds like a slow ramp at first. But over time, do you expect this maybe not to be exclusive, but do you expect -- maybe, I don't know. What's your long-term plan? Do you eventually, bring most of it in-house? Is that the goal or can you talk -- speak to that or?

Well, we're not providing specific mix, if you will of how because, again, this is also about protecting and dual-sourcing a very important product to our portfolio, so yes, I mean, again, early days with the product we have manufactured inventory on the shelf that we can start to integrate into the flow. And we will work with mission teams and get the expertise behind it, and the capacity opportunity with that facility is significant so that we have the ability to provide for our own total volume and growth. But at the same time, I think it's also important from a business continuity perspective to be able to continue to leverage that long seeing partnership that we've had. And we think that it will always be a mix.

Just a couple of on PYLARIFY, just really quick. I know you've never given the actual unit price, but just from a high level, your pricing sort of in the range you thought it would be, that. And the second question is just a technicality. On the CVR, on the contingent value rights, I guess the payments are done after the year, does that come off on the P&L, how is that sort of accounted for?

So, I'll start with the CVR and then, I don't know maybe Paul or Mary Anne you can take up the price question. But with regard to the CVR, the way they work, just to remind people, is that it's based on sales over a $100 million in 2022 and over a $150 million in 2023. And they are capped at 19.9% of total consideration in the Progenics deal. So as such, our obligation is to accrue based on the Monte Carlo simulation, the potential liability that the company would have. And so that -- obviously you do that as you bring your forecast into those Monte Carlo Analysis, which are done by third-parties. And we recorded that through the P&L. You saw that come through the P&L in Q4 in the GAAP P&L. And of course, we evaluate those every single quarter and true them up from a -- from the perspective of, will they pay out? And so, you can see in the K this morning, the total accumulated value that's there -- that will continue based on time value of money to move around a little bit. But the cash payment itself would then become -- becomes a balance sheet item, where the contingent liability then becomes cash in what wouldn't likely be the first part of 2023 and 2024, respectively depending on how the CVR is actually accrue.

And, Larry, as you know, it has been our long-standing policy in the win, that we do not speak to pricing. I will tell you that as a matter of public record, because we deal with PMFs as an agency, that the pricing of the product does get publicly reported through CMS on a trailing basis, until it does get publicly reported. So I will say that the pricing of the products are the cross competitive products are fairly similar.

Got it. Okay. Great. Thank you very much.

And thank you. And I am showing no further questions. I would now like to go ahead and close the call. This concludes today's conference call. Thank you for participating. You may disconnect.