Lantheus Holdings Inc (LNTH) 2018 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen. Welcome to the Lantheus Holdings Second Quarter 2018 Earnings Conference Call. This is your operator for today's call. (Operator Instructions)

This call is being recorded for replay purposes. A replay of the audio webcast will be available in the investors section of the company's website approximately 2 hours after completion of the call and will be archived for 30 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 in 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 -- at 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 review of Q2, and Andrea will follow with an overview of our financial performance along with our 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 3-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'll 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 isotope 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 at NTP, they suggest they're 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 nearing 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, SHINE 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'll be back to review our recent progress on our 3-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'll 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 income for the second quarter of 2018 was $16.5 million, an increase of approximately 4% over last year, excluding the GE payment.

Second quarter interest expense totaled $4.3 million, which was unchanged from Q2 of last year. Net income for the second quarter was $9.7 million or $0.25 per diluted share compared with $13.6 million or $0.35 per diluted share for the second quarter of 2017. Adjusted net income for the second quarter of 2018 was $10.2 million or $0.26 per diluted share compared with $15.7 million or $0.40 per diluted share in the second quarter of last year. The decrease primarily reflects the impact of the GE payment and an increase in the tax provision following the release of our income tax valuation allowance in the fourth quarter of 2017.

Moving on to the balance sheet. As of June 30, 2018, we had cash and cash equivalents totaling $86.5 million. Borrowing capacity under our revolving credit facility remained at $75 million, making our total liquidity, including cash on hand, $161.5 million. This provides substantial support for our operating and strategic investment needs and represents a 22% improvement compared with the same period 1 year ago. Second quarter 2018 operating cash flow totaled $20.3 million compared with $20.6 million in Q2 of 2017.

Capital expenditures during the second quarter of 2018 were $5.6 million compared to $3.4 million in the second quarter of 2017, reflecting increased investment in some of our strategic programs.

Turning now to our guidance for the third quarter of 2018, we anticipate total revenue in the range of $82 million to $86 million, and adjusted EBITDA in the range of $18 million to $21 million. For the year, we are maintaining our guidance for revenue in the range of $337 million to $342 million, and for adjusted EBITDA, in the range of $85 million to $90 million.

With that, I will now turn the call back over to Mary Anne.

Thank you, Andrea. I will now provide some updates on our business performance and strategic programs.

On July 25, CMS published its proposed rules for 2019 HOPPS procedures. The proposed reimbursement rates for contracts 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 their contrast offers in echo procedures when needed. The final CMS HOPPS's 2019 rules are expected to be published in November.

Strategically, we have added to our patent to state for DEFINITY. In addition to the U.S. patents already granted through 2037 that covers certain factors of DEFINITY, we were recently granted 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 patients' 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 pharmacokinetic 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 less 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 SPA is not completed, we are at the stage of answering routine questions with the FDA. We believe we'll 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 site qualification visits. If an LVEF indication is approved, the addressable echo patient population in which DEFINITY could be used would approximately double, and we would have 3 years of marketing exclusivity for that new indication.

Additionally, the build-out of our in-house microbubble manufacturing capabilities at our Billerica campus remains on schedule. Once online, the facility will help to ensure reliable supply as well as improve our cost of goods sold and gross margin.

Regarding our PET product pipeline, earlier this week, we jointly announced with GE Healthcare the start of the second Phase III clinical trial for Flurpiridaz F 18, with the first patient enrolled in June. This agent is the focus of our collaboration and license agreement with GE Healthcare. This prospective open-label international multicenter trial for PET MPI will enroll up to 650 participants with the last patient's follow-up projected to occur in August 2020. The future economics of this collaboration provide for regulatory end-sales milestone payments, double-digit royalties on U.S. sales and single-digit royalties on sales outside of the U.S. and the option to co-promote the agent in the U.S. market.

Next step is our Phase III LMI 1195 program. 1195 is our fluorine 18-based PET agent that we believe represent a first-in-class and useful diagnostic tool for a population of patients at risk for sudden cardiac death. While we now anticipate we will initiate the trial in 2019, we have undertaken work with the FDA on an SPA for the planned single Phase III clinical trial. Addressing the third prong of our growth strategy, we are actively assessing external opportunities. Ideal opportunities will both complement our current capabilities and address current unmet patient or market needs.

In addition, we would prioritize assets that are or would soon be accretive to revenue and profit margins while improving cash flow. In closing, we are pleased with our business results to date and our progress on strategic programs, and we look forward to updating you in the coming quarters.

With that, Andrea and I are now ready to take your questions. Operator?

(Operator Instructions) Our first question comes from the line of Raj Denhoy with Jeffrey's.

This is Anthony in for Raj. I apologize, Mary Anne, I was muted. So maybe just to 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.

Sure. Anthony, let me answer your first question on TechneLite and that really -- you asked 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 in the call, SHINE is a -- 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 margins 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 the way that makes it most price efficient for us.

That's helpful. And then the follow-up. Again, on NTP, would you -- assuming 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 [last in man] and then you would get an analysis of the study thereafter? Or are you expecting a final readout, sort of, August 2020? Just a clarification on timing.

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 end order demand fulfillment, and so there is no way to catch up on orders [loft]. 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 at 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 the 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.

Our next question comes from Erin Wright with Crédit Suisse.

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

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 are strong supporter of the medical societies that are involved in that. I think, Erin, what you are referring to with the merging competitive landscape perhaps are the announcements 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 that generated it 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 the market changes next year, the year after or several years from now.

Okay. Great. And then 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 the M&A pipeline? Could you be in a position to close a deal or 2 by year-end?

Sure. So again, 2 very different questions. Our on-site 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 coal product, not one of our nuclear products. We are very much on schedule there. I may have described in a 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 1-year-plus in length. We will as we near completion, we'll undergo inspection by the FDA. And there, we'll (sic) [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 on-site manufacturing project. Your other question about M&A -- as I mentioned, on 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 their -- 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 to saying that I expect one of those deals to close next month or by the end of the year. Suffice to say when it does, we'll announce it and then I'll be more than glad to talk about it.

Our next question comes from Larry Solow with CJS Securities.

Mary, could you maybe just speak a little bit more to defend the any -- I assume, though, that any update on any 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. Is it just a matter of waiting out a few more quarters? And as we keep -- get one more quarter in the book on the filing, do you think eventually these sort of fears will wane? Or what are your thoughts on that?

Larry, I think your thoughts are a perfect example of what we are facing with the market and that is, my belief, is that many of the analysts who consider us are used to the pharmaceutical market, where in fact, we've seen historically, very significant drops in revenue of exclusive products 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 mirror what you see for a 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 the time of going generic was the most successful radiopharmaceutical ever commercialized in the U.S. market, was a product that certainly demonstrated what would be the pent-up demand to enter with a generic product. And yet, if you compare the post-genericization pattern of revenue sales and loss for that product, it is strikingly different from what you see post the genericization event we seen with products such as Prilosec and other major brands that have been in pharmaceutical market.

I'll offer 2 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 product is sold directly from our campus right into echocardiography labs, where it is stocked and it is used in fulfillment with a procedure and then billed out to Medicare or a third-party payer as part of a procedure. That differs in the following 2 very dramatic ways from a pharmaceutical product. Pharmaceutical products are uniformly -- I am going to say universally, but it's not exclusively distributed from large wholesalers, wherefore there is the possibility for very large scale switch on a very real time basis, as these wholesalers sometimes deliver 3 times a day to the pharmacies that they serve. So you have a very easy part of the channel where it's very easy to flip the supply going out to the customer.

Similarly, at the retail encounter between a patient and a pharmacist, you have the opportunity in real time for electronic switch of a prescription. So a patient -- and we're all patients ourselves -- a patient who approaches a pharmacy counter to fill a prescription, in real-time, it can be offered the opportunity to have that prescription instead filled with the generic form of the same product that they had, that their prescription notes, as long as it's AB-rated. And there is also -- there is very frequently an economic incentive for the patient to comply with that generic switch. Neither of those dynamics are applicable or relevant in the supply channel in which DEFINITY operates in that it is not a product that is ordered by prescription, nor it is a product that's housed by wholesalers, nor is there a point of electronic transaction where that decision can be changed. And we feel those factors, plus our work in protecting what we see as the patented facet of DEFINITY, will impact what will be the behavior of the market post 2000 -- mid-2019, when our first composition of patent -- matter patent expires. We also, just as a reminder, have an additional Orange Book patent which goes out to 2037, and based on that, that being included in the Orange Book, it'd require any potential generic filer of a DEFINITY -- potential DEFINITY generic product to use a paragraph for filing process with the FDA, which would automatically include notification to Lantheus, to myself, that they had -- there was the intent to -- attempt to bring a generic product to market. So I hope that answers part of your question. Happy to (inaudible) .

Absolutely. And I'm (inaudible) for the VIALMIX, obviously, that's a -- seems like a big advantage. How does the patent situation on that come into play? In other words, if somehow generic was able to get in on the composition matter patent expiration, they wouldn't be able to -- is the VIALMIX and (inaudible) a separate patent? Does that run out for a much further time? And that is seems to be an advantage of your products, they wouldn't, I guess, have access to a similar type thing, right?

Well, it's true in the following way. The VIALMIX is also a patented device, it is not an Orange Book-listed patent, but it is a USPTO listed patent and yet for -- we would defend those patents and 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, the DEFINITY trials, the year-by-year end started, I think looks like it's a little bit delayed on the SPA. Is that going to -- is there any particular reason why it's delayed other than just FDA back and forth? And would that -- could necessarily push out some of your R&D expense from '18 into future years?

It's -- so the answer is yes and yes, Larry. It is just routine back and forth with the FDA. We had assumed earlier in the year that we'd be completed by mid-year. We are not. But we do still anticipate we'll initiate the trial by year-end. Can that cause some expenses to float into '19 from '18? It's possible. We have not noted yet that we see any predictable movement of expenses but I'll -- I'll have a much better line of sight on that as we come closer to year end.

Okay, but there is no real benefit -- you sort of disbanding to date, obviously, is pretty much in line because it wouldn't have really accelerated, I guess, until you sort of got closer to the trial start date, right?

True. And I'll 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 aligns more clearly what the expectations are for the outcomes of the trial, that then lean toward 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 goalposts before the game starts, if you will. Just one other question. On TechneLite, sounds like you said but you were able to secure supplies to this quarter. If the -- if NTP is not back up by the -- by August or if that runs into the end of August, whatever that might be, is there a potential for some more impact on your sales going forward? I guess, that's still somewhat of an uncertainty?

So I just 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, yes, that you're able to -- yes, I'm sorry.

We mitigated the absence of NTP as one of our suppliers. We were able to mitigate [that announce of value sourcing more from our other suppliers].

Right now, we are -- based on our discussions with NTP, they are targeting a mid-August restart, so given that, that already puts us into the quarter, yes, I would anticipate that versus what is the normal run rate you'd see in other quarter, there will still be a slight revenue hit for TechneLite in this quarter. But as you heard Andrea say and as you heard then me reaffirm at the end of my comments, we are reaffirming full year guidance and we also offered our guidance for third quarter. And I think that we're trying to send a message with that as well that as a larger company level with all the puts and takes of our portfolio of products, we feel we can manage what we see as the -- as any remaining issue with TechneLite revenue related to supply outage.

And then just lastly, any color on the recent departure of the -- your head of commercial sales, Tim Healey, I think he left last week? Or that was in a case or any particular reason for that? Was that just agree to disagree and moved on to greener pastures or anything there?

No, we did separate -- Tim did separate from the company. I will, of course, not comment on employee matters. As Tim was a named executive officer, we did publish an AK announcing the day of his separation from the company. Just for everyone's awareness, my prior roll 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 in to me. Not saying they're going to like it, but they will have their old boss back.

Our next question comes from Lei Huang with Wells Fargo.

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?

I did not -- no, Lei, I did not say that. 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. All right, so it's possible your guidance assumes it comes back online sooner or later than August. You're just saying, here is what you've been told, mid-August restart. But your guidance may assume something different?

And -- so there is many scenarios that underlie how we fund -- how we come to final guidance and it includes, 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 a 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-high single-digit. One, I would 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, then I'm going to turn it over 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'm excluding those that are done on an emergency or crisis basis, those tend to lag in the full summer months because people postpone having those studies done until everyone's back from vacations and staff is fully back up and so you do normally see that. Having said that then, as you mentioned Lei, we do normally see kind of a stronger growth -- a growth behavior in the latter half of the year. It's really done as you can imagine driven by Q4, where we typically see a resurgence of echo studies, including those done with DEFINITY, and the kind of the recurrence of normally scheduled studies in our nuclear program.

Got it, okay, I guess, I was referring to like year-over-year growth. It looks like year-over-year, first half revenue growth was sort of in the low single digit, whereas in the back half of year, if we compared to the prior-year period, it looks like it's closer to -- at least the guidance looks like it's implying something closer to mid- to mid-high single-digit. So I was looking at year-over-year comparison, '18 versus '17.

So that fair, and so then I would say Lei, it's -- I think what's driving the math there is the fact that we also have the TechneLite outage in the first quarter of this year and we don't -- from a revenue planning perspective, we don't anticipate it continuing for the balance of the year. So that would have first half '18 versus first half '17, look weaker than second half '18 versus second half '17.

Got it, okay. And 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 '18 over first half '17, you should pull the $5 million onetime payment from GE out of '17 because it was a onetime nonrecurring milestone payment.

Yes, got it, yes. And then, along the same lines, just looking at your adjusted EBITDA margin, it looks like it was in the first half of 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, it looks like it would be slightly lower, call 25%, 26% or so. One, I want to make sure my math is in the ballpark and two, what's kind of causing that little dip in margin, first half '18 versus second half '18?

That's a very good question, very insightful, Lei. I think what's driving that -- the most causative contributor to that are the R&D programs, as we had released earlier in the year. We had seen some timing delay on some of those expenses and they have moved into the second half of the year. So there was already R&D expense planned 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 on DEFINITY. First, just to be clear, 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 matter patent you mentioned for the alternative formulation, is there anything else you can share on that at this point, in terms of the formulation or the timeline? I guess, we're typically thinking a composition matter patent having to do with a drug substance. But when you marry that with the term alternative formulation, it's not quite clear what it means.

And so I'm -- we're not trying to be unclear about that. I think the information 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 fit their needs in the clinics and for their patients. That's from a separate perspective. That doesn't indicate 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.

No -- I know I won't, I don't have anything to update on timeline. I will note, though, just to be clear, that the -- it's an Orange Book-awarded patent 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, the alternative formulation is approved by the FDA and then it will run out through 2035.

Got it, okay. So the patent has been issued by the U.S. patent office?

Patent has been issued, it will just -- it will not be listed in the Orange Book because the Orange Book 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.

(Operator Instructions) I'm showing no further questions in queue at this time. I would like to turn the call back to Miss 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 5 in Boston. With that, we will end today's call.

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