Lantheus Holdings Inc (LNTH) 2023 Q2 法說會逐字稿

Good morning. Welcome to the Lantheus Second Quarter 2023 Financial Results Conference Call. This is your operator for today's call. (Operator Instructions) This call is being recorded for replay purposes. A replay of the webcast will be available in the Investors section of the company's website approximately 2 hours after the completion of the call and will be archived for at least 30 days.

I will now turn the call over to your host for today, Mark Kinarney, Vice President of the Investor Relations. Mark?

Thank you. Good morning, and welcome to today's call. With me are Mary Anne Heino, our CEO; Paul Blanchfield, our President; and Bob Marshall, our Chief Financial Officer. Mary Anne will begin the call with introductory remarks and then turn the call over to Paul to provide a strategic and operational update. Bob will cover our financial results and provide updated guidance. 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 second quarter 2023 results. The release and today's slide presentation are in the Investors section of our website at lantheus.com. I would like to remind you that any comments made during our call today could include forward-looking statements. Actual results may differ materially from these statements due to a variety of risks and uncertainties.

Please note that we assume no obligation to update our commentary or any 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.

Discussions during this call will also include certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures is also included on the Investors section of our website.

It is my pleasure to now turn the call over to our CEO, Mary Anne.

Thank you, Mark, and good morning to everyone. I am so pleased to share that Lantheus delivered yet another solid quarter with reported revenue of $321.7 million, up 44% year-over-year. We continue to focus on our commitment to innovation and operational excellence, and ultimately, to making a meaningful difference in patients' lives. In fact, in the first half of 2023, we impacted a life of more than 3 million patients.

Outside the U.S., we are pleased to note that our PSMA PET imaging agent will soon be available to prostate cancer patients in Europe. Curium, our European partner, announced last week that they have received marketing authorization for Pylclari from the European Commission.

Lantheus has been a recognized leader in nuclear medicine for more than 65 years, and we believe our differentiated capabilities uniquely support our position as the leading radiopharmaceutical focused company.

Our expertise and commitment to bringing unique products of differentiated clinical value are why we are the clear market leader with both PSMA PET with PYLARIFY and with our ultrasound-enhancing agent DEFINITY. It's an inspiring time for our industry as the renaissance underway in radiopharmaceuticals was clearly evident at the recent Society of Nuclear Medicine and Molecular Imaging or SNMMI, annual meeting.

The breadth of attendees from across medical specialties and the increased focus on radiopharmaceuticals, including diagnostics, biomarkers and therapeutics, speaks to the increased adoption and importance of these innovative products to the health care community.

Our deep expertise in radiopharmaceuticals and our proven ability to successfully commercialize products have made us the partner of choice in this space and enabled us to expand our pipeline with late-stage radio therapeutic candidates. This includes PNT2002 for prostate cancer and PNT2003 for neuroendocrine tumors. We also have earlier-stage assets, such as MK-6240, our F 18 labeled PET diagnostic imaging agent targeting Tau tangles for Alzheimer's disease and our novel fibroblast activation protein alpha or fat imaging agent, which recently entered the clinic.

It's an exciting time to be in radiopharmaceuticals and as the leading radiopharmaceutical focused company, we are committed to advancing our portfolio of leading products and late-stage product candidates to deliver better patient outcomes for those we serve.

Before I turn the call over to Paul, I would like to take a minute to note recent developments in the PSMA PET imaging class, including the recent approval of an additional F 18 based agent. We believe the health care community is well served to have a broad set of choices available. We're also confident that PSMA PET with PYLARIFY offers clear clinical and commercial differentiation.

Clinically, PYLARIFY offers the best combination of both isotope and F 18 and our unique and very PSMA targeting ligand. It's important to note that each of the approved F 18 PSMA agents are new chemical entities with unique pharmacokinetics as well as corresponding pharmacodynamic profiles.

We believe the clinical value of PYLARIFY was well demonstrated in our pivotal trials. These trials for PYLARIFY, CONDOR and OSPREY, both demonstrated high predictive value, positive predictive value, which, by definition, correlates to a low rate of false positives.

Additionally, it is worth noting that the newly approved F 18 PSMA agent in the U.S. includes an explicit warning and precaution in its label that recommends because of the associated risk of false positive interpretation that health care professionals should consider multidisciplinary consultation and histopathological confirmation or biopsy when clinical decision-making hinges on uptake only in the prostate and/or prostate bed region or only on uptake interpreted as borderline in patients with suspected recurrence. We believe the advantages of PSMA PET with PYLARIFY are clear, robust and well documented in scientific literature and our package insert.

With that, I'll now turn the call over to Paul to provide a strategic and operational update.

Thank you, Mary Anne, and good morning, everyone. Leading the way for Lantheus is PYLARIFY, which delivered sales of $210.5 million, representing 61.7% year-over-year growth and approximately 8% sequential growth from the first quarter of 2023, with the vast majority of our sequential growth driven by our existing accounts.

We believe PSMA with PYLARIFY offers sustainable competitive advantages that will enable it to remain the #1 PSMA PET imaging agent, even with the approval of additional competing agents. PYLARIFY's clinical differentiation includes being the only PSMA PET imaging agent to have measured change in intended patient management for 99% of enrolled patients in a registrational biochemical recurrence or BCR study with results having been published in a peer-reviewed scientific journal.

Our pivotal Phase III CONDOR study demonstrated that nearly 2/3 of BCR patients with negative or equivocal conventional imaging results at inclusion had a change in intended management after being scanned with PYLARIFY. PYLARIFY also demonstrated high to very high inter and intra reader agreement, which we believe provides confidence in the consistent interpretation of PSMA PET with PYLARIFY scans.

Scientific literature broadly supports F 18s image clarity advantages versus other isotopes used in PSMA PET imaging. Our pivotal studies, scientific research, KOL feedback and guidelines, all demonstrate the differentiated clinical value of PSMA PET with PYLARIFY. PYLARIFY also has the largest dedicated commercial team and significant adoption as demonstrated by the more than 200,000 PYLARIFY scans performed since launch. -- broad payer access, including transitional pass-through status, a geographically diverse multi-partner PMF supply network, including both commercial and academic partners and sustained supply reliability.

Finally, PYLARIFY has a nearly 2-hour half-life versus 68 minutes for Gallium 68 products, which we believe offers more flexible dose administration advantages for imaging centers and the patients they serve. There have been promising developments in the reimbursement landscape as the centers for Medicaid and Medicare Services, or CMS, recently requested public comments on proposed hospital outpatient prospective payment system.

CMS put forth several proposals, including for radiopharmaceuticals for the first time since 2008, separate payment for radiopharmaceutical diagnostics following expiration of transitional pass-through status. We are working with our industry partners and other stakeholders to strongly advocate that CMS adopt this important proposal while simultaneously working with Congress to pass the FIND Act to ensure that patients maintain access to innovative diagnostic radiopharmaceuticals, including PYLARIFY.

We are positive about the future and the impact we continue to have on men living with prostate cancer.

In our microbubble business, DEFINITY maintained its strong momentum with second quarter sales of $70.5 million, up 13.2% year-over-year and remain the clear market leader in the U.S. ultrasound-enhancing agent market. Contributing to year-over-year growth was an increase in overall health system procedure volume as patient visits continue to rebound in this post-pandemic environment. We expect these trends, combined with our continued focus on educational programs and promotional efforts to help sustain our momentum in the second half of the year.

As Mary Anne mentioned, we have continued to expand our portfolio and pipeline, including PSMA-targeted radio therapeutics. To realize this potential, we continue to work closely with our partner, POINT Biopharma to progress PNT2002 across R&D, supply chain, manufacturing and commercial readiness.

We received fast track designation from the FDA in April and expect to read out top line data from splash the Phase III registrational trial later this year. Splash is designed to evaluate the efficacy and safety of PNT2002 in patients with metastatic castrate-resistant prostate cancer who have progressed following treatment with an androgen receptor pathway inhibitor or ARPI.

The study has 3 phases: dosimetry, randomized treatment and long-term follow-up. Splash commenced with a 27-patient safety and dosimetry lead-in, after which patients were randomized 2:1 to receive either PNT2002 or the alternate ARPI therapies like abiraterone or enzalutamide. In total, 412 patients were randomized. The primary endpoint is radiographic or imaging-based progression-free survival as assessed by blinded independent central review.

At the time of primary endpoint analysis, we will also perform an interim analysis on overall survival, which could provide important information for our future discussions with the FDA. As is custom in long-term oncology studies, final overall survival analysis will be performed when data have matured sufficiently.

When we announced our collaboration with POINT in November, we estimated a U.S. total addressable market for PSMA radiopharmaceuticals of $3.5 billion. With the approved PSMA radiotherapy set to exceed $1 billion in sales this year, even amidst supply disruptions, we believe this market could be larger. Needless to say, we look forward to progressing PNT2002 for men with prostate cancer and to sharing top line data in the second half of this year.

I'm pleased to note that this quarter, we completed our integration of Cerveau Technologies and its asset MK-6240, a clinical-stage PET imaging agent for Alzheimer's disease, which is already being used as a biomarker in more than 60 clinical trials. Tau imaging has the potential to play an important role in patient staging and patient selection for future treatments.

We are particularly encouraged by the proposed guidelines from the Alzheimer's Association and the National Institute on Aging for diagnosis and staging of Alzheimer's disease that incorporates Tau PET as well as the approval and regulatory submission of new therapies, such as lecanemab and donanemab. We look forward to sharing more progress on MK-6240 and its potential in the future.

We have also progressed our novel SAP alpha-targeted copper-64 label PET imaging agent. In collaboration with ratio Therapeutics, we initiated a Phase I study evaluating the pharmacokinetics, biodistribution and radiation dosimetry in adult healthy volunteers.

SAP is overexpressed in the tumor micro environment, specifically in cancer-associated fibroblasts, which are believed to modulate tumor progression and immune response. The ubiquitous expression of FAP across nearly all epithelial-derived cancers, paired with the low expression in normal tissues, makes it a unique target to focus on for tumor imaging for a wide variety of cancers, including breast, pancreatic, lung and stomach cancer. Following the completion of the healthy volunteer study, we plan to progress to a Phase I study in cancer patients.

I will now turn the call over to Bob for a financial update.

Thank you, Paul, and good morning. I will provide highlights of the second quarter financials, focusing on adjusted results unless otherwise noted.

Net revenue for the second quarter was $321.7 million, an increase of $98 million or 43.8% over the prior year period. Earnings per share for the second quarter were $1.54, an increase of $0.66 or 73.8% over the prior year.

Turning now to the details, beginning with radiopharmaceutical oncology. The category contributed revenue of $211.3 million of sales, up 61.1% over the prior year, with PYLARIFY delivering $210.5 million of sales, up 61.7% over the year-over-year.

Precision Diagnostics recorded $97.6 million, up 12% from the prior year quarter. Sales of DEFINITY were $70.5 million, 13.2% higher as compared to the prior year quarter. TechneLite revenue was $21.6 million, up 11.1% from the prior year due to mainly to the realization of opportunistic sales in the quarter.

Lastly, strategic partnerships and other revenue was $12.8 million, driven primarily by MK-6240 and the RELISTOR royalty. As was noted in this morning's RELISTOR press release, we sold our rights to the RELISTOR quarterly net sales royalty stream, though we have retained the rights to any future potential milestone payments. I will provide some additional details just ahead of our updated guidance discussion.

Gross profit margin for the second quarter was 69.6%, an increase of 359 basis points over the second quarter 2022 results on a similar basis. As has been the case in recent quarters, the increase is due mainly to favorable volume and product mix led by PYLARIFY and DEFINITY, but also lower logistics expenses, partially offset by generally higher overhead costs.

Operating expenses were 345 basis points favorable over the prior year at 22.9% of revenue, which was in line with our previously guided expense levels.

As was noted last quarter, we continue to invest in sales and marketing efforts with an expansion of our PYLARIFY sales force intended to support and expand adoption, which demonstrates our confidence in the underlying PSMA PET imaging market. Within G&A and R&D, while the ERP implementation and advancement of our pipeline continue, we are also investing in infrastructure to support PYLARIFY's growth in addition to activities associated with the point and MK-6240 programs.

Operating profit for the quarter was $150.1 million, an increase of 69.4% over the same period prior year. Total adjustments in the quarter totaled $25.9 million before taxes. Of this amount, $12.7 million and $12.4 million of expense are associated with noncash stock and incentive plans and acquired intangible amortization, respectively.

Also, during the quarter, we reduced our net contingent liability accrual by $7.6 million and recorded a fixed asset impairment of $6 million. The remainder is related to acquisition and other nonrecurring expenses. Our effective tax rate was 26.7% in the quarter. The resulting reported net income for the second quarter was $94.1 million and net income of $109.6 million on an adjusted basis, an increase of 74.3% over the prior year quarter. GAAP fully diluted earnings per share were $1.33 and $1.54 on an adjusted basis, an increase of 73.8% over the prior year quarter.

Now turning to cash flow. Second quarter operating cash flow was a use of $32.3 million as compared to cash provided of $72.6 million in Q2 2022. Capital expenditures totaled $10.7 million, in line with expectations. Free cash flow, which we define as operating cash flow less capital expenditures, was a use of $43 million, a decrease of $111.2 million from the prior year period.

During the quarter, the company satisfied its obligation under the contingent value rights issued in the Progenics acquisition by paying $99.6 million, broken down between operating cash flows of $95.9 million and the balance within financing cash flows.

Additionally, the company remitted both Q1 and Q2 tax payments in April and June, respectively, totaling $44.5 million. Cash and cash equivalents net of restricted cash, stood at $414.1 million at quarter end. We continue to have access to our $350 million undrawn bank revolver and are comfortable with our very strong liquidity position.

Before turning to guidance, I would like to provide some additional details regarding the sale of the RELISTOR royalty stream. Lantheus retains the right to any future milestone payments and received an initial cash payment of approximately $98 million before tax in exchange for the royalties. This action will result in a reduction of approximately $13 million of revenue and approximately $0.14 of earnings per share, both split equally between the third and fourth quarters of this year. Strategically, we believe this unlocks significant value today as we focus on our core businesses defined and follow disease to deliver better patient outcomes.

Turning now to our guidance for the third quarter and updated guidance for the full year, which incorporates the financial impact of the RELISTOR divestiture. We forecast revenue to be in the range of $310 million to $315 million for the third quarter of 2023, an increase of approximately 30% and 32% over the third quarter of 2022. We are updating our full year view to take into consideration second quarter performance as well as the sale of RELISTOR royalty stream.

Therefore, we now forecast full year revenue to be in the range of $1.245 billion to $1.27 billion from the prior range of $1.23 billion to $1.27 billion. The implied PYLARIFY full year range is now $835 million to $860 million, up from the prior range of $820 million to $860 million. We expect DEFINITY to continue its momentum and also expect MK-6240 to now contribute $15 million of full year revenues rather than the prior guide of $10 million.

Turning now to earnings. Adjusted EPS should be in the range of $1.30 to $1.35 for the third quarter as we continue to invest in additional sales and marketing efforts as well as infrastructure to support company growth. We now expect adjusted full year EPS to be in the range of $5.60 to $5.70 per share versus the prior range of $5.45 to $5.70.

With that, let me turn the call back over to Mary Anne.

Thank you, Bob. In closing, the second quarter was yet another solid quarter anchored by our market-leading product, PYLARIFY and DEFINITY. Our commitment to execution and excellence are the cornerstones on which we operate.

At Lantheus, we are driven by our purpose to find, fight and follow disease to deliver better patient outcomes. We believe that radiopharmaceuticals present significant potential, both diagnostically and therapeutically in what has become a modernized approach to personalized medicine. You see if a patient is avid for the target, you treat the disease at the target and then you monitor patient response via imaging.

By investing in innovative diagnostics and therapeutics, we are positioning Lantheus to remain the leading radio pharmacy focused company. Products with sustainable advantages such as PYLARIFY and DEFINITY have been the key to our long-standing success, and we are proud to be able to equip health care professionals with the tools they need to make a significant difference in the lives of patients.

With that, Bob, Paul and I are now ready to take your questions. Operator, please go ahead.

(Operator Instructions) Your first question, it comes from the line of Roanna Ruiz from Leerink Partners.

So wanted to ask about your guidance raise first off. What are the main drivers behind that? And could you talk a bit about your level of confidence in reaching possibly the high end of that range?

So I'll start and then people can contribute. So I mean, yes, you've noted the fact that, yes, by removing the RELISTOR royalty stream out of the back half of the year that -- and keeping our top end from the prior guide that, that is effectively the rate that we're trying to point you to.

Where it's coming from, obviously, is an outperformance in Q2. We're really pleased that it was broad-based across all 3 of the categories. And as we look to the future, we have a lot of confidence. And that was one of the reasons that we did raise the bottom end of the PYLARIFY range up more than double the -- over the beat of what we had provided this guidance in the prior quarter.

So from there, those are, I think, the main drivers of the revenue guidance performance. And if you look at the EPS part of it, it's similar. I mean, the performance on EPS is also an accumulation of our outperformance in Q2, which then allows us to continue to invest in the business, which I think continues to demonstrate our confidence in driving growth.

Maybe I'll just add, Bob, very much agree with that. I think we're pleased with the continued adoption, specifically of PYLARIFY, including its position as the #1 PSMA PET imaging agent. We believe it is clinically and commercially differentiated. Obviously, we are cognizant that we have new competition over the last couple of weeks. That's been expected. And indeed, we believe that physicians in prostate cancer patients are well served to have a broad set of choices available.

The additional voice and awareness will help promote the overall benefit of PSMA PET for prostate cancer patients. And as the clear market leader, we believe that we can benefit from that. We do believe our product is clinically and commercially differentiated. It is obviously a dynamic market, but we remain confident about the potential for PYLARIFY and the overall PSMA PET imaging category.

Roanna, I'll just add one sort of 2 comments here that I'd like everyone to hear. And the first is our confidence. And as Bob said, effectively by having to remove relator revenue and the -- so the EPS in the back half of the year, that is an effect a raise to what our prime guidance was. And you also see our bottom guidance coming up. And this, I think, relates to my second point.

First, we are incredibly confident in what we are accomplishing in the market here. And we're very also pleased to see the markets rebound, especially the return of significant patient volume to the DEFINITY market. But the second thing that we are really attending to as a team is trying to be tighter in the guidance that we offer you so that you have more -- you have better line of sight to what we're anticipating for the business and you can build your models about that. So I'd say that's the other concerted effort that you see with the guidance that we offered here.

And for your next question, it comes from the line of Yuan Zhi from B. Riley.

So my first one is, we saw the commercial launch of another F 18 based PSMA PET imaging agent, POSLUMA, at EANM Conference, and thank you for hosting me at your training session during the conference. Investors have been asking us about the difference between PYLARIFY and this newer one, POSLUMA. For these 2 moleculars, can you please comment on the clinical data presented so far between these 2? Is there any clinically meaningful difference, understand they are not compared in the same trial? Then I have a quick follow-up.

No, thank you for the question. I guess I'll take this first. First, let me say, I know there's been a lot of chatter from the market about the F 18 product being alike. And it's interesting at this time, and I'll comment. But I really wish the more of the chatter was about what we're doing for patients and what PSMA imaging represents an innovation to the prostate cancer treatment community.

It's interesting about this feedback because it seems that the generation of it is from one of the Gallium PSMA agent offers into the marketplace, and that makes it fairly ironic, and I'll explain why. The 2 commercially available Gallium PSMA agents in the U.S. both employed a 505(b)(2) regulatory approach to seek approval.

Essentially, they referenced the safety and efficacy data generated by UCLA and UCSF and then supplement and completed a bridging PK study to demonstrate their equivalency to those academic products. In direct contrast, the 2 F 18 PSMA agents employed a 505(b)1 reg cap or an NDA application in which essentially you must demonstrate that you were uniquely different from any other approved agents. The 2 F 18 approved agents do share a common isotope F 18. And I think as we noted in our comments, it's well supported with an abundance of scientific literature that F 18 generated images are clearer than those generated by Gallium.

The 2 F 18 agents are uniquely different in the PSMA targeting ligand that is attached to the F 18 isotope, and that conveys into important PK and PK differences, which we feel are well documented in the reported results of our 2 pivotal trials. In both those trials, we reported very high positive predictive value, which, again, as I noted earlier, correlates to low false positive rates in the trial.

So again, I think somewhat ironically, it'd be much more credible to say that the Gallium PSMA agents in the U.S. are alike. -- and the F 18 agents in the U.S. are uniquely different. We can go into more scientific discussion of the actual results of trials, but I think those are all well published. The pivotal trials are well published in peer-reviewed journals. And so they are there available for direct comparisons.

Got it. For further clarifications here we also heard comments from the other earnings calls that there are adjustments or changes in practice guidelines that do not favor F 18 based PSMA PET agents related to positive rates, particularly in bone lesions. Can you clarify if you have seen such changes, and we would appreciate any extra color?

Again, this is one I'm almost going to label as desperately seeking science because in looking at those comments, what we've come to appreciate is that the guidelines that are being referenced are the European guidelines. PYLARIFY was just approved in the European Commission, but is not yet included in guidelines. Those guidelines referenced the only PSMA, F 18 PSMA PET agent that is approved in Europe, which is an agent that is not approved in the U.S. nor under development in the U.S.

So why those guidelines would be referenced when you have such outstanding exemplary guidelines in the U.S. with the NCCN, SNMMI and AUA is somewhat bewildering to us. And I will -- I can confirm you fully that those guidelines, the U.S.-based guidelines from those exempt agencies have not changed their stance on PYLARIFY and its value in being used in PSMA PET imaging and in patient selection for PSMA-based therapeutics.

And for your next question, it comes from the line of Anthony Petrone from Mizuho Americas.

Once again, Anthony Petrone from Mizuho Americas.

Kyle, why don't we move forward and we can come back to Anthony?

Yes, sure. And your next question comes from the line of Richard Newitter from Truist Securities.

So I wanted to maybe just start off on PYLARIFY. Any color that you can give on how sales and performance tracked throughout the quarter and maybe even into the early part of 3Q. And specifically, did you see any changes? Or do you see the new competitor, the new F 18 competitor show up at all later in the 2Q?

Thanks for the question. I think we're confident in the trajectory that we saw over the course of the second quarter, which was in line with our overall expectations. As Bob had noted in the last quarter, we do see impacts from the holidays. So in the second quarter, it would be Memorial Day, we see natural impacts and we would expect over July 4 and then the future Labor Day, Thanksgiving and Christmas. But overall, we're very comfortable with the trends we saw. We're not going to comment on what we've seen in the third quarter to date, other than Bob reiterating the guidance and raising what we saw and expect for the second half of the year.

So overall, we remain confident. As I said earlier in my prepared remarks, we expected an additional competitor to come on board. We are very comfortable with our market-leading position as the #1 PSMA PET imaging agent. We are very pleased with the overall growth of the market that is now annualizing and our estimates approximately $1.2 billion. And that's versus the TAM that we shared back in January and noted there could be upside of $1.6 billion. So we still are very pleased with the uptake of PYLARIFY, the uptake of the overall market and where we're going to go going forward.

And Rich, this is Mary. I'm just going to add what I say at each target of these calls, I would like everyone to appreciate and something that we're thrilled at. We are still in a launch here. This is a brand-new market, a brand-new category, and we continue to be incredibly confident in what we see as a potential growth. As Paul mentioned, we're already dollarizing at $1.2 billion. We see minimally a TAM of $1.6 billion, and we see upside on that based on, again, evolving physician intent to use these products in their management, their diagnosis and management of prostate cancer.

And for your next question, it comes from the line of Matt Taylor from Jefferies.

So I wanted to see if you could comment a little bit further on some of the reimbursement developments that you talked about with CMS asking for public commentary and the FIND Act is kind of running in parallel. Maybe you could discuss some of the potential outcomes that you see there. Could you help us understand the timing of when some of these things had happened and maybe which of those you view as most likely?

Thanks for the question, Matt. So I think we were obviously pleased as we mentioned in our prepared remarks that CMS released their proposed OPPS rules for the calendar year 2024 in the middle of July. -- in those proposed rules for the first time since 2008, so 15 years, they included proposed rules, 5 of them that it would adjust the reimbursement for innovative radiopharmaceutical diagnostics and 2 of which would dramatically change the current transitional pass-through payment status effectively as they proposed potentially beginning next year.

And so we're naturally very pleased that CMS has heard the need for continued patient access to these innovative radiopharmaceutical diagnostics. And we are working with stakeholders as well as members across the industry to submit comments and to help CMS understand the importance of specifically a number of their proposed rules, which could go into effect in calendar year '24. Generally speaking, CMS finalizes its rules for the upcoming year in the early December, late November time frame, after which -- before which they receive comments. And so we're obviously working with them and our industry partners to ensure that they understand the importance and are optimistic that those could go into effect in next year.

That said, we've always said we have a multipronged approach, and so we are also supporting the FIND Act, both in the House and in the Senate. The FIND Act was reintroduced in the house on February 27. It has 34 cosponsors, including bipartisan support as the cosponsors. It was also referenced in a recent House Energy and Commerce Committee meeting on July 18, where there were several members made comments about the importance of supporting the FIND Act. And then it was introduced in the Senate on May 9 and also has a bipartisan sponsorship.

And so we're naturally hopeful that the FIND Act will be included in a legislative hearing this fall and being passed in due course. But as we said, we have a multipronged strategy, both through CMS and through the FIND Act as well as other commercial strategies to minimize the potential impact on pass-through and most importantly, ensure that prostate cancer patients continue to have access to innovative radiopharmaceuticals, diagnostics, including PYLARIFY, the market-leading agent.

And to your next question, it comes from the line of Anthony Petrone from Mizuho Americas.

Congrats on the strong quarter here. Maybe just high level on looking at the PSMA prostate cancer testing landscape and just in terms of share, as we go forward here, we do have the third competitor in the U.S. market. Maybe just thoughts on how share is going to trend now with 3 options in the marketplace?

And then one quick follow-up will be on Europe. Just a recap on how we should be thinking about the rollout of PYLARIFY in Europe? There's fewer pet facilities, but yet there's a higher incidence of prostate cancer. So how should we be thinking about the rollout in Europe? And I'll have one quick follow-up.

So Anthony, I'm going to start -- I'll speak to what our expectations are from a share perspective. Share is a fixed pool, it's 100%. So the only thing you know for sure is that any participants have to share that number. What we're really confident about is that we will remain the commanding leader in this marketplace from a market share perspective. For this quarter, we were reporting approximately 70% is our estimated share.

And again, I need to be clear about that because there is no -- unlike the pharmaceutical industry, there is no third party here that explicitly and very carefully follow and track market share. So we do have to estimate it. But our estimate is, again, 70% of the market, and we continue to be the market leader, and we will continue to be the market leader, which is a really great place to be.

For your Europe question, it's not one that we will answer specifically this time, although I really appreciate your comments about the infrastructure of PMS being less, but yet the incidence and prevalence for gentleman prostate cancer being higher. What I will say is we're really confident with our partner, Curium is the leading PMS provider. They have the largest network of PMS throughout Europe. And so that's, as you know, from our launch, that's an important, important access point that really once you have the infrastructure, then you can drive the demand. But it will be our partner doing that. So it would be really early and probably, I would say, inappropriate at this time for us to offer any projections there.

And for your next question, it comes from the line of Justin Walsh from JonesTrading.

[LNTH 1363 S] is still early, but I was wondering if you can comment on the potential advantages and disadvantages of copper-64 PET compared with fluorine 18 PET imaging. And sort of related to that, why use copper for targeting fat and flooring for PSMA. And is there some concern that the future entrance of copper-based PSMA agents could pressure PYLARIFY down the road?

I'm going to comment to your question generally, and then if we can absolutely jump deeper into the science [of it], but I think what you're seeing here for the larger marketplace is the intent to deploy a variety of isotopes and then exploit what are the individual differences between the different isotopes. Copper-64 is a really good isotope for PET. It has a short positron range, which is just a little bit longer than F 18 and a longer half-life. So remember, with the positron range, that's where you get clarity of image. So it has -- it's a little bit longer than F 18, but not noticeably. So you get that nice clear image. But with a longer half-life, you have really distinct commercial advantages about how to distribute your product.

And so I will say copper production has a long way to go in terms of scale up. Curium is the only company that we're aware with a commercial copper-64 products in the U.S., which is called the TechNet and that's an orphan indication. So the overall value moving that's available to that is probably lower. But again, I would point you to what we're seeing in the larger marketplace, and this goes to some of the alphas as well as some of the other isotopes.

The intent within radiopharmaceuticals to employ and deploy these isotopes across a variety of imaging and therapeutic products that really make for me, as I said earlier, my really personalized medicine -- and so that's kind of our stance. I won't do a direct comparison of F 18 to copper other than what I just talked to you about the positron range and then the half-life. But really, you always have to think about the full product. What is the isotope, -- what is the ligand or the -- what it's ever being chelated or conjugated and look at the total value being offered by that product.

And for your next question, it comes from the line of Larry Solow from CJS.

Just a clarification first and then a question. So your guidance essentially is going to $5.45, $5.70 to $5.74, $5.84, right, apples-for-apples, including RELISTOR, right?

It's $0.14 impact in the back half of the year. So it was a $5.60 to $5.70. So yes, that would be the equivalent…

It would be $5.74 or $5.84.

That would have been the equivalent. Yes, but you have to make sure.

Yes. Absolutely. Okay. Just a question on Paul, just a follow-up on just on adoption trends. As you go forward and more recently, are you -- is it more expansion on existing doctors you're getting new doctors or scans averages are they continuing to go upwards. And then also in terms of -- are you seeing more penetration in the -- for initial staging of high-risk patients or suspected bio recurrence? Is there a different fare where you have better penetration?

Larry, that was about 25 questions in 1. I'm going to turn to Paul.

Larry, thanks for the question. I think where we see clarify and really the added penetration, I think this has really followed a trend that we had expected. If we go back to what we talked about last year, we were really about adding additional accounts, and those were metrics that we shared as we were having more imaging centers, whether they be government facilities, hospitals or freestanding imaging centers adopt PYLARIFY and be able to offer it to their referring physicians.

I think what we've seen over the last couple of months and certainly in the second quarter was the -- there's only so many accounts we're going to be adding. And so our real focus has been driving adoption and raising awareness amongst referring physicians. That does include new physicians that have not yet adopted PSMA PET imaging, including with PYLARIFY. But I would say it's increasingly ensuring those physicians understand the breadth of patients with which they can prescribe and the benefits of PSMA Pet with PYLARIFY.

Naturally, the recurrent setting, where we had a previous conventional imaging pet imaging agent approved in that setting was an early adopter. I think we've seen increased adoption in the initial staging and going down from high -- very high risk to high risk to intermediate unfavorable as we would expect in a launch. And then naturally, with [Pavecto] being approved last year, we've also seen albeit minor, some scans to support that patient selection.

So I think things are generally following the trend that we would expect where that existing account growth or the activation of referring physicians has really been a key focus of ours. And as Bob mentioned, we've made investments in our sales and marketing demand-generating activities, which we think is appropriate given where we are, but also demonstrates the confidence in the growth potential to not only continue to grow this $1.2 billion category, but also expand what the potential is as guidelines in medical practice continues to evolve.

That was about 23 of your 2 questions.

And for your next question, it comes from the line of David Turkaly from JMP Securities.

Just looking at Slide 7 in the deck, and you talked a lot about the commercial and clinical differentiation of PYLARIFY, but we look at the warnings and precautions in the commentary there. And I really just love to get your thoughts on do doc-- do you assume that they're going to look at that and change their practice? Or do you have any precedent to look at where there was something like that clinically or a different label that actually impacted practice? Or do you feel like the docs are going to hid these warnings? Or is it something that -- any thoughts that you have on sort of what impact that might have would be great.

I think it's a really fair question, and I'll answer it this way. We are absolutely committed as we always have been as a company to operating within our kind of field of play, which in the United States reg market is your package insert your label. That is the basis for your right for promotion. The basis for your right for share, especially from a commercial perspective from sharing clinical data about your products, and we're incredibly committed to that. I think your comment about, will doctors really change their mind based on a single part of the label. I don't think so. I think what's much more relevant here is the clinical experience that physicians already have with PYLARIFY.

We've been in the market it's now over 2 years. And I think by any means measurable, any you would call this a blockbuster launch. And I say that -- I'm proud to say that, but I'm much more proud about why that happened. -- that happened because the level of innovation that was represented by PSMA imaging was correlated and matched by our commercial execution, the excellence with which we brought this product to physicians and to the market.

So I think that is really going to be much more the basis of how physicians choose going forward, what product to use when scanning their patients. When it is relevant to necessary, they do refer back to package inserts to make sure that their own practice is kind of in line with that. We brought particular attention to it today only because we've been offered significant feedback about the attempt to make a claim about F 18 agents in general being alike. And we wanted to clarify where the products are different. And as I said, most distinctively, they're different in that they're both their unique new chemical entities that both follow different paths to approval based on the construct of the isotope and the ligand that attached to it.

And I would just add, I do think this matters in the marketplace. I think clinical and commercial differentiation is important. We saw that with our early commercial competitor, where they were approved about 6 months after us. And if you look at the relative share position, those clinical and commercial differentiators do play out. We welcome as we've expected additional competition with another F 18 agent. But as a fourth-to-market agent, where PYLARIFY has a significant market leadership where over 200,000 patients have been scanned where this has been used in over 1,000 imaging centers that we've shared. We think we have a market-leading position with sustainable clinical and commercial advantages that will enable us to remain the market leader for many years to come.

And we have a follow-up question from Richard Newitter from Truist Securities.

I also have 2 quick ones here. Mary Anne, -- you had mentioned something about a slight change to your guidance, I think, either philosophy. With this updated guide, can you just refresh us on what that meant with a narrower band? And then just the second question is on the [SPLASH] trial. You're going to have Novartis' PSMA 4 trial probably read out before or around the same time. Investors are naturally going to ask or tried to compare between those trials. So Paul or anything you can say about differences between those trials that you'd highlight as people try to compare them? Is that fair? And what do you think would be a reasonable way to compare the [PMFs] primary endpoint.

You're welcome. So I'll take on your first question, Rich, with kind of what I was trying to convey. I think we have been -- again, we have been in through a pandemic and then through a launch, we have not -- we have had our guidance more reflect a wider range just because of the uncertainty of what was going on in the market with points during the launch, you just -- you know your products going well. You just don't know exactly where it's going.

We feel now, and this is what you're seeing in our guidance is on what of a tightening of the range, our confidence in having better line of sight to what our product is doing. And it's on both ends and DEFINITY, we're now confident that patient volume is coming back into that market. So the market now represents again the opportunity that it had before the pandemic. And so we have better line of sight in forecasting there. But we also feel as a company based on what has been our long-standing pattern of beating and raising on guidance that it was also fair to our analyst community to try to give a tighter view as to where we think we're heading. And Bob, and probably add here.

Yes, Rich, and I don't want you to take the impression that this is new. I actually made those kinds of comments that we were taking that kind of a shift in the view, just as Mary Anne just outlined over the last couple of quarters. So we're kind of continuing the trend here of what we had kind of came into the 2023 fiscal year with that kind of a view as we had continued to gain knowledge with a couple of years of experience under our belt, we can see things like holiday schedules and so forth that start to outline a clearer pattern for us to be able to give we think, intelligent and guidance ranges.

And to your second question, Rich, about the [FLASH], you are so right that people will be incredibly eager to compare not only the trial designs, but the trial results when you're talking about PSMA 4 and then land you're also correct or Mark intelligence would also suggest that the PSMA 4 data will read out at ESMO, which will proceed what we believe what is -- what will be the release and the availability of the SPLASH data.

I won't use this time here to try to compare actual trial designs. What I will say that is important is that both PSMA 4 and SPLASH are in the same patient population, which is a pre-chemo population and the -- any comparison to date has been between the FLASH dosimetry data, the lead-in data and the VISION trial data, which really are a different patient population. So we'll wait to see. I think the important outcomes that will be looked at will, of course, be radiographic progression and then OS. OS data will also trail a little bit because you by definition, you have to let that data mature. But I can assure you, there will be lots of discussion about these data, and there'll be many players in the marketplace who will want to understand how the data are different and what they say.

I will say, in general, though, and this is something you've heard us say before that from a radiopharmaceutical perspective, one of the things that we see as an absolute content in this market is the willingness to embrace additional products just because of the supply chains associated with these projects and products and like, there is more so than I'd say in other non-radiopharmaceutical categories, a willingness for physicians and a desire for physicians to have access to more than one type of product. And we think that will be very positive for PNT2002 and PNT2003.

And for your next question, we have a follow-up question from Roanna Ruiz of Leerink Partners.

So I wanted to check in about your contracts with the large PMF networks for a second. Like how long do some of these last, can you remind us, are you planning to add new ones in the near term or revamp some contracts? And could they help guarantee some exclusivity in terms of holding majority preferred morning-time manufacturing physicians for PYLARIFY and things like that.

Thanks, Roanna. I appreciate the question. So as we've shared in the past, we have a multichannel PMFs strategy across the U.S. We're currently working with 47 PMFs, up almost 75% year-over-year and are able to offer PYLARIFY. -- to a little over 95% of the U.S. population just based on drive times and where we do those.

A number of our PMF contracts, we shared publicly go out a number of years, including to 2027 and beyond. We are not exclusive to any individual PMF chain, although some of our partners are exclusive to us. We have been working for this for a number of years to ensure that PYLARIFY is remaining accessible, including in those predetermined manufacturing time slots that we've continued to work through and optimize as medical practice has become more clear. And so we feel very comfortable in our PMF position to be able to continue to provide the market-leading product at the times and days in which our customers require it.

We do naturally continue to work with our PMF partners to expand redundancy to create more supply. And we really think that's a unique value proposition that is not replicated by any other PSMA imaging agent, including recently approved F 18 competitors.

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