Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- PYLARIFY, Lantheus Holdings Inc (LNTH, Financial)'s PSMA PET imaging agent, is on track to reach blockbuster status with over $1 billion in sales in 2024.
- DEFINITY, the company's ultrasound-enhancing agent, saw a 14% year-over-year increase in sales, driven by market share gains and high market growth.
- The CMS decision to pay separately for specialized diagnostic radiopharmaceuticals starting January 1, 2025, is expected to enhance patient access and support innovation.
- Lantheus Holdings Inc (LNTH) has a strong pipeline with promising late-stage diagnostic product candidates for Alzheimer's disease, MK-6240 and NAV-4694.
- The company reported a significant increase in free cash flow, reaching $159.3 million, up $57.1 million from the previous year.
Negative Points
- PYLARIFY experienced a sequential revenue decline due to traditional third-quarter seasonality and net price impacts from strategic partnerships.
- The company's TechneLite revenue decreased by 12% due to opportunistic sales in the prior year not repeated in this year's third quarter.
- Operating expenses increased by 111 basis points, driven by higher R&D investments and sales and marketing efforts.
- The implied fourth-quarter guidance appears light, with expectations of increased R&D expenses impacting earnings.
- The reclassification of the company's 2027 convertible debt to a current liability may distort working capital statistics.
Q & A Highlights
Q: Could you talk about the factors behind PYLARIFY's 3Q revenues and how this should flow into the rest of the year?
A: Paul Blanchfield, President, explained that PYLARIFY grew 20% year over year in Q3 and is on track to grow mid-20% in 2024, reaching blockbuster status. The sequential decline was due to traditional third-quarter seasonality, net price impact from strategic partnerships, and intentional tradeoffs due to product availability. They expect to remain the PSMA PET imaging agent of choice and grow revenue sequentially in Q4.
Q: Can you clarify the CMS reimbursement rates for 2025 and the implied Q4 guidance?
A: Paul Blanchfield confirmed that CMS will pay separately for radiopharmaceutical diagnostics above a $630-day arithmetic mean cost, with PYLARIFY's 2025 payment rate matching its current rate. Robert Marshall, CFO, noted that Q4 revenue is expected to be higher than Q3, with PYLARIFY on track for mid-20% growth for the year. The step-down in EPS from Q3 to Q4 is due to increased R&D expenses.
Q: Why use the term "sustain" instead of "grow" for PYLARIFY's $1 billion franchise in 2025?
A: Brian Markison, CEO, clarified that they anticipate volume growth for PYLARIFY next year. Paul Blanchfield added that strategic partnerships have caused net price compression, but they expect the market to grow with increasing incidence, prevalence, and adoption of PSMA PET imaging.
Q: Can you provide more details on the Alzheimer's diagnostic pipeline and its differentiation from current options?
A: Jeff Humphrey, Chief Medical Officer, highlighted that their Alzheimer's diagnostics, MK-6240 and NAV-4694, have high sensitivity and low off-target binding, offering anatomical imaging that correlates with symptom severity. Paul Blanchfield added that the market potential is significant, with PET imaging complementing serological tests and leveraging existing infrastructure.
Q: How should we think about the royalties from PYLCLARI and the potential growth of FLYCARDO?
A: Paul Blanchfield noted that PYLCLARI's financial impact is minimal in the near term as it ramps up in Europe. For FLYCARDO, GE Healthcare holds commercialization rights, and Lantheus will receive milestones and royalties. The cardiac imaging market is sizable, and they are optimistic about its growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
