Lantheus Holdings, Inc. (LNTH) Earnings Call Transcript & Summary

Welcome, everyone. I'm Sanji Bita with JPMorgan Healthcare. And we are pleased to have with us the CEO of Lantheus, Mary Anne Heino. For logistic purposes, please reserve your questions till the end of the presentation. And with that, I will let Mary Anne take over.

Thank you. Good morning, everyone, and thank you so much for joining the Lantheus JPM presentation. As we start with the next slide, I will show you a slide that I'm sure you've seen in many other presentations. It is our policy around safe harbor statements and forward-looking information. It's available here as well as our website. So I'd appreciate if you would take a moment to look at it. As we begin our presentation today, I'd like to share with you our vision for Lantheus, and our vision is that Lantheus will be -- is and will remain the leading radiopharmaceutical-focused company in the world. It's something that we think is very important, and it really serves our mission to find, fight and follow disease to deliver better patient outcomes. And I'll share with you a little bit more today about how we think we can contain and continue to achieve that vision. If we move forward, I'll start with an overview of what I'll be sharing with you today. And first and foremost, we did preannounce full year revenues for 2023. And I'm really glad to report that we had a stellar year in 2023. For us, it's always about patients. And in 2023, we impacted the lives of more than 6.2 million patients with a variety of different diseases. For having done that, we also recorded financials that had us for the first time break through the $1 billion mark as a company. And in fact, while these are still estimated revenues, which will be finalized and shown at our February meeting, we did believe -- we believe that we've reached approximately $1.3 billion in annual revenue with the company, which we think is a tremendous achievement for where we started, where we are, and more importantly, where we'll take the success. And we think that creates tailwinds going into 2024. As we go into 2024, we will continue to use what we think are our core strengths, which is deep expertise not only in radiopharmaceuticals, but very importantly, in the supply chains that must accompany those radiopharmaceuticals to ensure consistent and reliable supply out to our clinicians and the patients who use our products. From a capital perspective, we are in, I would say, an acquisitive mode. We just announced via press release yesterday our most recent collaboration, this with Perspective Therapeutics. But we feel we are well capitalized and well positioned to deploy our capital from a position of strength as a partner of choice in the radiopharmaceutical company -- industry. And for those who are familiar with the industry, there are not that many companies as compared to other, I would say, modalities and types companies that participate in the radiopharmaceutical industry. It's a very complex industry. It's a very heavily oversighted industry. And in fact, we are oversighted by more than 20 government agencies annually for our privilege to receive, manufacture and deliver radioisotope-based products. So it's a really unique set of expertise and capabilities that you must have to be successful in this arena, and we have been very successful in 2023 and feel we will be so going forward. If we take a look at where we are currently in the larger market, we are advancing leadership in a market that is highly valued and highly growing. And one of our core areas of expertise is the handling of radioisotopes. And if you look at the lower-left hand of this slide, you can see all the isotopes that we've had experienced with over our history. And again, this is not just the the receipt and manufacturing of these. Very importantly, it's how these isotopes are supplied back into the medical market for use with patients and use by clinicians. As we look forward, we see our future growth fueled by platform expansion with the different assets that we are actively developing. And these are, as you can see in the lower right-hand corner, PNT2002, MK-6240, PNT2003 and Lantheus 1363S. And I'll talk a little bit more about those products later in my presentation. But first, I'd call your attention to the top of the slide because this is where we are currently in our market. We have a market-leading portfolio of commercialized agents. First and foremost, our product PYLARIFY, which was introduced only a slide 2 years ago and represents innovation and new medical art in the diagnosis and management of prostate cancer. We introduced this product that was approved in May of 2021. We quickly introduced it to the market. And as we offer, again, very estimated looks at full year revenue for 2023, this product is already approaching blockbuster status with revenue -- annual revenue of close to $1 billion and still very much growing in a market that is also growing. Our product DEFINITY is also the world-leading contrast agent used for echocardiography exams. And we have a long history as a company with supplying TechneLite, a very important technetium-based agent, into what is called the spec-based market and is used in cardiac imaging. Again, market-leading portfolio of commercial agents and a strong pipeline to continue to bring other products to market. If we look specifically and if we advance -- if we look specifically at the larger environment, not only are we growing, but the radiopharma space is growing. There is increased intense interest in the role that radiopharmaceuticals can play in life sciences in the delivery of care. And by estimates, this global market will grow from approximately $7 billion to almost $40 billion over the next 10 -- 9- to 10-year period. This growth is being fueled by innovation and by appreciation for the role that radiopharmaceuticals can play in complex diseases, especially oncology, with respect to therapeutics. From a diagnostic perspective, we've continued to see innovation. And one of the very exciting products we have in our pipeline is MK-6240, which we believe can bring the same level of innovation to staging and diagnosis of Alzheimer's disease as we have already accomplished in the staging and diagnosis of prostate cancer. Some of the trends that we see in this market are noted on the right-hand side. And one of the more important trends is the advent of therapeutic-based radiopharmaceuticals. There are currently a handful of them already available in the space. Over the next decade, you will see several more come into prominent markets and play a very important role in those markets. If we move forward, I'll show you a view into each of our particular suite of products. And I'll focus here on PYLARIFY, PNT2002, MK-6240, and then I'll talk a little bit about our M&A strategy. But what I'd like you to take away from this slide that I'm showing you now is the very large total addressable markets in -- for those markets that we compete in. For PYLARIFY, which is the PSMA imaging market for prostate cancer, we estimate the current total addressable market is high as $3 billion. And that is a recent change. We have -- since launch, we have been continually reassessing and updating what we see as the total addressable market. And that market has grown since launch from under $1 billion to now an estimation of $3 billion. Our asset PNT2002, which will compete in the therapeutic prostate cancer market, comes into a market where it currently assumed total addressable market of up to $10 billion for radioligand prostate agents alone. This is a class of agent that has been rapidly developed. We already have one commercial agent that's not Lantheus. But in the market, there is one commercial agent available and there are several under development, including our product, PNT2002. MK-6240, as I already referred to, is our agent under development for staging and diagnosis and management decision for Alzheimer's patients. And this truly represents innovation in that space, badly needed innovation in that space. We see the total addressable market here currently at approximately $1.5 billion. But again, as we get closer to entering that market commercially, we'll continue to assess and update what that total value can be for that market. And I'll stop now and speak for a minute as to what our M&A strategy is as a company, as a corporation. We are fully committed to having a portfolio of isotopes across our different product groups. And while currently in the radiopharmaceutical space, it's common for companies to be centered around a single isotope or a single platform, we see a broad opportunity to develop and bring to market variety of isotopes across a variety of platforms. And we, quite frankly, think we are the company to do that because of the deep expertise we already have in dealing with radiopharmaceuticals. And I'll note the deal again that we just announced with Prospective Therapeutics. What Prospective Therapeutics adds to our portfolio is a lead-based asset. But it's not just the asset, the isotope. More importantly, it's the platform on which the isotope is offered. We think the platform, which many times is related to is referred to as a chelator, is best in class in Perspective's -- once they've developed. And we're tremendously excited that not only the potential for that application in neuroendocrine tumors, but we also announced our intention to codevelop and bring to market a potential asset in the prostate cancer therapeutic area, which comes to another aspect of our corporate strategy with respect to M&A. We are committed to having multiple shots on goals in those therapeutic and diagnostic areas where we choose to compete. So again, with reference to the Perspective collaboration we just announced, that brings us another shot on goal, not only in neuroendocrine tumors, which complements our asset under development, PNT2003; but another potential asset in prostate cancer, which will complement our asset under development, which is PNT2002. In total, if you do the math, we will participate in markets with over $10 billion in total addressable opportunity for our products. If we move forward, I'll speak a little bit more specifically about each of our products, and I'll start with PYLARIFY. As I mentioned, this was a product that we launched -- was approved and we launched in May of 2021 that has literally changed the approach to diagnosis and management of prostate cancer to date and has much more to offer in the space. We credit that since launch, we've already seen over 250,000 PYLARIFY scans offered in the U.S. medical marketplace. And as I mentioned earlier, we have now updated again what we see as a total addressable market for this product. So as early as 2023 or as late as 2023, we had valued that market at approximately $1.6 billion. We now estimate for the period 2024 through 2029, that total addressable market will grow from $2 billion up to $3 billion and will represent by 2029 up to 700,000 types of scans, PSMA-based scans, being offered for the diagnosis and management of prostate cancer. This is true innovation and is recognized as such in the prostate cancer community. If we move forward, I'll show you the top line results we had from our asset that's under development that is part of our collaboration with what was formerly POINT Biopharma, which is now owned and acquired by Lilly, for PNT2002. This is a trial that looked at a certain subclass of patients in -- with prostate cancer who had the choice to either come on to active treatment with PNT2002 or switch to a treatment with one of the available -- commercially available PARP inhibitors that are available in the marketplace. We are pleased to report that we had highly statistical significant results for our primary endpoint, which is radiographic-free progression for patients. As we look forward, we are waiting for maturation of what's called the overall survival, secondary endpoint. It's very common in cancer trials to have a delay before those data are mature enough to read. And as we have announced previously, we are awaiting the maturation of those OS data to make our best decisions as to how to drive this asset forward. And we'll continue to update you with respect to that. But again, this, again, is another highly valuable, highly growing market for the use of radioligands in prostate cancer. And as you can see on the right hand of my slide, we value that this market has the potential to reach a total of up to $10 billion in total addressable market value and treat up to 40,000 patients, unfortunately, who carry this diagnosis. If we move forward, I'll give a view into MK-6240, and this is our novel clinical stage [indiscernible] based imaging agent for Alzheimer's disease. Again, this marks innovation in the diagnosis and treatment of Alzheimer's disease in that with an agent of this caliber, you can truly see -- not only see but measure the volume of tau tangles in the brains of Alzheimer's patients, which very much then determines what treatment path should be offered to these patients. There is simply nothing like this in the market. It is already being used in over 90 clinical trials under development for therapeutic-based agents. And for having been used in those trials, we received the data for the performance of our product in those trials, and that will very much guide and populate our regulatory strategy as we go forward. Finally, I'll talk again about -- a little bit about the very exciting collaboration we just announced with Perspective Therapeutics. What's most important in radiopharmaceuticals are 3 considerations. The first is your choice of isotope. What isotope are you using either diagnostically or therapeutically to target? The second is what page or chelator are you using to house that isotope so that you can be sure that as you inject it into the body, it goes to your intended site and sits there and stays there so it can offer either diagnostic efficacy or therapeutic efficacy? On both of those cases, we believe that Perspective Therapeutics has the best-in-class combination of isotope and chelator to effectively deliver the product for drug-specific purposes, either in the treatment of neuroendocrine tumors or in prostate cancer, which are -- those are the 2 areas that are currently under development. The third aspect of a radiopharmaceutical is what is that moiety that you attach your radiopharmaceutical isotope cage to. And that moiety in diagnostic views has the ability to be very specific and be -- very, very specific as to what part of the body it sits in. And in the therapeutic case, it carries not only that specificity for you, but it carries efficacy as well. And in that prospective as well, here I'm saying prospective, we also believe that the assets that have been developed by Perspective will truly have important clinical utility, both the neuroendocrine tumors for which there are already some early data sets available and also as we move forward with the prostate cancer asset. We believe the same will be through there. So this is a very exciting time for us. We were so thrilled that we were able to have this happen in time for JPMorgan, and you can expect to hear much more from us about these assets in our collaboration as we move through 2024. Again, I reference that we offered estimated revenues. And Bob Marshall, my CFO, who's with me today, says I must say estimated every time I say that word. We are pleased to be able for -- as a precedent to offer an estimated view to total 2023 performance and you can see here what that amounted to. For worldwide revenue, we estimate that we will reach somewhere between $1.295 billion to $1.297 billion, again, the first year as a company that we've broken through that $1 billion mark. And for PYLARIFY revenue, we estimate that total annual revenue will come in between $851 million to $853 million. Now you can see as we offer on this slide, the incredible growth that, that represents over our performance in 2022. And I will share with you that if I prepare this slide for 2022 versus 2021, it would have been just as impressive. We believe that this level of full year performance creates tailwinds for us going into 2024 because it really speaks to the market's intention, especially with PYLARIFY, for continued uptake and use in the diagnosis and management of prostate cancer. I will also note that a product that's not broken out here is our product DEFINITY and our DEFINITY franchise. This is a 23-year-old product that continues to grow in contribution to our company. And in fact, if you estimate the revenue for 2023, it demonstrates minimally 11% growth over 2022. Again, a 23-year-old product that continues to have strong value and uptake in the communities that it serves, which is echocardiography in the -- out in the hospital outpatient departments. If we move forward, I'll recap some of what I said by saying, again, as a company, we are really attached to the science of radiopharmaceuticals and what we think they can achieve. But we're incredibly motivated by the number of patients who benefit from our efforts. And 2023 was a remarkable year in that over 6.2 million patients benefited from the assets that we bring to market as do the clinicians who can use our products to better manage their patients. The revenue, as I noted, again, estimated at $1.3 billion will be finalized at our late February earnings call. We're confident it will be in the range that we offered here. But what I'd like you to take away from our presentation today is that we are the leading radiopharmaceutical-focused company in the world. And with that title and with that obligation, we see our ability to continue to grow and to contribute to the very exciting activity that's taking place in the radiopharma space. With that, I'll close my presentation, and I'll take any questions that you have.

Yes? You'll have to use the mic or we'll have to have you repeat it.

You did share some initial thoughts about the announcement with Perspective Therapeutics. Is there anything else you could share with us? And help us understand why Perspective was the right partner of choice?

Sure. And I mean, I think I've offered several comments already during my presentation about what we were so attracted to from that -- what their product portfolio is. But I think the very -- the other very important aspect of what Perspective means to us, it comes back to again what our strategy is going forward to build out our company. Perspective introduced lead and lead-based assets into our company. Prior to that, with the acquisition of Servo, we introduced an additional suite of F 18-based products. And with our Progenics acquisition, we introduced iodine-based products. So I think we are demonstrating through our activity, our intent to, again, be a broad portfolio player in the radiopharmaceutical space. I think the other thing that we take pride in from the Perspective collaboration is that we are really seen as partner of choice in this market. And partners have -- everyone has lots of choices. And I think anyone who's following the radiopharma space knows how much interest there's been there, knows that there's been significant activity. Most recently, you have the announcement of BMS' intention to acquire AreBio as well as Lilly closing out their acquisition of POINT. And what we see from those actions as well as the actions that we're taking is really strong affirmation that radiopharmaceuticals will play an increasingly critical role in overall life sciences and in choice of health care delivery and product choice. And it's something that we're really proud of. I would also say we're not done. Bob Marshall has done an incredible job for us with managing not only our balance sheet but our capital structure, and we are well positioned to act on similar opportunities going forward.

Okay. Maybe another question from me. You did mention briefly about the acquisition of POINT Pharma (sic) [ POINT Biopharma ] and a phrase BioAll in the radiopharma space. What are your general thoughts about the M&A activity in the space?

Well, my general thought is assets are getting more expensive by the day. And that is something that we'll have to deal with. But again, from a larger perspective, we like in sometimes the -- what the rise in the current interest is in radiopharmaceuticals to what's happened with ADCs or antibody drug conjugates. It was another space that was somewhat created, started out in small specialty companies. And then quickly, once the value proposition of the products was recognized, became a very high interest to large pharma. And you saw similar acquisitions of small companies there. We think that pace will continue, and I'm really glad about that. Now I said as I start, to the extent that it drives competition for and perhaps the price of assets, that's something that we'll have to deal with. But I think what it really drives is recognition of the role that radiopharmaceuticals can play. And that's something that at Lantheus we've known for over 60 years. It's only much more recently that the larger market has come to appreciate the role that these types of products can play in diagnosis and therapeutic intervention with patients. And that's something that's really affirming to what our vision is as a company. Was that complete with all my comments?

That was a great presentation, really very interesting. I'd be interested to hear your thoughts on where -- what are the sort of targets that you see coming up in radiopharmaceuticals that are of most interest, new targets?

That's actually a great question. And my answer is going to be very different based on utility as a diagnostic versus utility as a therapeutic. I think at this time, from a therapeutic perspective, the targets will be oncology-based because what you are achieving or what you're attempting to achieve with the inclusion of a radiopharmaceutical and isotope in a product complex is to take advantage of the destructive power that radioactive decay can have on a micro environment where it's most suitably applied to a tumor microenvironment. And what's really interesting and where we're really trying to make sure that we apply our knowledge and expertise with radiopharmaceuticals is with -- if you used the correct isotopes in combination with the correct moiety, you have truly micro destruction of tissue while you retain healthy tissue surrounding that. And that's something that as a therapy target is really appealing to us, especially in the oncology area. We also -- and this is again related to the structure in how you encapsulate or they hold the radioisotopes. But what you also have the ability to do is control off-target impact where you don't have, unfortunately, the benefit therapeutically of what you're trying to achieve, but unfortunately, side effects related to that product systemically being impacting other organs or tissues. And that's something also that we see increasing development and accurate development of with radiopharmaceuticals. So again, I think when we're talking about therapeutic assets, we'll remain probably focused in the immuno-oncology -- oncology and immuno-oncology space. When it comes to diagnostics, now you're talking about lower energy -- use of lower-energy isotopes on -- and frequently it's F 18 or a gallium-based isotope. And here now you have the opportunity to cross into many disease states and certainly outside of oncology. And the example that we've offered there is our acquisition of Servo. The Servo agent that I showed you in my presentation is an Alzheimer's-targeting agent. So you're still taking advantage of radioactive decay, but in this case, you're using it to use the decay pattern to create an image for you of a micro environment. And in the case of that microenvironment, it can be total body or it can be very targeted out of specific tissue. In the case of MK-6240, that tissue is the brain. In the case of PYLARIFY, it's whole-body imaging, so you can see cancer cells literally at the cellular level. And that's something that simply has not been achieved to date with other modalities. So potential for future development across other therapeutic areas for diagnostic purposes, absolutely. I think in the short term -- the short to midterm, our development with therapeutics will stay focused on oncology targets.

I just wanted to ask your thoughts on the importance of theranostic pairs with regards to diagnostic and therapeutic approaches.