Here in London. I'm Matt Taylor, the U.S. Medical Supplies and Devices Analyst here at Jefferies, and I'm pleased to be joined by management from Lantheus. So we're meant to have a 25-minute fireside chat. I'll kick it off with questions for most of the time here. Just wanna introduce the management team that's here with us today. We have, Bob Marshall, all the way on your left. He's the CFO of Lantheus. Paul Blanchfield is the President. And then Mark Kinarney here in the front row is the Director of Investor Relations.
So, Bob, maybe to kick it off, for some of those folks who aren't as familiar with Lantheus, can you talk a little bit about just the kind of the journey of the company? I'd love for you to cover sort of the bones of the company and how you came to evolve into today?
So, this is about a 65-year-old company. This is actually one of the original companies in this space, sort of moving between what was planar and SPECT, which is now evolving into what is PET imaging. Primarily, the company had been focused in diagnostics, using products like TechneLite, which is a moly derivative, if you will, generators that we use in a lot of cardiology-type diagnostic tools. Also, the company has and continues to sell Xenon and other products that go along with TechneLite generators. The company also in about 23 years ago launched a microbubble using ultrasound, called DEFINITY, and had been the company's primary product over the years.
It was off of that platform that starting in 2018, the company embarked on a transition to, to be more focused in the radiopharmaceutical space, and to build upon what we have always sort of seen as our core competencies, which in this field really comes down to logistics, supply chain, manufacturing, and commercialization. There are very few companies in the world with that experience that we bring to the table that has allowed us to become what one could be called a sort of a partner of choice. And in doing so, in 2020, we acquired a company in New York called Progenics. And from the Progenics assets, we gained what is now a leading diagnostic in PSMA PET imaging called PYLARIFY.
We launched that in 2021, and have seen sales go from, you know, effectively launch to, midpoint of the guide, somewhere around $850 million this year. Last year, almost to the day, we announced the in-licensing of two assets from POINT Biopharma, PNT2002 and PNT2003, both therapeutics in this space. And the reason that the combination made a lot of sense in terms of them working with us, it's, it is a collaboration, has largely to do with the fact that we have demonstrated the ability to commercialize these kinds of assets more broadly, and to build on those successes. And so we're really looking forward.
Those we would expect to see a readout on phase III on 2002 by the end of this year, which would then help us, you know, sort of take that next leap forward in terms of really becoming a theranostics, in terms of having diagnostics, but also therapeutics, within this space. Paul, I don't know if you want to add on to that.
No, I think our focus, as Bob said, to be the leading radiopharmaceutical-focused company. I think this overall space and landscape is incredibly exciting when we look at the number of clinical assets that are under development, more than there ever have been, both levering new isotopes, whether they be PET imaging isotopes, like F-18, like copper, like gallium, otherwise, or in the therapeutic space, whether they be lutetium, whether they be a long standard of iodine, or whether it be some of the new alphas, that are coming out. And so we think there's significant opportunity, and we'll talk a little bit more about some of those differentiating capabilities that are gonna enable us to be the continued leading radiopharmaceutical-focused company going forward.
Yeah, so you both touched on this, and sometimes people ask me, "You know, Matt, why do you cover this company? Is it, is it really a med tech company?" I say, "No, it's a diagnostic, therapeutic, logistic, manufacturing company." So you, you mentioned all these different capabilities. Maybe talk about how unique that is to have all those together in the space. How many other folks can do that, and what has that enabled to you to do as a player in a space that's expected to grow a lot over the next 10 years?
Yeah, no, I think it's a, it's a great question. I think the key there is, one, we're in a space that's expected to grow, we believe, exponentially. So market research would suggest that this could be a $30 billion plus market by the end of the decade. That's going from just a few billion dollars in a business that, as Bob mentioned, has been around for 65 years, but has more been on the periphery of imaging. And now with the emergence, and we've seen a tremendous amount of mergers and acquisitions in the space, Novartis has made two large deals in the last couple of years. We've seen Eli Lilly look to make an entry in the space in the last couple of weeks.
There's increasing excitement, not least of which is the clinical assets that are coming, the record amounts of venture capital and new company formation, and then the number of treating sites, which in the U.S. is now over 200 sites... are treating patients with radiotherapeutics, and that just speaks to the overall growth potential. But Matt, as you mentioned, being successful in this space is a bit different than your traditional, small molecule or even biologic space. The manufacturing and the logistics, specifically supply chain, are differentiated capabilities. We've seen other large pharma companies, even this year, struggle, with being able to bring product to market.
Because unlike your traditional manufacturing space, where you can build 60, 90, 120 days' worth of inventory, the inventory of these products last in the minutes, hours, or if you're lucky, days. And so, as an example, for PYLARIFY, we're making this product at over 50 sites across the U.S. on a daily basis and delivering it to a specific patient at a specific time in a specific dose. And if we're off by a couple hours, that patient is not able to get diagnosed and potentially staged with prostate cancer, and so we take that incredibly seriously. From a regulatory and clinical environment, naturally, traditional pharma is very focused on working with the Food and Drug Administration in the United States, the FDA.
We not only work closely with them, but we work with the NRC, the Nuclear Regulatory Commission, to be able to manage what we can ship and where and ensuring that we're staying within spec. And then on that note, we also work with the Department of Transportation. To be able to bring radioisotopes across state lines does indeed require significant logistical expertise to be able to ensure that you're following all relevant guidelines, which do differ at times from state to state. And then naturally, this leads to the commercialization.
We do have experience, as we've seen, and I think speaks to our experience of launching PYLARIFY, which as Bob mentioned, the guide for this year is between $840 million and $860 million in its second full year on the market, which then led us to be able to partner with POINT Biopharma to commercialize their two lead assets, PNT2002 and PNT2003, for prostate cancer and neuroendocrine tumors, respectively, worldwide, with the exception of some Asia-Pacific markets, and then in turn, acquire MK-6240, an exciting Alzheimer's agent.
These really are, we believe, differentiated capabilities, and we have the benefit of being a focused radiopharmaceutical company that gets up every day thinking about this space and ensuring that, most importantly, we get our product to customers on time, in the right dose, with the right reliability.
Great. And you touched on this muscle that the company's been building around acquisitions, partnerships. You've brought in a lot of assets over the last few years. I think one thing that may be underappreciated is how much the personnel has changed to enable that as well. So maybe talk about your ability as a platform to add more value through those kind of in the future. And Bob, if you wanna touch on that as a preferred use of cash, that would be great.
Yeah, the company's in a great spot from a capital perspective. There's a lot of interest in this space, and we see a lot of opportunities out there for us to be able to deploy that capital. Excuse me. You know, and as you've heard, you know, we look at opportunities not in terms of from a business development perspective. We're sort of indifferent as to how we go about acquiring assets, whether they're in-licensed, asset-only, or whole co-type acquisitions. Excuse me. The company had $600 million dollars, $614 million in September, and we expect we've been generating something north of $100 million a quarter. And we have access to a $350 million undrawn revolver. Excuse me.
We have significant opportunity to be able to go out and find other assets. And as I mentioned earlier, one of the benefits of having been successful with these assets that we already have in-house is, and it is mainly sort of a biotech kind of development where you're seeing these assets being developed. They're looking at us in the terms, "How do we maximize the value of these assets?" And as a company that has been able to demonstrate the ability to do this quite successfully, you know, a lot of times we're getting inbounds when we're able to action. And so, from that perspective, the company, you know, while there's a lot of opportunity out there, we're going to be disciplined.
You know, we look at things in terms of the markets that we can fully diligence and fully understand, as well as meet financial metrics that we think that are prudent from a shareholder perspective. So to that end, you know, we are looking to make sure that we're building out our clinical pipeline, you know, in terms of being able to drive growth, not only from what we've seen thus far, which has been significant, but to be able to sort of drive growth between, you know, the balance of this decade and even into the next decade.
Great. Like a lot of good CFOs, cash flow makes Bob very emotional.
This is what happens when you travel multiple weeks in a row.
So maybe we could talk a little bit about the high-level opportunity for PYLARIFY. Just recently, you talked about this $1.6 billion current opportunity now potentially growing to $3 billion in 2028. So love to hear about some of the key steps that you think allow the market to grow that way. You know, what are the unlocking mechanisms to get there?
Yeah, absolutely. So overall, we think there's significant opportunity for PSMA PET imaging, both in the US and worldwide, with PYLARIFY naturally being the leader that we can expect for many years to come. We've highlighted, and we did recently at our earnings call, that the current addressable market in the US for PSMA PET imaging is about $1.6 billion or 350,000 scans-... That is naturally an estimate. I wish we could ask every man in the US to stand up who has prostate cancer and tell us exactly where they are in their journey, but it doesn't work that way. And so we estimate it to be about 350,000.
But we think there's significant opportunity for future growth of the market, and so we believe that by 2028, that potential could be north of $3 billion or 600,000 scans. Now, how do we get from 350 to 600,000? There's three big drivers. The first is going to be the approval of radioligand therapies in additional lines besides post-chemo. So I'm speaking about PNT2002, where we'll have SPLASH top-line data later this year. I'm speaking about Pluvicto, which recently released top-line data for PSMAfore. That's being studied in both the pre-chemo setting as well as the hormone-sensitive setting for prostate cancer.
That unlocks a significant amount of patients, not only for the therapeutics, but recognizing that every RLT in prostate cancer needs an imaging scan prior to treatment and potentially, along the way, to monitor progress and/or to set a new baseline. That's a big driver of future potential volumes. The second is going to be the continued evolution in the staging, so these are men that are newly diagnosed with prostate cancer. Currently, the label for PYLARIFY, and indeed, all PSMA PET imaging in the U.S., is for those of risk of metastases. It does not necessarily define risk, and so we have to look for NCCN or SNMMI guideline agencies, and they currently look down to the intermediate unfavorable.
We believe that in the next couple of years, that we could see more adoption in the intermediate favorable, which would open up another new pocket of patients to be scanned on an annual basis. And then lastly, unfortunately or fortunately, the incidence of prostate cancer continues to increase 2%-3% per year. That's the bad thing. The good thing is life expectancy continues to increase, and so we also see continued increasing prevalence. And so overall, when you compound those, we think there's significant growth for PYLARIFY and the overall PSMA PET imaging market, for many years to come.
Great. Certainly with your first mover advantages in F-18, having some advantages on, on half-life and just distributability. You've hovered around 70% market share in this market, but there's new competition now with Blue Earth coming in with another F-18. So maybe you can just talk about how you plan to defend your market share and how you see that shaking out now with another F-18 competitor.
Absolutely. First and foremost, we think more voice in the marketplace is a positive opportunity for all of us. We're effectively in the second full year of launch, and while we and many of you talk to us about PSMA PET imaging all the time, there are significant portions of the population in the U.S. that are not yet fully adopted PSMA PET imaging. And so more voice in the marketplace is incredibly important to raise awareness for what is effectively a new modality and some KOLs have said the most important innovation since the PSA serological test decades ago. And so overall, we think that's going to continue to raise awareness for PSMA PET imaging. As the largest ship, if you will, on the seas, we think that rising tide helps us. We are acutely aware of competition.
We noted just recently, to date, we have seen minimal impact to our business from Blue Earth's agent. Blue Earth's agent, POSLUMA, did just receive pass-through on October first, and so that will continue for three years. We are acutely focused. We are in touch with our customers on a daily basis. We believe that we are clinically and commercially differentiated in the marketplace, and we believe that our customers understand that. Naturally, there are risks, but as a company that wakes up every day thinking about this, we think we're very well positioned for PYLARIFY to continue to grow and to continue to be the market leader for many years to come.
Maybe you could just double-click on that. Talk a little bit more about the clinical and commercial differentiation, excuse me, and how that'll allow you to maintain a leading position even as another competitor comes in.
Sure. So if we think about, first of all, I'll speak commercially. We are the lone player to have a multi-partner F-18 cyclotron network across the U.S. Effectively, PYLARIFY, or I should say, PSMA PET imaging, is either on a gallium generator basis, which has the benefit of a broad reach, given the availability of generators, but less scale than an F-18 cyclotron, which is being used to produce FDG, which does more than 2 million doses per year. And so there's a preexisting network, and in our case, multiple networks, with 50-plus PET manufacturing facilities that we believe provides reliability, and assurances to customers to receive their product on time, in full. PYLARIFY is currently accessible, from an insurance perspective, at over 90% covered lives.
Our customers have adopted this significantly, and we believe those commercial advantages, specifically, I would also note first-mover advantage, when we think that these are men going to be living with prostate cancer, fortunately, for many years. The ability to have a comparable scan to demonstrate progress or hopefully, remission of prostate cancer over time, receiving those serial scans, if you will, with the same agent, are incredibly important. We do a tremendous amount of education to go out there and to differentiate. And so when we look at our advertising and promotion, when we look at our sales force, when we look at our customer contracts with our market access position and with our on-time, in-full reliability, we think that's important.
From a clinical differentiating, we do see our clinical trials demonstrating, significant benefits to PYLARIFY®, including a patient's change in management, where two-thirds of patients had a change in intended management. What this means, effectively, is it's not a diagnostic for diagnostic's sake. Our data and our pivotal trials demonstrate that physicians change how patients are treated as a result of a PYLARIFY® scan, and we believe that data to be robust. When we look at the share of false positives, relative to some other markets, players on the market, we believe we have an advantage there. And so that continued clinical reliability and built into preexisting workflows in the PET CT centers, as well as in the hospitals, will allow us to continue to differentiate in the future.
... Great. And we talked a little bit about reimbursement, and that's one question that we get a lot, given the way the setup is in the U.S. with Medicare in the outpatient setting, means that after approval, the companies generally get a three-year pass-through. So there's a mismatch on that when yours ends and when your competitor's ends, there's about a two-year gap, right? And so I wanted to touch on two mechanisms that may absolve that, because frankly, that doesn't make a lot of sense to reward innovation that way. We just saw Medicare ask for feedback on some potential changes to reimbursement in the outpatient setting.
Like Medicare often does, they took the feedback and said, "We'll see you later." So maybe talk about some potential for that to change in the future, and any insights you had through the public comment period.
Yeah. A very complicated question and a complicated issue, but you're—I know you're well-versed in this. I think this is a complicated, thorny issue. We continue to remain optimistic. So to lay the groundwork, transitional pass-through payment is a separate payment dynamic for traditional Medicare, which in the U.S., of prostate cancer, makes up about a third of overall payers. Recognizing that you have commercial payers, you have Medicare Advantage, and then the remaining third, roughly, would be traditional Medicare fee-for-service, which is the government payment system. And then it is specific to site of care, and that would be strictly hospital outpatient settings. So when you take those two overlap, it impacts a little more than 20% of current patients today.
Now, as alluded to, there is an odd construct in the U.S., where payment, separate payment for that product is received for three years, and thereafter, it is bundled into a broader PET CT payment code. And so, ourselves, and the, the allusion was to, POSLUMA, but ourselves, Telix, and Novartis, who currently make up north approximately 95% share of the market, all lose pass-through within a nine-month period. Ourselves, January 1st, 2025, Illuccix, Telix's product,
July
... July 1st of 2025, and Novartis' Locametz, October 1st, 2025. And so you have a dynamic where 90%-95% of the market will potentially lose reimbursement for a specific patient population that affects 20%. Now, to remedy this, there's a number of different paths. CMS came out for the first time in years, as Matt alluded to, requesting comments on how to potentially remedy this situation. There was overwhelming number of comments in support of separate payment. There was some discussion about whether that payment threshold is $150 or something different, potentially $500. CMS took that feedback and said, "Thank you. This is a complicated issue.
We look to continue the dialogue and potentially revisit in the future." And so we'll be working with CMS over the coming months, as will other stakeholders, to provide feedback to this artificial construct that could create challenges in the marketplace. CMS would likely come out with additional guidelines in July for additional feedback, and note we would have effectively until 2025 for this to be remedied. The other course of action is the U.S. Congress, where the FIND Act, which has been bipartisan supported across Democrats and Republicans, it was reintroduced in the House at the beginning of this year in January. It was introduced in the Senate in May.
It recently was the topic of a House Energy and Commerce Committee meeting in September, and there's been numerous fly-ins from different constituents around the country to help Congress understand the impact, not only to prostate cancer, but as well to potential other disease areas like Alzheimer's, to ensure there's separate payment. And so between those two avenues, we are hopeful that either CMS, Centers for Medicare and Medicaid Services, or the U.S. Congress, will take action because this really could impact the broader access, which indeed, both of those bodies are strived with ensuring, and so we remain optimistic. That said, we also have a number of opportunities to remedy the situation, if you will, by working closely with our customers.
We haven't explained significant detail on that for competitive reasons, but naturally, pharmaceutical businesses are very accustomed to navigating reimbursement dynamics with customers. And so the clinical and commercial differentiation that I spoke to before, we believe will continue to enable PYLARIFY to be the market leader. It'd be a lot easier if CMS or the FDA acted, but we are not reliant on that to continue to ensure PYLARIFY's success growing forward.
Obviously, we could see this come back around in the proposed rule next year. Do you actually think it's possible that you get a separate track or comment pathway for radiopharmaceuticals with Medicare?
We do think there's certainly a path for them to have separate payment. Whether they come out at a different timeline, I would rather bet on other things than on CMS or the US Congress taking specific actions at different times. But I think they've left the door as open as they can be, to be open to feedback, to recognizing that this is an important issue. I think they will see further pressure from Congress. I think Congress will also see pressure from CMS to act.
Prostate cancer affects over 3 million men in the U.S., and to have a reimbursement schema that artificially creates some noise in the marketplace, I don't think is in the best interest of the prostate cancer community, nor do I think it's the best interest of the regulatory bodies or the U.S. Congress. And so we are optimistic, but also planning, for how we continue to navigate if this—even if it doesn't happen.
Great. And I, I probably shouldn't go through this session without bringing up SPLASH on the readout. So maybe you should talk a little bit about that and your expectations, your confidence in PNT2002, and the chances that the data looks as good or, or better than, God forbid, Pluvicto.
... So thank you. Yes, a hot topic of late. We are very excited, in the next six-ish weeks, by the end of this year, together with POINT Biopharma, our partner here that Bob mentioned earlier, that we've partnered with for about a year now, we'll be releasing top-line data for our phase III registrational SPLASH data. We are naturally excited to be able to share that data when it's available. Until that data is available, we would point to the lead-in cohort, which was approximately 27 patients, that had a radiographic progression-free survival or RPFS of about 11.5 months.
There was not a control arm, and so we can't compare it to anything, but we think that speaks to the benefits from an efficacy standpoint, and we would hope that that would look favorably, or at least comparably, to that of some other agents in the market, including the other product from Novartis that you alluded to, and released data just a few weeks ago. From a safety perspective, we saw the lead-in data. We think overall from an oncologic agent in the pre-chemo setting, it was well-tolerated, with serious adverse events, Grade 3 or plus at about 25% of the population, and those that were serious, about 18%. But at the end of the day, that was a lead-in cohort.
Ultimately, that's why we do clinical trials, to be able to understand what the true data will look like, and we, and all of you, are very excited to see what that top-line data looks like in the next couple of weeks. So we look forward to sharing more.
So we have to wrap up, but maybe the last question I'll ask is, obviously, Lilly is buying or proposed to buy POINT, and so what should that tell us about the prospects for PNT2002, if anything, and or the POINT platform?
Well, I think, the fact that Lilly has, you know, dipped their toes into this market is, validating to, not only the deal that we did with POINT last year, but also, in the broader radiopharmaceutical industry in, in general. But I do think it's also important to point out that, you know, while, you know, this, you know, transaction likely, you know, will close, our deal with Lil- with POINT, doesn't change at all. You know, we're still working very closely with the POINT team, both across, you know, clinical and regulatory, manufacturing, as well as commercial readiness. So we're, you know, we're really looking forward to, to, to that partnership as we, as we move forward. I think it's, it's just, again, very validating to the fact that the radiopharmaceutical industry is, you know, just getting started.
Great. Well, thank you very much. Thanks for your time, and thanks for your interest in Lantheus.
Thanks, Matt.