Good morning, ladies and gentlemen. Welcome to the Lantheus Holdings third quarter 2020 earnings conference call. This is your operator for today's call. Please note that all lines have been placed on mute to prevent any background noise. This call is being recorded for replay purposes. A replay of the audio webcast will be available in the Investors section of the company's website approximately two hours after the completion of the call and will be archived for 30 days. I'd now like to turn the call over to your host for today, Mark Kinarney, Senior Director of Investor Relations. Mark, the floor is yours.
Good morning, ladies and gentlemen. Welcome to the Lantheus Holdings third quarter 2020 earnings conference call. This is your operator for today's call. Please note that all lines have been placed on mute to prevent any background noise. This call is being recorded for replay purposes. A replay of the audio webcast will be available in the Investors section of the company's website approximately two hours after the completion of the call and will be archived for 30 days. I'd now like to turn the call over to your host today, Mark Kinarney, Senior Director of Investor Relations. Mark, the floor is yours.
Thank you, and good morning. Welcome to Lantheus Holdings' third quarter 2020 earnings conference call. This morning, we issued a press release, which was furnished to the Securities and Exchange Commission under Form 8-K, reporting our third quarter 2020 results. You can find the results in the Investors section of our website at lantheus.com. For those of you not on the webcast, you can find the slide presentation in the Investors section of our website under the Presentations tab. Before we get started, I'd like to remind you that our comments during the call will include forward-looking statements. Actual results may differ materially from those indicated by forward-looking statements due to a variety of risks and uncertainties. In particular, the continuing impact of COVID-19 on our business results and outlook is a best estimate based on the information available as of today's date.
Please note that we assume no obligation to update these 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 include certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures is also included in the Investors section of our website. With me on today's call are Mary Anne Heino, our President and CEO, and Bob Marshall, our Chief Financial Officer. Mary Anne will begin with some introductory remarks and a business update. Bob will cover our financial results. Mary Anne will conclude the call with closing comments. We'll open the call for Q&A. With that, it's my pleasure to now turn the call over to Mary Anne.
Thank you, Mark, and good morning, everyone. I hope this finds each of you and your families safe and well as you listen to this call. As we continue to navigate through the COVID-19 pandemic, the health and safety of our employees, patients, and other partners in the healthcare community remain our top priority. The long-term strategy for Lantheus is one of sustainable growth. I am pleased to share with you today the progress we have made across the business in those areas we feel offer significant opportunities for growth. Today, I will update you on our progress within our prostate cancer portfolio, our Microbubble franchise, and in our pharma services business. I will begin with PyL, the lead product in our prostate cancer portfolio. In late September, we filed our NDA with the FDA for PyL, our prostate-specific membrane antigen or PSMA PET imaging agent.
In our NDA, we included a request for priority review, which, if granted, could shorten the FDA's review to six months from the time of acceptance versus the standard review time of 10 months. We project we will receive notification from the FDA confirming acceptance of the filing for substantive review by early December. I would like to recognize the PyL NDA team for their unwavering commitment to submitting what we feel is an excellent and comprehensive filing. Despite the disruption of the pandemic, our teams continue to come together virtually as a highly effective company. We are very excited to have PyL under review for approval and potentially available to both physicians and patients who we feel will benefit from it. Prostate cancer is the second leading cause of death in men today.
Each year in the U.S., there are approximately 192,000 new cases of prostate cancer diagnosed, and more than 3.2 million men are currently impacted by the disease. We currently estimate that there is a potential need for up to 130,000 PSMA-targeted images per year in the U.S., which is based on the incidence of prostate cancer biochemical recurrence in approximately 50,000 men per year, in addition to ongoing imaging in the prevalent population. Needless to say, this presents a large addressable market with an estimated market valuation of approximately a half billion dollars. If approved, PyL will be the first commercial F 18-labeled PSMA-targeted PET diagnostic agent. Our clinical program included two prospective, well-designed phase III studies vetted by the FDA to establish the safety and diagnostic performance of PyL imaging across the disease continuum of prostate cancer with verified data, pathology, or composite truth standard.
PyL has been administered in approximately 3,500 patients with prostate cancer globally, including the two Progenics-sponsored phase III studies, investigator-sponsored studies, and clinical use reported in the literature, and has an attractive safety profile as demonstrated throughout clinical use. In July 2020, at the Society of Nuclear Medicine and Molecular Imaging meeting, or SNMMI, we unveiled our PSMA imaging awareness campaign, which was then launched online in September. This campaign focuses on four key aspects of PSMA imaging, the role of PET imaging as a leading technology, the benefits of PSMA as a target, the advantages of F 18 as the isotope-based tracer, and finally, the additional value artificial intelligence software tools can add to the clinician.
Given that PyL may be the first F 18 commercial diagnostic agent approved, I'll spend a few minutes discussing how PyL is produced and distributed, as well as what we believe are the inherent advantages of the F 18 isotope in this imaging agent. PyL is a nuclear PET imaging agent containing the Fluorine-18 isotope, which is commonly abbreviated as F 18. At a PET manufacturing facility, or PMF, F 18 is produced on a cyclotron. F 18 is introduced into a synthesis box, where it reacts with the PyL precursor to form the PyL drug substance, which is then purified and formulated to produce a bulk finished product vial. Individual patient-ready doses are withdrawn from this bulk finished product vial and delivered to PET imaging centers, which are usually part of a hospital's nuclear medicine department.
This batch process approach to the production of PyL produces a large quantity of bulk finished product, which can eventually be 30-40 doses or more per batch, depending on size of cyclotron, demand, and proximity to end-user customers. This is important given the prevalence of prostate cancer and the volume of imaging studies performed at larger treatment centers, especially when compared to the relatively few number of doses that can be produced from a generator-driven process. In addition to the advantages of batch processing, we believe there are a number of other advantages of F 18, making it the ideal isotope for a PSMA-targeted imaging agent. For example, F 18 has a 110-minute half-life, which means doses can be easily transported to hospitals within a two to three-hour radius of the production site.
Moreover, given its half-life, F 18 offers more flexibility as to when a patient can be imaged after the dose has been prepared. This is important to an imaging center as they schedule multiple different types of PET procedures throughout the day. We believe F 18 produces images with high resolution. When compared to other radioisotopes used in PET prostate cancer imaging, F 18 has a higher positron yield, which improves contrast resolution and decreases image noise. Turning to our commercial portfolio. In August, we announced that the FDA approved our sNDA for VIALMIXRFID, a next-generation activation device designed specifically for DEFINITY. As a reminder, DEFINITY is the only image-enhancing agent approved with a dedicated proprietary activation device for preparation before administration. Our proprietary device, VIALMIX, is used for that process. Our newly approved VIALMIXRFID incorporates two advanced features that provide important customer benefits.
First, VIALMIXRFID incorporates RFID tag technology, allowing for product tracing of each vial to the specific patient in which it was used. This is a patient safety feature already present in unit drug dosing in hospitals. We are pleased to be able to offer the same patient safety benefit for DEFINITY. Second, the RFID tag allows the VIALMIX to differentiate between DEFINITY and DEFINITY room temperature or RT. DEFINITY RT is a modified formulation of DEFINITY that allows for room temperature storage. It is currently under FDA review. Assuming FDA approval, DEFINITY RT's reconstitution parameters of shake time and shake speed will be different than those that are currently used for the DEFINITY formulation.
The VIALMIXRFID will differentiate between the two product formulations and apply the different reconstitution parameters appropriately. This means the introduction of DEFINITY RT will be seamless to our customers, and they will only require one VIALMIXRFID device for all their DEFINITY needs. A U.S.-issued patent on the use of the new VIALMIXRFID with an expiration date of 2037 has been listed in the Orange Book. An additional patent applications have been submitted in major markets throughout the world. We continue to see steady recovery throughout the quarter, primarily driven by DEFINITY, though we do see differences geographically due to COVID-19. Bob will speak specifically to the trends we are seeing in DEFINITY growth over prior periods. While the recovery we've seen in DEFINITY has not been matched by our nuclear portfolio overall, our TECHNELITE business did perform relatively well during the quarter, posting a 13.6% sequential growth rate.
Our Xenon business, however, continues to be negatively impacted by limited utilization of in-hospital respiratory inhalation products as a result of COVID-19 transmission concerns, and this market may not return to pre-COVID-19 levels until well into 2021. Regarding AZEDRA, we are encouraged by its continued utilization despite ongoing hospital access limitation to company representatives and have been maintaining volume with our current Centers of Excellence network. Going forward, our plan includes further enhancements to our commercial capabilities to drive awareness, and we may also consider expanding our commercial footprint once institutions reopen access to our sales team. We believe market opportunity exists for the only FDA-approved therapy for pheochromocytoma and paraganglioma, and we are committed to ensuring physicians and patients are aware of and have access to this important treatment.
In the meantime, we continue to make significant progress in optimizing our iodine manufacturing network to ensure sufficient supply at potentially a more favorable cost. This plan involves work at our Somerset facility as well as with the external partners we use for additional supply. For example, as part of our integrated iodine strategy, we have been able to leverage relationships, most notably with IRE, to more directly manage our I-131 supply chain. Our goal is to ensure adequate capacity to satisfy our projected commercial and clinical needs for AZEDRA, as well as to support our 1095 clinical development program. I will discuss our progress in our pharma services, digital, and partnerships business. Within the last few months, we have signed clinical supply agreements with both Regeneron and Bayer to include PyL in their clinical trials for prostate cancer.
PyL will be used to assess PSMA expression levels at different times during their respective studies. We believe these are illustrative of the value pharmaceutical companies see in PyL as a next-generation diagnostic imaging agent and represents a potential growth opportunity beyond the large market I discussed earlier. We also continue to identify growth opportunities in our microbubble franchise. Last week, we announced a strategic collaboration in which we will use our microbubbles in combination with Insightec's investigational MR-guided focused ultrasound platform to evaluate treatment of glioblastoma, one of the most aggressive malignant primary brain tumors affecting over three Americans per 100,000 and presenting a very low five-year survival rate. This partnership directly aligns with the key Lantheus growth strategy of pursuing new applications for our microbubble platform, as well as our expansion into oncology.
In the digital solutions area of our pharma services business, in September 2020, the FDA granted 510(k) clearance for the use of our aBSI digital solution on the GE Precision Healthcare platform. aBSI is our stand-alone artificial intelligence, or AI, application approved by the FDA for the evaluation of patients with bone metastases from prostate cancer. aBSI works by quantifying the selective lesions identified on a bone scan image. Bone scans are the second most broadly used radiopharmaceutical diagnostic imaging study performed in the U.S. The AI application provides a bone scan index value as adjunct information related to the progression of disease, supporting more informed clinical decisions. We are excited about the potential for this AI application in the overall treatment paradigm of prostate cancer and the complementary role it plays to our prostate cancer product pipeline, an important growth area for the company.
Lastly, regarding 1095, our phase II PSMA-targeted clinical development candidate for the treatment of metastatic prostate cancer, in October, we resumed patient enrollment for our ARROW trial in both the U.S. and Canada. As a reminder, during the second quarter, Progenics had paused new enrollment to minimize the risk to subjects and healthcare providers during the pandemic. Trial resumption is site-dependent, as each clinical site individually makes a determination as to when to allow new patient enrollment in the trial, given the current status of infection rates and other considerations at the clinical site. With that, I'll conclude my update on key commercial and strategic programs and turn the call over to Bob. Bob?
Thank you, Mary Anne , good morning, everyone. I will focus my discussion on adjusted results unless otherwise noted. Revenue for the third quarter was $88.5 million, an increase of 3.2% from the prior year quarter and a decrease of 3.6% organically. We continue to see progress across our portfolio from June through the end of the quarter, with revenue up by 34.1% over Q2. Sales of DEFINITY in the third quarter were $55.4 million, or 5.8% higher as compared to the prior year quarter, 37.3% higher sequentially over the second quarter. DEFINITY sustained volume strength during the quarter, when you analyze this year's performance to last year's Q3 growth rate of 19.7%, the two-year stacked quarterly average growth rate remains in line with low-to-mid-teens growth expectations. TECHNELITE revenue was $21.5 million, down 1.2% from the prior year quarter.
Similar to DEFINITY's sequential improvement, TECHNELITE grew at a positive but lesser pace at 13.6% sequentially. Other nuclear, inclusive of newly acquired assets, increased 10.5% to $17.2 million. Rebates and allowances totaled $5.5 million. Gross profit margin for the third quarter was 47.4%, a decrease of 225 basis points from the third quarter of 2019. The decrease is due largely to unfavorable contribution on lower Xenon revenue year-over-year due to a relatively fixed cost of raw materials. Additionally, ongoing logistics costs and the necessary added decay purchases to support those logistics also compared unfavorably year-over-year. Operating expenses were 39.8% of net revenue, driven primarily by ongoing investment to advance pipeline products, including PyL, notably the FDA filing fee paid in the quarter, as well as costs associated with a larger employee base in our first full quarter as a combined company.
Operating expenses were $15.6 million higher than Q2 2020, modestly lower than the anticipated increase associated with the comparative spend from Progenics, as I noted on our last earnings call. During the quarter and within these numbers, we were able to realize the targeted run rate savings of $4.6 million announced on our prior earnings call, in addition to certain of those cost containment initiatives we implemented earlier this year. Operating profit for the quarter was $6.8 million, or a decrease of 61.5% from the same period prior year. Adjustments in the quarter totaled $11.6 million before taxes. Of this amount, $4 million is associated with non-cash stock and incentive plans, $4.8 million related to acquired intangible amortization, and $800,000 related to changes in fair value associated with contingent consideration. The balance of $2 million is tied to ongoing integration efforts and other one-time expenses related to the Progenics acquisition.
Our effective tax rate was 41.9% in the quarter. The elevated rate is driven by a fixed interest accrual associated with our uncertain tax positions for which we aren't indemnified. When these accruals, taken together with certain levels of profitability, the results impact the underlying effective tax rate. The resulting reported net income for the third quarter was a loss of $6.4 million and a net profit of $2.4 million on an adjusted basis, a decrease of 78.5% compared to the prior year period. GAAP basic and fully diluted earnings per share were a loss of $0.10 and a profit of $0.04 on an adjusted basis, a decrease from the prior year of 87.1%. Turning to cash flow. Third quarter operating cash flow was $8.6 million as compared to $26.4 million in Q3 2019. Capital expenditures totaled $3.7 million, comparable to the prior year quarter.
Free cash flow, which we define as operating cash flow less capital expenditures, was $4.8 million, a decrease of $18.3 million from the prior year period. Cash earnings as well as a net contribution from working capital were the main drivers of the decrease in the quarter. Importantly, despite increased investment during the quarter related to our newly combined business and our ongoing integration efforts, we generated positive free cash flow in our first quarter following the acquisition. Cash and cash equivalents now stand at $88 million. We continue to have access to our undrawn bank revolver and are comfortable with our strong liquidity position. While I'm not providing specific targets for our fourth quarter due to the ongoing uncertainty amidst a surging COVID-19 environment, I would like to provide a level of direction for the fourth quarter.
Revenue is anticipated to be largely in line with the third quarter 2020, with ongoing support from DEFINITY, which will have similar year-over-year growth as compared to our third quarter performance. As a reminder, last year's fourth quarter results for DEFINITY was a 22.3% growth rate. While we anticipate slightly improved revenue performance, transient tech transfer costs associated with both our Billerica and Somerset facilities to drive longer term efficiencies are expected to modestly impact gross margin in the fourth quarter relative to the third. Operating expenses should be modestly higher than our adjusted Q3 run rate as we continue to build scale in our commercial and manufacturing effort in support of PyL. Additionally, we expect the resumption of patient enrollment in our 1095 clinical study alongside other R&D efforts to advance our pipeline. Lastly, we anticipate ending the year in a strong cash position.
Free cash flows will continue to benefit from increasing profitability as well as ongoing diligent capital management. Looking to the future, free cash flows will also benefit from the acquired NOLs from Progenics, which totaled approximately $339 million after applying Section 382 of the Internal Revenue Code. Taken together with pre-2020 NOLs of Lantheus, the aggregate NOLs available to the combined business are approximately $510 million, of which approximately half can be used over the next five years to reduce the cash impact of taxes over that period, dependent on tax book profitability. In addition to financial performance indicators, I also want to provide updates on several integration and expense-related milestones. Company remains on track to deliver on targeted strategic and tactical integration goals forecast to be completed during 2020.
For example, as Mary Anne mentioned earlier, we've accomplished the most significant goal to date with the filing of the PyL NDA in September and launched our PSMA imaging awareness campaign online. Additionally, we have finalized our manufacturing strategy in support of Iodine-131 products and are executing against that plan currently. Tactically, internal controls have been integrated with testing underway, and various IT solutions have been merged to promote internal efficiencies and communication. With that, let me turn the call back over to Mary Anne.
In closing, I would like to recognize all Lantheus employees for their commitment to patients and to our customers. I'm very encouraged with what I have seen in the first full quarter as a combined entity. Not only have we achieved a significant milestone with our PyL submission, but we also continue to make the expected progress throughout the organization in the other areas that are important to our growth strategy, our microbubble franchise and our pharma services business. With what I have seen, I am more optimistic than ever in our ability to deliver on our strategic vision of sustained growth for Lantheus. I look forward to future updates on the progress of our business. With that, Bob and I are now ready to take your questions. Operator, please go ahead.
To ask a question, simply press star one on your telephone keypad. Again, that's star one to ask a question, we'll pause for a moment to compile the roster. Your first question is from Larry Solow with CJS Securities. Please go ahead.
Good morning. Thanks for taking the questions. Mary Anne, perhaps we'll start with maybe a global question, just on Progenics. Obviously, I think you announced the acquisition about a year ago. You only had it for, I guess, three or four months. Just to date, what surprises you the most, perhaps on the plus side? What, if any, things are maybe not negative, but maybe where there's more room for improvement than maybe perhaps you thought a few months ago when you first acquired the company?
I think it's a very fair question, Larry. Good morning. Hope you're doing well.
Yeah.
On the plus side, as I said in my closing remarks, and I'll then flash back to my beginning remarks, I am just incredibly impressed with the way these teams have come together with no disruption to what was ongoing in the business on both sides and what was important to the business to get the PyL submission in and have that be such an outstanding file. I think it's real testament to not only the will of the two companies to come together, but the greater will to do it amidst what was a really struggling backdrop, the pandemic, and then the need to do everything virtually. I want to say hats off to all the employees there. It really speaks to their intent to become one. On the other positive side, as Bob noted, we're on target for our synergies.
That is something that we've always been committed to, we remain committed to. Again, something that was complicated by the pandemic, just from almost an administrative perspective, getting everything together. I'm incredibly pleased with that. On the less positive side, because I'll never say negative, but on the less positive side, we're operating in a world where our sales teams and all of our customer-facing teams have now had a complete sea change in how they access their customers. We're trying to find out and trying to work our way through, as are so many other companies, coming through this, what is the right way coming out of this to go forward and be able to offer the services that we've always offered? We're very intent on medical education. We truly feel that was our success and our cornerstone with DEFINITY.
It's a model that we want to apply to AZEDRA. It's certainly part of the model that we'll apply with PyL. That model needs to be completely rethought in a new world where, on an ongoing basis, access to customers may be permanently limited in the physical sense. That's something we're going to have to think through. In the same sense, I'll speak to the 1095 trial. The ARROW trial was underway. We were starting to see good patient enrollment and accumulation of patients in the trial, and that came to a full halt for all the right reasons.
We're starting now. We are incredibly eager to bring back and have that drug offered to patients who we feel will benefit and to get ourselves to a point of patient enrollment where we can get to a point to see and make decisions around the value of that asset. I'd say those are some of the things that they're not really related to the acquisition or our efforts at integration. They're more related to the backdrop of the market that we're trying to accomplish it in.
Great. No, that was very helpful. Maybe just a follow-up question for Bob. You mentioned synergies and whatnot are certainly on target. I know you're not giving guidance, but just on some of the cost sides. The sales and marketing line was somewhat lower than I thought it would be. I realize you just acquired Progenics, but is that line item that I would expect that to go up sequentially as we look out and maybe cost come from savings come from other line items? Is that fair to say?
Yeah. Good morning, Larry. Yeah, that's actually an astute observation. The synergies are coming from the G&A line.
Great.
Those things are the redundant positions like C-suite and that kind of thing, as well as other administrative like board costs or work that's done from an audit fee perspective. Those are the places that we're finding cost savings. For sales and marketing, it has really more to do with the fact that what Mary Anne was just articulating, we're doing less promotion in person. There's less travel costs and those kinds of expenses.
Right.
From that perspective, we would expect, yes, that as we build out our commercial team, our CCO has done a good job of attracting some talent, particularly toward the end of the quarter, which is why I noted that operating expenses would be slightly higher in the fourth quarter because we would see the beginnings of those people starting to do their work and to be prepared for the PyL commercial launch, as well as dependent on ongoing, whether we can get access. There are regionally some places where you can get access into hospitals, they're not many at this juncture. We would forecast that as access is granted in the future, that people will be doing more of that in-person promotion, which is more expensive.
Got it. Okay, great. I appreciate that color. Thanks a lot.
No worries.
Again, to ask a question, press star one on your telephone keypad. Your next question is from Raj Denhoy with Jefferies. Please go ahead.
Yeah. Hi, good morning. Maybe, Bob, I could ask you a basic question, I apologize. There was no revenue reported from Progenics in the quarter, no RELISTOR royalty or AZEDRA sales, and I'm curious what the accounting for that is and why not?
It's included in other. I had said that we had acquired, which is where we've housed our other assets, is included in there, Raj it's not included.
Okay, fair enough.
It's just in that number.
Okay. Yeah, I guess then that sort of makes the case that you were making earlier about Xenon really falling off, I guess because. Well, maybe the question would be, could you tell us how much those two lines were so we can maybe get a sense of what the underlying other nuclear business did prior to Progenics coming in? Those two lines the RELISTOR and the AZEDRA.
Yeah.
Yeah, I don't mind. In fact, mathematically, you could probably get there given the growth rates I gave you both the growth rate that we had for the quarter plus the organic. You could back into it. From that perspective, in combination, RELISTOR continued to perform fairly consistently as we have been seeing in that sort of $4.5 million number for the quarter. AZEDRA is very much sort of in line with what we saw in the third quarter as well, which was right around about $1.5 million.
Okay, that's helpful. Mary Anne, just on PyL, I'm curious, you've given more information recently just in terms of your views on the size of the market, and we have a better sense on timing at this point, but I'm curious your views on the cadence of the ramp should it get approved. I appreciate it could be anywhere from six to 10 months given the expedited review path or not. How quickly does this ramp in a sense, and what could constrain it? Do you have to sign contracts with the radiopharmacies? Is there capacity at cyclotrons at this point? How should we think about how this starts to roll out?
Good morning, Raj. I hope you're doing well, happy to talk about that because I think it is really a very intuitive question. Certainly, you're probably used to pharmaceutical launches and some of the gates that kind of control how a pharmaceutical comes out, coverage is certainly one of those gates. We feel we'll be well prepared at launch with, as you say, contracts down the channel for where we need channel partners to move the product. There are some other gates. One of them is the pass-through application to CMS. With this type of radiopharmaceutical product, you are required after approval to put application in through CMS for designation and recognition of pass-through. It's not a question of whether it will be approved, it is a question of just from the function of putting the application in.
There could be a 60-day gap between the approval date and when you get that application in, and then when the application comes back, it's approved. I think you do need to gate the uptake based on that. If you look at the population here, this is a significant Medicare population of patients in the market that I was referring to. While average age of diagnosis at time of diagnosis for prostate cancer is below the Medicare age, these gentlemen fortunately live for 18 - 20 years. Especially if you're talking about our addressable population, which is mainly biochemical recurrence, these are gentlemen who have been already within the treatment paradigm, and many of them will be of Medicare age. I think we need to gate that way. The other gating factor is the coverage you have across the U.S. population.
With radiopharmaceuticals that are PET manufactured, when you submit your application, within your application, you submit for simultaneous approval of PET manufacturing facilities. Each site is considered an approved manufacturing site just by nature of how the product is produced, as I described it in my comments earlier. What is very typical with these products is you submit with a group of PET manufacturing facilities, and then immediately at approval, you submit the next, I'll call them a basket or group of PMFs that will then also be considered and approved for the FDA as additional supplemental manufacturing sites, and you can do that on a six-month basis. There are different regulatory pathways that allow you either quicker access to those approvals or more standard review, and we intend to take availability of all of them.
That will also present gating as to what percent of the total U.S. addressable population will have, I'll say, access to immediately at approval. What I will say is that we are confident that by six months out, we will essentially be covering the U.S. population. From the zero to six-month period, it is somewhat of a ramp.
Yeah. Given those constraints, right? Having to establish the pass-through payment and then ultimately getting the volume of manufacturing sites higher, do you anticipate there could be revenue in 2020? Next year, again, I realize there's the timing constraints around the FDA approval process, but just trying to right-size how to think about this next year.
Raj, reference 2020, I believe you probably meant 2021.
Sorry, 2021, yeah. Apologies, 2021.
We do absolutely anticipate revenue in 2021, but we also look at it, I guess, as you're noting, through the lens of those different constraints that will face us as we come through launch. We're confident about what I said. Our file, we think, is very strong. We think our approach to market is strong. We certainly know that there is unmet demand in the market, and there's high anticipation for this product, and we also believe that the F 18-based product is the stronger product for the market. I think what would be fair to say as you think about how to think about the product, the higher ramp and the steeper ramp comes in 2022.
Fair enough. Maybe I'll squeeze one in. I'm not sure if there's other questions, but you mentioned the other product on the market, the gallium generator-based product. One could make the case that given the ease of manufacturing of the agent, or the lack of necessity to use a cyclotron to manufacture it, might make it easier to use initially. How do you think that ultimately plays out in terms of your competitive position versus that other product, assuming you guys both get approved?
Yes, you mentioned both get approved. That product is also under consideration by the FDA for approval. While I agree with you that at immediate approval, the channel availability is broader because it's produced under the practice of pharmacy and not under GMP. The significant constraint there is how many doses can be produced by any pharmacy at any time. This is a generator-produced product, and specifically with the gallium generator, there is a limited number of doses that can be produced maximally for a day by each generator, and the use of those doses compete with other gallium-based products.
There's also the logistics of when the doses can be produced and when they can be used, because the logistics typically, and this is kind of current practice out in the U.S., in a nuclear medicine department is they typically like to schedule more of their FDG-based studies in the morning because those patients who are undergoing FDG studies need to be fasting. It's just more humane and logistically easier if they use the morning time on the PET machines for FDG-based doses. That kind of then, under current practice, limits when they can do the prostate PSMA scans to the afternoon, which further constrains how those fewer doses can be used because you can't space them out well over the day.
Helpful. I appreciate it. Thank you.
We show no further questions at this time. Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Have a wonderful day.