Earnings Call: Q2 2018

Aug 1, 2018

Good afternoon, ladies and gentlemen. Welcome to the Lantheus Holdings Second Quarter 2018 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 2 hours after completion of the call and will be archived for 30 days. I would now like to turn the call over to your host for today, Mira Murphy, Director of Investor Relations and Corporate Communications. Good afternoon, everyone, and thank you for joining us for Landius Holdings' 2nd quarter earnings conference call. With me today are Mary Anne Hayno, our President and Chief Executive Officer and Andrea Sabins, our Vice President of Finance, who will be standing in for Jack Crowley, our Chief Financial Officer, due to a death in his family. Earlier this afternoon, we issued a press release, which was also filed with the Securities and Exchange Commission under Form 8 ks, reporting our 2nd quarter results. You can find the release as well as a replay of this call in the Investors section of our website atlantheus.com. Please note that the remarks we make today regarding future expectations, plans and prospects for the company constitute forward looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward looking statements as a result of various important factors, which we disclose in more detail in the Risk Factors section of our annual report filed under Form 10 ks with the SEC and available on our website. We remind you that any forward looking statements represent our views as of today and should not be relied upon as representing our views at any subsequent date. While we may update any such forward looking statements in the future, we specifically disclaim any obligation to do so except as otherwise required by applicable law. Also, please note that on today's call, we will reference certain non GAAP financial measures with respect to our performance. We use these non GAAP indicators for financial and operational decision making and as a means to evaluate our performance. Reconciliations to GAAP metrics for EBITDA, adjusted EBITDA, adjusted operating income, adjusted net income, adjusted net income per diluted common share and free cash flow are set forth in our earnings press release. Of particular note, these tables include the reconciliation of our GAAP net income to adjusted EBITDA, a metric we consider to be particularly relevant at this time due to the variability of our technology transfer activities and related costs. Mary Anne will begin her comments today with a high level review of Q2 and Andrea will follow with an overview of our financial performance along with our Q3 and full year guidance. Mary Anne will then provide updates regarding our corporate growth strategy and programs. After their prepared remarks, both Mary Anne and Andrea will take questions. With that, I will turn the call over to Mary Anne. Thank you, Mira, and good afternoon, everyone. Q2 was another solid quarter for us. We met our guidance for revenue and exceeded our guidance for adjusted EBITDA. This year continues to be a period of strategic investment in our business with an eye towards longer term growth objectives. Our 3 pronged strategy is to 1, enhance the growth trajectory and profitability of our core microbubble franchise 2, augment and invest in our pipeline with a special focus on emerging technologies and 3, pursue external opportunities that fit with our objective to deliver long term sustainable growth and profitability. I'll discuss each area of our corporate growth strategy after Andrea reviews our Q2 numbers in detail. But first, I want to provide an update regarding one of our nuclear isotope suppliers, NTP, in South Africa. As we previously disclosed, the NTP processing facility has been offline since early June. This has temporarily impacted a portion of our supply of molybdenum 99 or moly-ninety nine, the medical isotope used in our proven high specific activity TechneLite generators. NTP is working with South African regulators on its remediation efforts. In our latest discussions with our partners at NTP, they suggest they are targeting a mid August restart of production. While NTP's outage did impact our Q2 revenue, we were able to source additional Moly-ninety nine from our other suppliers, allowing us to mitigate the impact of this shortage and to reaffirm our full year financial guidance. Looking ahead, I would like to note the efforts we are making to further strengthen our Moly-ninety nine supply chain for our proven high specific activity Teknalyte generators. Our supply partner, ANSTO, is nearing completion of a project that ANSTO anticipates will significantly increase its moly-ninety nine production capacity. In addition, our supplier IRE is targeting to complete its conversion to full LEU supply in 2019, which will also bring additional flexibility to our supply chain. Finally, another strategic partner of Aje is Schein Technologies, which is well underway with its project to bring domestic supply of moly-ninety nine to the U. S. Marketplace. Pending approval, Schein is expected to initiate commercial supply in 2021, at which time Schein will fortify our moly-ninety nine supply chain. I will now turn the call over to Andrea, who is standing in for Jack on today's call to review the Q2 numbers. As mentioned, I'll be back to review our recent progress on our 3 pronged corporate strategy. Andrea? Thanks, Mary Anne, and good afternoon, everyone. Please note that the tables in today's press release include a reconciliation of our GAAP results to the as adjusted non GAAP performance I'll review in a moment. We exceeded our guidance for adjusted EBITDA and came within the range of our guidance for revenue. The relative outperformance of adjusted EBITDA reflects thoughtful cost management along with the timing impact of some R and D expenses. Digging into the numbers and starting from the top line, the company delivered $85,600,000 in worldwide revenue for the Q2 compared with $88,800,000 in the Q2 of 2017. DEFINITY continued to perform well with worldwide revenues totaling $46,100,000 for the quarter, up 15% from Q2 of last year. TechneLite revenue was $23,500,000 compared to $26,700,000 a year ago, which was primarily a result of the disruption in moly-ninety nine supply that Mary Anne discussed earlier. Xenon revenue for the quarter was $7,600,000 essentially flat when compared with $7,900,000 in the Q2 of 2017. Finally, revenue from our other product category was $8,400,000 in the 2nd quarter compared with $14,100,000 a year ago. As a reminder, last year's other revenue included the $5,000,000 upfront payment received in the Q2 of 2017 from GE Healthcare under the flocuridaz F-eighteen collaboration and license agreement. Our 2nd quarter gross profit margin, excluding technology transfer activities, was 51.9% compared with 50.3% last year, excluding the impact of the GE payment. Operating expenses were $27,900,000 for the Q2, a slight decrease as compared to $28,100,000 in the Q2 of last year. Operating income for the Q2 of 2018 was $15,900,000 an increase of approximately 22% over last year, excluding the GE payment and adjusted operating income for the Q2 of 2018 was $16,500,000 an increase of approximately 4% over last year, excluding the GE payment. 2nd quarter interest expense totaled $4,300,000 which was unchanged from Q2 of last year. Net income for the Q2 was $9,700,000 or $0.25 per diluted share compared with $13,600,000 or $0.35 per diluted share for the Q2 of 2017. Adjusted net income for the Q2 of 2018 was $10,200,000 or $0.26 per diluted share compared with $15,700,000 or $0.40 per diluted share in the Q2 of last year. The decrease primarily reflects the impact of the GE payment and an increase in the tax provision following the release of our income tax valuation allowance in the Q4 of 2017. Moving on to the balance sheet. As of June 30, 2018, we had cash and cash equivalents totaling $86,500,000 Borrowing capacity under our revolving credit facility remained at $75,000,000 dollars making our total liquidity, including cash on hand, dollars 161,500,000 This provides substantial support for our operating and strategic investment needs and represents a 22% improvement compared with the same period 1 year ago. 2nd quarter 2018 operating cash flow totaled $20,300,000 compared with $20,600,000 in Q2 of 2017. Capital expenditures during the Q2 of 2018 were $5,600,000 compared to $3,400,000 in the Q2 of 2017, reflecting increased investment in some of our strategic programs. Turning now to our guidance. For the Q3 of 2018, we anticipate total revenue in the range of $82,000,000 to $86,000,000 and adjusted EBITDA in the range of $18,000,000 to 21,000,000 dollars For the year, we are maintaining our guidance for revenue in the range of $337,000,000 to $342,000,000 and for adjusted EBITDA in the range of $85,000,000 to $90,000,000 With that, I will now turn the call back over to Mary Anne. Thank you, Andrea. I will now provide some updates on our business performance and strategic programs. On July 25, CMS published its proposed rules for 2019 HOPP procedures. The proposed reimbursement rates for contrast enhanced echo, including procedures with DEFINITY for 2019 are consistent with the current 2018 rates. We are pleased these proposed rates recognize the incremental value that contrast offers in ECHO procedures when needed. The final CMS HOP's 2019 rules are expected to be published in November. Strategically, we have added to our patent to state for DEFINITY. In addition to the U. S. Patents already granted through 2,030 7 that cover certain facets of DEFINITY, we were recently granted a composition of matter patent in the U. S. For our alternative formulation of DEFINITY that will run through 2,035. We believe the addition of another formulation to our DEFINITY portfolio will offer customers additional flexibility in choosing the formulation that best meets their patients' needs. Next, we reached another key milestone in our DEFINITY China program with DoubleCrane. Recently, enrollment was completed for all needed studies, which includes cardiac, kidney, liver and pharmacokinetic studies. Analysis of the resulting data is in progress and we expect the application for approval to be submitted to the China FDA by the end of this year. As shared previously, we are pursuing a left ventricular ejection fraction or LVEF indication for DEFINITY. We continue to work with the FDA on a special protocol assessment or SPA for our LVEF trial design. While the SPA is not completed, we are at the stage of answering routine questions with the FDA. We believe we remain on track to initiate trial by the end of 2018 and in fact have started trial activities, including contracting with both the CRO and core laboratory, identifying trial sites and conducting site qualification visits. If an LVEF indication is approved, the addressable echo patient population in which DEFINITY could be used would approximately double and we would have 3 years of marketing exclusivity for that new indication. Additionally, the build out of our in house microbubble manufacturing capabilities at our Vilrica campus remains on schedule. Once online, the facility will help to ensure reliable supply as well as improve our cost of goods sold and gross margin. Regarding our pet product pipeline, earlier this week, we jointly announced with GE Healthcare the start of the 2nd Phase 3 clinical trial for flupirodas F18 with the 1st patient enrolled in June. This agent is the focus of our collaboration and license agreement with GE Healthcare. This prospective open label international multi central trial for pet MPI will enroll up to 6 50 participants with the last patient follow-up projected to occur in August 2020. The future economics of this collaboration provide for regulatory and sales milestone payments, double digit royalties on U. S. Sales and single digit royalties on sales outside of the U. S. And the option to co promote the agent in the U. S. Market. Next up is our Phase 3 LMI-eleven ninety five program. 1195 is our Fluorine 18 based pet agent that we believe represents a 1st in class and useful diagnostic tool for a population of patients at risk for sudden cardiac death. While we now anticipate we will initiate the trial in 2019, we have undertaken work with the FDA on an SPA for the planned single Phase III clinical trial. Addressing the 3rd prong of our growth strategy, we are actively assessing external opportunities. Ideal opportunities will both complement our current capabilities and address current unmet patient or market needs. In addition, we would prioritize assets that are or would soon be accretive to revenue and profit margins while improving cash flow. In closing, we are pleased with our business results to date and our progress on strategic programs, and we look forward to updating you in the coming quarters. With that, Andrea and I are now ready to take your questions. Operator? Our first question comes from the line of Raj Anoj with Jefferies. Your line is now open. Raj? Hi. This is Anthony in for Raj. I apologize, Marion, I was muted. Thanks for taking the question. Maybe just to start on TechneLite, just a bit light versus our expectations. I'm just trying to get a sense of the price volume dynamics in the quarter, how that played out? And then maybe a related question to that would be looking ahead to the Moly supply agreement with Schein. I'm just wondering how that plays out as it relates to margins for the radiopharma business? And then I have one follow-up. Thanks. Sure. Eddy, let me answer your first question on TechneLite and that really you asked what the price volume dynamic is for revenue for the quarter. It really is a volume dynamic, not a price dynamic. We are essentially fully contracted for sales for TechneLite. So the pricing is set through those contracts. As we noted during the call, the volume deficit we had, which led to the revenue deficit is related to NTP being offline since early June. We were able to mitigate a significant portion of that supply outage, but not fully. And that's what's driving the, as you described, lighter than anticipated TechneLite revenue. Looking forward to Schein, as I mentioned in the call, Schein is a little bit in the future. We anticipate that they can begin commercial supply to us in 2021. I won't comment now on pricing or margins since it is an event sitting out in our future. I think it's fair to say that we continue to seek ways to not only fortify our supply chain, but to do so in a way that makes it most price efficient for us. That's helpful. And then the follow-up again on NTP, would you I'm assuming intra quarter orders will sort of shift depending on availability. So do you see pent up demand as NTP comes back on or are those orders lost? And then lastly, just on F-eighteen, the announcement with GE, the timing there August 2020, is that specifically last in man and then you would get an analysis of the study thereafter? Or are you expecting a final readout sort of August 2020, just a clarification on timing? Thanks again. I'll get back in queue. Thank you. So let me address first your questions about NTP and pent up demand. Anthony, in this case, there really is no pent up demand because in the case of TechneLite, it's pretty much a moment in time or just in time type of manufacturing and order demand fulfillment. And so there is no way to catch up on orders lost. During this time, we are very focused on ensuring that our customers receive as much supply as we can offer them and ultimately that patients are not in any way inconvenienced by not having appropriate supply enough to do the patient exams that that supply ultimately satisfies. And that's been a major concern for us. Speaking to what was the other question was on flupiridaz and on the August 2020, that is the last patient out date. And of course, after that, there will have to be analysis of the data that were generated by the trial, which will ultimately fuel and allow completion of the full file for submission to the FDA. Thanks again. You're welcome. Our next question comes from Erin Wright with Credit Suisse. Your line is now open. Great, thanks. A follow-up on TechneLite. I guess, can you explain or speak to sort of your thoughts on the competitive landscape for TechneLite and how you envision that sort of evolving in your competitive positioning overall? Thanks. Yes. First, let me say it's our hope and we support all the efforts to bring additional sources additional addition modalities to the testing that's done under that specialty. So we are strong supporters of that and we're a strong supporter of the medical societies that are involved in that. I think, Erin, what you're referring to with the emerging competitive landscape perhaps are the announcements that were made last quarter by BWXT about their intent to enter the marketplace with a competitive product that would be a competitor to our product, which is TechEnlight self contained proven, high specific activity, the generator that's currently in the marketplace. And we feel that we will continue to have the type of product quality and the type of competitive dynamics that will allow us to very successfully complete in that market, whether that market changes next year, the year after or several years from now. Okay, great. And then somewhat of a 2 part question here, but can you give us an update on the manufacturing position to a position to close a deal or 2 by year end? Thanks. Sure. So again, 2 very different questions. Our on-site manufacturing project is the installation of a line that will allow us to have an additional source of manufacturing for DEFINITY. So that's our cold product, not one of our nuclear products. We're very much on schedule there. I may have described in a previous call, this is the refit of an existing structure on our campus. And so from a timeline perspective, it's accelerated by the ability to use the existing infrastructure of that building. It's still a project that is certainly year plus in length. We will as we near completion, we will undergo inspection by the FDA and there will give us kind of a more finite time point to point to when we can bring first commercial product into our supply chain for the U. S. Market. So that's our on-site manufacturing project. Your other question about M and A, as I mentioned in the call and I really will not be any more specific, but we are well advanced in our consideration of what types of assets and or companies in their geographies or in their the markets they compete in are the right fit for us. And that really is kind of a multipronged approach to improve what our shot on goal will be once we move forward. I will not offer any more detail or will I commit unnecessarily to saying that I expect one of those deals to close next month or by the end of the year. Suffice to say, when it does, we'll announce it and then I'll be more than glad to talk about it. Great. Look forward to it. Thanks. Our next question comes from Larry Solow with CJS Securities. Your line is now open. Hi, great. Thanks. Good afternoon. Maybe just speak a little bit more to DEFINITY? Any I assume, Mel, but any update on the any patent filed? And obviously, you're doing a good job building around the estate there with alternative formulations at least and expanding to different potential uses. But just thoughts on sort of it seems like some of the overhang on the stock is related to the patent situation. And is it just a matter of waiting out a few more quarters? And as we keep get one more quarter on the BOP and no filing, do you think eventually these sort of fears will wane? Or what are your thoughts on that? Larry, I think your thoughts are a perfect example of what we're facing with the market. And that is my belief is that many of the analysts who consider us are used to the pharmaceutical market, where in fact we've seen historically very significant drops in revenue of exclusive products post genericization events with those products. I have offered in earlier calls the consideration that the pattern post genericization for a diagnostic product does not mirror what you see for a pharmaceutical product. And there are several reasons for that. In fact, we have experienced ourselves because our product CardioLite, which went generic in 2,008 and at the time of going generic was the most successful radiopharmaceutical ever commercialized in the U. S. Market was a product that certainly demonstrated what would be the pent up demand to enter with a generic product. And yet, if you compare the post genericization pattern of revenue, sales and loss for that product, it is strikingly different from what you see post the genericization events we've seen with products such as Prilosec or any of the other major brands that have been in the pharmaceutical market. I'll offer 2 reasons why the diagnostic market and in particular, the DEFINITY supply chain is different. And they both have to do with the channel and how the channel is used and accessed. In the case of DEFINITY, our product is sold directly from our campus right into echocardiography labs where it is stopped and it is used in fulfillment with a procedure and then build out to Medicare or a third party payer as part of a procedure. That differs in the following 2 very dramatic ways from a pharmaceutical product. Pharmaceutical products are uniformly, I'm going to say universally, but it's not exclusively distributed from large wholesalers, where for there is a possibility for very large scale switch on a very real time basis as these wholesalers sometimes deliver 3 times a day to the pharmacies that they serve. So you have a very easy part of the channel where it's very easy to flip the supply going out to the customer. Similarly, at the retail encounter between a patient and a pharmacist, you have the opportunity in real time for electronic switch of a prescription. So a patient and for all patients ourselves, a patient who approaches a pharmacy counter to fill a prescription in real time can be offered the opportunity to have that prescription instead filled with the generic form of the same product that they had that their prescription knows as long as they be rated. And there's also there's very frequently an economic incentive for the patients to comply with that generic switch. Neither of those dynamics are applicable or relevant in the supply channel in which DEFINITY operates. In that, it is not a product that is ordered by prescription nor is it a product that's housed by wholesalers nor is there a point of electronic transaction where that decision can be changed. And we feel those factors plus our work in protecting what we see as the patented facets of Xfinity will impact what will be the behavior of the market post mid-twenty 19 when our first composition of patent, matter patent expires. We also, just as a reminder, have an additional Orange Book patent, which goes out to 2,037. And based on that being included in the Orange Book, it require any potential generic filer of a DEFINITY potential DEFINITY generic product to use a Paragraph IV filing process with the FDA, which would automatically include notification to Lantheus, to myself that there was the intent to attempt to bring a generic product to market. So I hope that answers part of your question. Absolutely. Yes. And how does the vial mix, obviously that's a it seems like a big advantage. And how does the patent situation on that come into play? In other words, if somehow generic was able to get in on the composition of matter patent expiration, they wouldn't be able to is the Valmexenoid a separate patent, does that run out for a much further time? And that seems to be an advantage of your product, so they wouldn't, I guess, have access to a similar type thing, right? Well, it's true in the following way. The BioMx is also a patented device. It is not an Orange listed patent, but it is a USPTO listed patent. And therefore, we would defend those patented aspects of our Violex. Any potential generic filer wishing to enter the market would have to do so with their own dedicated apparatus that would have to be also approved as a device through a regulatory process. Okay. Just a couple of other follow ups. You mentioned a little bit on the pipeline. On the DEFINITY trials, the year by year end start date, I think it looks like it's a little bit delayed on the SPA. Is that going to is there any particular reason why it's delayed other than just FDA back and forth? And would that necessarily push out some of your R and D expense from 2018 into future years? So the answer is yes and yes, Larry. It is just routine back and forth with the FDA. We had assumed earlier in the year that we'd be completed by mid year. We're not. But we do still anticipate we'll initiate the trial by year end. Can that cause some expenses to float into 2019 from 2018? It's possible. We have not noted yet that we see any predictable movement of expenses, but I'll have a much better line of sight on that as we come closer to year end. Okay. But there was no real benefit. You sort of the spending to date obviously is pretty much in line because it wouldn't have really accelerated, I guess, until you sort of got closer to the trial start date, right? True. And I'll just note for everyone's awareness, we are seeking an SPA, which is a special protocol assessment. That is not required for us to start our trial. We have chosen to have that conversation with the FDA because we feel that aligns more clearly what the expectations are for the outcomes of the trial that then lean towards the FDA saying the basis of this trial is also the basis of approval for the indication. Right. So I guess it sort of sets the goalpost before the game starts, if you will. Just one other question on TechneLite, it sounds like you said that you were able to secure supply for this quarter. If the NTP is not back up by August or if that runs into the end of August or whatever that might be, is there a potential for some impact more impact on your sales going forward? I guess that's still somewhat of an uncertainty? So I just want to clarify, Larry. I hope I did not misspeak. I did not mean to communicate that we had secured another supply. No, no. I know. You said enough. I said enough. Yes, that you were able to yes, I'm sorry. We mitigated the absence of NTP as one of our suppliers. We're able to mitigate that amount of volume by sourcing more from our other suppliers. Right now, we're based on our discussions with NTP, they're targeting a mid August restart. So given that that's already put us into the quarter, yes, I would anticipate that versus what is the normal run rate you've seen in other quarters, there will still be a slight revenue hit for TeknoLight in this quarter. But as you heard Andrea say, and as you heard then me reaffirm at the end of my comments, we are reaffirming full year guidance and we also offered our guidance for Q3. And I think that we're trying to send a message with that as well that at the larger company level with all the puts and takes of our portfolio of products, we feel we can manage what we see as any remaining issue with TechneLite revenue related to supply outage. Okay. And then just lastly, any color on the recent departure of your Head of Commercial Sales, Tim Healy? I think he left last week or that was in an 8 ks. Is there any particular reason for that? Was that just agreed to disagree, you moved on to greener pastures or anything there? So we did separate Tim did separate from the company. I will of course not comment on employee matters. As Tim was a named Executive Officer, we did publish an 8 ks announcing the day of his separation from the company. Just for everyone's awareness, my prior role in the company, my initial role in the company was Chief Commercial Officer before becoming Chief Operating Officer. And in the interim, while we do complete our search for a new commercial head, the commercial team will be reporting into me. Not saying they're going to like it, but they will have their old boss back. Got you. Okay, great. Thanks very much. You're welcome. Our next question comes from Lei Wang with Wells Fargo. Your line is now open. Thanks. Hi. It's Lei calling in for Larry. Just to be clear on NTP and your guidance, your Q3 guidance and your 2018 full year guidance that you maintained that assumes NTP is back online in mid August. Is that right? No, Lee, I did not say that. I apologize if that's the inference I gave. What I would like to say is that we have considered what the impact of any outage could be, but I'm not trying to suggest that we have locked that down to saying that it only includes a considered outage up to the middle of August. Got it. Okay. All right. So it's possible your guidance assumes it comes back online sooner or later than August. You're just saying here's what you've been told mid August restart, but your guidance may assume something different. So there's many scenarios that underlie how we come to final guidance and it includes, as I mentioned before, puts and takes across different parts of the product line and included in that are considerations for different restart times, full restart times of NTP. Got it. Okay. And then just a couple of questions on your guidance. So in first half of the year, it looks like your revenue grew total revenue grew in the low single digit. It looks like you're guiding to second half top line growth that's closer to midormidhigh single digit. 1, I want to make sure kind of I'm looking at those numbers correctly. And if that is correct, can you just remind us what drives the faster growth in the second half? So a couple of things, and I'm going to turn it over to Andrea. She can be more numeric with you. But I would remind everyone that this quarter that we're currently in, if you look at the pace of our quarters historically, this is a lower quarter for us and we attribute that to essentially what we call vacationality. So for scheduled procedures, which typically DEFINITY is and for the routine scheduled procedures that nuclear studies typically are and I'm excluding those that are done on an emergency or crisis basis. Those tend to lag in the full summer months because people postpone having those studies done until everyone's back from vacations and staff is fully back up. And so you do normally see that. Having said that then, as you mentioned, Leigh, we do normally see a stronger growth behavior in the latter half of the year. It's really then, as you can imagine, driven by Q4, where we typically see a resurgence of ECHO studies, including those done with DEFINITY and the kind of the re current of normally scheduled studies in our nuclear program. Got it. Okay. I guess I was referring to a year over year growth. It looks like year over year first half revenue growth was sort of in the low single digit, whereas in the back half of the year, if we compare it to the prior year period, it looks like it's closer to at least the guidance looks like it's implying something closer to mid to mid high single digit. So I was looking at year over year comparison 2018 versus 2017. That's fair. And so then I would say, Lavey, it's what I think what's driving the math there is the fact that we also had the TechnoBite outage in the Q1 of this year. And we don't from a revenue planning perspective, we don't anticipate it continuing for the balance of the year. So that would have first half twenty eighteen versus first half twenty seventeen look weaker than second half twenty eighteen versus second half twenty seventeen. Got it. Okay. And are there any other factors other than the TechnoLight supply issue? Are there any other factors we should consider in the second half that could help growth? No. The only thing I would remind you is when you're comparing first half 'eighteen over first half 'seventeen, you should pull the $5,000,000 one time payment from GE out of 'seventeen because it was a one time non recurring milestone payment. Yes, got it. Yes, thanks. And then along the same lines, just looking at your adjusted EBITDA margin, it looks like it was in the first half of the year, it looks like it was, call it, around 28%. And then if I look at your full year guidance kind of back into the second half, it looks like it would be slightly lower, call it, 25%, 26% or so. 1, I want to make sure my math is in the ballpark. And 2, what's kind of causing that little dip in margin first half twenty eighteen versus second half twenty eighteen? That's a very good question, very insightful, Leigh. I think what's driving that, the most positive contributor to that are the R and D programs. As we had released earlier in the year, we had seen some timing delay on some of those expenses and they have moved into the second half of the year. So there was already R and D expense planned for that period. And in addition, that period is now picking up some of the expense that had been planned earlier in the year to occur earlier in the year. Got it. Okay. Very helpful. And if I can just squeeze in a couple of questions on DEFINITY. First, just to be clear, and I know you talked about the patent quite a bit, but just to be clear, are you aware of any generic DEFINITY filing at this time? No, I have not been notified about any generic filings for DEFINITY to the state. Okay, perfect. And then the new composition of matter patent, you mentioned for the alternative formulation. Is there anything else you can share on that at point, in terms of the new formulation or the timeline? I guess we're typically thinking a composition of matter patent having to do with a drug substance. But when you marry that with the term alternative formulation, it's not quite clear what it means. So we're not trying to be unclear about that. I think the information I offered this time, which should indicate what we're working on is that we are offering an alternative formulation so that physicians can choose at their discretion, which best meets their needs in the clinic and for their patients. That from a perspective that doesn't indicate a different substance. It really does speak more to the composition or the packaging that the substance comes in. And that's all I'll share at this point. Got it. Okay. So nothing new you can share at this point in terms of timeline? No, I don't have anything to update on time. I will note though, just to be clear that the it's an Orange Book awarded patent, but it won't be Orange Book awarded until the product is actually approved. So the patent has been awarded, but it will not be Orange Book listed until the product itself, the alternative formulation is approved by the FDA and then it will run out through 2,035. Got it. Okay. So the patent has been issued by the U. S. Patent Office? Patent has been issued. It will not be listed in the orange book because the orange book refer is a listing of patents that are that pertain to approved FDA products and therefore you won't get the orange book listing until the product is approved by the FDA. Got it, perfect. Thanks very much, Maryann. You're welcome, Leigh. I'm showing no further questions in queue at this time. I'd like to turn the call back to Ms. Murphy for closing remarks. Thank you for joining us today. Please note, we will be presenting at the Wells Fargo Securities 2018 Healthcare Conference on September 5 in Boston. With that, we will end today's call. Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating.