Welcome everybody to the Leerink Global Healthcare Conference. My name is Roanna Ruiz. I'm one of the Senior Biotech Analysts here at Leerink, and it is my pleasure to welcome members of the Lantheus team. With me, I have Mary Anne, CEO, also have Kim, Chief Accounting, and also Bob, CFO as well. Good to have the full lineup of the team here with us today.
Thank you.
Yes.
Before we start, I do just have to mention, in lieu of having a printed safe harbor statement here, I would encourage all of you to visit our website and see our safe harbor statement in the possible case that we do make forward-looking statements during today's presentation. Thank you.
Yep. Sounds good. I'll start with a bigger picture question before we dive into the fun details.
Mm-hmm.
Mary Anne, could you just recap for us for any investors who are new or maybe refreshing on the story, like what's been the journey so far for Lantheus, for the past year or so, and what are your thoughts about how the business is evolving so far?
Yes. Happy to speak to that. You know, 2025 was an interesting year for us. We were very much under challenge with our brand PYLARIFY, and that is really related to our blockbuster status. We are really the only target that our competitors had to come after. It was a year of high competitive dynamics with pricing. We also, as folks may be aware, we lost our what's called pass-through status, which allows for a different reimbursement rate by CMS for fee-for-service Medicare patients, and that was also then competitively challenged for us. It made the pricing dynamics in the hospital segment, which is the only segment that falls under TPT. It made it more challenging for us.
We made it through and most importantly, it was very much a setup year for us. As you may know from the news over the last couple of weeks, we've had two Fridays in a row with FDA approvals. A week ago Friday, a conditional approval for our product for NET, PNT2003. I'm not yet allowed to say the commercial name, which is only conditionally approved still because there's a 30-month stay in effect that will expire in early June. Last Friday, we received the terrific news that our product, PYLARIFY TruVu, which is our follow-on formulation of our product PYLARIFY, was approved by the FDA. 2025 was for dealing with what we dealt with. We were also very much getting set up for 2026 and beyond.
We have two more potential FDA approvals awaiting us this year, and we are just incredibly thrilled about where the space is going. From a competitive standpoint now with PYLARIFY TruVu approved, it gives us the ability to go back to what were some of our price-sensitive customers who did opt to move to a competitive agent that did have pass-through reimbursement in the hospital setting and to re-engage them. We've already seen some return of those customers to PYLARIFY for having had clinical experience with the other product. Now we'll have not only PYLARIFY TruVu, but because of some of the acquisitions that we also closed in 2025, we really have a portfolio offering to nuclear medicine.
If you heard me speak on our earnings call and if you heard me in any other conference setting, that's what I'll be saying, is that that's really what we tried to consolidate and get momentum with in 2025 coming into 2026 and beyond. That is the incredible portfolio that we will have to offer our nuclear medicine customer, which is the common denominator really for radiopharmaceuticals, whether you're talking diagnostically or therapeutically. Again, 2026 is going to be from a revenue perspective, and Bob gave guidance when we had our earnings call. Our revenue is not up significantly in 2026, but our momentum comes into play, and that's what we're really excited about.
Yep. Sounds great. I'll dig in a bit on the PYLARIFY side, just, you know, spot-checking on the PSMA PET franchise and how you're thinking about things. You know, volume and price, you know, competitive entrants, you're mentioning, alluding to that a little bit. I was curious, as you look into this year, what are the most important levers to help stabilize and re-accelerate growth in the PSMA PET franchise?
For us, in our PSMA PET franchise, it really is about protecting and stabilizing PYLARIFY as we bring PYLARIFY TruVu to market. That will take us the better part of this year because again, it's an F-18 based isotope that will run through PET manufacturing facilities. We currently have about, I think about exactly 70 PMFs that are supporting PYLARIFY. Those will be on a regional basis, turned over in transition to PYLARIFY TruVu, but each PMF site is a separate approval because they're all GMP rated by the FDA. What we've allowed ourselves as we look at 2026 to really do is make sure that every part of the market is set up the way we need it to be as we go into 2027.
When you're talking about PET-based radiodiagnostics, you're talking about three really important areas of consideration. One is coding, and coding is accomplished through a code called a HCPCS code that, with approval, you can then apply for through the FDA or through CMS, and that is we can apply for that now as of April 1st. For applying April 1st, we then can be fairly assured, just by the time it takes for them to process it, that'll be in place by October 1st. In similar but slightly different fashion with transitional pass-through, that is also an application that you submit. You're not awarded it. With approval, you submit an application, and if your application is complete, you're awarded.
For us, that application process, the application must be in by the first day of the last month of any quarter. For having done so, then approval is the next subsequent quarter. For applying on June 1st, we'll have pass-through status achieved by, again, October 1st. That then marries to all of the work that our sales reps will do to make sure that offices are fully aware of what coding to use, how to apply. They already know the prioritization process because basically all PET radiodiagnostics are prior auth. It gives us the time in the market to make sure all of our customers are ready. They know exactly when to switch over and start ordering TruVu, and then we'll do the transition of all the PMFs in the fourth quarter.
We're doing it on a regional basis to really de-risk so that every region at one time will have one product, and there'll be very little confusion about where there are two products within a region. There'll never be two products in a single PMF. For short periods of time, there could be two products in a region. We plan to have that all in place and done, so that as we roll into 2027, we are really ready to take off with the product. Our contracting, we'll be redoing all of our contracting this year as well.
Yeah. That was. You preempted my next question.
Oh.
Curious about the contracting side. Anything else you can share about the possible transition from PYLARIFY to PYLARIFY TruVu, for contracts and-
Sure
customers?
Yes. It is a separate, an absolutely separate part of a contract. For having the contracts already in place for, again, now having a portfolio of products, it becomes only an amendment to a contract and not a full, you know, creation of a contract, which is very much an advantage because it can take. Hospital settings are not fast-moving animals, I'll say. It can take several months from start to get a contract in place with a hospital. We've done all that already with PYLARIFY. We were able to use that base of customer relationship to bring Neuraceq in quickly, and now we'll do the same with TruVu. There'll be a negotiation with customers.
Again, different competitive dynamics now because of the different status of, especially in the hospital, with hospital customers, the different status and coverage of TruVu. In our non-hospital settings, it is, as always, a negotiation. We will, again, have that all completed by the end of Q4 this year.
Okay. Mm-hmm. Sounds great. I think in the beginning, you alluded to a little bit of recent guidance and thinking about this year. I mean, could you just refresh us on how or if new products are contributing to your current guidance and just help break it down and refresh us on, you know, what are the assumptions that go into it?
I think Bob's best on that.
Yeah. You know, my prepared remarks on the earnings call, I did note that I didn't expect any contribution effectively from any of these new approvals for this year. As Mary Anne's been talking about, this is a year to set it up for a re-acceleration when you get into next year. In terms of the actual guidance that we gave, you know, we took a position with PYLARIFY that sort of assumes that there will be the potential for ongoing pricing pressure in the market, that some of our competitors that, particularly one that may be losing pass-through, or will be losing pass-through in about six months' time, may become a little more aggressive just to build a volume base.
Because of those factors and just reflecting on how last year played out, we are sort of guiding to a -8% to -10% for PYLARIFY this year. Still kinda keeping in that $900 million range. I guess that's the midpoint.
Mm-hmm.
With regard to DEFINITY, we see that at low- to mid-single-digit %. Importantly, we did divest our SPECT business, which was about $111 million in the prior year until in 2025. Not there, but you know, having Neuraceq step in at $130 million-$140 million of contribution. Inorganic growth at triple-digit % because of the fact that we've only owned it since July. Still, you know, it's that's a great sort of margin swap out, if you will.
Mm-hmm.
Which is one of the reasons that, you know, the combination of SPECT coming out and Neuraceq coming in, that's how we've been able to sort of hold our gross margin.
Yep. Super helpful. One question that I've gotten from investors just thinking about PYLARIFY volume versus price impact over the recent year and how you're thinking about it in 2026. Could you share a little bit more color about how you're envisioning it going this year?
The guidance assumes, I think I also said that, I would expect sort of net revenue contribution to be somewhat flattish throughout the year, and that has to do with the combination of, call it, volume, which would be much sort of like what we saw in 2025, which was low single-digit. Yes, we had a great fourth quarter, but I think on average, it was low single-digit volume growth, with a gross-to-net that had on average, you know, I think we exited it in the mid-teens sort of gross-to-net.
What I was saying is I would think as we go through the balance of this year, you would have incremental gross-to-net, and but volumes also potentially offsetting it, and that's how it would stay stable, if you will, as a number across the year.
Yes. I think it's also important to note 2025 versus 2026, larger PSMA market volume growth. 2025, I think we called about 20% for the full year-over-year volume growth, but about half that for 2026. This is just huge market beginning to stabilize. You know, the last couple of years have been a roller coaster only on the way up. There's no down in front of us, but there is a stabilization of the growth. I think we're predicting about 10%-11%.
Right
market volume growth for the year.
Blockbuster numbers.
Yep. That makes a lot of sense. Great. Talking about TruVu for a bit, could you just discuss some of the really exciting manufacturing and operational advantages for TruVu versus original PYLARIFY?
Mm-hmm.
How are you thinking about the differentiation there? What will customers appreciate the most?
This is truly a value add for our customers. From the start, the one thing our customers wanted that they could not get with PYLARIFY was more of it, simply more of it, especially at key times during the day. This change that we've made to manufacturing is all about addressing that need. What happens when you're producing or manufacturing radioisotopes, you have to stabilize the product, and that gives you you know, the half-life of the isotope is set, but the half-life and what that means for how far you can distribute it is really also about how much radioactivity you can load into the manufacturing batch. That's really what we've changed here.
By changing out some of the stabilizers and changing the volume of them, we're able to load much more radioactivity into the manufacturing run. The net is, if you're working with what's considered some of the higher power cyclotrons, which are very present out in network, you can get up to 50% more doses. That is simply availability then for customers. You think about it, these are the freestanding imaging centers. These are the hospital-based imaging centers where they have a routine, how they like to move patients through, and this is the number one thing that they have asked us for years. They've always appreciated the clinical benefits of the product. That's, and that doesn't change with the new formulation. But what they have always wanted was more.
What our competitors took advantage of, kind of eating away at our edges, was the fact that we had a capped amount of supply that we could get out with each manufacturing run. To the extent that there was more patients than we had doses, that's where our competitors were able to come in and nibble around. That's not very scientific, but somewhat true. Nibble around.
Makes sense. Still fully understood what you're saying.
Yeah.
I guess in terms of cadence of benefit and just thinking about 2026 is how would you frame the year in terms of is it an execution year? Is it a setup year? You know, where's the real uplift coming from TruVu and some of the newer products?
It's both. It is a setup year, and it is also an execution year because as Bob referenced, we brought Neuraceq in last year. This is also a product with a lot of upside potential because the market's really been waiting, and now is arriving, I'll say. The Alzheimer's market is so similar to the PSMA market with the very big difference of the sequence of events. In the PSMA-based market, you had the advent of PSMA, the introduction of PSMA, which stood for itself without needing a therapeutic tie to it because of the, you know, the incredible benefit it brings to prostate cancer diagnosis and consideration of management. Then you had the therapeutic come out shortly after. In the Alzheimer's market, you've had certainly a long delay in the therapeutics coming to market.
The value and appreciation of the imaging, the beta-amyloid and the tau-based imaging agents, has been tied to the availability of therapeutics. Now, you've got two beta-amyloid therapeutics on the market. If you look in ClinicalTrials.gov and see what's going on with research, there is extensive phase III research now for both beta-amyloid-based products and tau-based products. That is now coming at the Alzheimer's market. Neuraceq is there now to address it. We also have in our pipeline, we have MK-6240 that has an approval, a PDUFA date later this year. We have NAV-4694, which is a second-generation beta-amyloid product that is also within phase III at this point. That is very much a market that's coming.
With Neuraceq, it's about execution for us. We will add, since we've acquired the product, we acquired it. It had, I believe, 16 PMFs in service. We will add a total of at least another 12 to that. We'll broaden the footprint of it, so for availability. Then from a relationship and portfolio perspective, these are also our PYLARIFY customers. We'll introduce in a portfolio way Neuraceq to them, all execution, but also set up for what's coming with MK-6240 and NAV-4694. As you heard me speak earlier, it very much is a set-up year for TruVu, which will really come into its own beginning in 2027.
Yep. I'm glad you started talking about the Alzheimer's diagnostics because I was gonna go there too. How are you thinking about all these different products that are coming through, getting approvals and launching, and how are they gonna be used in clinical practice? Like, what's some of your early market research saying? What is early feedback from physicians saying in terms of implications of use and value driving for the patient, et cetera?
I think it's fair to say that the beta-amyloid use application is more fully understood and already at play out in, especially now that you have again approved therapeutic products that combat Alzheimer's from a beta-amyloid perspective. The issue, and it is an issue, is that the three products that are beta-amyloid imaging agents that are in the market, none of them have pass-through status, because they were introduced eight to 10 years ago, so their pass-through is long expired. What that means is because of the way they are reimbursed in the hospital setting only for Medicare fee-for-service patients, it's a disadvantaged reimbursement scheme that's used there. It's called MUC, and MUC as a calculation is highly susceptible to inequities related to how hospitals approach their management accounting.
We're really waiting for, one of the breakthroughs there will be when CMS adopts an ASP-based reimbursement schema for fee-for-service Medicare versus MUC, that will really level out the attractiveness, I'll say, or the utility of hospital-based settings as well as freestanding imaging-based settings. We see growing application and utilization already. I think as we start to really see year to year of clinical data from the therapeutics, that will reinforce the story here. We believe very strongly in tau as well as beta-amyloid. If you understand the kind of disease, what you come to appreciate is while beta-amyloid is a signal, a really strong signal that a patient is at risk for Alzheimer's, it is not a demonstration of clinical manifestation for the patient.
Tau really ties to clinical manifestation, and unfortunately, in the case of Alzheimer's, that means cognitive decline. We're in both. As I said, we have not only MK-6240, which has a PDUFA date later this year. That's a tau-based agent. That is the most widely used tracer, radiodiagnostic tracer in the ongoing clinical trials for Alzheimer's disease, about 17 large pharma trials around the world. We also have NAV-4694, which will be second generation for the beta-amyloid, you know, consideration of the Alzheimer's population. Really a franchise approach there as well as we're doing in prostate cancer.
Yep. Got it. Got it. One question I've been getting from investors is just how big is the TAM for Alzheimer's diagnostics and thinking about tau and beta-amyloid and, you know, what needs to happen to accelerate growth in that TAM? You alluded a little bit to therapeutics launching and things like that. Anything else that we should think about?
Mark's gonna keep me honest here.
$1.5 billion.
Yeah. We believe that the Alzheimer's TAM radiodiagnostic will be reached $1.5 billion by the end of this decade, and really there's two things that will really, you know, kickstart that and kinda guarantee the path there. One is the continued approval of therapeutic-based drugs. If you look into the pipelines again, it looks like tau-based drugs will make it to the market by 2028, 2029-ish.
You'll have the continued also addition of beta-amyloid-based therapeutics into the market, and what that will do also with medical experience is that will impact the guidelines, and that's the other thing that was, I would say different in its occurrence, for prostate cancer versus Alzheimer's. By the time that the PSMA agents made it to the market, there was so much clinical evidence that the guidelines really embrace them, and that's where you really do change, not only do you change medical practice, but you get insurance coverage.
Mm-hmm
Because many of the commercial insurers like to look at what the guidelines are saying before they will allow coverage. We'll see the same pattern in Alzheimer's, but again, it's just a little bit from a sequence perspective. It's not following the same sequence that prostate cancer did.
Okay. Got it. Thinking a little bit about execution, I guess, how are you thinking about capital allocation? Because so much is going on. You've got some PDUFAs coming up. You've got new launches. You've got your commercial business. You've got TruVu. How are you picking and prioritizing and managing across all of these in terms of doing that? Are you doing additional BD? Like, how are you thinking about this going forward?
I'll just start, and then I'm gonna turn over to Bob. Bob has been my incredible partner for eight years now, is it?
Eight.
Eight years now. Taught me more about finance than I imagined I would ever learn, and also about the practicalities of it, but he is a master about capital allocation, so I'll let him speak to that. I will speak to the BD piece. I think as we look to 2026, and I'll probably say that it's true about 2027 as well, we're gonna pause on big BD. We did, you know, a lot in 2025. Integrating that has been time-consuming and a very important priority for us, but it also allowed us to complete our strategic vision. We have recently been very clear in saying that we will be radiodiagnostic-focused, not exclusive, but focused as we go forward.
I also said in our earnings call, "And we're going to digest what we have on our plate," and that will mean that we'll probably take a pause, except if an opportunistic type tuck-in came in. That's our stance on BD, and I'll let Bob speak to capital allocation.
Yeah, I'll just get to, like, the actual capital allocation, but I'll let Kim talk to, like, how we're structuring.
Mm-hmm
Ourselves for investment this year. You know, in last year, we bought back $300 million of shares, very opportunistically. We still have $200 million left on our current authorization that runs for quite, I think another couple years.
Mm-hmm.
You know, we'll continue to look for those opportunities to you know to buy shares. We have 360 million, I think, as of last quarter end. Obviously, we've bought since then. You know, in terms of investment.
Sure. I know Bob alluded earlier in terms of the margin. We are expecting our margin to hold flat at about 65%, and that's really a combination of the spec business coming out, offset by the annualization of what we saw from the addition of LMI and Evergreen this year, as well as some of the PYLARIFY pricing dynamics. Moving down the P&L, if we think of sales and marketing, that will be one of our larger investment areas this year, about 12%, 12.5% of revenue, really focusing on our PYLARIFY, TruVu, OCTEVY, bringing those to market and ensuring we have access and availability of those products. R&D, we'd expect to hold up a little bit, 10%-11% of revenue.
We will be focusing on more of the diagnostics, but making sure we're investing in a way we can advance the therapeutic portfolio as well. In G&A, we expect to hold flat about 10% this year.
Okay, great. I wanted to squeeze in a question about OCTEVY as well, since we have a little bit of time. How are you positioning OCTEVY in the NET diagnostic landscape? One thing that I noticed in talking to investors, they're curious if is it tied to theranostic pairing with PNT2003, or could it stand alone in terms of patient diagnostics? Like, how does that play out?
I will say first and very clearly, it is not tied only as a theranostic pair. It's a very strong corporate advantage to be able to offer a theranostic pair. Like PSMA in that market, in the NET imaging market, the products stand on their own for evaluation of the patients, and then there's a consideration of what you use as a therapeutic. We also have a PDUFA date for that that is, I believe, March 29th of this month. The way that we will position that will, again, from a portfolio perspective, this all rests in the nuclear medicine department.
The consideration of what to image, when to image, who to image, how to image, and so we will use that relationship to introduce our product. We don't need to wait for the approval of our therapeutic for that. The other piece that will come into play is this will be the only product. There's two other products in the market currently, commercialized. One is a gallium-based agent, the other is a copper-based agent. Our product will come in as a gallium-based agent and be the only agent with transitional pass-through coverage, because those, again, those products are older, have been in the market and their pass-through period has expired.
We see it as a tremendous opportunity to broaden our footprint and to demonstrate to nuclear medicine what we intend to be to them, and then to bring our products in in a portfolio way. The only product that doesn't somewhat fit that mold, it's hospital-based, but not nuclear medicine, is DEFINITY. That remains somewhat separate, but 25 years in, our relationships there are rock solid. We still hold over 80% share with DEFINITY, and it's a lovely contributor to our balance sheet, so we'll continue to support that as well.
Yep, sounds good. I wanted to circle back a little bit to PYLARIFY TruVu in terms of thinking ahead with, say everything goes well, you get TPT as early as October. How are you thinking about or what have you shared so far in terms of how you're thinking about the sort of reimbursement shift that could happen with PYLARIFY TruVu relative to what we know about PYLARIFY today?
It is just an absolute switchover. We will not host two products into the market ultimately. We will have a single product in the market, and it will be PYLARIFY TruVu. From a manufacturing perspective, it makes much more sense to us because of the efficiency of the manufacturing process to retire, so to speak, PYLARIFY with the introduction of TruVu. Of course TruVu will have transitional pass-through coverage effective, we believe, on October 1st and for a three-year period. We also believe by the time that three-year period expires, by that time CMS will have adopted an ASP-based price reference versus an MUC-based price reference.
Transitional pass-through will remain in effect as a reimbursement scheme or for new products because it has to, because the way that CMS determines or calculates their ASP price reference is by looking historically at about 18 months of data. That's the purpose of pass-through, to allow a market to adopt and use a product and allow CMS a period of time for which to gather claims that they can then use to set the price reference once TPT expires.
Okay. Got it. That's really helpful. I know we have a couple minutes left, maybe the last closing question, a little bit more bigger picture. What do you think is most underappreciated about the Lantheus story today that investors should think about?
Of course, we think our stock is undervalued. Of course we do. I don't think anyone sits up here and doesn't say that. You know, I think that one of the most important and probably one of the most fulfilling things that Bob and I have accomplished over the years is trying to really raise the level of awareness about radiopharmaceuticals as an integral part of life sciences, where it fits in, that it's here to stay, that it will only become more and more kind of mainstream for use in either diagnosing or treating. I think over the years, some of our investors have struggled to kind of fully realize that picture themselves because they're so used to the pharmaceutical model. Radiopharmaceuticals are really very different.
They don't follow the typical pharmaceutical models, and I'll give you an example. DEFINITY lost composition of matter as its main patent in 2019, and Bob and I relentlessly over the years kept saying, "Don't put a generic model in your models now, because that doesn't apply here." The ability, even though isotopes are freely available to everyone, right? If it's on the chemical chart, you can use it. It doesn't mean they're accessible for people to really bring to market. That's something that we continue to try to teach and have folks appreciate is the unique not only offering that you can make with them, but some of the extended types of protective market situations you can have with it.
Yep. Sounds great. Well, thanks so much for joining us.
Oh, thank you.
This was great.
Thank you. Thank you everyone for coming.
Yep.
Applause, wow.