Good morning, everybody. My name is Andy Hsieh. I'm a research analyst here at William Blair. I cover Lantheus. I'm required to inform you that for a complete list of research disclosures and potential conflicts of interest, please visit our website at williamblair.com. We're pleased to have John Wiggins, the VP Head of Asset Leadership, with us today. We're going to do this a little bit differently. We're not going to have a presentation, but we're going to have a fireside chat about company operations with a specific focus on isotopes. After our fireside chat, our breakout is going to be Burnham B on the second floor. John, thank you for joining us today. Maybe for the first part, you can talk about Lantheus strategy, kind of the operations, and why isotope is such central to your company strategy and positioning.
Absolutely. Thanks, Andy. I'm John Wiggins, Head of Asset Leadership at Lantheus, and for those of you who don't know, Lantheus is the leading radiopharmaceutical-focused company. Radiopharmaceuticals may be unfamiliar to some people, so I'll just give a quick background on that. When we think about radiopharmaceuticals, they're often called molecularly targeted agents because we administer a drug that binds to very specific molecules within the body. If I take prostate cancer as an example, there's a protein that sits on the surface of prostate cancer cells called PSMA, the prostate-specific membrane antigen, and our drugs can find that protein, bind to that, and then, in the case of our drugs, which are diagnostics, essentially light up those tumor cells.
They give off a particular type of radiation that's detectable by what's called a positron emission tomography scanner, a PET scanner, and then physicians can see an image of where in the body that drug has gone, which generally indicates where in the body there's prostate cancer. If there's a question of whether a patient has metastatic disease or not, you can administer a dose of PYLARIFY, and it will light up anywhere in the body that there's prostate cancer, and then the physician can tell if there is metastatic disease, if it's gone beyond the prostate itself. There are also companies that make therapeutics, and we have some therapeutic agents in our own pipeline. Those use a different type of radiation and can kill off cancer cells, for example, and treat disease that way, in addition to being able to see it.
When we think about isotope strategy, the different radioactive isotopes that you attach to that pharmaceutical molecule have different effects. I talked already about the difference between imaging and therapy, and the type of radiation that's given off by those isotopes. Even within diagnostics, the different types of isotopes that we can use all have different properties. There are things like half-life, which is how quickly they decay away. That affects how close to the patient they have to be made, how long the physicians have to administer the drug and then take an image. There are properties like the range of the radiation that they give off, which end up affecting the resolution of the image, whether we can get a nice crisp image with very high resolution or whether there's a little bit of blur to the image.
How often those isotopes give off a particular type of radiation, and that can affect things like scan time, so how long it takes for the image to be acquired, how long the patient has to be in that scanner, and therefore, ultimately, the throughput of the imaging center. A lot of different properties here that we have to take into account when we're developing our agents and picking which isotope we want to use.
Yeah. Maybe we can talk a little bit about how they're produced, because it's fundamentally different from what we know. Bioreactors, small molecules, right?
Yeah.
It's basically chemical synthesis. How do you think about upstream ways to produce these short half-life isotopes?
Yeah. The supply chain for radiopharmaceuticals is an integral part of this whole ecosystem because these things are radioactive and are decaying all the time. We can't make a product that sits on the shelf. We have to be able to make it essentially in real time, and that could mean anything as close to a couple hours before it's administered, to maybe out to a week or so before it's administered for the relatively long half-life isotopes. The way that those isotopes are made generally starts with some sort of enriched stable isotope. In the case of, for example, fluorine-18, which is the isotope that we use with PYLARIFY, that starts with oxygen-18. There's a particular type of water that our contract manufacturers use that's called oxygen-18 enriched water.
If you think about water as H2O, it means the O in that case is oxygen-18 specifically, and when you put that on a cyclotron, which is a particle accelerator, and strike it with a proton, it absorbs that proton and it kicks out a neutron, and that becomes fluorine-18. This is basically particle physics, but it's being put to use for medical imaging. There are other types of isotopes, like gallium-68, which we use in a number of products in our pipeline that are produced from a generator. In that case, you might use that same kind of particle accelerator approach to produce what's called a parent isotope. The parent isotope in this case is germanium-68. Germanium-68 has a much longer half-life, a couple of hundred days, and it sits in a little unit about the size of a paint can.
It is constantly decaying to gallium-68. By eluting that generator, by rinsing a special solution through it, you can collect the gallium-68 that's been produced. Gallium-68 has a short half-life, about one hour. You need essentially a new batch of it every couple of hours to be able to produce a imaging agent. That generator gives you an item that can sit, I'll say, on the shelf. It's really inside of a clean room hood, and you can continually produce fresh gallium-68 off of that generator. Those are very different supply chains. One of them requires a cyclotron to be sitting relatively close to the patient, and then it produces a large number of doses for use in that immediate area.
The other one requires just that little paint can size thing, but you also only get a couple of doses off of it at a time.
Maybe you can also talk a little bit about some of the therapeutic isotopes, lutetium-177, things like that.
Yeah.
How would that differ from the generator-based and the cyclotron-based production methodologies?
Yeah. Lutetium-177 is the isotope that we use.
the therapies that we have in our pipeline, and it's the most widely used isotope in therapy today, at least in new molecularly targeted therapies. That's produced in a nuclear reactor. It starts with an enriched isotope again. In this case, it's called ytterbium-176. That's put into a nuclear reactor. Nuclear reactors give off lots of neutrons. That ytterbium target captures one of those neutrons, turns into ytterbium-177, which decays into lutetium-177, and then that can be separated out, extracted, and attached to these molecules. That gives off a different type of radiation that can be used to kill off cancer cells. That supply chain, because lutetium has a bit longer half-life, about a week, that can be done in reactors all around the world, shipped to processing centers, and then to pharmaceutical manufacturing facilities, and used to make patient doses.
Those patient doses still typically have to be administered within a few days of production.
It's still a very short supply chain. You can't make the product and put it on a shelf.
Yeah. Well, I appreciate your 101 on alchemy. I also wanted to talk about these complex supply chains. There's been historically a lot of different disruptions, right?
Bristol Myers, after the acquisition of RayzeBio.
Yes
They did have some hiccups there. Also the OG of the radiopharma space, Novartis, after launching PLUVICTO, there were two major supply disruptions. Talk a little bit about some of the remediation strategies that you have at Lantheus to really mitigate potential supply disruptions, and maybe identify where in that supply chain you see major problems.
Yeah. I think the two different PLUVICTO disruptions that you referenced.
Right
are really enlightening because they were for two different reasons. One of them was that lutetium shortage and the fact that there wasn't enough lutetium-177 being produced in the world, that it wasn't reliable enough, that the production was concentrated in a small group of nuclear reactors in Europe. It happened that all of those essentially went offline at the same time.
Because there were no reactors available to make more lutetium, we very quickly run out of supply within a week or two, and therefore there wasn't enough. The lutetium supply chain has since become much more robust, and it's a relatively commoditized product now. There are a lot of people who make it in a lot of different reactors around the world, including in nuclear power reactors in the U.S. Because nuclear power reactors run a very high percentage of the time, that means that it's much more routinely available now. The actinium-225 shortage that you referenced with RayzeBio , I think it's really just that actinium is in that same point in its life cycle.
that lutetium was several years ago. I'm sure that actinium will go through that same growth curve and will ultimately be robustly available, but it's not there yet. The second PLUVICTO outage wasn't because of the isotope shortage.
It was because of finished pharmaceutical manufacturing. As you might imagine, making a radioactive drug takes a whole different set of sort of safety requirements and manufacturing capabilities than a typical pharmaceutical. Because PLUVICTO was the first really large-scale lutetium product, radiopharmaceutical therapy, that didn't exist in the way that it needed to, and we had to also build out, or in this case, Novartis had to build out the manufacturing infrastructure for the finished pharmaceutical drug. That has to meet these two competing requirements. On the one hand, it has to meet the FDA requirements which are basically make the drug safe from contamination.
People are the biggest source of contamination, so keep the drug in the safe spot, the kind of insulated, isolated area of manufacturing. Usually what that means is, if you think about that from an airflow standpoint, it means all the fresh air goes right to where the drug is being made. It then flows outward to the people. For radiation safety, you want exactly the opposite. For radiation safety, you want the airflow to go away from the people and into where the radioactivity is. You can't have both those things. That's a tough thing to do to build that manufacturing environment that can meet both the FDA requirements as well as the Nuclear Regulatory Commission requirements.
At Lantheus, on the diagnostic side, we have the advantage of working with this infrastructure of fluorine-18 manufacturers that have been around for a few decades at this point. We've been making fluorodeoxyglucose, FDG. There are over two million scans a year done with FDG because it's been around for so long, it's well-established, and PYLARIFY fit right into that manufacturing infrastructure. Unlike the therapeutic developers who are going through this kind of learning curve and growth curve of a brand-new type of product out there, we're plugging into an existing manufacturing infrastructure, and that has certainly made it an easier path to get PYLARIFY to where it is today. Similarly, when we look ahead at our pipeline of diagnostic agents, by and large, they fall into that same sort of thing.
They're either fluorine-18, fitting into what we call the PET manufacturing facility infrastructure, or they're gallium-68, where they fit into a radiopharmacy infrastructure. That's using those kind of paint can type things that I described earlier. I would say there's a notable exception there in copper-64. We have one agent in our pipeline that uses copper-64. This is a fibroblast activation protein, or FAP-targeted agent. FAP is broadly expressed across a lot of solid tumors. It's also expressed in fibrotic diseases like MASH liver disease, like cardiac fibrosis, pulmonary fibrosis. We see, ultimately, the potential for a very large market there. One of the things that we like about copper-64 is that it has a little bit longer half-life, 12 hours, versus the two hours for fluorine-18, or one hour for gallium-68, and therefore might be able to be centrally manufactured.
That copper-64 infrastructure doesn't exist today.
That's one that's going to have to go through that growth curve, and we're going to have to build up much more robust supply of that. We think we've timed this right to have a phase I agent, because by the time it's ready for commercialization, that infrastructure will be in place, but it's certainly not there today.
Yeah. It is very interesting in terms of the fluorine-18, gallium-68 comparison. I am curious if you can quantify that for us in terms of the volume. Right? That is a very important question in terms of the scalability of cyclotron-produced versus generator-produced gallium-68.
Yeah. That's a great question for PET, for positron emission tomography in general. We've just seen such dramatic growth.
Of things like PYLARIFY and PSMA PET in prostate cancer. Of course, we're excited now about the amyloid agents.
We're doing Alzheimer's imaging for those, and that's a very quickly growing market. There has been a fantastic growth. We're starting from that base of FDG that I mentioned, of 2+ million doses a year. It's not from zero to 500,000 doses a year. It's a little bit more modest growth overall. As we look at the availability of F-18 capacity, of production capacity on those cyclotrons, we're seeing robust investment in new cyclotrons and new PET manufacturing facilities, in upgrades of existing PET manufacturing facilities. We're confident that we're going to be able to keep up, at least on a national level, with the demand for F-18.
F-18 is still a short half-life, that two-hour half-life, at production, like all politics is local, all F-18 production is local, and there may be some kind of bumpy spots throughout the U.S.
Hey, this city is going to be behind on F-18 manufacture. At a large scale at least, we believe that there's going to be robust capacity there. Gallium-68 is a different ecosystem because it's now these generators instead of cyclotrons. We, again, see a good growth in the production of those generators and the capacity of those generators. They take up a lot of clean room floor space in radiopharmacies, and that's expensive floor space. We see that radiopharmacies are going to have to add more space to put these generators and to use them in production of radiopharmaceuticals. Again, we think that's going to keep pace with the demand that we and others are bringing to it, but it does take the investment that's going on.
Copper-64, as I mentioned, that has a lot further to go, but we do see the investment there that we think is necessary to make that happen. I look beyond the isotope production and the radiopharmaceutical production, the next piece we need, of course, is scanning.
That's right, yeah.
We need the PET imaging machines.
We are seeing a lot of investment in those. That's probably more of the bottleneck than the isotope, than the pharmaceutical production. What we're seeing there is that these imaging centers are starting to open on weekends, extend their hours, and do what they can to make more slots available during the week. The other piece of that that's important that I mentioned earlier is throughput.
With an F-18 agent like PYLARIFY, what we see is that these centers can get a faster patient throughput. They can shorten their scan time per patient in comparison to some other agents, like gallium-based agents, that require a little bit longer scan time to get the same amount of information out of the scan. That may be an advantage for our customers in using PYLARIFY versus other agents to be able to make better use, more efficient use, of the existing infrastructure that they have. Along with increasing the number of scanners and the times those scanners run, though, we have to have staffing to do that.
We see that staffing can be a real challenge there. We're working closely with not only industry associations, but also associations of physicians and technologists, including the Society of Nuclear Medicine, to train up more and more of these technologists and make them available to operate these scanners at extended hours and more days of the week.
Yeah. I wanted to ask you about the patient flow. A patient comes in, get the infusion PYLARIFY. Can you describe what happens afterwards?
Yeah
finally to the image acquisition and then the results. I've heard also new machines, one at Peter Mac down in Australia, they basically have low single-digit image acquisition time. Talk a little bit about some of the newer technologies from scanner manufacturers and potentially how can that squeeze in the inpatient time and therefore allowing a more robust number of patients getting scanned, too.
Absolutely. Just to go through that whole patient process.
that patient flow. The patient comes in, ideally the dose is already there waiting for them. These doses are delivered within an hour, maybe, in many cases, of the time that they're going to be injected into the patient. This is a very real-time sort of thing, and things can go wrong there. You can have a driver stuck in traffic or the patient stuck in traffic, and things aren't there at exactly the right time. It takes very careful planning to get those doses there right when they need to be there and make them available for the patient. Typically, and this is the case for prostate cancer imaging. After the patient's injected, they'll go through an uptake time.
It takes some time for the drug to circulate in the body and bind to the tumor and clear out of the bloodstream and away from healthy tissue, and that's about an hour. Usually the patient will be sitting in a holding room for about an hour, and that can be a limiting factor on capacity for a lot of these imaging centers, is that they don't have enough rooms to hold these patients in. As they add another scanner, for example, they need to add a suite of holding rooms along with that. That's another area of investment.
Right
for these imaging centers, is to be sure that they have the capacity to do that. After that hour, the patient's going to go lie on the scanner. You talked about the different types of scanners, and in many cases, it's the different age of scanners. Newer scanners have more sensitive detectors, and those may therefore allow shorter imaging times. They also have things called time-of-flight imaging, which can tell more precisely where the radiation emission occurred within the patient and give you a higher resolution, crisper image, potentially with less data, and therefore with less time on the scanner. The other thing that we've seen a lot recently is just the size of the scanner.
Originally, these scanners might only image a slice of the patient that's maybe one foot at a time, or maybe not even that much, and the patient has to wait one minute or two at that position, maybe four or five minutes at that position, then advance to the next slice and kind of move all the way through, and that could take a half hour or more to acquire a full image. You talk about Peter Mac and some of these other places that have whole body scanners-
where the scanner is the full length of the patient, therefore you're acquiring all of this information at once, that gives you a much shorter scan time. It can also do some really cool stuff in the clinical phase, where you can dynamically watch the agent being injected and see where it goes in the body as it's going through that uptake pattern. That can actually be useful in a lot of cases, not only for that clinical stage drug development, then in developing what you want the imaging protocol to look like. As an example, one of our agents that's actually commercially available today is Neuraceq, we're developing it in cardiac amyloidosis as well. Today it's used for Alzheimer's imaging. In the future, potentially also for cardiac amyloidosis.
There are two different types of cardiac amyloidosis, light chain and ATTR. We see the potential with this agent using either dynamic imaging, so where you actually watch the uptake over the first 15 minutes or so after injection, or maybe it's just two time point imaging. You look five minutes after injection, and then again 15 minutes after injection, that we can diagnose cardiac amyloidosis and then potentially distinguish between the two types, and they have two different therapeutic approaches. That's useful information to get out of it. That's certainly easier to do on one of those whole body scanners. In the case of cardiac imaging, you're only imaging a small slice of the body anyway. That can also be done on one of those older scanners as well. The type of scanner that you're using is certainly important.
After the scan, it's important to realize this patient's been injected with radioactivity, and to some extent, they're giving off radiation after that.
We need to be careful about where that patient goes, what they do, when they can be released. For agents like gallium-68, isotopes like gallium-68 and fluorine-18 that have short half-lives, it's really not an issue. The patient is giving off low levels of radiation to begin with, and they're only giving them off in meaningful levels for a few hours afterwards. That's not enough time to be of any danger to the public. When we think about longer half-life isotopes, and this can be the case for the therapeutic isotopes, where there are large quantities administered, or potentially for agents like zirconium-89, for example.
That patient's going to be giving off more radiation and giving it off for a longer time period. In some cases, there have to be restrictions on when those patients can be released from the hospital and what they can do afterwards. For example, they may be given instruction to isolate from their family for a day or two, and that can be a limit on how much of these isotopes we can give to a patient, and therefore the therapeutic efficacy. We have to have this kind of careful balance of giving enough to treat the disease, but not so much that there's a danger from radiation. As therapeutic companies are developing their products, that's an important factor for them to take into consideration.
I think this is a good time to kind of summarize all the isotopes that you have talked about just in the PET imaging area, basically gallium-68, fluorine-18, zirconium, right? copper. Just because there's so many things out there. There are kind of things that's in regulatory review. There are things that's in phase III that could come online in two years. Just do a quick summary for us, pros and cons. Some of the physical properties, biological properties for us for those four PET imaging isotopes.
Yeah, absolutely. Let me try doing it by property.
Okay.
If I start with half-life, and I'll go from shortest to longest here. Gallium-68 is about a one-hour half-life, fluorine-18 is about two hours, copper-64 is 12, and then zirconium-89 is about 3 days. That makes a difference in a few ways. One is the supply chain. The shorter the half-life, the closer the production has to be to the patient, the more real-time it all is. Things like once you get to copper, to 12 hours, you can conceivably do centralized production. We have isotopes today, like iodine-123 with a similar half-life that are centrally produced in the U.S., distributed, and used in relatively high volume. We've seen proof that centralized manufacturing with that 12-hour half-life can work once there's enough supply infrastructure. Centralized manufacturing gives some advantages from a kind of a manufacturing efficiency standpoint.
It's relatively transparent to the customers and to the patients what that supply chain looks like kind of behind the scenes. The other area where half-life can be interesting and useful is in the imaging protocol and what type of pharmaceuticals you can use there. With zirconium-89, for instance, with that three-day half-life, if you have an antibody, like a full-sized antibody as opposed to a small molecule, the kinetics there are just much slower. Typically, it takes a day or maybe a few days for an antibody to fully bind to the target and to clear out from the blood pool. Therefore, you need a longer half-life isotope like zirconium to be able to do that imaging. What we see in the general direction of our imaging development is an antibody may have advantages for therapeutic uses.
We don't see as much advantage for diagnostics, and our preference is to have a small molecule that binds quickly so it can be a single session. The patient goes in, they're administered the drug, and then within a relatively short time, they're imaged, and they don't have to worry about coming back at some later time. If I go over to another property of radiation safety that I mentioned earlier, you have this, fundamentally, PET isotopes emit positrons, which give off a certain energy of gamma ray photon. They all give off that same energy. They may also give off other types of radiation. When we look at gallium-68 and fluorine-18, those are pretty clean. They don't give off a lot of other radiation. Gallium-68 more so than F-18 does. Copper-64 and zirconium-89 do give off more other types of radiation, and zirconium-89 especially.
A big downside for zirconium-89 is that it's giving off this potentially more dangerous radiation, and because it's got a longer half-life, it's giving it off for a longer period of time. That's another reason that we would lean away from zirconium-89 and away from that full-size antibody as the pharmaceutical molecule that we want to use, and again, prefer the shorter half-life isotopes and the smaller molecules.
Another aspect that I would look at is the scan time associated with these. I mentioned this earlier in comparison of F-18 and PYLARIFY to gallium products. It's all the more so the case for copper-64. Copper-64 gives off the positron, which is a diagnostically useful type of radiation to us, less than 20% of the time that it decays. If you want to get the same amount of information with a scan using copper-64, you need about five times as much of it to be equivalent to gallium-68 and even more than that to reach F-18 levels. That just may not be doable. The half-life makes up for a little bit of that, but not a ton.
When we look at copper-64 and where that's useful, there has to be a clear advantage in terms of that longer half-life, and there has to be enough of it administered. I think that the challenge that we've seen with a lot of the copper products, both the one that's commercial now and the ones that are in development, is that I don't think they've done their dose development work correctly, I'll say.
They're not administering enough activity to get a high-quality image in a reasonable scan time, and therefore, a lot of these centers, especially a lot of the community centers that don't have the brand-new state-of-the-art full-body scanners which is the vast majority of them are going to have to put patients on the scanner for a lot longer. Back to our capacity discussion earlier, that's just tough to do when you're in an environment where you've got more and more demand for PET scans, and you really want to be sure that you've got efficient patient workflows and throughput there.
Maybe for the last question I want to ask about the TruVu, version 2.0, supply chain perspective, how do you kind of slot these two across your manufacturing infrastructure?
Yeah, absolutely. That's a great question. For those not familiar with PYLARIFY and maybe the radiopharmaceutical diagnostic market more broadly, PYLARIFY has been around for 5+ years now. When a new radiopharmaceutical is approved, it can apply for what's called pass-through payment, and it's reimbursed at a higher level then. That only lasts for three years. Pass-through on PYLARIFY has expired already. What we see is that some of our competitors still have pass-through payment. That only applies to traditional Medicare patients, so fee-for-service Medicare patients in the hospital outpatient setting. It's a minority of patients, but it can have implications beyond that, as a lot of these hospital institutions want to use a single agent. We've come out with a new formulation of the PSMA molecule behind PYLARIFY, so this is called PYLARIFY TruVu.
It's based off the same clinical studies that supported the original PYLARIFY application, so the same initial staging, and biochemical recurrence. The difference is on the manufacturing side. We've added a radiostabilizer, which allows us to put more activity into each batch, make a bigger batch of PYLARIFY, we can get out of that some combination of more doses or doses that are delivered further or have a later expiry time. That helps us with reaching more patients, and especially we talked about the expanding hours of a lot of these imaging centers. It helps us with reaching patients at more times of day in a more efficient way. We're excited to see that come to market, and bring that increased availability to patients because of that. We also expect that it will bring with it pass-through payment.
Yeah.
through CMS. We've applied for that pass-through payment now. We'll find out in mid-September, I think, whether we get it.
That's expected as it's really just kind of a checklist of things that we have to go through to get that payment. The biggest of those is FDA approval.
which has already occurred.
Yeah.
When we think about how we roll that out, while we expect the coding for it to be effective on October 1st and the pass-through payment.
We want to give some time to be sure that there's really no friction for our customers, and that they're able to get prior authorization where necessary, that they're able to get reimbursement smoothly, that they have it loaded into all of their systems. We're not going to launch immediately on October 1st.
Instead, we're going to look later into Q4 to start our launch. It's going to be a rollout geographically across the U.S. We'll make TruVu available in one region first. That's going to be one of our lower volume regions to be sure that everything goes smoothly. We have some time period after that before we continue the rollout to be sure that the manufacturing and the payment and everything is occurring as expected. We can address any issues that come up there. Then we'll continue to roll out that availability across the U.S.
Mm-hmm. Great. I think this is a great stopping point. We'll continue our discussion up on the second floor, Burnham B. Thank you for your attention. Thanks, John.
Thanks, Andy.