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    Lantheus Holdings Inc (LNTH)

    Q3 2024 Summary

    Published Jan 6, 2025, 8:15 PM UTC
    Initial Price$80.35July 1, 2024
    Final Price$105.84October 1, 2024
    Price Change$25.49
    % Change+31.72%

    What went well

    • Lantheus's advanced Alzheimer's diagnostic agents, MK-6240 and NAV-4694, are potentially best-in-class with high sensitivity and low off-target binding, offering significant market potential as the U.S. market for Alzheimer's radiodiagnostics could reach $1.5 billion by the end of the decade and $2.5 billion by mid-2030s. They expect to submit NDAs for MK-6240 in 2025 and NAV-4694 in 2026.
    • PYLARIFY, their #1 PSMA PET imaging agent, continues to be the market leader, expected to reach blockbuster status with more than $1 billion in sales in 2025, with continued growth anticipated in the PSMA PET imaging market, which could expand from $2 billion to $3 billion by the end of the decade.
    • Additional revenue streams from royalties on products like FLYRCADO (Flurpiridaz), approved for enhanced diagnosis of coronary artery disease, and Pocari in Europe provide further growth opportunities, with Lantheus receiving tiered double-digit royalties in the U.S. and mid-single-digit royalties outside the U.S..

    What went wrong

    • PYLARIFY revenue experienced a sequential decline in Q3 due to net price compression from strategic partnerships and intentional trade-offs due to product availability, and may continue to face pricing pressures into 2025. , ,
    • The PNT2002 Phase III trial may face delays as the FDA could require completion of 100% of overall survival events, potentially extending into the first quarter or beyond, impacting the regulatory timeline.
    • Financial contributions from global partnerships, such as with Curium for PYLARIFY/[Poclari] and GE Healthcare for FLYRCADO (Flurpiridaz), are expected to be minimal in the near term, limiting immediate revenue growth from these collaborations.

    Q&A Summary

    1. PYLARIFY Revenue Outlook
      Q: Why use "sustain" instead of "grow" for PYLARIFY's $1B franchise?
      A: Management clarified they expect PYLARIFY volume to grow next year, but due to net price compression from strategic partnerships, revenue impact will normalize over 2025. They remain positive on the market's growth and are confident in sustaining the $1 billion franchise.

    2. CMS Reimbursement Rates for PYLARIFY
      Q: Will PYLARIFY's CMS reimbursement rate remain steady in 2025?
      A: The final 2025 CMS payment rate for PYLARIFY matches its existing rate, effectively sustaining payment for 2025. Management feels confident that PYLARIFY will be paid appropriately in 2025, supporting continued growth.

    3. Strategic Partnerships and Price Compression
      Q: How much impact have strategic partnerships had on pricing?
      A: Strategic partnerships have led to net price compression in Q3, impacting sequential performance. This effect will continue into next year but is expected to normalize over the first half of 2025. The partnerships are multiyear contracts, and management views the impact as transitory.

    4. Alzheimer's Diagnostic Pipeline
      Q: How do your Alzheimer's assets differentiate from others?
      A: Management is excited about their Alzheimer's portfolio, including MK-6240, which appears to be a best-in-class asset with great detection rates and minimal off-target binding. It's in advanced Phase III development. There is significant market potential, forecasted at $1.5 billion by the end of the decade.

    5. PNT2002 Trial and FDA Approval
      Q: What is the timeline if FDA wants 100% events in PNT2002 trial?
      A: If the FDA requires completion of the study, it's possible it could continue into the first quarter, but the final OS event timing is uncertain. Management prefers not to speculate but continues to work with Lilly and analyze data.

    6. Q4 Guidance and R&D Expenses
      Q: Why is there a sequential step down in Q4 guidance?
      A: The expected decrease in EPS from Q3 to Q4 is due to increased R&D expenses, representing the biggest step-up in operating expenses and causing the projected earnings to step down.

    7. Future Pricing and Ability to Adjust Contracts
      Q: Can you adjust pricing within strategic partnerships?
      A: Management engages in partnerships with key customers to grow together but won't comment on contract details. They believe PYLARIFY will be paid appropriately in 2025 and are positive about maintaining suitable pricing.

    8. PYLARIFY Market Growth and Multiyear Outlook
      Q: Do you expect PYLARIFY to grow revenue on a multiyear basis?
      A: Management remains positive about long-term growth in the PSMA PET imaging market. While net price compression will normalize over the first half of next year, they expect overall market growth and for PYLARIFY to continue leading as a sustainable franchise.

    9. Royalties from Pocari and FLYCARDO
      Q: Any color on royalties from Pocari and growth of FLYCARDO?
      A: Pocari approvals in Europe are pleasing, but financial impact is minimal in the near term as it ramps up. Regarding FLYCARDO, GE holds commercialization rights, and they are excited about its potential in the large cardiac imaging market.

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