What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-07-31 compared with 2020-04-30 · 457 added, 105 removed, 282 unchanged (67% of the section changed)

3 unchanged sentences

(in thousands, except par value)

2020 December 31,

Current assets

1 unchanged sentence

Accounts receivable, net 46,883 43,529

Inventory 35,334 29,180

Other current assets 8,630 7,283

2 unchanged sentences

Intangibles, net 389,512 7,336

Goodwill 57,765 15,714

Deferred tax assets, net 67,441 71,834

Other long-term assets 60,918 21,627

Total assets $ 879,695 $ 405,919

Liabilities and stockholders’ equity

24 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

Revenues $ 66,010 $ 85,705 $ 156,714 $ 172,215

Cost of goods sold 40,162 41,132 92,864 83,558

Gross profit 25,848 44,573 63,850 88,657

Operating expenses

3 unchanged sentences

Total operating expenses 31,393 30,036 62,270 57,951

Operating income

Operating (loss) income ( 5,545 ) 14,537 1,580 30,706

Interest expense 1,914 4,543 3,860 9,135

Income before income taxes

Loss on extinguishment of debt — 3,196 — 3,196

Other income ( 756 ) ( 1,312 ) ( 1,106 ) ( 2,499 )

(Loss) income before income taxes ( 6,703 ) 8,110 ( 1,174 ) 20,874

Income tax expense 309 1,698 2,501 4,513

Net income per common share:

Net (loss) income $ ( 7,012 ) $ 6,412 $ ( 3,675 ) $ 16,361

Net (loss) income per common share:

Basic $ ( 0.16 ) $ 0.16 $ ( 0.09 ) $ 0.42

Diluted $ ( 0.16 ) $ 0.16 $ ( 0.09 ) $ 0.41

Weighted-average common shares outstanding:

Basic 43,135 38,972 41,284 38,789

Diluted 43,135 40,239 41,284 40,064

The accompanying notes are an integral part of these condensed consolidated financial statements.

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

Net (loss) income $ ( 7,012 ) $ 6,412 $ ( 3,675 ) $ 16,361

Other comprehensive (loss) income:

2 unchanged sentences

Total other comprehensive (loss) income ( 212 ) 88 ( 1,646 ) 144

Comprehensive income

Comprehensive (loss) income $ ( 7,224 ) $ 6,500 $ ( 5,321 ) $ 16,505

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended March 31, 2020

Six Months Ended June 30, 2020

Common Stock Additional

Capital Accumulated

Deficit Accumulated

Comprehensive

Stockholders’

Shares Amount

Balance, January 1, 2020 39,251 $ 393 $ 251,641 $ ( 136,473 ) $ ( 960 ) $ 114,601

Other comprehensive income

Net income — — — 3,337 — 3,337

Other comprehensive loss — — — — ( 1,434 ) ( 1,434 )

Stock option exercises and employee stock plan purchases 33 — 366 — — 366

3 unchanged sentences

Balance, March 31, 2020 39,750 $ 398 $ 253,530 $ ( 133,136 ) $ ( 2,394 ) $ 118,398

Three Months Ended March 31, 2019

Net loss — — — ( 7,012 ) — ( 7,012 )

Other comprehensive loss — — — — ( 212 ) ( 212 )

Stock option exercises and employee stock plan purchases 7 — 50 — — 50

Vesting of restricted stock awards and units 242 2 ( 2 ) — — —

Shares withheld to cover taxes ( 36 ) ( 1 ) ( 484 ) — — ( 485 )

Issuance of common stock, net of $ 3,776 issuance costs

26,845 269 394,065 — — 394,334

Fair value of replacement options related to pre-acquisition services — — 7,125 — — 7,125

Stock-based compensation — — 3,385 — — 3,385

Balance, June 30, 2020 66,808 $ 668 $ 657,669 $ ( 140,148 ) $ ( 2,606 ) $ 515,583

Six Months Ended June 30, 2019

Common Stock Additional

Capital Accumulated

Deficit Accumulated

Comprehensive

Stockholders’

Shares Amount

Balance, January 1, 2019 38,466 $ 385 $ 239,865 $ ( 168,140 ) $ ( 1,108 ) $ 71,002

Net income — — — 9,949 — 9,949

Other comprehensive income — — — — 56 56

4 unchanged sentences

Balance, March 31, 2019 38,818 $ 388 $ 242,068 $ ( 158,191 ) $ ( 1,052 ) $ 83,213

Net income — — — 6,412 — 6,412

Other comprehensive income — — — — 88 88

Stock option exercises and employee stock plan purchases 9 — 120 — — 120

Vesting of restricted stock awards and units 253 3 ( 3 ) — — —

Shares withheld to cover taxes ( 37 ) ( 1 ) ( 943 ) — — ( 944 )

Stock-based compensation — — 3,358 — — 3,358

Balance, June 30, 2019 39,043 $ 390 $ 244,600 $ ( 151,779 ) $ ( 964 ) $ 92,247

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended

Six Months Ended

Operating activities

Adjustments to reconcile net income to net cash flows from operating activities:

Net (loss) income $ ( 3,675 ) $ 16,361

Adjustments to reconcile net (loss) income to net cash flows from operating activities:

Depreciation, amortization and accretion 7,764 6,577

1 unchanged sentence

Amortization of debt related costs 338 639

Loss on extinguishment of debt — 3,196

Provision for bad debt 206 57

4 unchanged sentences

Long-term income tax payable and other long-term liabilities 1,409 2,036

Other 408 ( 10 )

Increases (decreases) in cash from operating assets and liabilities:

Accounts receivable 2,087 ( 1,755 )

Inventory ( 6,777 ) ( 365 )

Other current assets 1,742 ( 118 )

4 unchanged sentences

Capital expenditures ( 4,953 ) ( 13,984 )

Net cash used in investing activities

Lending on bridge loan ( 10,000 ) —

Cash acquired in acquisition of business 17,562 —

Net cash provided by (used in) investing activities 2,609 ( 13,984 )

Financing activities

Proceeds from issuance of long-term debt — 199,461

Payments on long-term debt and other borrowings ( 7,032 ) ( 270,247 )

Equity issuance costs ( 345 ) —

Deferred financing costs ( 1,225 ) ( 2,034 )

Proceeds from stock option exercises 50 444

2 unchanged sentences

Net cash used in financing activities ( 10,218 ) ( 74,158 )

Effect of foreign exchange rates on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Effect of foreign exchange rates on cash, cash equivalents and restricted cash ( 112 ) 105

Net decrease in cash, cash equivalents and restricted cash ( 469 ) ( 56,516 )

Cash, cash equivalents and restricted cash, beginning of period 92,919 113,401

Cash, cash equivalents and restricted cash, end of period $ 92,450 $ 56,885

Lantheus Holdings, Inc.

Condensed Consolidated Statements of Cash Flows (Continued)

(in thousands)

Six Months Ended

Reconciliation to amounts within the condensed consolidated balance sheets

Cash and cash equivalents $ 90,309 $ 56,885

Restricted cash included in other long-term assets 2,141 —

Cash, cash equivalents and restricted cash at end of period $ 92,450 $ 56,885

The accompanying notes are an integral part of these condensed consolidated financial statements.

8 unchanged sentences

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Lantheus Holdings, Inc.

and its direct and indirect wholly-owned subsidiaries and have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.

The accompanying unaudited condensed consolidated financial statements include the accounts of Holdings and its direct and indirect wholly-owned subsidiaries, including Progenics Pharmaceuticals, Inc., a Delaware corporation (“Progenics”) for the period from June 19 through June 30, 2020 (see “Acquisition of Progenics” below), and have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.

Accordingly, these condensed consolidated financial statements do not include all of the information and notes required by generally accepted accounting principles in the United States of America (“U.S.

1 unchanged sentence

In the opinion of management, all adjustments (consisting of normal and recurring adjustments) considered necessary for a fair statement have been included.

The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ended December 31, 2020 or any future period.

The results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ended December 31, 2020 or any future period.

The condensed consolidated balance sheet at December 31, 2019 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by U.S.

1 unchanged sentence

These condensed consolidated financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto included in Item 8 of the Company’s most recent Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities Exchange Commission (“SEC”) on February 25, 2020.

Progenics Transaction

On October 1, 2019, the Company entered into an Agreement and Plan of Merger (the “Initial Merger Agreement”) to acquire Progenics Pharmaceuticals, Inc.

PGNX) (“Progenics” and, such acquisition, the “Progenics Transaction”).

The terms of the Initial Merger Agreement were amended and restated on February 20, 2020 (the “Amended Merger Agreement”).

Progenics is an oncology company developing innovative medicines and artificial intelligence to find, fight and follow cancer.

Under the terms of the Amended Merger Agreement, the Company will acquire all of the issued and outstanding shares of Progenics common stock by means of a merger of a wholly-owned subsidiary of the Company with and into Progenics in which Progenics stockholders will receive, for each share of Progenics stock held at the time of the closing of the Progenics Transaction, merger consideration consisting of 0.31 of a share of the Company’s common stock and a non-tradeable contingent value right (a “CVR”) tied to the financial performance of PyL TM ( 18 F-DCFPyL), Progenics’ prostate-specific membrane antigen targeted imaging agent designed to visualize prostate cancer currently in late stage clinical development (“PyL”).

Acquisition of Progenics

On June 19, 2020 (the “Closing Date”), pursuant to the Amended and Restated Agreement and Plan of Merger, dated as of February 20, 2020 (the “Merger Agreement”), by and among Holdings, Plato Merger Sub, Inc., a wholly-owned subsidiary of Holdings (“Merger Sub”), and Progenics, Holdings completed the previously announced acquisition of Progenics, by means of a merger of Merger Sub with and into Progenics, with Progenics surviving such merger as a wholly-owned subsidiary of Holdings (the “Merger”).

In accordance with the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of Progenics common stock, par value $ 0.0013 per share, issued and outstanding immediately prior to the Effective Time (other than shares of Progenics common stock owned by Holdings, Progenics or any of their wholly-owned subsidiaries) was automatically cancelled and converted into the right to receive (i) 0.31 (the “Exchange Ratio”) of a share of Holdings common stock, par value $ 0.01 per share, and (ii) one contingent value right (a “CVR”) tied to the financial performance of PyL (18F-DCFPyL), Progenics’ prostate-specific membrane antigen targeted imaging agent designed to visualize prostate cancer currently a late stage clinical candidate (“PyL”).

Each CVR will entitle its holder to receive a pro rata share of aggregate cash payments equal to 40 % of U.S.

net sales generated by PyL in 2022 and 2023 in excess of $ 100 million and $ 150 million, respectively.

In no event will the Company’s aggregate payments in respect of the CVRs, together with any other non-stock consideration treated as paid in connection with the Progenics Transaction, exceed 19.9 % of the total consideration the Company pays in the Progenics Transaction.

Following the closing of the Progenics Transaction, the aggregate ownership stake of the former Progenics stockholders will be approximately 40 % of the combined company.

Progenics’ stockholders will also be entitled to appraisal rights as provided under Delaware law.

In addition, pursuant to the Amended Merger Agreement, the holder of each in-the-money option to purchase shares of Progenics common stock under any equity based compensation plan of Progenics (“Progenics Stock Option”) will be entitled to receive in exchange for each such in-the-money option (i) an option to purchase common stock of the Company (each, a “Company Stock Option”) converted based on the 0.31 exchange ratio and (ii) a vested or unvested CVR depending on whether the underlying option is vested.

Holders of out-of-the-money Progenics Stock Options will receive Company Stock Options converted on an exchange ratio adjusted based on actual trading prices of common stock of Progenics and the Company prior to the closing of the Progenics Transaction.

The Progenics Transaction was unanimously approved by the Boards of Directors of both companies and requires, among other things, the affirmative vote of a majority of the outstanding shares of common stock of Progenics and a majority of votes cast by the holders of the common stock of the Company.

The Progenics Transaction is currently expected to close in June 2020, subject to the satisfaction or waiver of certain closing conditions.

Following the closing of the Progenics Transaction, which the parties intend to

report as tax-deferred to Progenics’ stockholders with respect to the stock component of the merger consideration for U.S.

federal income tax purposes, the combined company will continue to be headquartered in North Billerica, Massachusetts and will trade on the NASDAQ under the ticker symbol LNTH.

On March 15, 2020, Progenics and LMI entered into a bridge loan agreement, pursuant to which LMI agreed to provide for a secured short-term loan to Progenics on or after May 1, 2020 in an aggregate principal amount of up to $ 10.0 million .

The bridge loan matures on the earlier to occur of (a) September 30, 2020 and (b) the date on which Progenics enters into a debt financing or similar arrangements or any amendment to, or replacement of, its existing debt provided by one or more third parties following the termination date of the merger agreement, in either case, having aggregate net cash proceeds that exceed the amount then required to repay all obligations under the bridge loan agreement in full in cash.

The bridge loan bears interest at a rate per annum of 9.5 % and is secured through the pledge to LMI of all of the issued and outstanding shares of capital stock of Molecular Insight Pharmaceuticals, Inc., a subsidiary of Progenics (“MIPI”), and any debt of MIPI owed to Progenics.

On March 11, 2020, the World Health Organization declared the novel coronavirus (“COVID-19”), a respiratory illness first identified in Wuhan, China, a pandemic.

In no event will the Company’s aggregate payments in respect of the CVRs, together with any other non-stock consideration treated as paid in connection with the Progenics Transaction, exceed 19.9 % (which we estimate could be approximately $ 100 million) of the total consideration the Company pays in the Progenics Transaction.

No fractional shares of Holdings common stock have been or will be issued in the Merger, and Progenics’ former stockholders have received or will receive cash in lieu of any fractional shares of Holdings common stock.

In addition, in accordance with the Merger Agreement, at the Effective Time, each Progenics stock option with a per share exercise price less than or equal to $ 4.42 (an “in-the-money Progenics stock option”) received in exchange for each such in-the money Progenics stock option:

(i) an option to purchase Holdings common stock (each, a “Replacement Stock Option”) converted based on the Exchange Ratio, and (ii) a vested or unvested CVR depending on whether the underlying in-the-money Progenics stock option was vested at the Effective Time.

Each Progenics stock option with a per share exercise price greater than $ 4.42 (an “out-of-the-money Progenics stock option”) received in exchange for such out-of-the-money Progenics stock options a Lantheus Stock Option converted on an exchange ratio determined based on the average of the volume weighted average price per share of common stock of Progenics and Lantheus Holdings prior to the Effective Time, which exchange ratio was 0.31 .

As a result of the acquisition, Holdings issued 26,844,877 shares of Holdings common stock and 86,630,633 CVRs to former Progenics stockholders.

Holdings also assumed 34,000 in-the-money Progenics stock options and 6,507,342 out-of-the-money Progenics stock options, each converted into Lantheus Stock Options as noted above.

In addition, Lantheus assumed Progenics equity plans, which, on an as-converted basis, increased the number of Lantheus shares available for issuance by an aggregate of 4,211,290 shares prior to converting the stock options noted above, subject to certain limitations as to eligibility for issuance.

Please refer to Note 8, “Business Combinations”, for further details on the acquisition.

On March 11, 2020, the World Health Organization declared the novel coronavirus (“COVID-19”) a pandemic.

The global spread of COVID-19 has created significant volatility, uncertainty and economic disruption.

Governments in affected regions have implemented, and may continue to implement, safety precautions which include quarantines, travel restrictions, business closures, cancellations of public gatherings and other measures as they deem necessary.

Many organizations and individuals, including the Company and its employees, are taking additional steps to avoid or reduce infection, including limiting travel and working from home.

These measures are disrupting normal business operations both in and outside of affected areas and have had significant negative impacts on businesses and financial markets worldwide.

The Company experienced operational and financial impacts from the COVID-19 pandemic beginning late in the first quarter of 2020, including the impact of stay-at-home mandates and related safety measures such as the delay of elective medical procedures, resulting in a decline in the volume of procedures using the Company’s products.

Many organizations and individuals, including the Company and its employees, have taken additional steps to avoid or reduce infection, including having non-essential employees work from home and limiting travel.

These measures have disrupted normal business operations both in and outside of affected areas and have had significant negative impacts on businesses and economies worldwide.

It is not clear when businesses or economies will return to their pre-COVID-19 operating status or productivity.

The Company experienced operational and financial impacts from the COVID-19 pandemic beginning late in the first quarter of 2020 and through the date of this filing, including the impact of stay-at-home mandates and advisories, and a decline in the volume of procedures and treatments using the Company’s products.

As a result of the COVID-19 pandemic, the Company undertook a thorough analysis of all of its discretionary expenses.

In the first quarter of 2020, the Company implemented certain cost reduction initiatives, including, among other things, reducing travel and promotional expenses and implementing a hiring freeze through the balance of 2020.

The severity of the material impact of the COVID-19 pandemic on the Company's business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on the Company's customers and suppliers, all of which are uncertain and cannot be predicted.

While the impact of COVID-19 on the Company’s results of operations and cash flows is expected to be material, at least in the short term, given the dynamic nature of this situation, the Company is currently unable to accurately predict the impact of COVID-19 on its overall 2020 operations and financial results or cash flows for the foreseeable future and whether the impact of COVID-19 could lead to potential impairments.

Beginning in the first quarter of 2020, the Company implemented certain cost reduction initiatives, including, among other things, reducing travel and promotional expenses, reducing the Company’s work week from five days to four , reducing salaries by between 20 % and 75 %, and implementing a hiring freeze through the balance of 2020.

In the latter half of June, the Company restored its work week back to five days and restored most salaries back to 100 % (other than executive team members whose salaries were restored in early July and directors whose compensation will remain at reduced levels for the balance of the calendar year).

The severity of the on-going impact of the COVID-19 pandemic on the Company's business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic, and the extent and severity of the impact on the Company's customers and suppliers, all of which are uncertain and cannot be predicted.

While the impact of COVID-19 on the Company’s results of operations and cash flows has been, and is expected to continue to be, material, given the continually evolving nature of the pandemic, the Company is currently unable to accurately predict the impact of COVID-19 on its overall 2020 operations and financial results or cash flows for the foreseeable future and whether the impact of COVID-19 could lead to potential future impairments.

Summary of Significant Accounting Policies

4 unchanged sentences

The Company does not enter into derivative financial instruments for speculative or trading purposes.

Business Combinations

The Company accounts for business combinations using the acquisition method of accounting.

The Company recognizes the assets acquired and liabilities assumed in business combinations on the basis of their fair values at the date of acquisition.

The Company assesses the fair value of assets acquired, including intangible assets, and liabilities assumed using a variety of methods.

Each asset acquired and liability assumed is measured at fair value from the perspective of a market participant.

The method used to estimate the fair values of intangible assets incorporates significant assumptions regarding the estimates a market participant would make in order to evaluate an asset, including a market participant’s use of the asset and the appropriate discount rates.

Acquired in-process research and development (“IPR&D”) is recognized at fair value and initially characterized as an indefinite-lived intangible asset, irrespective of whether the acquired IPR&D has an alternative future use.

Any excess purchase price over the fair value of the net tangible and intangible assets acquired is allocated to goodwill.

Transaction costs and restructuring costs associated with a business combination are expensed as incurred.

During the measurement period, which extends no later than one year from the acquisition date, the Company may record certain adjustments to the carrying value of the assets acquired and liabilities assumed with the corresponding offset to goodwill.

measurement period, all adjustments are recorded in the condensed consolidated statements of operations as operating expenses or income.

Contingent Consideration Liabilities

The estimated fair value of contingent consideration liabilities, initially measured and recorded on the acquisition date, are considered to be a Level 3 instrument and are reviewed quarterly, or whenever events or circumstances occur that indicate a change in fair value.

The contingent consideration liabilities are recorded at fair value at the end of each reporting period with changes in estimated fair values recorded in general and administrative expenses in the condensed consolidated statements of operations.

The estimated fair value is determined based on probability adjusted discounted cash flow and Monte Carlo simulation models that include significant estimates and assumptions pertaining to commercialization events and sales targets.

The most significant unobservable inputs are the probabilities of achieving regulatory approval of the development projects and subsequent commercial success.

Significant changes in any of the probabilities of success would result in a significantly higher or lower fair value measurement.

Significant changes in the probabilities as to the periods in which milestones will be achieved would result in a significantly lower or higher fair value measurement.

Intangible and Long-Lived Assets

The Company’s IPR&D represents intangible assets acquired in a business combination that are used in research and development activities but have not yet reached technological feasibility, regardless of whether they have alternative future use.

The primary basis for determining the technological feasibility or completion of these projects is obtaining regulatory approval to market the underlying products in an applicable geographic region.

Because obtaining regulatory approval can include significant risks and uncertainties, the eventual realized value of the acquired IPR&D projects may vary from their fair value at the date of acquisition.

The Company classifies IPR&D acquired in a business combination as an indefinite-lived intangible asset until the completion or abandonment of the associated research and development efforts.

Upon completion of the associated research and development efforts, the Company will determine the useful life and begin amortizing the assets to reflect their use over their remaining lives.

Upon permanent abandonment, the Company writes-off the remaining carrying amount of the associated IPR&D intangible asset.

IPR&D assets are tested at least annually or when a triggering event occurs that could indicate a potential impairment and any impairment loss is recognized in our condensed consolidated statements of operations.

Recent Accounting Pronouncements

Standard Description

Effective Date

1 unchanged sentence

Recently Issued Accounting Standards Not Yet Adopted

ASU 2020-04, “Reference Rate Reform (Topic 848)”

This ASU provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.

March 12, 2020 through December 31, 2022

The Company does not expect that the adoption of this standard will have a material impact on the Company’s condensed consolidated financial statements.

Accounting Standards Adopted During the Three Months Ended March 31, 2020

Accounting Standards Adopted During the Six Months Ended June 30, 2020

ASU 2020-04, “Reference Rate Reform (Topic 848)” This ASU provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.

January 1, 2020 The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326)”

This ASU will require financial instruments measured at amortized cost and accounts receivable to be presented at the net amount expected to be collected.

This ASU requires financial instruments measured at amortized cost and accounts receivable to be presented at the net amount expected to be collected.

The new model requires an entity to estimate credit losses based on historical information, current information and reasonable and supportable forecasts that affect the collectability of the reported amount.

January 1, 2020

The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

January 1, 2020 The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

Revenue from Contracts with Customers

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

Major Products/Service Lines by Segment (in thousands) 2020 2019 2020 2019

Product revenue, net (1)

$ 56,657 $ 75,190 $ 135,402 $ 150,624

License and royalty revenues

revenues 57,399 75,190 136,144 150,624

International

Product revenue, net (1)

8,270 9,987 19,738 20,536

License and royalty revenues 341 528 832 1,055

Total International revenues

8,611 10,515 $ 20,570 $ 21,591

Total revenues $ 66,010 $ 85,705 $ 156,714 $ 172,215

12 unchanged sentences

The Company develops these inputs based on the best information available, including its own data.

The Company’s financial assets measured at fair value on a recurring basis consist of money market funds and interest rate swaps.

The Company’s financial assets and liabilities measured at fair value on a recurring basis consist of money market funds, interest rate swaps, a contingent receivable and contingent consideration liabilities.

The Company invests excess cash from its operating cash accounts in overnight investments and reflects these amounts in cash and cash equivalents in the condensed consolidated balance sheets at fair value using quoted prices in active markets for identical assets.

1 unchanged sentence

Please refer to Note 12, “Derivative Instruments”, for further details on the interest rate swaps.

The Company recorded a contingent receivable and the contingent consideration liabilities resulting from the acquisition of Progenics at fair value based on inputs that are not observable in the market.

Please refer to Note 8, “Business Combinations”, for further details on the acquisition.

The tables below present information about the Company’s assets and liabilities measured at fair value on a recurring basis:

March 31, 2020

(in thousands)

June 30, 2020

(in thousands) Total Fair

Value Level 1 Level 2 Level 3

Money market $ 49,662 $ 49,662 $ — $ —

Contingent receivable 10,100 — — 10,100

Total assets $ 59,762 $ 49,662 $ — $ 10,100

Interest rate swaps $ 1,953 $ — $ 1,953 $ —

Contingent consideration liabilities (1)

16,300 — — 16,300

Total liabilities $ 18,253 $ — $ 1,953 $ 16,300

December 31, 2019

(in thousands)

(in thousands) Total Fair

Value Level 1 Level 2 Level 3

Money market $ 39,530 $ 39,530 $ — $ —

Total assets $ 39,530 $ 39,530 $ — $ —

(1) Includes purchase consideration of $ 3.7 million related to CVRs and $ 12.6 million of assumed contingent consideration liabilities.

During the three and six months ended June 30, 2020, there were no transfers into or out of Level 3.

As part of the acquisition of Progenics, the Company acquired the right to receive certain future milestone and royalty payments due to Progenics from CytoDyn Inc., related to a prior sale of certain intellectual property.

The Company has the right to receive $ 5.0 million upon regulatory approval and a 5 % royalty on net sales of approved products.

The Company considers the contingent receivable a Level 3 instrument (one with significant unobservable inputs) in the fair value hierarchy.

The estimated fair value was determined based on probability adjusted discounted cash flows that included significant estimates and assumptions pertaining to regulatory events and sales targets.

The most significant unobservable inputs are the probabilities of achieving regulatory approval of the development projects and subsequent commercial success.

As part of the acquisition of Progenics, the Company issued CVRs and recorded the fair value as part of consideration transferred.

Refer to Note 1, “Basis of Presentation” for further details on the CVRs.

Additionally, the Company assumed contingent consideration liabilities related to a previous acquisition completed by Progenics in 2013.

These contingent consideration liabilities include potential payments of up to $ 70.0 million if the Company attains certain net sales targets for Azedra and 1095 and a $ 5.0 million 1095 commercialization milestone.

The Company considers the contingent consideration liabilities a Level 3 instrument (one with significant unobservable inputs) in the fair value hierarchy.

The estimated fair value was determined based on probability adjusted discounted cash flows and Monte Carlo simulation models that included significant estimates and assumptions pertaining to commercialization events and sales targets.

The most significant unobservable inputs are the probabilities of achieving regulatory approval of the development projects and subsequent commercial success.

Significant changes in any of the probabilities of success or the probabilities as to the periods in which milestones will be achieved would result in a significantly higher or lower fair value measurement.

The Company records the contingent consideration liability at fair value with changes in estimated fair values recorded in general and administrative expenses in the condensed consolidated statements of operations.

The following tables summarize quantitative information and assumptions pertaining to the fair value measurement of assets and liabilities using Level 3 inputs at June 30, 2020.

(in thousands) Fair Value at June 30, 2020 Valuation Technique Unobservable Input Assumption

Contingent receivable:

Regulatory milestone $ 3,100 Probability adjusted discounted cash flow model Period of expected milestone achievement 2021

Probability of success 90 %

Discount rate 23 %

Royalties 7,000 Probability adjusted discounted cash flow model

Probability of success 13 % - 77 %

Discount rate 23 %

Total $ 10,100

(in thousands) Fair Value at June 30, 2020 Valuation Technique Unobservable Input Assumption

Contingent consideration liability:

Net sales targets - PyL (CVRs) $ 3,700 Monte-Carlo simulation Period of expected milestone achievement 2022 - 2023

Discount rate 24 %

1095 commercialization milestone 2,200 Probability adjusted discounted cash flow model Period of expected milestone achievement 2026

Probability of success 45 %

Discount rate 0.48 %

Net sales targets - AZEDRA and 1095 10,400 Monte-Carlo simulation Probability of success 40 % - 100 %

Discount rate 23 % - 24 %

Total $ 16,300

For those financial instruments with significant Level 3 inputs, the following table summarizes the activities for the periods indicated (in thousands):

Financial Assets Financial Liabilities

(in thousands) Six Months Ended

June 30, 2020 Six Months Ended

June 30, 2020

Fair value, beginning of period $ — $ —

Progenics acquisition 10,100 16,300

Fair value, end of period $ 10,100 $ 16,300

Changes in unrealized gains (losses) included in earnings $ — $ —

The Company provides for income taxes at the end of each interim period based on the estimated effective tax rate for the full year, adjusted for any discrete events which are recorded in the period they occur.

The Company’s effective tax rate in fiscal 2020 differs from the U.S.

federal statutory rate of 21% principally due to the impact of state taxes and the accrual of interest on uncertain tax positions.

federal statutory rate of 21% principally due to the impact of state taxes, non-deductible transaction costs, and the accrual of interest on uncertain tax positions.

Cumulative adjustments to the tax provision are recorded in the interim period in which a change in the estimated annual effective tax rate is determined.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

(in thousands) 2020 2019 2020 2019

3 unchanged sentences

In determining whether its deferred tax assets are more-likely-than-not realizable, the Company evaluated all available positive and negative evidence, and weighed the objective evidence and expected impact.

The Company continues to record a valuation allowance of $ 1.2 million against the net deferred tax assets of its U.K.

The Company has recorded valuation allowances of $ 3.0 million against the net deferred tax assets of certain foreign subsidiaries, as well as a valuation allowance of $ 0.7 million against net state deferred tax assets due to the potential expiration of certain state tax losses and tax credits prior to utilization.

In connection with the Company’s acquisition of the medical imaging business from Bristol-Myers Squibb (“BMS”) in 2008, the Company recorded a liability for uncertain tax positions related to the acquired business and simultaneously entered into a tax indemnification agreement with BMS under which BMS agreed to indemnify the Company for any payments made to settle those uncertain tax positions with the taxing authorities.

4 unchanged sentences

Assuming that the receivable from BMS continues to be considered recoverable by the Company, there will be no effect on net income and no net cash outflows related to these liabilities.

On June 19, 2020, the Company acquired the stock of Progenics Pharmaceuticals, Inc.

in a transaction that is expected to qualify as a tax-deferred reorganization under Section 368 of the Internal Revenue Code of 1986, as amended.

The transaction resulted in an ownership change of Progenics under Section 382 and a limitation on the utilization of Progenics’ pre-transaction tax attributes.

All pre-transaction research credits and Orphan drug credits have been removed from the balance sheet, and the gross carrying value of the tax loss carryforwards reduced to their realizable value on the opening balance sheet, in accordance with the Section 382 limitation.

Significant deferred tax liabilities arising from the purchase accounting basis step-up in identified intangibles were also recorded as part of the purchase accounting, resulting in a small net overall deferred tax liability for Progenics after the application of purchase accounting.

Inventory consisted of the following:

(in thousands)

(in thousands) June 30,

2020 December 31,

Raw materials $ 15,629 $ 11,417

4 unchanged sentences

Property, plant and equipment, net, consisted of the following:

(in thousands)

(in thousands) June 30,

2020 December 31,

Land $ 13,450 $ 13,450

Buildings 69,643 75,654

Machinery, equipment and fixtures 88,728 87,763

1 unchanged sentence

Construction in progress 15,535 10,546

208,287 208,152

accumulated depreciation and amortization ( 85,384 ) ( 91,655 )

Total property, plant and equipment, net $ 122,903 $ 116,497

Depreciation and amortization expense related to property, plant and equipment, net, was $ 3.0 million and $ 2.5 million for the three months ended March 31, 2020 and 2019 , respectively.

T he Company tests long-lived assets for recoverability whenever events or changes in circumstances suggest that the carrying value of an asset or group of assets may not be recoverable.

As a result of a decline in expected future cash flows and the effect of COVID-19 related to certain other nuclear legacy manufacturing assets in the U.S.

Depreciation and amortization expense related to property, plant and equipment, net, was $ 2.7 million and $ 2.5 million for the three months ended June 30, 2020 and 2019, respectively, and $ 5.7 million and $ 5.0 million for the six months ended June 30, 2020 and 2019, respectively.

The Company tests long-lived assets for recoverability whenever events or changes in circumstances suggest that the carrying value of an asset or group of assets may not be recoverable.

During the three months ended March 31, 2020, as a result of a decline in expected future cash flows and the effect of COVID-19 related to certain other nuclear legacy manufacturing assets in the U.S.

segment, the Company determined certain impairment triggers had occurred.

2 unchanged sentences

The Company then estimated the fair values of the asset group based on their discounted cash flows.

The carrying value exceeded the fair value and as a result, the Company recorded a non-cash impairment of $ 7.3 million for the three months ended March 31, 2020 in cost of goods sold in the condensed consolidated statement of operations.

The carrying value exceeded the fair value and as a result, the Company recorded a non-cash impairment of $ 7.3 million for the six months ended June 30, 2020 in cost of goods sold in the condensed consolidated statement of operations.

Business Combinations

On June 19, 2020, the Company completed the acquisition of Progenics, an oncology company developing innovative medicines and artificial intelligence to find, fight and follow cancer.

The acquisition combines the commercialization, supply chain and manufacturing expertise of the Company with the currently commercialized products and R&D pipeline of Progenics.

Progenics brings several commercial products and a pipeline of product candidates that will further diversify the Company’s commercial and clinical development portfolios.

Under the terms of the Merger Agreement, the Company acquired all of the issued and outstanding shares of Progenics common stock for a purchase price of $ 419.0 million by means of an all-stock transaction, which includes Replacement Stock Options for precombination services as well as CVRs.

The CVRs were accounted for as contingent consideration, the fair value of which was determined using a Monte-Carlo simulation.

Additionally, the fair value of replacement options related to pre-acquisition services was recorded as a component of consideration transferred.

Finally, as a result of the acquisition, Lantheus effectively settled an existing bridge loan with Progenics at the recorded amount (principal and accrued interest) of $ 10.1 million, representing the effective settlement of a preexisting relationship.

This effective settlement of the bridge loan was treated as a component of consideration transferred.

The Company determined that the bridge loan was at market terms and no gain or loss was recorded upon settlement.

The acquisition date fair value of the consideration transferred in the acquisition consisted of the following:

(in thousands) Amount

Issuance of common stock $ 398,110

Fair value of replacement options 7,125

Fair value of bridge loan settled at close 10,074

Fair value of contingent considerations (CVRs) 3,700

Total consideration transferred (1)

(1) Non-cash investing and financing activities in the condensed consolidated statements of cash flows

The transaction was accounted for as a business combination which requires that assets acquired and liabilities assumed be recognized at their fair value as of the acquisition date.

While the Company uses its best estimates and assumptions as part of the purchase price allocation process to value the assets acquired and liabilities assumed on the acquisition date, its estimates and assumptions are subject to refinement.

Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions.

The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company’s results of operations.

The purchase price allocation is preliminary and is subject to change, including for the valuation and amortization of intangible assets, income taxes and related valuation allowances and certain assets and liabilities among other items.

The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the acquisition date.

Any potential adjustments made could be material in relation to the preliminary values presented below.

The preliminary fair value of the assets acquired and liabilities assumed were as follows:

(in thousands) Amount

Cash and cash equivalents $ 15,421

Accounts receivable 5,787

Inventory 915

Other current assets 3,250

Property, plant and equipment 14,972

Identifiable intangible assets (weighted average useful life):

Currently marketed product ( 15 years)

Licenses ( 11.5 years)

Developed technology ( 9 years)

IPR&D 150,900

Other long-term assets 37,631

Accounts payable ( 1,616 )

Accrued expenses and other liabilities ( 8,207 )

Other long-term liabilities ( 30,778 )

Long-term debt and other borrowings ( 40,200 )

Deferred tax liabilities ( 3,717 )

Goodwill 42,051

Total consideration transferred $ 419,009

Intangible assets acquired consist of currently marketed products, licenses, developed technology and IPR&D.

The fair value of the acquired intangible assets was determined based on estimated future revenues, royalty rates and discount rates, among other variables and estimates.

The acquired intangible assets subject to amortization were assigned useful lives based on the expected use of the assets and the regulatory and economic environment within which they are being used and are being amortized on a straight-line basis over the respective estimated useful lives.

The estimated fair values of the IPR&D assets were determined based on the present values of the expected cash flows to be generated by the respective underlying assets.

The Company used a discount rate of 24.0 % and cash flows that have been probability adjusted to reflect the risks of product commercialization, which the Company believes are appropriate and representative of market participant assumptions.

As part of the acquisition, the Company acquired the right to receive certain future milestone and royalty payments due to Progenics, related to a prior sale of certain intellectual property.

The estimated fair value of the acquired contingent receivable of $ 10.1 million was determined by applying a probability adjusted discounted cash flow model based on estimated future expected payments and recorded in other long-term assets.

The goodwill recognized is attributable to future technologies that are not separately identifiable that could potentially add to the currently developed and pipeline products and Progenics’ assembled workforce.

Future technologies did not meet the criteria for recognition separately from goodwill because they are part of the future development and growth of the business.

Goodwill of $ 42.1 million recognized in connection with the acquisition is not deductible for tax purposes and has not yet been assigned to operating segments.

The Company recognized $ 7.5 million and $ 8.9 million of acquisition-related costs, including legal, accounting, compensation arrangements and other related fees that were expensed when incurred in the three and six months ended June 30, 2020, respectively.

These costs are recorded in general and administrative expenses in the condensed consolidated statements of operations.

Progenics Pro Forma Financial Information

Progenics has been included in the Company’s consolidated financial statements since the acquisition date.

Progenics contributed revenues of $ 1.0 million and a net loss of $ 3.2 million to the Company’s condensed consolidated statement of operations for the three and six months ended June 30, 2020.

The following unaudited pro forma financial information presents the Company’s results as if the Progenics acquisition had occurred on January 1, 2019:

Six Months Ended

June 30, 2020 Six Months Ended

June 30, 2019

(in thousands) Amount Amount

Pro forma revenue $ 167,619 $ 186,462

Pro forma net loss 18,115 42,901

The pro forma financial information for all periods presented adjusts for the effects of material business combination items, including amortization of acquired intangible assets, transaction-related costs, adjustments to interest expense related to the assumption of long-term debt, retention and severance bonuses and the corresponding income tax effects of each.

These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the operating results of the Company that would have been achieved had the acquisition actually taken place on January 1, 2019.

In addition, these results are not intended to be a projection of future results and do not reflect events that may occur after the acquisition, including, but not limited to, revenue enhancements, cost savings or operating synergies that the combined company may achieve as a result of the acquisition.

Asset Retirement Obligations

1 unchanged sentence

The Company has production facilities which manufacture and process radioactive materials at its North Billerica, Massachusetts and San Juan, Puerto Rico sites.

As of March 31, 2020 , the liability is measured at the present value of the obligation expected to be incurred, of approximately $ 26.9 million .

As of June 30, 2020, the liability is measured at the present value of the obligation expected to be incurred, of approximately $ 26.9 million.

The following table provides a summary of the changes in the Company’s asset retirement obligations:

(in thousands)

(in thousands) Amount

Balance at January 1, 2020 $ 12,883

Accretion expense 719

Balance at March 31, 2020

Balance at June 30, 2020 $ 13,602

The Company is required to provide the U.S.

1 unchanged sentence

The Company has provided this financial assurance in the form of a $ 28.2 million surety bond.

Intangibles, Net

Intangibles, net, consisted of the following:

June 30, 2020

(in thousands) Amortization Method Cost Accumulated Amortization Net

Trademarks Straight-Line $ 13,540 $ ( 10,683 ) $ 2,857

Customer relationships Accelerated 98,903 ( 95,214 ) 3,689

Currently marketed product Straight-Line 142,100 ( 289 ) 141,811

Licenses Straight-Line 87,500 ( 235 ) 87,265

Developed technology Straight-Line 3,000 ( 10 ) 2,990

IPR&D N/A 150,900 — 150,900

Total $ 495,943 $ ( 106,431 ) $ 389,512

December 31, 2019

(in thousands) Amortization Method Cost Accumulated Amortization Net

Trademarks Straight-Line $ 13,540 $ ( 10,407 ) $ 3,133

Customer relationships Accelerated 99,019 ( 94,816 ) 4,203

Total $ 112,559 $ ( 105,223 ) $ 7,336

The Company recorded amortization expense for its intangible assets of $ 0.9 million and $ 0.5 million for the three months ended June 30, 2020 and 2019, respectively, and $ 1.3 million and $ 0.9 million for the six months ended June 30, 2020 and 2019, respectively.

The below table summarizes the estimated aggregate amortization expense expected to be recognized on the above intangible assets:

(in thousands) Amount

2025 and thereafter 155,509

Total $ 238,612

Long-Term Debt, Net, and Other Borrowings

As of March 31, 2020 , the Company’s maturities of principal obligations under its long-term debt and other borrowings are as follows:

(in thousands)

As of June 30, 2020, the Company’s maturities of principal obligations under its long-term debt and other borrowings are as follows:

(in thousands) Amount

Remainder of 2020 $ 8,607

Total principal outstanding 225,899

Unamortized debt discount

Unamortized debt premium 1,566

Unamortized debt issuance costs ( 687 )

Finance lease liabilities 375

Total 227,153

current portion ( 17,143 )

Total long-term debt, net and other borrowings $ 210,010

At March 31, 2020 , the Company’s interest rate under the 2019 Term Facility was 2.5 % .

At June 30, 2020, the Company’s interest rate under the 2019 Term Facility was 3.4 %.

On June 19, 2020, the Company amended its 2019 Credit Agreement (“the Amendment”) as a result of the impact of the COVID-19 pandemic on the business and operations of the Company and the near-term higher level of indebtedness resulting from the Company’s decision not to immediately repay the Progenics debt secured by the RELISTOR royalties following the Company’s acquisition of Progenics.

The Company accounted for the Amendment as a debt modification and capitalized $ 1.2 million of associated costs.

The Amendment provides for, among other things, modifications to LMI’s financial maintenance covenants.

The covenant related to Total Net Leverage Ratio (as defined in the Amended Credit Agreement) has been waived from the date of the Amendment through December 31, 2020.

The maximum total net leverage ratio and interest coverage ratio permitted by the financial covenant is displayed in the table below:

2020 Amended Credit Agreement

Period Total Net Leverage Ratio

Q1 2021 5.50 to 1.00

Q2 2021 3.75 to 1.00

Thereafter 3.50 to 1.00

Period Interest Coverage Ratio

Q2 2020 to Q1 2021 2.00 to 1.00

Thereafter 3.00 to 1.00

The Amendment also introduces a new financial covenant requiring Consolidated Liquidity (as defined in the Amended Credit Agreement) to be no less than $ 150.0 million.

The Consolidated Liquidity covenant is tested on a continuing basis beginning on the date of the Amendment and ending on the date on which LMI delivers a compliance certificate for the fiscal quarter ending March 31, 2021.

For the period beginning on the date of the Amendment and ending on the Adjustment Date (as defined in the Amended Credit Agreement) for the fiscal quarter ending March 31, 2021, loans under the Amended Credit Agreement bear interest at LIBOR plus 3.25 % or the Base Rate plus 2.25 %.

On and after the Adjustment Date for the fiscal quarter ending on March 31, 2021, loans bear interest at LIBOR plus a spread that ranges from 1.50 % to 3.00 % or the Base Rate plus a spread that ranges from 0.50 % to 2.00 %, in each case based on LMI’s Total Net Leverage Ratio.

The commitment fee applicable to the Revolving Facility is 0.50 % until the Adjustment Date for the fiscal quarter ending March 31, 2021.

On and after the Adjustment Date for the fiscal quarter ending on March 31, 2021, the commitment fee ranges from 0.15 % to 0.40 % based on LMI’s Total Net Leverage Ratio.

On June 19, 2020, as a result of the acquisition, the Company assumed Progenics outstanding debt as of such date in the amount of $ 40.2 million.

Progenics, through a wholly-owned subsidiary MNTX Royalties Sub LLC (“MNTX Royalties”), entered into a $ 50.0 million loan agreement (the “Royalty-Backed Loan”) with a fund managed by HealthCare Royalty Partners III, L.P.

(“HCRP”) on November 4, 2016.

Under the terms of the Royalty-Backed Loan, the lenders have no recourse to Progenics or any of its assets other than the right to receive royalty payments from the commercial sales of RELISTOR products owed under Progenics’ license agreement with Salix Pharmaceuticals, Inc., a wholly-owned subsidiary of Bausch Health Companies Inc.

The RELISTOR royalty payments will be used to repay the principal and interest on the loan.

The Royalty-Backed Loan bears interest at a per annum rate of 9.5 % and matures on June 30, 2025.

On June 22, 2020, HCRP waived the automatic acceleration of the Royalty-Backed Loan that otherwise would have been triggered by the consummation of the Progenics Transaction and MNTX Royalties agreed not to prepay the loan until after December 31, 2020.

Under the terms of the loan agreement, payments of interest and principal, if any, are made on the last day of each calendar quarter out of RELISTOR royalty payments received since the immediately-preceding payment date.

On each payment date, 50 % of RELISTOR royalty payments received since the immediately-preceding payment date in excess of accrued interest on the loan are used to repay the principal of the loan, with the balance retained by the Company.

Starting on September 30, 2021, all of the RELISTOR royalties received since the immediately-preceding payment date will be used to repay the interest and outstanding principal balance until the balance is fully repaid.

Derivative Instruments

4 unchanged sentences

In accordance with hedge accounting, the interest rate swaps are recorded on the Company’s condensed consolidated balance sheets at fair value, and changes in the fair value of the swap agreements are recorded to other comprehensive loss and reclassified to interest expense in the period during which the hedged transaction affected earnings or it will become probable that the forecasted transaction would not occur.

At March 31, 2020, accumulated other comprehensive loss included $ 0.4 million of pre-tax deferred losses that are expected to be reclassified to earnings during the next 12 months.

At June 30, 2020, accumulated other comprehensive loss included $ 0.6 million of pre-tax deferred losses that are expected to be reclassified to earnings during the next 12 months.

The following table presents the location and fair value amounts of derivative instruments reported in the condensed consolidated balance sheet:

(in thousands)

March 31, 2020

December 31, 2019

Derivatives type

Classification

Interest rate swap

Accrued expenses and other liabilities

Accumulated Other Comprehensive Loss

The components of Accumulated Other Comprehensive Loss, net of tax of $ 0.3 million and $ 0.0 million for the three months ended March 31, 2020 and March 31, 2019, respectively, consisted of the following:

(in thousands)

Foreign currency translation

Unrealized loss on cash flow hedges

(in thousands) June 30, 2020 December 31, 2019

Derivatives type Classification

Interest rate swap Accrued expenses and other liabilities $ 1,953 $ —

Accumulated Other Comprehensive Loss

The components of Accumulated Other Comprehensive Loss, net of tax of $ 0.5 million and $ 0.0 million for the six months ended June 30, 2020 and June 30, 2019, respectively, consisted of the following:

(in thousands) Foreign currency translation Unrealized loss on cash flow hedges Accumulated other comprehensive loss

Balance at January 1, 2020 $ ( 960 ) $ — $ ( 960 )

1 unchanged sentence

Amounts reclassified to earnings — 76 76

Balance at March 31, 2020

Balance at June 30, 2020 $ ( 1,154 ) $ ( 1,452 ) $ ( 2,606 )

Balance at January 1, 2019 $ ( 1,108 ) $ — $ ( 1,108 )

1 unchanged sentence

Amounts reclassified to earnings — — —

Balance at March 31, 2019

Balance at June 30, 2019 $ ( 964 ) $ — $ ( 964 )

Stock-Based Compensation

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

(in thousands) 2020 2019 2020 2019

4 unchanged sentences

Total stock-based compensation expense $ 3,385 $ 3,358 $ 6,460 $ 6,078

Net Income Per Common Share

A summary of net income per common share is presented below:

Net (Loss) Income Per Common Share

A summary of net (loss) income per common share is presented below:

Three Months Ended

June 30, Six Months Ended

(in thousands, except per share amounts) 2020 2019 2020 2019

Net (loss) income $ ( 7,012 ) $ 6,412 $ ( 3,675 ) $ 16,361

Basic weighted-average common shares outstanding 43,135 38,972 41,284 38,789

2 unchanged sentences

Diluted weighted-average common shares outstanding 43,135 40,239 41,284 40,064

Basic income per common share

Diluted income per common share

Basic (loss) income per common share $ ( 0.16 ) $ 0.16 $ ( 0.09 ) $ 0.42

Diluted (loss) income per common share $ ( 0.16 ) $ 0.16 $ ( 0.09 ) $ 0.41

Antidilutive securities excluded from diluted net income per common share 1,649 31 1,517 55

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

(in thousands) 2020 2019 2020 2019

2 unchanged sentences

Interest income 105 276 214 559

Other 3 187 3 247

Total other income $ 756 $ 1,312 $ 1,106 $ 2,499

5 unchanged sentences

In addition, intellectual property disputes often have a risk of injunctive relief which, if imposed against the Company, could materially and adversely affect its financial condition or results of operations.

As of March 31, 2020 , the Company had no material ongoing litigation in which the Company was a party.

In addition, the Company had no material ongoing regulatory or other proceedings and no knowledge of any investigations by government or regulatory authorities in which the Company is a target, in either case, that the Company believes could have a material and adverse effect on its current business.

If a matter is both probable to result in material liability and the amount of loss can be reasonably estimated, the Company estimates and discloses the possible material loss or range of loss.

If such loss is not probable or cannot be reasonably estimated, a liability is not recorded in its condensed consolidated financial statements.

As of June 30, 2020, the Company had the following material ongoing litigation in which the Company was a party:

RELISTOR Subcutaneous Injection

Between November 19, 2015 and September 18, 2017, Progenics, Salix, Valeant (now Bausch) and Wyeth filed multiple lawsuits against Mylan Pharmaceuticals and certain of its affiliates (collectively, “Mylan”) in the United States District Court for the District of New Jersey for infringement of certain U.S.

patents based upon Mylan’s filing of multiple ANDAs seeking to obtain approval to market a generic version of RELISTOR subcutaneous injection before some or all of those patents expire.

These actions were later consolidated into two separate actions in the District of New Jersey.

On May 1, 2018, in the lead action, the Court granted Plaintiffs’ motion for partial summary judgment as to the validity of a particular claim that Mylan had admitted it infringed.

On May 23, 2018, the Court entered an order for final judgment in favor of Plaintiffs and against Mylan on that particular claim.

As a result, trial on the merits in the lead action was adjourned, allowing trial, if necessary, to be consolidated with the lagging, second action.

Fact discovery has concluded in the lagging case, but deadlines for expert discovery have not yet been set.

On May 25, 2018, Mylan filed a Notice of Appeal to the United States Court of Appeals for the Federal Circuit (“CAFC”).

On April 8, 2020, the CAFC issued its decision reversing the Court’s grant of summary judgment and remanding for further proceedings.

On June 22, 2020, Plaintiffs filed a petition for rehearing/rehearing en banc, and on July 24, 2020 that petition was denied.

RELISTOR Tablets - Actavis

Between December 6, 2016 and December 8, 2017, Progenics, Salix, Bausch, and Wyeth filed suit against Actavis, Actavis LLC, Teva Pharmaceuticals USA, Inc., and Teva Pharmaceuticals Industries Ltd.

(collectively, “Actavis”) in the United States District Court for the District of New Jersey for infringement of certain U.S.

patents based upon Actavis’s filing of an ANDA seeking to obtain approval to market a generic version of RELISTOR tablets before some or all of those patents expire.

The actions were later consolidated into a single action in the District of New Jersey.

On May 6-9, 2019, a bench trial was held, and on July 17, 2019, the Court issued an Order finding the asserted claims of a certain U.S.

patent valid and infringed.

The Court additionally ordered that the effective date of any approval of Actavis’s ANDA may not be earlier than the expiration date of that patent.

Actavis filed an appeal of the Court’s decision with the CAFC on August 13, 2019.

The matter is currently pending on appeal at the CAFC and merits briefing is underway.

Actavis’s opening brief was filed February 6, 2020.

The deadline for Plaintiffs to file their responsive brief is currently September 15, 2020.

On June 13, 2019, Progenics, Salix, Bausch, and Wyeth filed another suit against Actavis in the United States District Court for the District of New Jersey for infringement of a separate, and at that time, recently granted U.S.

patent based upon Actavis’s filing of an ANDA seeking to obtain approval to market a generic version of RELISTOR tablets before this patent expires.

Litigation in this action is underway, and fact discovery has not yet begun.

RELISTOR European Opposition Proceedings

In addition to the above described ANDA notifications, in October 2015, Progenics received notices of opposition to three European patents relating to methylnaltrexone.

Notices of opposition were filed separately by each of Actavis Group PTC ehf and Fresenius Kabi Deutschland GmbH.

Between May 11, 2017 and July 4, 2017, the opposition division provided notice that the three European patents would be revoked.

Each of these matters are on appeal with the European Patent Office.

Oral proceedings are set to occur on September 22, 2020, November 17, 2020 and November 18, 2020.

For each of the above-described RELISTOR proceedings, Progenics and Bausch continue to cooperate closely to vigorously defend and enforce RELISTOR intellectual property rights.

Pursuant to the RELISTOR license agreement between Progenics and Bausch, Bausch has the first right to enforce the intellectual property rights at issue and is responsible for the costs of such enforcement.

Because the outcome of litigation is uncertain and in these RELISTOR proceedings the Company does not control the enforcement of the intellectual property rights at issue, no assurance can be given as to how or when any of these RELISTOR proceedings will ultimately be resolved.

German PSMA-617 Litigation

On November 8, 2018, Molecular Insight Pharmaceuticals, Inc., a subsidiary of Progenics (“MIP”), filed a complaint against the University of Heidelberg (the “University”) in the District Court of Mannheim in Germany.

In this Complaint, MIP claimed that the discovery and development of PSMA-617 was related to work performed under a research collaboration sponsored by MIP.

MIP alleged that the University breached certain contracts with MIP and that MIP is the co-owner of inventions embodied in certain worldwide patent filings related to PSMA-617 that were filed by the University in its own name.

On February 27, 2019, Endocyte, Inc., a wholly owned subsidiary of Novartis AG, filed a motion to intervene in the German litigation.

Endocyte is the exclusive licensee of the patent rights that are the subject of the German proceedings.

On November 27, 2018, MIP requested that the European Patent Office (“EPO”) stay the examination of a certain European Patent (EP) and related Divisional Applications, pending a decision from the German District Court on MIP’s Complaint.

On December 10, 2018, the EPO granted MIP’s request and stayed the examination of the patent and patent applications effective November 27, 2018.

MIP filed a Confirmation of Ownership with the United States Patent and Trademark Office (“USPTO”) in the corresponding US patent applications.

MIP’s filing with the USPTO takes the position that, in light of the collaboration and contracts between MIP and the University, MIP is the co-owner of these pending U.S.

patent applications.

On March 6, 2020, MIP filed with the USPTO a notice stating that the Power of Attorney in certain pending US patent applications was signed by less than all applicants or owners of the applications.

On February 27, 2019, the German District Court set € 0.4 million as the amount MIP must deposit with the Court as security in the event of an unfavorable final decision on the merits of the dispute.

The Court held the first oral hearing in the case on August 6, 2019.

The Court considered procedural matters and granted the parties the right to make further submissions.

A further oral hearing occurred July 23, 2020, during which the Court heard live testimony from several witnesses.

Progenics is vigorously enforcing its rights in this German proceeding.

Because Progenics is the plaintiff, if unsuccessful in this proceeding, Progenics may also have liability for Court fees and fees and disbursements of defendant’s and intervenor’s counsel, such fees and disbursements to be at least partially covered by the aforementioned cash security deposited with the Court.

Because the outcome of litigation is uncertain, no assurance can be given as to how or when this German proceeding will ultimately be resolved.

Litigation Related to the Merger

Nine purported stockholders of Progenics filed ten lawsuits alleging, among other things, that Progenics and the members of the Progenics Board of Directors violated Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 17 C.F.R.

§ 244.100 and Rule 14a-9 promulgated under the Exchange Act, by misstating or omitting certain allegedly material information in the S-4 Registration Statement filed with the Securities and Exchange Commission (“SEC”) on November 12, 2019, the amended S-4 Registration Statement filed with the SEC on March 16, 2020, and/or the Schedule 14A proxy statement filed with the SEC on March 19, 2020 related to the Merger.

Two of the actions alleged that the Company and Plato Merger Sub, Inc.

(“Merger Sub”) violated Section 14(a) and/or Section 20(a) of the Exchange Act.

One of the actions further alleged that the members of the Progenics Board breached their fiduciary duties of care, loyalty and good faith to the stockholders of Progenics related to the Merger, that Progenics, the Company and Merger Sub aided and abetted such breaches of fiduciary duty, and that the Company and Merger Sub violated Section 14(a) of the Exchange Act.

All such lawsuits have been voluntarily dismissed, with the last of the cases dismissed on June 23, 2020.

Whistleblower Complaint

In July 2019, Progenics received notification of a complaint submitted by Dr.

Syed Mahmood, the former Vice President of Medical Affairs for Progenics, to the Occupational Safety and Health Administration of the United States Department of Labor (“DOL”), alleging that the termination of his employment by Progenics was in violation of Section 806 of the Sarbanes-Oxley Act of 2002 (“SOX”).

Mahmood sought reinstatement to his former position of Vice President of Medical Affairs, back pay, front pay in lieu of reinstatement, interest, attorneys’ fees and costs incurred, and special damages.

In March 2020, Dr.

Mahmood filed a complaint in the U.S.

District Court for the Southern District of New York (as permitted by SOX because the DOL had not issued a decision within 180 days).

Mahmood’s federal complaint asserts claims of violation of Section 806 of SOX.

The DOL action has been dismissed and the matter will proceed in federal district court.

Progenics’ Answer to the Complaint is presently due by August 26, 2020.

The Company believes the claims in this matter are without merit, and the Company has meritorious defenses to the claims.

The Company intends to vigorously defend against the claims.

The Company is unable to estimate the potential liability with respect to the legal matters noted above.

There are numerous factors that make it difficult to estimate reasonably possible loss or range of loss at the various stages of the legal proceedings noted above, including the significant number of legal and factual issues still to be resolved in those various legal proceedings.

Segment Information

2 unchanged sentences

The results of these operating segments are regularly reviewed by the Company’s chief operating decision maker, the President and Chief Executive Officer.

The Company’s segments derive revenues through the manufacture, marketing, selling and distribution of medical imaging products, focused primarily on cardiovascular diagnostic imaging.

The Company’s segments derive revenues through the manufacture, marketing, selling and distribution of innovative diagnostic and therapeutic agents and products.

All goodwill has been allocated to the U.S.

operating segment.

operating segment, except for the goodwill recognized in connection with the Progenics acquisition which has not yet been assigned to operating segments.

The Company does not identify or allocate assets to its segments.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

(in thousands) 2020 2019 2020 2019

Revenue by product from external customers

DEFINITY $ 39,544 $ 53,466 $ 94,554 $ 103,182

TechneLite 15,591 16,865 34,947 36,923

Other nuclear 5,804 9,127 14,866 18,651

Rebates and allowances ( 3,540 ) ( 4,268 ) ( 8,223 ) ( 8,132 )

Revenues 57,399 75,190 136,144 150,624

International

DEFINITY 821 1,163 2,602 2,558

TechneLite 3,318 3,241 7,060 7,328

Other nuclear 4,473 6,119 10,911 11,715

1 unchanged sentence

Total International Revenues 8,611 10,515 20,570 21,591

DEFINITY 40,365 54,629 97,156 105,740

TechneLite 18,909 20,106 42,007 44,251

Other nuclear 10,277 15,246 25,777 30,366

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands) 2020 2019 2020 2019

Operating income

Operating (loss) income

$ ( 6,001 ) $ 12,689 $ ( 1,013 ) $ 27,273

International 456 1,848 2,593 3,433

Total operating income

Total operating (loss) income ( 5,545 ) 14,537 1,580 30,706

Interest expense 1,914 4,543 3,860 9,135

Income before income taxes

Subsequent Events

On April 1, 2020, the Company drew down $ 100.0 million under its 2019 Revolving Facility, the proceeds of which the Company has currently invested in short-term, interest-bearing instruments.

On April 2, 2020, the Company and Progenics issued a joint press release announcing that they had decided to reschedule their respective special meetings of stockholders to vote on matters related to the Progenics Transaction from April 28, 2020 to June 16, 2020.

The rescheduled special meetings will allow both companies the time necessary to respond to the COVID-19 pandemic and its effect on each company’s business and on the combined entity and provide appropriate disclosure to their shareholders.

The Company is continuing to monitor the latest developments regarding the COVID-19 pandemic and its impact on the Company’s business, financial condition, results of operations and prospects.

On April 10, 2020, the Company announced several steps that it has taken to respond to the COVID-19 pandemic intended to maintain financial flexibility.

These actions include transitioning to a four day work week to better align manufacturing, supply, distribution and other activities with reduced product demand, reducing non-essential discretionary expenses, and reducing executive and employee compensation effective April 13, 2020 for the balance of the second quarter of 2020.

In addition, our Board of Directors has also reduced director and committee member compensation by 35 % for the second half of the year and has elected to receive all remaining compensation payable in 2020 in the form of time-based restricted stock units that will vest on the first anniversary of the grant date, rather than in cash.

On April 14, 2020, the Company entered into a support agreement (the “Support Agreement”) with Velan Capital, L.P., Altiva Management Inc., Velan Capital Partners LP, Velan Capital Holdings LLC, Velan Capital Investment Management LP, Velan Principals GP LLC, Velan Capital Management LLC, Balaji Venkataraman, Deepak Sarpangal and Kevin McNeill (collectively, the “Velan Stockholders”), pursuant to which, among other things and subject to the terms and conditions set forth in the Support Agreement, the Velan Stockholders agreed to vote (or cause to be voted) their respective shares of Company and Progenics common stock in favor of certain matters relating to the Progenics Transaction, and that the Velan Stockholders will abide by certain customary standstill provisions, in each case, subject to the terms and conditions set forth in the Support Agreement.

Loss on extinguishment of debt — 3,196 — 3,196

Other income ( 756 ) ( 1,312 ) ( 1,106 ) ( 2,499 )

(Loss) income before income taxes $ ( 6,703 ) $ 8,110 $ ( 1,174 ) $ 20,874

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements