What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2020-11-05 compared with 2020-07-31 · 184 added, 157 removed, 519 unchanged (40% of the section changed)

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Examples of forward-looking statements include statements we make relating to our outlook and expectations including, without limitation, in connection with:

(i) the impact of the global COVID-19 pandemic on our business, financial conditions or prospects;

(i) the impact of the global COVID-19 pandemic on our business, financial conditions or prospects, or on the timing and enrollment of our clinical trials;

(ii) continued market expansion and penetration for our commercial products, particularly DEFINITY, in the face of segment competition and potential generic competition as a result of patent and regulatory exclusivity expirations;

(iii) the global Molybdenum-99 (“Mo-99”) supply;

(iv) our products manufactured at Jubilant HollisterStier (“JHS”);

(v) our efforts in new product development, including for PyL, the Progenics prostate cancer diagnostic imaging agent, and new clinical applications for our products;

(vi) the integration of the Progenics product and product candidate portfolio following the consummation of the Progenics transaction (the “Progenics Transaction”);

(vii) our capacity to use in-house manufacturing;

and (viii) our ability to commercialize our products in new ex-U.S.

(iv) our products manufactured at Jubilant HollisterStier (“JHS”) and our plans to develop a modified formulation of DEFINITY (“DEFINITY RT”) with Samsung Biologics (“SBL”);

(v) our efforts in new product development, including for PyL, the Progenics prostate cancer diagnostic imaging agent, including our ability to obtain FDA approval of PyL in 2021, and new clinical applications for our products;

(vi) our dependence upon third parties for the manufacture and supply of PyL and the timing of that manufacturing capacity becoming available;

(vii) the continued integration of the Progenics product and product candidate portfolio following the consummation of the Progenics transaction (the “Progenics Transaction”);

(viii) our capacity to use in-house manufacturing;

(ix) our ability to commercialize our products in new ex-U.S.

(x) the expected timing for commercialization of products we or our strategic partners may develop, including flurpiridaz F 18;

and (xi) our ability to develop highly contextualized assessments of disease burden using PSMA AI.

Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions.

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Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions and the following:

• The impact of the global COVID-19 pandemic on our business, financial condition or prospects, including a decline in the volume of procedures and treatments using our products, potential delays and disruptions to global supply chains, manufacturing activities, logistics, operations, clinical development programs, employees and contractors, the business activities of our suppliers, distributors, customers and other business partners, as well as the effects on worldwide economies, financial markets, social institutions, labor markets and healthcare systems;

• The impact of the on-going global COVID-19 pandemic on our business, financial condition or prospects, including a decline in the volume of procedures and treatments using our products, potential delays and disruptions to global supply chains, manufacturing activities, logistics, operations, clinical development programs, employees and contractors, the business activities of our suppliers, distributors, customers and other business partners, as well as the effects on worldwide economies, financial markets, social institutions, labor markets and healthcare systems;

• Our ability to continue to grow the appropriate use of DEFINITY in suboptimal echocardiograms in the face of segment competition from other echocardiography contrast agents, including Optison from GE Healthcare Limited (“GE Healthcare”) and Lumason from Bracco Diagnostics Inc.

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• Our dependence upon third parties for the manufacture and supply of a substantial portion of our products, raw materials and components, including DEFINITY at JHS;

• Risks related to the integration of the Progenics Transaction, including:

• Risks related to the continued integration of the Progenics Transaction, including:

• The integration of the Progenics Transaction may involve unexpected costs, liabilities or delays;

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• Risks related to RELISTOR, commercialized by Bausch, and that the revenues generated for us thereby may not meet expectations;

• The extensive costs, time and uncertainty associated with the development of new products, such as PyL, including further product development relying on external development partners or developing internally;

• Risks associated with our lead agent in development, PyL, for which we filed a New Drug Application (“NDA”) with the U.S.

Food and Drug Administration (“FDA”) on September 29, 2020, including:

• Our ability to obtain FDA approval of PyL in 2021;

• Our ability to successfully gain post-approval market acceptance and adequate reimbursement for PyL in the U.S.

and on a global basis (other than Europe, where the agent has been previously out-licensed to Curium, and in Australia and New Zealand, where we do not have commercialization rights);

• Our dependence upon third parties for the manufacture and supply of PyL and the timing of that manufacturing capacity becoming available;

• Risks associated with flurpiridaz F 18, which in 2017 we out-licensed to GE Healthcare, including:

• GE Healthcare’s ability to successfully complete the Phase 3 development program, including delays in enrollment that have resulted from the COVID-19 pandemic;

• GE Healthcare’s ability to obtain FDA approval;

• GE Healthcare’s ability to gain post-approval market acceptance and adequate reimbursement;

• Risks associated with our DEFINITY RT candidate, including our ability to obtain FDA approval and gain post-approval market acceptance and adequate reimbursement;

• Risks associated with 1095, including delays in enrollment that have resulted from the COVID-19 pandemic and our ability to successfully complete the Phase 2 study in metastatic castrate-resistant prostate cancer (“mCRPC”);

• Our ability to identify and acquire or in-license additional products, businesses or technologies to drive our future growth;

• Our ability to protect our intellectual property and the risk of claims that we have infringed on the intellectual property of others;

• Risks associated with the technology transfer programs to secure production of our products at additional contract manufacturer sites, including a modified formulation of DEFINITY at Samsung BioLogics (“SBL”) in South Korea;

• Risks associated with the technology transfer programs to secure production of our products at additional contract manufacturer sites, including DEFINITY RT at Samsung BioLogics (“SBL”) in South Korea;

• Risks associated with our investment in, and construction of, additional specialized manufacturing capabilities at our North Billerica, Massachusetts facility, including our ability to bring the new capabilities online by 2021;

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(“Jubilant Radiopharma”) and PharmaLogic Holdings Corp (“PharmaLogic”);

• Risks associated with our lead agent in development, PyL, including:

• Our ability to file our New Drug Application (“NDA”) with the U.S.

Food and Drug Administration (“FDA”) later in 2020;

• Our ability to obtain FDA approval of PyL in 2021;

• Our ability to successfully commercialize PyL in North America and on a global basis (other than Europe, where the agent has been previously out-licensed to Curium, and in Australia and New Zealand, where we do not have commercialization rights).

• Risks associated with flurpiridaz F 18, which in 2017 we out-licensed to GE Healthcare, including:

• GE Healthcare’s ability to successfully complete the Phase 3 development program, including delays in enrollment that have resulted from the COVID-19 pandemic;

• GE Healthcare’s ability to obtain Food and Drug Administration (“FDA”) approval;

• GE Healthcare’s ability to gain post-approval market acceptance and adequate reimbursement;

• Risks associated with 1095, including delays in enrollment that have resulted from the COVID-19 pandemic and our ability to successfully complete the Phase 2 study in mCRPC;

• Risks associated with the manufacturing and distribution of our products and the regulatory requirements related thereto;

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“Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, in Part II, Item 1A.

“Risk Factors” in our Quarterly Report on Form 10-Q for the period ended March 31, 2020, and in Part II, Item 1A.

“Risk Factors” in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2020 and June 30, 2020, and in Part II, Item 1A.

“Risk Factors” in this Quarterly Report on Form 10-Q.

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The following discussion and analysis of our financial condition and results of operations should be read together with the condensed consolidated financial statements and the related notes included in Item 1 of this Quarterly Report on Form 10-Q as well as the other factors described in Part I, Item 1A.

“Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, and Part II, Item IA.

“Risk Factors” in our Quarterly Report on Form 10-Q for the period ended March 31, 2020, and Part II, Item IA.

“Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, in Part II, Item 1A.

“Risk Factors” in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2020 and June 30, 2020, and in Part II, Item 1A.

“Risk Factors” in this Quarterly Report on Form 10-Q.

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Acquisition of Progenics

On June 19, 2020, pursuant to the Merger Agreement among Holdings, Merger Sub and Progenics, we completed the acquisition of Progenics, by means of a merger of Merger Sub with and into Progenics, with Progenics surviving the merger as a wholly-owned subsidiary of Holdings.

Immediately thereafter, Holdings contributed the shares of Progenics to LMI so that Progenics is now a wholly-owned subsidiary of LMI.

Progenics is an oncology company focused on the development and commercialization of innovative targeted medicines and artificial intelligence to find, fight and follow cancer.

On June 19, 2020, we completed the acquisition of Progenics.

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

Progenics’ portfolio of products and product candidates includes therapeutic agents designed to target cancer (AZEDRA, 1095 and PSMA TTC), as well as imaging agents designed to target PSMA for prostate cancer (PyL and 1404).

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first AZEDRA sales, and second, royalties, development and commercial milestones from strategic partnerships, in particular royalties from Bausch from sales of RELISTOR.

In accordance with the Merger Agreement, each share of Progenics common stock, par value $0.0013 per share, issued and outstanding immediately prior to the transaction 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 CVR.

Former Progenics stockholders received cash in lieu of any fractional shares of Holdings common stock.

In addition, in accordance with the Merger Agreement, 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 (i) an option to purchase Holdings common stock (each, a “Lantheus 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 time of the transaction.

Each Progenics stock option with a per share exercise price greater than $4.42 (an “out-of-the-money Progenics stock option”) received 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 Holdings prior to the transaction, which exchange ratio was 0.31.

Holdings issued 26,844,877 shares of Holdings common stock and 86,630,633 CVRs to former Progenics stockholders in connection with the Merger.

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 at the exchange ratios noted above.

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 at an exchange ratio of 0.31.

As a result of the Progenics Transaction, Lantheus added the following products and product candidates to its portfolio:

Product / Product Candidate

Ultra-Orphan Theranostic

Ultra-Orphan Therapeutic

AZEDRA (iobenguane I 131) 555 MBq/mL injection

Unresectable, locally advanced or metastatic pheochromocytoma or paraganglioma

Prostate Cancer Theranostics

Prostate Cancer Diagnostics and Therapeutics

PyL (18F-DCFPyL)

PSMA-targeted PET/CT imaging agent for prostate cancer

Preparing NDA

NDA filed on September 29, 2020

Worldwide (ex.

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Discussions with EMA

Digital Technology

Digital Solutions

Imaging analysis technology that uses artificial intelligence and machine learning to assist readers in the quantification and standardized reporting of PSMA-targeted imaging

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CE marked (E.U.

Worldwide (ex.

Automated Bone Scan Index (BONENAVI)

Automated reading and quantification of bone scans of prostate cancer patients using artificial intelligence and deep learning

Other Programs

Other Partnerships

RELISTOR Subcutaneous Injection (methylnaltrexone bromide)

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HIV Infection

CytoDyn intends to request Type A meeting with FDA to discuss BLA

CytoDyn is working to provide information required by the FDA in order to resubmit a BLA

See Part I, Item 1A.

“Risk Factors” in our Annual Report on form 10-K for the year ended December 31, 2019, and Part II, Item 1A.

“Risk Factors” in our Quarterly Report on Form 10-Q for the period ended March 31, 2020 for information regarding certain risks associated with our proposed acquisition of Progenics.

“Risk Factors” in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2020 and June 30, 2020 for information regarding certain risks associated with our acquisition of Progenics.

Our Expanded Portfolio

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We believe we are currently the leading provider of Xenon in the U.S.

• RELISTOR (methylnaltrexone bromide) is a treatment for opioid-induced constipation (“OIC”) that decreases the constipating side effects induced by opioid pain medications such as morphine and codeine without diminishing their ability to relieve pain.

RELISTOR is approved in two forms:

a subcutaneous injection (12 mg and 8 mg) and an oral tablet (450 mg once daily).

• FDG is an injectable, fluorine-18-radiolabeled imaging agent used with PET technology to identify and characterize tumors in patients undergoing oncologic diagnostic procedures.

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AZEDRA is the first and only FDA-approved therapy for this indication.

RELISTOR is approved in two forms:

a subcutaneous injection (12 mg and 8 mg) and an oral tablet (450 mg once daily).

• Quadramet is an injectable radiopharmaceutical used to treat severe bone pain associated with osteoblastic metastatic bone lesions.

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In February 2020, Progenics received CE marking for the standalone workstation model of aBSI, meeting the quality standards set by the European Economic Area.

In September 2020, the FDA granted 510(k) clearance for the use of aBSI on a GE Healthcare system.

• Cobalt (Co 57) is a non-pharmaceutical radiochemical used in the manufacture of sources for the calibration and maintenance of SPECT imaging cameras.

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through an AZEDRA direct sales team.

RELISTOR was licensed to Bausch, and we collect quarterly royalties based on their sales.

RELISTOR was licensed to Bausch, and we collect quarterly royalties based on those sales.

We also maintain our own direct sales force in Canada for certain of our products.

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In addition to our commercial products, we now have an extensive portfolio of product candidates in clinical development, including:

• PyL (also known as 18F-DCFPyL) is a fluorine 18-based PSMA-targeted PET imaging agent that enables visualization of both bone and soft tissue metastases, with potential high clinical utility in the detection of recurrent and/or metastatic prostate

cancer, as well as staging of high risk disease.

• PyL (also known as 18F-DCFPyL) is a fluorine 18-based PSMA-targeted PET imaging agent that enables visualization of primary tumors as well as bone and soft tissue metastases, with potential high clinical utility in the detection of recurrent and/or metastatic prostate cancer.

Progenics has completed a clinical development program that consisted of two pivotal clinical studies, which were designed to provide robust, prospective, well-controlled, and pathology- or composite truth standard-verified data to establish the safety and diagnostic performance of PyL across the disease continuum of prostate cancer.

The results from these studies provide data in support of the potential of PyL to reliably detect and localize disease, including in patients with low PSA values, and may help enable appropriate disease management, thus supporting the potential use for detection of recurrent or metastatic prostate cancer.

Progenics completed two successful pre-NDA meetings with the FDA in the first quarter of 2020, and we intend to submit the PyL NDA to the FDA later in 2020.

• Flurpiridaz F 18 is a fluorine 18-based PET MPI agent to assess blood flow to the heart.

We filed the PyL NDA with the FDA on September 29, 2020, requesting priority review.

• Flurpiridaz F 18 is a fluorine 18-based PET MPI agent designed to assess blood flow to the heart.

On April 25, 2017, we announced entering into a definitive, exclusive Collaboration and License Agreement with GE Healthcare for the agent’s continued Phase 3 development and worldwide commercialization.

The second Phase 3 trial is now underway;

however, because of the COVID-19 pandemic, enrollment in the global clinical development program has been delayed.

however, because of the COVID-19 pandemic, enrollment in the global clinical development program had been delayed and has now resumed at a slower recruiting pace.

GE Healthcare now expects to complete enrollment by mid-2021 and, assuming regulatory approval, begin commercialization in early 2023.

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• 1095 (also known as I-131-1095) is a PSMA-targeted iodine-131 labeled small molecule that is designed to deliver a dose of beta radiation directly to prostate cancer cells with minimal impact on the surrounding healthy tissues.

Following the removal of the import alert on Centre for Probe Development & Commercialization (“CPDC”), Progenics initiated eleven clinical sites in the U.S along with the six active sites in Canada to support enrollment in the Company’s multicenter, randomized, controlled, ARROW Phase 2 study in metastatic castration-resistant prostate cancer (“mCRPC”).

Because of the COVID-19 pandemic, Progenics paused new enrollment in the Phase 2 trial to minimize the risk to subjects and healthcare providers during the pandemic.

Following the removal of the import alert on Centre for Probe Development & Commercialization (“CPDC”), Progenics initiated eleven clinical sites in the U.S.

along with the six active sites in Canada to support enrollment in the Company’s multicenter, randomized, controlled, ARROW Phase 2 study in mCRPC.

Because of the COVID-19 pandemic, Progenics new enrollment in the Phase 2 trial was paused to minimize the risk to subjects and healthcare providers during the pandemic.

For subjects who are active and have been randomized for the study, they continue to receive treatment doses and are being monitored for safety and efficacy in a manner that is permissible by each clinical site.

New enrollment in the ARROW Phase 2 study restarted in October 2020.

• PSMA TTC is a thorium-227 labeled PSMA-targeted antibody therapeutic.

PSMA TTC is designed to deliver a dose of alpha radiation directly to prostate cancer cells with minimal impact on the surrounding healthy tissues.

Bayer AG (“Bayer”) has exclusive worldwide rights to develop and commercialize products using our PSMA antibody technology in combination with Bayer’s alpha-emitting radionuclides.

Bayer AG (“Bayer”) has exclusive worldwide rights to develop and commercialize products using our PSMA antibody platform in combination with Bayer’s alpha-emitting radionuclides.

Bayer is conducting a Phase 1 trial of PSMA TTC in subjects with mCRPC.

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• PSMA AI is an imaging analysis technology that uses artificial intelligence and machine learning to assist readers in the quantification and standardized reporting of PSMA-targeted imaging.

Progenics recently completed a performance study of automated segmentation algorithms with PyL/CT images from the PyL research access initiative.

Progenics recently completed a performance study of automated segmentation algorithms with PyL/CT images from our PyL research access initiative.

The study demonstrated the efficiency and effectiveness of a fully automated segmentation algorithm of the 49 bones and 12 soft tissue regions of the whole body from PyL-PSMA PET/CT images.

This work provides automated generation of lesion quantification, localization and staging, leading to highly contextualized assessments of disease burden.

This technology provides automated generation of lesion quantification, localization and staging.

We believe this leads to highly contextualized assessments of disease burden.

• Leronlimab (PRO 140) is an investigational humanized IgG4 mAb that blocks CCR5, a cellular receptor that is important in HIV infection, tumor metastases, and other diseases including certain liver diseases.

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In May 2020, CytoDyn announced it submitted a Biologics License Application (“BLA”) to the FDA for approval of Leronlimab in combination therapy for HIV infection.

On July 13, 2020, CytoDyn announced that it had received a refusal to file letter from the FDA for the BLA and that CytoDyn intends to request a Type A meeting with the FDA to discuss the FDA’s request for additional information.

On July 13, 2020, CytoDyn announced that it had received a refusal to file letter from the FDA for the BLA.

On August 20, 2020, CytoDyn announced that the FDA recommended that CytoDyn conduct its Type A meeting in writing with the FDA.

In September 2020, CytoDyn submitted its questions to the FDA, received written responses from the FDA, and held a telephonic meeting with the FDA to obtain further clarity on what additional information was required by the FDA with respect to CytoDyn’s BLA filing.

CytoDyn reports that it is currently working to provide the information required by the FDA in order to resubmit its BLA, which it anticipates will occur by the end of calendar year 2020.

Strategic Partnerships

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Curium is in discussions with EMA regarding the development path in Europe.

• Bayer Agreement – Under Progenics’ April 2016 agreement with a subsidiary of Bayer granting Bayer exclusive worldwide rights to develop and commercialize products using our PSMA antibody technology, in combination with Bayer’s alpha-emitting radionuclides, Progenics received an upfront payment of $4.0 million and milestone payments totaling $5.0 million.

• Bayer Agreement – Under Progenics’ April 2016 agreement with a subsidiary of Bayer granting Bayer exclusive worldwide rights to develop and commercialize products using our PSMA antibody platform, in combination with Bayer’s alpha-emitting radionuclides, Progenics received an upfront payment of $4.0 million and milestone payments totaling $5.0 million.

We could receive up to an additional $44.0 million in potential clinical and development milestones.

We are also entitled to single-digit royalties on net sales, and potential net sales milestone payments up to an aggregate of $130.0 million.

In addition, in October 2020, Progenics entered into a PyL Clinical Supply Agreement with Bayer to include PyL in their clinical trial for prostate cancer.

PyL will be used by Bayer to assess PSMA expression levels at baseline and during treatment.

• CytoDyn Agreement -- Leronlimab (PRO 140) is an investigational humanized IgG4 mAb that blocks CCR5, a cellular receptor that is important in HIV infection, tumor metastases, and other diseases including certain liver diseases.

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BONENAVI has been licensed to FUJIFILM for use in Japan since 2011.

• Regeneron Agreement – In June 2020, Progenics entered into a PyL Clinical Supply Agreement with Regeneron Pharmaceuticals, Inc.

(“Regeneron”) under which Progenics will supply PyL to Regeneron as an imaging agent to evaluate and follow subjects for a Phase 1/2 clinical study of Regeneron’s PSMA-targeted mCRPC therapeutic candidate.

Key Factors Affecting Our Results

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Towards the end of the first quarter of 2020 we began to experience, and through the date of this filing we are continuing to experience, impacts to our business and operations related to the COVID-19 pandemic, including the impact of stay-at-home mandates and advisories, and a decline in the volume of procedures and treatments using our products.

For example, there has been a substantial reduction in pulmonary ventilation studies in which our Xenon-133 gas is used because of institutional concerns and professional society guidelines relating to a hospital’s ability to adequately decontaminate examination rooms and related equipment used to administer those studies during the COVID-19 pandemic, thereby reducing Xenon-133 sales.

We cannot predict the magnitude or duration of the pandemic’s impact on our business.

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

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

In addition, effective April 13, 2020, we reduced our work week from five days to four days in order to better align manufacturing, supply, distribution and other activities with reduced product demand.

We also reduced pay for our personnel, including a 75% reduction for Mary Anne Heino, our President and Chief Executive Officer, a 35% reduction for members of our executive team, a 25% reduction for our vice presidents, and across-the-board reductions of 20% of salaries for our other salaried employees and 20% of hours for our hourly employees for that same time period.

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.

In the latter half of June 2020, we restored our 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).

In the first quarter of 2020 we implemented certain cost reduction initiatives.

For most of the second quarter of 2020, we reduced our work week from five days to four days and reduced the pay for our personnel by varying amounts, depending on level of seniority.

We can give no assurances that we will not have to take additional cost reduction measures if the pandemic continues to adversely affect the volume of procedures and treatments using our products.

During the second quarter of 2020, Progenics also implemented certain cost reduction initiatives, including reducing promotional spending and furloughing a portion of its field-based AZEDRA commercial operations and medical employees.

Progenics also furloughed several of its clinical employees.

The commercial and medical employees were returned to full service with Progenics as of June 22, 2020.

In addition, Progenics paused new enrollment in the Phase 2 trial of 1095 in mCRPC patients to minimize the risk to subjects and healthcare providers during the pandemic.

GE Healthcare, our development and commercialization partner for flurpiridaz F 18, also delayed enrollment in the second Phase 3 clinical trial because of the pandemic and has informed us that it now intends to resume enrollment in the third quarter of 2020.

While we are currently unable to estimate the impact of COVID-19 on our overall 2020 operations and financial results, we ended the second quarter of 2020 with $90.3 million of cash and cash equivalents.

During the second quarter of 2020, Progenics also implemented certain cost reduction initiatives, and new enrollment in the Phase 2 trial of 1095 in mCRPC patients was paused to minimize the risk to subjects and healthcare providers during the pandemic.

New enrollment in that study restarted in October 2020.

GE Healthcare, our development and commercialization partner for flurpiridaz F 18, also delayed enrollment in the second Phase 3 clinical trial because of the pandemic and resumed enrollment in the third quarter of 2020.

While we are currently unable to estimate the impact of COVID-19 on our overall 2020 operations and financial results, we ended the third quarter of 2020 with $88.0 million of cash and cash equivalents.

With our available liquidity and prudent expense management, we believe we will be able to maintain a state of preparedness to resume full business activities to support our customers as external conditions allow, although we can give no assurances that we will have sufficient liquidity if the pandemic continues to adversely affect the volume of procedures and treatments using our products for an extended period of time.

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We now have a total of four Orange Book-listed method of use patents, one of which expires in 2035 and three of which expire in 2037, as well as additional manufacturing patents that are not Orange Book-listed expiring in 2021, 2023 and 2037.

Outside of the U.S., while our DEFINITY patent protection and regulatory exclusivity have generally expired, we are currently prosecuting additional patents to try to obtain similar method of use and manufacturing patent protection as granted in the U.S.

Outside of the U.S., while our DEFINITY patent protection and regulatory exclusivity have generally expired, we are

currently prosecuting additional patents to try to obtain similar method of use and manufacturing patent protection as granted in the U.S.

Hatch-Waxman Act - Even though our longest duration Orange Book-listed DEFINITY patent extends until March 2037, because our Orange Book-listed composition of matter patent expired in June 2019, we may face generic DEFINITY challengers in the near to intermediate term.

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If we were to (i) receive any such Notice in the future, (ii) bring a patent infringement suit against the ANDA applicant within 45 days of receiving that Notice, and (iii) successfully obtain the full 30 month stay, then the ANDA applicant would be precluded from commercializing a generic version of DEFINITY prior to the expiration of that 30 month stay period and, potentially, thereafter, depending on how the patent dispute is resolved.

Solely by way of example and not based on any knowledge we currently have, if we received a Notice from an ANDA applicant in August 2020 and the full 30 month stay was obtained, then the ANDA applicant would be precluded from commercialization until at least January 2023.

Solely by way of example and not based on any knowledge we currently have, if we received a Notice from an ANDA applicant in November 2020 and the full 30 month stay was obtained, then the ANDA applicant would be precluded from commercialization until at least May 2023.

If we received a Notice some number of months in the future and the full 30 month stay was obtained, the commercialization date would roll forward in the future by the same calculation.

• Modified Formulation - We are developing at SBL a modified formulation of DEFINITY.

We believe this modified formulation will provide an enhanced product profile enabling storage as well as shipment at room temperature (DEFINITY’s current formulation requires refrigerated storage), will give clinicians additional choice, and will allow for greater utility of this formulation in broader clinical settings.

We have a composition of matter patent on the modified formulation which runs through 2035.

If the modified formulation is approved by the FDA, then this patent would be eligible to be listed in the Orange Book.

We currently believe that, if approved by the FDA, the modified formulation could become commercially available in early 2021, although that timing cannot be assured.

Given its physical characteristics, the modified formulation may also be well suited for inclusion in kits requiring microbubbles for other indications and applications (including in kits developed by third parties of the type described in the next paragraph).

• Modified Formulation - We are developing DEFINITY RT, a modified formulation of DEFINITY, at SBL.

We believe DEFINITY RT will provide an enhanced product profile enabling storage as well as shipment at room temperature (DEFINITY’s current formulation requires refrigerated storage), will give clinicians additional choice, and will allow for greater utility of this formulation in broader clinical settings.

We have a composition of matter patent on DEFINITY RT which runs through 2035.

If DEFINITY RT is approved by the FDA, then this patent would be eligible to be listed in the Orange Book.

We currently believe that, if approved by the FDA, DEFINITY RT could become commercially available in early 2021, although that timing cannot be assured.

Given its physical characteristics, DEFINITY RT may also be well suited for inclusion in kits requiring microbubbles for other indications and applications (including in kits developed by third parties of the type described in the next paragraph).

• Vialmix RFID – In August 2020, the FDA approved a supplemental NDA for our next-generation activation device designed specifically for both DEFINITY and DEFINITY RT product candidate.

The activation rate and time are controlled by Vialmix RFID through the use of radio-frequency identification technology (“RFID”) to ensure reproducible activation of DEFINITY.

The RFID tag, which is affixed to the vial label, enables the DEFINITY vial to be appropriately activated when utilized with the Vialmix RFID activation device.

issued patent on the use of the new Vialmix RFID with an expiration date of 2037 has been listed in the Orange Book, and additional patent applications have been submitted in major markets throughout the world.

• New Clinical Applications - As we continue to look for other opportunities to expand our microbubble franchise, we are evaluating new indications and clinical applications beyond echocardiography and contrast imaging generally.

For example, in April 2019, we announced a strategic development and commercial collaboration with Cerevast Medical, Inc.

• In April 2019, we announced a strategic development and commercial collaboration with Cerevast Medical, Inc.

(“Cerevast”) in which our microbubble will be used in connection with Cerevast’s ocular ultrasound device to target improving blood flow in occluded retinal veins in the eye.

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Glioblastoma is a lethal and devastating form of brain cancer with median survival of 15 months after diagnosis.

• In October 2020, we announced a strategic collaboration with Insightec Ltd., an Israeli company (“Insightec”) which will use our microbubbles in connection with Insightec’s transcranial guided focused ultrasound device for the treatment of glioblastoma as well as other neurodegenerative conditions.

• In-House Manufacturing - We have completed construction of specialized, in-house manufacturing capabilities at our North Billerica, Massachusetts facility for DEFINITY and, potentially, other sterile vial products.

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As of the filing of this report, these COVID-19-related transportation challenges have been largely eliminated.

Because of these various supply chain constraints, depending on reactor and processor schedules and operations, we have not been able to fill some or all of the demand for our TechneLite generators on certain manufacturing days.

Because of these various supply chain constraints, depending on reactor and processor schedules and operations, we have historically not been able to fill some or all of the demand for our TechneLite generators on certain manufacturing days.

ANSTO’s new Mo-99 processing facility could eventually increase ANSTO’s Mo-99 production capacity from approximately 2,000 curies per week to 3,500 curies per week with additional committed financial and operational resources.

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In addition to JHS, we are also currently working to secure additional alternative suppliers for our key products as part of our ongoing supply chain diversification strategy.

We have ongoing development and technology transfer activities for a modified formulation of DEFINITY with SBL, which is located in South Korea.

We currently believe that if approved by the FDA, the modified formulation could be commercially available in 2021, although that timing cannot be assured.

We have ongoing development and technology transfer activities for DEFINITY RT with SBL, which is located in South Korea.

We currently believe that if approved by the FDA, DEFINITY RT could be commercially available in 2021, although that timing cannot be assured.

We have also completed construction of specialized, in-house manufacturing capabilities at our North Billerica, Massachusetts facility, as part of a larger strategy to create a competitive advantage in specialized manufacturing, which will also allow us to optimize our costs and reduce our supply chain risk.

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Research and Development Expenses

To remain a leader in the marketplace, we have historically made substantial investments in new product development.

In addition to our flurpiridaz F 18 clinical development program, the expenses of which are now being borne by GE Healthcare, and our proposed LMI 1195 Phase 3 clinical program for the diagnosis and management of neuroendocrine tumors in pediatric and adult populations, the final plans for which are still being developed, the Progenics Transaction brings additional and substantial clinical development expense.

Progenics completed two successful pre-NDA meetings with the FDA in the first quarter of 2020, and we intend to submit the PyL NDA to the FDA later in 2020.

For 1095, the ARROW Phase 2 study in mCRPC patients has been paused to minimize risk to subjects and healthcare providers during the pandemic.

To remain a leader in the marketplace, we have historically made substantial investments in new product development, including, among other things, our flurpiridaz F 18 clinical development program, the expenses of which are now being borne by GE Healthcare.

The Progenics Transaction brings additional and substantial clinical development expense.

We filed the PyL NDA with the FDA on September 29, 2020, requesting priority review.

For 1095, the ARROW Phase 2 study in mCRPC patients had been paused to minimize risk to subjects and healthcare providers during the pandemic, and new enrollment in that study restarted in October 2020.

In addition, the Company’s development activities for PSMA AI are on-going.

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New Initiatives

In addition to integrating the new assets and programs resulting from the Progenics Transaction, we continue to seek ways to further expand our portfolio of products and product candidates, evaluating a number of different opportunities to acquire or in-license additional products, product candidates, businesses and technologies to drive our future growth.

As the Progenics Transaction indicates, we are particularly interested in expanding our presence in oncology, in radiotherapeutics as well as diagnostics.

In May 2019 we entered into a strategic collaboration and license agreement with NanoMab Technology Limited, a privately-held biopharmaceutical company focusing on the development of next generation radiopharmaceuticals for cancer precision medicine.

We believe this collaboration will provide the first broadly-available imaging biomarker research tool to pharmaceutical companies and academic centers conducting research and development on PD-L1 immuno-oncology treatments, including combination therapies.

We can give no assurance as to when or if this collaboration will be successful or accretive to earnings.

In addition to integrating the new assets and programs resulting from the Progenics Transaction, we continue to seek ways to further expand our portfolio of products and product candidates and how best to optimize the value of our current assets, evaluating a number of different opportunities to collaborate with others or to acquire or in-license additional products, product candidates, businesses and technologies to drive our future growth.

As the Progenics Transaction indicates, we are particularly interested in expanding our presence in oncology, in both radiotherapeutics and diagnostics.

In May 2019, we commenced an initiative to build out our Pharma Services capabilities by entering into a strategic collaboration and license agreement with NanoMab Technology Limited, a privately-held biopharmaceutical company focusing on the development of next generation radiopharmaceuticals for cancer precision medicine.

We believe this collaboration will provide the first broadly-available PD-L1 imaging biomarker research tool to pharmaceutical companies and academic centers conducting clinical trials on immuno-oncology treatments, including combination therapies.

We have also expanded our Pharma Services offering to include PyL for pharmaceutical companies developing PSMA-targeted therapies and have entered into PyL clinical supply agreements with both Regeneron and Bayer for use of PyL in prostate cancer clinical trials.

We can give no assurance as to when or if any of these Pharma Services collaborations will be successful or accretive to earnings.

Results of Operations

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2020 2019 2020 2019

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Loss on extinguishment of debt — — — 3,196

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

Other (income) loss (596) 804 (1,702) (1,695)

(Loss) income before income taxes (7,462) 5,357 (8,636) 26,231

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

Income tax (benefit) expense (1,076) 501 1,425 5,014

Net (loss) income $ (6,386) $ 4,856 $ (10,061) $ 21,217

Comparison of the Periods Ended June 30, 2020 and 2019

Comparison of the Periods Ended September 30, 2020 and 2019

Segment revenues are summarized by product as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2020 2019 Change

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Total revenues $ 88,544 $ 85,776 $ 2,768 3.2 % $ 245,258 $ 257,991 $ (12,733) (4.9) %

The decrease in the U.S.

segment revenues for the three months ended June 30, 2020, as compared to the prior year period is primarily due to a $13.9 million decrease in DEFINITY revenue as a result of lower unit volumes as a result of COVID-19.

The increase in the U.S.

segment revenues for the three months ended September 30, 2020, as compared to the prior year period is primarily due to a $2.9 million increase in DEFINITY revenue as a result of higher unit volumes and a $2.2 million increase in Other nuclear revenue driven by the addition of the Progenics revenue portfolio, offset in part by lower Xenon volume as a result of COVID-19.

TechneLite revenue was $0.6 million lower driven by COVID-19 impact, partially offset by supplier disruptions in 2019.

Other Nuclear revenue was lower than the prior year primarily associated with lower Xenon volume as a result of COVID-19, which was offset, in part, by reduced rebate and allowance provisions of $0.7 million.

Rebate and allowance provisions drove an additional decrease of $1.6 million.

The decrease in the U.S.

segment revenues for the six months ended June 30, 2020, as compared to the prior year period is primarily due to an $8.6 million decrease in DEFINITY revenue as a result of lower unit volumes as a result of COVID-19 that was concentrated in the second quarter, offset by first quarter performance.

TechneLite revenue was $2.0 million lower driven by COVID-19 impact, partially offset by supplier disruptions in 2019.

Other Nuclear revenue was lower than the prior year primarily associated with $4.1 million lower Xenon revenue with lower volume as a result of COVID-19.

The Progenics business contributed approximately $1.0 million of revenue to the U.S.

segment for the three and six months ended June 30, 2020.

The decrease in the International segment revenues for the three months ended June 30, 2020, as compared to the prior year period is primarily due to lower volume as a result of COVID-19.

The decrease in the International segment revenues for the six months ended June 30, 2020, as compared to the prior year period is primarily due to lower volume as a result of COVID-19 as well as opportunistic incremental demand of TechneLite in the prior year period.

segment revenues for the nine months ended September 30, 2020, as compared to the prior year period is primarily due to a $5.8 million decrease in DEFINITY revenue as a result of lower unit volumes as a result of COVID-19 that was concentrated in the second quarter, offset, in part, by third quarter performance.

TechneLite revenue was $2.6 million lower driven by COVID-19, partially offset by supplier disruptions in 2019.

Other Nuclear revenue was lower than the prior year primarily associated with lower Xenon volume as a result of COVID-19, offset, in part, by the addition of Progenics revenue portfolio.

The decrease in the International segment revenues for the three months ended September 30, 2020, as compared to the prior year period is primarily due to $0.6 million lower revenue in Other nuclear product as a result of COVID-19, offset, in part, by $0.4 million higher TechneLite revenue driven by supplier disruptions in 2019 and $0.2 million higher DEFINITY revenue driven by increased volume.

The decrease in the International segment revenues for the nine months ended September 30, 2020, as compared to the prior year period is primarily due to lower volume as a result of COVID-19.

Offsetting these decreases was an increase in DEFINITY revenue of $0.2 million driven by volume.

Rebates and Allowances

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Payments or credits made during the period (13,266)

Balance, June 30, 2020 $ 6,945

Balance, September 30, 2020 $ 7,486

Gross profit is summarized by segment as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2020 2019 Change

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The decrease in the U.S.

segment gross profit for the three months ended June 30, 2020, as compared to the prior year period is primarily due to lower DEFINITY, TechneLite, Xenon and other nuclear product unit volumes due to COVID-19.

This was offset by a decrease in rebate and allowance provisions.

segment gross profit for the three months ended September 30, 2020, as compared to the prior year period is primarily due to lower Xenon, TechneLite and other nuclear product unit volumes due to COVID-19, along with a decrease driven by rebate and allowance provisions.

These decreases were offset, in part, by and increase in DEFINITY gross profit driven by an increase in volume over the prior year period.

The decrease in the U.S.

segment gross profit for the six months ended June 30, 2020, as compared to the prior year period is primarily due to lower DEFINITY, TechneLite, and Xenon unit volumes due to COVID-19 and an asset impairment loss on other nuclear products.

The decrease in the International segment gross profit for the three and six months ended June 30, 2020, as compared to the prior year period is primarily due to lower DEFINITY and other nuclear product unit volumes due to COVID-19.

segment gross profit for the nine months ended September 30, 2020, as compared to the prior year period is primarily due to lower DEFINITY, TechneLite, and Xenon unit volumes due to COVID-19 and an asset impairment loss on other nuclear products.

The decrease in the International segment gross profit for the nine months ended September 30, 2020, as compared to the prior year period is primarily due to lower other nuclear product unit volumes due to COVID-19.

Sales and Marketing

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2020 2019 Change

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Total sales and marketing $ 11,609 $ 10,151 $ 1,458 14.4 % $ 28,044 $ 31,496 $ (3,452) (11.0) %

The increase in the U.S.

segment sales and marketing expenses for the three months ended September 30, 2020, as compared to the prior year period is primarily due to the addition of the Progenics business and increase in market research which was partially offset by reduced marketing promotional programs and travel due to COVID-19 and lower employee related costs.

The Progenics business contributed approximately $2.7 million of expense to the U.S.

segment for the three months ended September 30, 2020.

The decrease in the U.S.

segment sales and marketing expenses for the three and six months ended June 30, 2020, as compared to the prior year period is primarily due to reduced marketing promotional programs and travel due to COVID-19 impact, as well as lower employee-related costs.

segment sales and marketing expenses for the nine months ended September 30, 2020, as compared to the prior year period is primarily due to reduced marketing promotional programs and travel due to COVID-19, as well as lower employee-related costs offset by the addition of the Progenics business.

The Progenics business contributed approximately $3.0 million of expense to the U.S.

segment for the three and six months ended June 30, 2020.

The decrease in the International segment sales and marketing expenses for the three months ended June 30, 2020, as compared to the prior year period is primarily due to lower employee-related costs.

The International segment sales and marketing expenses for the six months ended June 30, 2020 is flat as compared to the prior year.

segment for the nine months ended September 30, 2020.

The decrease in the International segment sales and marketing expenses for the three and nine months ended September 30, 2020, as compared to the prior year period is primarily due to lower marketing promotional activities.

General and Administrative

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2020 2019 Change

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Total general and administrative $ 18,217 $ 18,061 $ 156 0.9 % $ 55,586 $ 43,943 $ 11,643 26.5 %

segment general and administrative expenses increased for the three and six months ended June 30, 2020 as compared to the prior year period.

The primary driver was an increase in acquisition-related costs associated with the acquisition of Progenics offset by lower employee-related costs driven by COVID related measures.

In addition, the Progenics business contributed approximately $2.9 million of expense to the U.S.

segment for the three and six months ended June 30, 2020.

The International segment general and administrative expenses increased for the three and six months ended June 30, 2020 as compared to the prior year period driven primarily by an insurance benefit received in 2019 which was partly offset by lower employee related costs in 2020.

segment general and administrative expenses decreased for the three months ended September 30, 2020 as compared to the prior year period.

The primary driver in the current year was lower acquisition-related costs associated with the acquisition of Progenics offset by unrealized losses related to changes in fair value of contingent consideration liabilities and the addition of the Progenics business.

The Progenics business contributed approximately $3.4 million of expense to the U.S.

segment for the three months ended September 30, 2020.

segment general and administrative expenses increased for the nine months ended September 30, 2020 as compared to the prior year period.

The primary driver was an increase in acquisition-related costs associated with the acquisition of Progenics and the addition of the Progenics business offset by lower medical insurance costs.

The Progenics business contributed approximately $6.3 million of expense to the U.S.

segment for the nine months ended September 30, 2020.

The International segment general and administrative expenses increased for the three and nine months ended September 30, 2020 as compared to the prior year period driven primarily by the addition of the Progenics business and an insurance benefit received in 2019 which was partially offset by lower employee related costs in 2020.

The Progenics business contributed approximately $0.2 million of expense to the International segment for each of the three and nine months ended September 30, 2020.

Research and Development

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2020 2019 Change

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Total research and development $ 11,684 $ 4,860 $ 6,824 140.4 % $ 20,150 $ 15,584 $ 4,566 29.3 %

The decrease in the U.S.

segment research and development expenses for the three and six months ended June 30, 2020, as compared to the prior year is primarily driven by clinical research expenses related to DEFINITY studies completing and lower employee related expenses.

The Progenics business contributed approximately $1.2 million of expense to the U.S.

segment for the three and six months ended June 30, 2020.

The decrease in the International segment research and development expenses for the three and six months ended June 30, 2020, as compared to the prior year period is primarily driven by regulatory costs related to Brexit matters.

The increase in the U.S.

segment research and development expenses for the three and nine months ended September 30, 2020, as compared to the prior year is primarily driven by the addition of the Progenics business, including the PyL NDA filing fee, partially offset by clinical research expenses related to DEFINITY studies completing and lower employee related expenses.

The Progenics business contributed approximately $7.6 million and $8.7 million of expense to the U.S.

segment for the three and nine months ended September 30, 2020, respectively.

The increase in the International segment research and development expenses for the three and nine months ended September 30, 2020, as compared to the prior year period is primarily driven by the addition of the Progenics business partially offset by regulatory costs related to Brexit matters.

The Progenics business contributed approximately $0.6 million of expense to the International segment for the three and nine months ended September 30, 2020.

Interest Expense

Interest expense decreased by approximately $5.3 million for the six months ended June 30, 2020 as compared to the prior year period due to the refinancing of our existing indebtedness in the second quarter of 2019 which reduced our underlying principal amount and decreased interest rates on our long-term debt.

Income Tax Expense

Income tax expense is summarized as follows:

Interest expense decreased by approximately $4.8 million for the nine months ended September 30, 2020 as compared to the prior year period due to the refinancing of our existing indebtedness in the second quarter of 2019 which reduced our underlying principal amount and decreased interest rates on our long-term debt.

Income Tax (Benefit) Expense

Income tax (benefit) expense is summarized as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2020 2019 Change

% 2020 2019 Change

Income tax expense $ 309 $ 1,698 $ (1,389) (81.8) % $ 2,501 $ 4,513 $ (2,012) (44.6) %

The income tax expense for the three and six months ended June 30, 2020 was primarily due to the recording of non-deductible transaction costs and the accrual of interest associated with uncertain tax positions.

Income tax (benefit) expense $ (1,076) $ 501 $ (1,577) (314.8) % $ 1,425 $ 5,014 $ (3,589) (71.6) %

The income tax benefit recorded for the three months ended September 30, 2020 was primarily due to the pre-tax losses incurred during the quarter, partially offset by the accrual of interest associated with uncertain tax positions.

The income tax expense recorded for the nine months ended September 30, 2020 was primarily due to the recording of non-deductible transaction costs and the accrual of interest associated with uncertain tax positions, partially offset by the income tax benefit recorded due to the pre-tax losses incurred during the nine month period.

We regularly assess our ability to realize our deferred tax assets.

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In determining whether our deferred tax assets are more-likely-than-not realizable, we evaluate all available positive and negative evidence, and weigh the objective evidence and expected impact.

As of June 30, 2020, we 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.

As of September 30, 2020, we recorded valuation allowances of $3.2 million against the net deferred tax assets of certain foreign subsidiaries, as well as a valuation allowance of $0.7 million against net U.S.

deferred tax assets due to the potential expiration of certain tax losses and state tax credits prior to utilization.

On June 19, 2020, we 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.

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 of Progenics’ 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.

Our effective tax rate for each reporting period is presented as follows:

Six Months Ended

Nine Months Ended

September 30,

Effective tax rate (16.5)% 19.1%

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state taxes, non-deductible transaction costs, and the accrual of interest on uncertain tax positions.

The decrease in the effective income tax rate for the six months ended June 30, 2020 as compared to the prior year period is primarily due to the lower amount of pre-tax income driving an increased tax rate impact from the accrual of interest on uncertain tax positions in the current period and non-deductible transaction costs.

The decrease in the effective income tax rate for the nine months ended September 30, 2020 as compared to the prior year period is primarily due to the lower amount of pre-tax income and a lower tax benefit of stock compensation deductions in the current nine month period.

Liquidity and Capital Resources

The following table provides information regarding our cash flows:

Six Months Ended

Nine Months Ended

September 30,

(in thousands) 2020 2019

Net cash provided by operating activities $ 15,827 $ 57,963

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

Net cash used in investing activities $ (1,127) $ (17,320)

Net cash used in financing activities $ (17,488) $ (76,058)

Net Cash Provided by Operating Activities

Net cash provided by operating activities of $7.3 million in the six months ended June 30, 2020 was driven primarily by $7.8 million of depreciation, amortization and accretion expense, impairment of long-lived assets of $7.3 million, stock-based compensation expense of $6.5 million, and changes in deferred taxes of $1.1 million.

Net cash provided by operating activities of $15.8 million in the nine months ended September 30, 2020 was driven primarily by $16.3 million of depreciation, amortization and accretion expense, stock-based compensation expense of $10.5 million, and impairment of long-lived assets of $7.3 million.

These net sources of cash were offset by a net loss of $10.1 million and a net decrease of $11.7 million related to movements in our working capital accounts during the period.

The overall decreases in cash from our working capital accounts were primarily driven by the payment of prior year annual bonuses as well as change in inventory related to COVID-19 impact on products and the timing of batch processes.

Net cash provided by operating activities of $31.5 million in the six months ended June 30, 2019 was driven primarily by net income of $16.4 million plus $6.6 million of depreciation, amortization and accretion expense, debt extinguishment expense of $3.2 million, stock-based compensation expense of $6.1 million and changes in deferred taxes of $2.4 million.

These net sources of cash were offset by a net decrease of $5.2 million related to movements in our working capital accounts during the period.

The overall decreases in cash from our working capital accounts were primarily driven by the payment of prior year annual bonuses.

Net Cash Provided by Investing Activities

Net cash used in investing activities during the six months ended June 30, 2020 reflected $17.6 million of acquired cash related to the non-cash acquisition of Progenics offset by $10.0 million in lending on a note receivable to Progenics prior to the acquisition and $5.0 million in capital expenditures.

Net cash used in investing activities during the six months ended June 30, 2019 reflected $14.0 million in capital expenditures.

The overall decreases in cash from our working capital accounts were primarily driven by the payment of prior year annual bonuses as well as change in inventory related to the COVID-19 impact on products and the timing of batch processes and accruals related to G&A expenses in connection with the acquisition of Progenics.

Net cash provided by operating activities of $58.0 million in the nine months ended September 30, 2019 was driven primarily by net income of $21.2 million plus $9.8 million of depreciation, amortization and accretion expense, stock-based compensation expense of $9.5 million, changes in deferred taxes of $3.8 million and debt extinguishment expense of $3.2 million.

These net sources of cash were further increased by a net increase of $7.3 million related to movements in our working capital accounts during the period.

The overall increases in cash from our working capital accounts were primarily driven by improved collections related to our accounts receivables and the timing of purchases.

Net Cash Used in Investing Activities

Net cash used in investing activities during the nine months ended September 30, 2020 reflected $10.0 million in lending on a note receivable to Progenics prior to the acquisition and $8.7 million in capital expenditures offset by $17.6 million of acquired cash related to the non-cash acquisition of Progenics.

Net cash used in investing activities during the nine months ended September 30, 2019 reflected $17.3 million in capital expenditures.

Net Cash Used in Financing Activities

Net cash used in financing activities during the six months ended June 30, 2020 is primarily attributable to the payments on long-term debt and other borrowings of $7.0 million related to the 2019 Term Facility and Royalty-Backed Loan and payments for minimum statutory tax withholding related to net share settlement of equity awards of $2.0 million.

Net cash used in financing activities during the six months ended June 30, 2019 is primarily attributable to the net cash outflow of approximately $73 million in connection with the refinancing of our previous 2017 Facility and payments for minimum statutory tax withholding related to net share settlement of equity awards of $2.1 million.

Net cash used in financing activities during the nine months ended September 30, 2020 is primarily attributable to the payments on long-term debt and other borrowings of $11.2 million related to the 2019 Term Facility and Royalty-Backed Loan, equity issuance costs related to the acquisition of Progenics of $3.8 million, and payments for minimum statutory tax withholding related to net share settlement of equity awards of $2.1 million.

Net cash used in financing activities during the nine months ended September 30, 2019 is primarily attributable to the net cash outflow of approximately $73.0 million in connection with the refinancing of our previous 2017 Facility, payments on long-term debt of $2.5 million related to the 2019 Term Facility and payments for minimum statutory tax withholding related to net share settlement of equity awards of $2.4 million.

Starting in 2019, we require certain senior executives to cover tax liabilities resulting from the vesting of their equity awards pursuant to sell-to-cover transactions under 10b5-1 plans.

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The 2019 Revolving Facility includes a $20.0 million sub-facility for the issuance of Letters of Credit.

The 2019 Revolving Facility includes

a $10 million sub-facility for Swingline Loans.

The 2019 Revolving Facility includes a $10.0 million sub-facility for Swingline Loans.

The Letters of Credit, Swingline Loans and the borrowings under the 2019 Revolving Facility are expected to be used for working capital and other general corporate purposes.

Please refer to our Form 10-K for fiscal year ended December 31, 2019 for further details on the 2019 Facility.

On April 6, 2020, the Company drew down $100.0 million under its 2019 Revolving Facility, and subsequently repaid such amounts on June 9, 2020.

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

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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 us.

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.

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.

Our ability to fund our future capital needs will be affected by our ability to continue to generate cash from operations and may be affected by our ability to access the capital markets, money markets or other sources of funding, as well as the capacity and terms of our financing arrangements.

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However, we cannot be assured that such an amendment or waiver would be granted, or that additional capital will be available on acceptable terms, if at all.

At June 30, 2020, our only current committed external source of funds is our borrowing availability under our 2019 Revolving Facility.

We had $90.3 million of cash and cash equivalents at June 30, 2020.

At September 30, 2020, our only current committed external source of funds is our borrowing availability under our 2019 Revolving Facility.

We had $88.0 million of cash and cash equivalents at September 30, 2020.

Our 2019 Facility, as amended, contains a number of affirmative, negative, reporting and financial covenants, in each case subject to certain exceptions and materiality thresholds.

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In addition, our reported financial condition and results of operations could vary due to a change in the application of a particular accounting standard.

There have been no other significant changes to our critical accounting policies or in the underlying accounting assumptions and estimates used in such policies in the six months ended June 30, 2020, except as set forth below.

There have been no other significant changes to our critical accounting policies or in the underlying accounting assumptions and estimates used in such policies in the nine months ended September 30, 2020, except as set forth below.

For further information, refer to our summary of significant accounting policies and estimates in our Annual Report on Form 10-K filed for the year ended December 31, 2019.

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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 2. Management’s Discussion and Analysis