What changed in this filing

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Item 1. Financial Statements

2021-11-04 compared with 2021-07-28 · 155 added, 104 removed, 608 unchanged (30% of the section changed)

3 unchanged sentences

(in thousands, except par value)

September 30,

2021 December 31,

39 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

8 unchanged sentences

Gain on sale of assets — — 15,263 —

Operating (loss) income ( 26,781 ) ( 5,545 ) ( 11,159 ) 1,580

Operating loss ( 14,328 ) ( 5,250 ) ( 25,487 ) ( 3,670 )

Interest expense 1,569 2,808 6,224 6,668

Gain on extinguishment of debt — — ( 889 ) —

Other income ( 182 ) ( 756 ) ( 731 ) ( 1,106 )

Other loss (income) 3,940 ( 596 ) 3,209 ( 1,702 )

Loss before income taxes ( 19,837 ) ( 7,462 ) ( 34,031 ) ( 8,636 )

12 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Net loss $ ( 13,415 ) $ ( 6,386 ) $ ( 31,064 ) $ ( 10,061 )

Other comprehensive income (loss):

Other comprehensive (loss) income:

Foreign currency translation ( 240 ) 185 55 ( 9 )

Unrealized gain (loss) on cash flow hedges, net of tax 98 ( 89 ) 851 ( 1,541 )

Total other comprehensive income (loss) 240 ( 212 ) 1,048 ( 1,646 )

Total other comprehensive (loss) income ( 142 ) 96 906 ( 1,550 )

Comprehensive loss $ ( 13,557 ) $ ( 6,290 ) $ ( 30,158 ) $ ( 11,611 )

3 unchanged sentences

(in thousands)

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Common Stock Additional

19 unchanged sentences

Balance, June 30, 2021 67,592 $ 676 $ 676,059 $ ( 167,595 ) $ ( 1,000 ) $ 508,140

Six Months Ended June 30, 2020

Net loss — — — ( 13,415 ) — ( 13,415 )

Other comprehensive loss — — — — ( 142 ) ( 142 )

Stock option exercises and employee stock plan purchases 48 1 960 — — 961

Vesting of restricted stock awards and units 23 — — — — —

Shares withheld to cover taxes ( 4 ) — ( 67 ) — — ( 67 )

Stock-based compensation — — 3,867 — — 3,867

Balance, September 30, 2021 67,659 $ 677 $ 680,819 $ ( 181,010 ) $ ( 1,142 ) $ 499,344

Nine Months Ended September 30, 2020

Common Stock Additional

22 unchanged sentences

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

Net loss — — — ( 6,386 ) — ( 6,386 )

Other comprehensive income — — — — 96 96

Stock option exercises and employee stock plan purchases 32 — 344 — — 344

Vesting of restricted stock awards and units 13 1 ( 1 ) — — —

Shares withheld to cover taxes ( 3 ) ( 1 ) ( 49 ) — — ( 50 )

Stock-based compensation — — 3,992 — — 3,992

Balance, September 30, 2020 66,850 $ 668 $ 661,955 $ ( 146,534 ) $ ( 2,510 ) $ 513,579

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

2 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Operating activities

13 unchanged sentences

Other 1,724 1,034

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

(Decreases) increases in cash from operating assets and liabilities:

Accounts receivable ( 7,721 ) ( 703 )

9 unchanged sentences

Cash acquired in acquisition of business — 17,562

Net cash provided by investing activities 10,647 2,609

Net cash provided by (used in) investing activities 8,227 ( 1,127 )

Financing activities

13 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Reconciliation to amounts within the condensed consolidated balance sheets

16 unchanged sentences

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 and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ended December 31, 2021 or any future period.

The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ended December 31, 2021 or any future period.

In the first quarter of fiscal year 2021, the Company completed the evaluation of its operating and reporting structure, which resulted in a change in operating segments.

10 unchanged sentences

net sales generated by PYLARIFY in 2022 and 2023 in excess of $ 100.0 million and $ 150.0 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 Acquisition, exceed 19.9 % (which the Company estimates could be approximately $ 100.0 million) of the total consideration the Company pays in the Progenics Acquisition.

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 Acquisition, exceed 19.9 % of the total consideration the Company pays in the Progenics Acquisition (which the Company estimates could be approximately $ 100.0 million).

No fractional shares of Holdings common stock were issued in the Progenics Acquisition, and Progenics’ former stockholders have received cash in lieu of any fractional shares of Holdings common stock.

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For most of the second quarter of 2020, the Company reduced the Company’s work week from five days to four days and reduced the pay for employees by varying amounts depending on level of seniority.

During the second quarter of 2020, Progenics also implemented certain cost reduction initiatives and paused new enrollment in the Phase 2 trial of 1095 in metastatic castrate-resistant prostate cancer (“mCRPC”) patients to minimize the risk to subjects and healthcare providers during the pandemic.

During the second quarter of 2020, Progenics also implemented certain cost reduction initiatives and paused new enrollment in the ARROW Phase 2 study of 1095, a PSMA-targeted therapeutic, in metastatic castrate-resistant prostate cancer (“mCRPC”) patients to minimize the risk to subjects and healthcare providers during the pandemic.

New enrollment in that study restarted in October 2020.

GE Healthcare Limited (“GE Healthcare”), the Company’s development and commercialization partner for flurpiridaz fluorine-18 (“F 18”), also delayed enrollment in the second Phase 3 clinical trial of flurpiridaz F 18 because of the pandemic and resumed enrollment in the third quarter of 2020.

Although the COVID-19 pandemic appears to have begun to recede in much of the United States, the pandemic could still have a future negative impact on the Company's business, particularly if there is a resurgence as a result of mutations or other variations to the virus that increase its communicability or its impact on certain populations.

Although some of the restrictions, including stay-at-home mandates, imposed in response to the COVID-19 pandemic have been lifted in much of the United States (the “U.S.”), and there has been a rapid rollout and development of certain vaccines, the resurgence of COVID-19 infections did impact certain aspects of the Company’s business during the third quarter of 2021 and the pandemic could still have a future negative impact on the Company's business, particularly if there are additional resurgences as a result of mutations or other variations to the virus that increase its communicability or its impact on certain populations, geographic regions and the healthcare system, including elective procedures and hospital access.

While the impact of COVID-19 on the Company’s results of operations and cash flows has been material, given continued uncertainty about the future trajectory of the pandemic, the Company remains unable to accurately predict the impact of COVID-19 on its overall 2021 operations and financial results or cash flows and whether the on-going impact of COVID-19 could lead to potential future impairments.

1 unchanged sentence

Reclassifications

Certain immaterial reclassifications in the prior period consolidated statement of cash flows have been reclassified to conform to the current year period financial statement presentation.

Reclassifications include $ 0.2 million from provision for bad debt to other at June 30, 2020.

Certain immaterial reclassifications in the prior period condensed consolidated statements of cash flows have been reclassified to conform to the current year period financial statement presentation.

Reclassifications include $ 0.2 million from provision for bad debt to other at September 30, 2020.

The Company had a reclassification in presentation related to rebates and allowances within product revenue.

4 unchanged sentences

Effect on the Condensed Consolidated Financial Statements

Accounting Standards Adopted During the Six Months Ended June 30, 2021

Accounting Standards Adopted During the Nine Months Ended September 30, 2021

ASU 2020-06, “Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40)” This ASU provides guidance to simplify the complexity associated with accounting for convertible instruments and derivatives.

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

Major Products/Service Lines (in thousands) 2021 2020 2021 2020

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Precision diagnostics includes DEFINITY, TechneLite and other imaging diagnostic products.

Radiopharmaceutical oncology consists primarily of AZEDRA and PYLARIFY.

Strategic partnerships and other includes partnerships related to other products, such as RELISTOR, that improve patient outcomes and care.

Radiopharmaceutical oncology consists primarily of PYLARIFY and AZEDRA.

Strategic partnerships and other includes partnerships related to other products of the Company, such as RELISTOR.

Revenue by product category on a net basis is as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2021 2020 (1)

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________________________________

(1) The Company reclassified rebates and allowances of $ 3.5 million and $ 8.2 million within each product category, which included $ 3.2 million and $ 7.5 million for DEFINITY, $ 0.3 million and $ 0.6 million for TechneLite and zero and $ 0.1 million for other precision diagnostics, for the three and six months ended June 30, 2020, respectively.

(1) The Company reclassified rebates and allowances of $ 5.5 million and $ 13.8 million within each product category, which included $ 5.1 million and $ 12.6 million for DEFINITY, $ 0.3 million and $ 0.9 million for TechneLite and $ 0.1 million and $ 0.2 million for other precision diagnostics, for the three and nine months ended September 30, 2020, respectively.

The Company’s performance obligations are typically part of contracts that have an original expected duration of one year or less.

14 unchanged sentences

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

June 30, 2021

September 30, 2021

(in thousands) Total Fair

15 unchanged sentences

Total liabilities $ 17,708 $ — $ 1,908 $ 15,800

During the three and six months ended June 30, 2021, there were no transfers into or out of Level 3.

During the three and nine months ended September 30, 2021, there were no transfers into or out of Level 3.

As part of the Progenics Acquisition, the Company acquired the right to receive certain future milestone and royalty payments due to Progenics from CytoDyn Inc.

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The Company considers the contingent consideration liabilities relating to the CVRs and the 2013 Acquisition, each a Level 3 instrument (one with significant unobservable inputs) in the fair value hierarchy.

The estimated fair value of these 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 estimated fair value of these 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.

2 unchanged sentences

The Company can give no assurance that the actual amounts paid, if any, in connection with the contingent consideration liabilities, including the CVRs, will be consistent with any recurring fair value estimate of such contingent consideration liabilities.

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, 2021.

The following tables summarize quantitative information and assumptions pertaining to the fair value measurement of assets and liabilities using Level 3 inputs at September 30, 2021.

Fair Value at Assumptions

(in thousands) June 30, 2021 December 31, 2020 Valuation Technique Unobservable Input June 30, 2021 December 31, 2020

(in thousands) September 30, 2021 December 31, 2020 Valuation Technique Unobservable Input September 30, 2021 December 31, 2020

Contingent receivable:

7 unchanged sentences

Fair Value at Assumptions

(in thousands) June 30, 2021 December 31, 2020 Valuation Technique Unobservable Input June 30, 2021 December 31, 2020

(in thousands) September 30, 2021 December 31, 2020 Valuation Technique Unobservable Input September 30, 2021 December 31, 2020

Contingent consideration liability:

11 unchanged sentences

Financial Assets Financial Liabilities

(in thousands) Six Months Ended

June 30, Six Months Ended

(in thousands) Nine Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

3 unchanged sentences

Fair value, end of period $ 13,800 $ 10,200 $ 46,800 $ 17,200

The change in fair value of the contingent financial asset and contingent financial liabilities, including the CVRs, resulted in an expense of $ 25.9 million for the six months ended June 30, 2021 and was primarily due to changes in revenue forecasts, changes in market conditions, a decrease in discount rates and the passage of time.

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.

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.

The change in fair value of the contingent financial asset and contingent financial liabilities, including the CVRs, resulted in an expense of $ 28.5 million for the nine months ended September 30, 2021 and was primarily due to changes in revenue forecasts, changes in market conditions, a decrease in discount rates and the passage of time.

Historically, the Company has calculated its provision for income taxes during its interim reporting periods by applying an estimate of the annual effective tax rate for the full year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete events).

For the three- and nine-month periods ended September 30, 2021, the Company has computed its provision for income taxes under the discrete method, which allows the Company to calculate its tax provision based upon the actual effective tax rate for the year-to-date period.

We determined that since small changes in estimated “ordinary” income would result in significant changes in the estimated annual effective tax rate, the historical method would not provide a reliable estimate for the three- and nine-month periods ended September 30, 2021.

The Company’s income tax expense is presented below :

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2021 2020 2021 2020

6 unchanged sentences

subsidiary, and $ 2.0 million against the net deferred tax assets of its Sweden subsidiary.

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 state 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 state taxing authorities.

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 state taxing authorities.

Accordingly, a long-term receivable is recorded to account for the expected value to the Company of future indemnification payments to be paid on behalf of the Company by BMS, net of actual tax benefits received by the Company.

The tax indemnification receivable is recorded within other long-term assets.

During the third quarter of 2021, the Company entered into a settlement agreement with one state and accordingly reduced the amount of the uncertain tax positions by $ 5.5 million.

The settlement payment to that state and the tax indemnification payment from BMS will be made in the fourth quarter of 2021.

The Company continues to accrue interest on the outstanding uncertain tax positions.

In accordance with the Company’s accounting policy, the change in the tax liabilities, penalties and interest associated with these obligations (net of any offsetting federal or state benefit) is recognized within income tax expense.

As these reserves change, adjustments are included in income tax expense while the offsetting adjustment is included in other income.

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.

For the three and six months ended June 30, 2021, the Company released $ 0.7 million of liabilities for uncertain tax positions, including interest and penalties of $ 0.5 million.

This included a release of liabilities of $ 0.5 million, including interest and penalties of $ 0.4 million, due to a change in estimate with respect to the Company’s indemnified uncertain tax positions arising from an effective settlement during the year.

As these reserves change (for example, by the state tax settlement noted above), adjustments are included in income tax expense while the offsetting adjustment is included in other income.

Assuming that the remaining 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.

In addition to the state tax settlement noted above, for the nine months ended September 30, 2021, the Company released $ 0.7 million of liabilities for uncertain tax positions, including interest and penalties of $ 0.5 million.

This included a release of liabilities of $ 0.1 million, including interest and penalties of $ 0.4 million, due to a change in estimate with respect to the Company’s indemnified uncertain tax positions arising from new information obtained during the year.

The remaining release of $ 0.2 million of liability was due to the lapse of a statute of limitations.

5 unchanged sentences

Inventory consisted of the following:

(in thousands) June 30,

(in thousands) September 30,

2021 December 31,

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If future commercial use of the product is not probable, then inventory costs associated with such product are expensed during the period the costs are incurred.

As of June 30, 2021, the Company had $ 2.6 million of such product costs included in inventories related to DEFINITY that have been manufactured through the Company’s in-house manufacturing capabilities, which is awaiting regulatory approval.

As of September 30, 2021, the Company had $ 3.2 million of such product costs included in inventories related to DEFINITY that have been manufactured through the Company’s in-house manufacturing capabilities, which is awaiting regulatory approval.

Property, Plant and Equipment, Net

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

(in thousands) June 30,

(in thousands) September 30,

2021 December 31,

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Total property, plant and equipment, net $ 116,441 $ 120,171

Depreciation and amortization expense related to property, plant and equipment, net, was $ 3.2 million and $ 2.7 million for the three months ended June 30, 2021 and 2020, respectively, and $ 6.2 million and $ 5.7 million for the six months ended June 30, 2021 and 2020, respectively.

Depreciation and amortization expense related to property, plant and equipment, net, was $ 3.6 million and $ 3.4 million for the three months ended September 30, 2021 and 2020, respectively, and $ 9.8 million and $ 9.1 million for the nine months ended September 30, 2021 and 2020, 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, the Company determined certain impairment triggers had occurred.

During the three months ended September 30, 2021, the Company reviewed certain facts relating to an asset group that included the right-of-use (“ROU”) asset associated with the lease of office space in the World Trade Center (the “WTC lease”) in New York City and resulted in a change to the asset group due to the negotiation of a sublease.

Please refer to Note 16, “Leases” for further details.

During the three months ended March 31, 2020, as a result of a decline in expected future cash flows and the effect of the COVID-19 pandemic related to certain other nuclear legacy manufacturing assets, the Company determined certain impairment triggers had occurred.

Accordingly, the Company performed an undiscounted cash flow analysis as of March 31, 2020.

1 unchanged sentence

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 six months ended June 30, 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 nine months ended September 30, 2020 in cost of goods sold in the condensed consolidated statements of operations.

Business Combinations

On June 19, 2020, the Company completed the Progenics Acquisition.

The acquisition combined the commercialization, supply chain and manufacturing expertise of the Company with the currently commercialized products and research and development (“R&D”) pipeline of Progenics.

The acquisition combined the commercialization, supply chain and manufacturing expertise of the Company with the currently commercialized products and research and development pipeline of Progenics.

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

1 unchanged sentence

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 Stock Options related to precombination 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.

Additionally, the fair value of the Replacement Stock Options was recorded as a component of consideration transferred.

Finally, as a result of the Progenics 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.

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Goodwill of $ 45.5 million recognized in connection with the acquisition is not deductible for tax purposes.

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.

The Company recognized $ 1.6 million and $ 10.5 million of acquisition-related costs, including legal, accounting, compensation arrangements and other related fees that were expensed when incurred in the three and nine months ended September 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 Closing 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.

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

Progenics contributed revenues of $ 5.9 million and $ 6.9 million, as well as a net loss of $ 12.6 million and $ 15.8 million to the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2020, respectively.

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

Nine Months Ended

September 30, 2020

(in thousands) Amount

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The transaction was consummated on January 29, 2021.

The purchase price for the stock sale was $ 18.0 million in cash, which includes a holdback amount of $ 1.8 million to be due to the Company in January 2022 and will also include a working capital adjustment once settled.

The purchase price for the stock sale was $ 18.0 million in cash, which includes a holdback amount of $ 1.8 million to be due to the Company in January 2022;

the purchase price also included a working capital adjustment.

The SPA contains customary representations, warranties and covenants by each of the parties.

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The Company does not believe this sale of certain net assets, reported as held for sale in the international segment prior to the change in segments in the first quarter of 2021, constituted a strategic shift that would have a major effect on its operations or financial results.

As a result, this transaction is not classified as discontinued operations in the Company’s accompanying consolidated financial statements.

As a result, this transaction is not classified as discontinued operations in the Company’s accompanying condensed consolidated financial statements.

The following table summarizes the major classes of assets and liabilities sold as of January 29, 2021 (date of sale) and held for sale as of December 31, 2020:

21 unchanged sentences

$ 1,448 $ 1,793

The sale resulted in a pre-tax book gain of $ 15.3 million, which was recorded within operating income in the condensed consolidated statement of operations for the six months ended June 30, 2021.

The sale resulted in a pre-tax book gain of $ 15.3 million, which was recorded within operating income in the condensed consolidated statements of operations for the nine months ended September 30, 2021.

Asset Retirement Obligations

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The Company has production facilities which manufacture and process radioactive materials at its North Billerica, Massachusetts site.

As of June 30, 2021, the liability is measured at the present value of the obligation expected to be incurred, of approximately $ 26.4 million.

As of September 30, 2021, the liability is measured at the present value of the obligation expected to be incurred, of approximately $ 26.4 million.

The Company previously operated a production facility which manufactured and processed radioactive materials at its San Juan, Puerto Rico site.

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Accretion expense 1,165

Balance at June 30, 2021 $ 14,797

Balance at September 30, 2021 $ 15,185

The Company is required to provide the U.S.

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Intangibles, net, consisted of the following:

June 30, 2021

September 30, 2021

(in thousands) Amortization Method Cost Accumulated Amortization Net

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Total $ 489,945 $ ( 113,933 ) $ 376,012

The Company recorded amortization expense for its intangible assets of $ 6.1 million and $ 0.9 million for the three months ended June 30, 2021 and 2020, respectively, and $ 10.8 million and $ 1.3 million for the six months ended June 30, 2021 and 2020, respectively.

The Company recorded amortization expense for its intangible assets of $ 8.4 million and $ 4.8 million for the three months ended September 30, 2021 and 2020, respectively, and $ 19.1 million and $ 6.1 million for the nine months ended September 30, 2021 and 2020, respectively.

In May 2021, PyL (18F-DCFPyL) was approved by the FDA under the name PYLARIFY.

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Long-Term Debt, Net, and Other Borrowings

As of June 30, 2021, the Company’s maturities of principal obligations under its long-term debt and other borrowings are as follows:

As of September 30, 2021, the Company’s maturities of principal obligations under its long-term debt and other borrowings are as follows:

(in thousands) Amount

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Total long-term debt, net and other borrowings $ 166,741

At June 30, 2021, the Company’s interest rate under the five-year secured term loan facility, which matures on June 30, 2024 (the “2019 Term Facility”) was 2.4 %.

At September 30, 2021, the Company’s interest rate under the five-year secured term loan facility, which matures on June 30, 2024 (the “2019 Term Facility”) was 2.1 %.

On March 31, 2021, the Company voluntarily repaid in full the entire outstanding principal on the original $ 50.0 million loan agreement (the “Royalty-Backed Loan”) with a fund managed by HealthCare Royalty Partners III, L.P.

8 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 June 30, 2021, accumulated other comprehensive loss included $ 0.7 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) June 30, 2021 December 31, 2020

At September 30, 2021, accumulated other comprehensive loss included $ 0.7 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 sheets:

(in thousands) September 30, 2021 December 31, 2020

Derivatives type Classification

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Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss, net of tax of $ 0.2 million and $ 0.5 million for the six months ended June 30, 2021 and 2020, respectively, consisted of the following:

The components of accumulated other comprehensive loss, net of tax of $ 0.2 million and $ 0.5 million for the nine months ended September 30, 2021 and 2020, respectively, consisted of the following:

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

2 unchanged sentences

Amounts reclassified to earnings — 539 539

Balance at June 30, 2021 $ ( 334 ) $ ( 666 ) $ ( 1,000 )

Balance at September 30, 2021 $ ( 575 ) $ ( 567 ) $ ( 1,142 )

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

1 unchanged sentence

Amounts reclassified to earnings — 243 243

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

Balance at September 30, 2020 $ ( 969 ) $ ( 1,541 ) $ ( 2,510 )

Stock-Based Compensation

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2021 2020 2021 2020

4 unchanged sentences

Total stock-based compensation expense $ 3,867 $ 3,992 $ 11,772 $ 10,452

Net (Loss) Income Per Common Share

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

Operating and finance lease assets and liabilities are as follows:

(in thousands) Classification September 30,

2021 December 31,

Operating Other long-term assets $ 8,287 $ 18,441

Finance Property, plant and equipment, net 508 525

Total leased assets $ 8,795 $ 18,966

Operating Accrued expenses and other liabilities $ 1,397 $ 1,164

Finance Current portion of long-term debt and other borrowings 356 249

Operating Other long-term liabilities 16,391 17,501

Finance Long-term debt, net and other borrowings 262 246

Total leased liabilities $ 18,406 $ 19,160

The Company leases office space in the World Trade Center in New York City.

In the third quarter of 2021, the Company negotiated a sublease agreement with an unrelated third party that was signed on October 11, 2021 (the “Sublease”) and has a term of nine years, which represents the remaining term of the WTC lease.

Both the WTC lease and the Sublease are classified by the Company as operating leases.

As a result of the negotiations of the Sublease, the Company determined that an impairment triggering event had occurred.

Accordingly, the Company performed an undiscounted cash flow analysis related to the asset group as of September 30, 2021.

Based on the undiscounted cash flow analysis, the Company determined that the asset group, including the ROU asset, had net carrying values that exceeded their estimated undiscounted future cash flows.

The Company then estimated the fair value of the asset group based on its discounted cash flows.

The carrying value exceeded the fair value and, as a result, the Company recorded a non-cash impairment of $ 9.5 million for the three and nine months ended September 30, 2021 in general and administrative expenses in the condensed consolidated statements of operations.

Net Loss Per Common Share

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands, except per share amounts) 2021 2020 2021 2020

1 unchanged sentence

Basic weighted-average common shares outstanding 67,623 66,820 67,409 49,858

Effect of dilutive stock options — — — —

Effect of dilutive restricted stock — — — —

Diluted weighted-average common shares outstanding 67,505 43,135 67,300 41,284

Basic loss per common share $ ( 0.39 ) $ ( 0.16 ) $ ( 0.26 ) $ ( 0.09 )

Diluted loss per common share $ ( 0.39 ) $ ( 0.16 ) $ ( 0.26 ) $ ( 0.09 )

Basic and diluted loss per common share $ ( 0.20 ) $ ( 0.10 ) $ ( 0.46 ) $ ( 0.20 )

Antidilutive securities excluded from diluted net income per common share 3,051 2,588 3,051 1,657

Other income consisted of the following:

Other Loss (Income)

Other loss (income) consisted of the following:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2021 2020 2021 2020

Foreign currency (gains) losses $ ( 13 ) $ ( 94 ) $ 29 $ 220

Tax indemnification income, net ( 158 ) ( 554 ) ( 731 ) ( 1,109 )

Foreign currency losses (gains) $ 127 $ ( 33 ) $ 156 $ 187

Tax indemnification loss (income), net 3,823 ( 555 ) 3,092 ( 1,664 )

Interest income ( 11 ) ( 7 ) ( 39 ) ( 221 )

Other 1 ( 1 ) — ( 4 )

Total other income $ ( 182 ) $ ( 756 ) $ ( 731 ) $ ( 1,106 )

Total other loss (income) $ 3,940 $ ( 596 ) $ 3,209 $ ( 1,702 )

Commitments and Contingencies

6 unchanged sentences

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, 2021, the Company had the following material ongoing litigation in which the Company was a party:

As of September 30, 2021, the Company had the following material ongoing litigation in which the Company was a party:

RELISTOR European Opposition Proceedings

1 unchanged sentence

EP1615646, EP2368553 and EP2368554.

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 were appealed to with the European Patent Office.

Notices of opposition were filed separately at the European Patent Office (the “EPO”) by each of Actavis Group PTC ehf and Fresenius Kabi Deutschland GmbH.

Between May 11, 2017 and July 4, 2017, the Opposition Division of the EPO (the “Opposition Division”) provided notice that the three European patents would be revoked.

Each of these matters was appealed to the Appeal Board of the EPO.

On November 13, 2020, Progenics withdrew the appeal for EP2368553 and EP2368554.

Notices of termination of the proceedings with revocation of the patent were issued on November 23, 2020 for both patents.

Oral proceedings for the third patent, EP1615646 were held on September 22, 2020.

The decision under appeal was set aside and the case was remitted to the opposition division for further prosecution.

The deadline for written submissions prior to an oral hearing is July 27, 2021.

The oral hearing is set for September 27, 2021.

Because the outcome of litigation is uncertain, the Company cannot predict how or when this matter will ultimately be resolved.

Progenics continued its appeal for the revocation of the third patent, EP1615646.

Oral proceedings for EP1615646 were held at the Appeal Board of the EPO on September 22, 2020.

The revocation decision under appeal was set aside and the case was remitted to the Opposition Division for further prosecution.

An oral hearing was held before the Opposition Division on September 27, 2021.

The parties are awaiting the final written decision of the Opposition Division.

The final written decision of the Opposition Division is appealable to the Appeal Board of the EPO by either party.

Because the outcome of opposition and appeal proceedings at the EPO is uncertain, the Company cannot predict how or when this matter will ultimately be resolved.

German PSMA-617 Litigation

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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 and related Divisional Applications, pending a decision from the German District Court on MIP’s Complaint.

On November 27, 2018, MIP requested that the EPO stay the examination of a certain European Patent 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.

5 unchanged sentences

16/510,495, 16/551,198).

On March 6, 2020, MIP filed with the

USPTO a notice stating that the Power of Attorney in certain pending U.S.

On March 6, 2020, MIP filed with the USPTO a notice stating that the Power of Attorney in certain pending U.S.

patent applications was signed by less than all applicants or owners of the applications.

6 unchanged sentences

The University and Endocyte each filed oppositions to MIP’s Notice of Appeal on March 12, 2021.

An oral hearing for the appeal is scheduled for February 9, 2022, at the Higher Regional Court Karlsruhe.

MIP is also considering its legal and procedural alternatives against the defendants in other jurisdictions and proceedings.

5 unchanged sentences

(“AAA”) filed a petition for post-grant review of U.S.

10,640,461 (the “’461 patent”) with the Patent Trial and Appeal Board (“PTAB”) of the United States Patent and Trademark Office.

10,640,461 (the “’461 patent”) with the Patent Trial and Appeal Board (“PTAB”) of the USPTO.

The ’461 patent is owned by MIP.

1 unchanged sentence

§§ 112 and 102(a)(1).

On February 9, 2021, the PTAB mailed a Notice of Filing Date Accorded to Petition and Time for Filing Patent Owner Preliminary Response.

The PTAB set a three month deadline for MIP to file a preliminary response.

The filing of a preliminary response to the petition is optional for MIP as the patent owner.

Should the PTAB decide to institute post-grant review, a schedule will be set, and MIP will be afforded three months from the date of institution to formally respond to the petition.

Because the outcome of litigation is uncertain, the Company cannot predict how or when this matter will be ultimately resolved.

The PTAB instituted Post-Grant Review (“PGR”) proceedings on July 29, 2021.

MIP’s written response to the PTAB is due by December 9, 2021.

The PTAB generally issues a final written decision on the validity of the challenged claims within one year of institution of the PGR proceedings.

The outcome of PGR proceedings is uncertain and the Company cannot predict whether the challenged claims 1, 45 and 47 of the ‘461 patent will be deemed to be valid or invalid.

Segment Information

6 unchanged sentences

Subsequent Events

In the third quarter of 2021, the Company concluded its assessment of eligibility related to first quarter 2021 qualified wages for the Coronavirus Aid, Relief and Economic Security Act Employee Retention Credit (“ERTC”).

The Company plans to file an amended tax return for the first quarter of 2021 to claim the ERTC and continues to evaluate eligibility as related to the second quarter 2021 qualified wages.

On October 11, 2021, the Company signed a sublease for certain office space.

See Note 16, “Leases”, for further details.

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