What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-04-29 compared with 2021-11-04 · 224 added, 256 removed, 164 unchanged (75% 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 and prospects;

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

(iii) our ability to successfully launch PYLARIFY as a commercial product, including (A) our ability to obtain FDA approval for additional PET manufacturing facilities (“PMFs”) that could manufacture PYLARIFY, (B) the ability of those PMFs to supply PYLARIFY to customers, and (C) our ability to sell PYLARIFY to customers;

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

(v) our products manufactured at Jubilant HollisterStier (“JHS”) and our modified formulation of DEFINITY (“DEFINITY RT”) to be commercially manufactured at Samsung Biologics (“SBL”), including our ability to renew, modify or replace those agreements as may be necessary;

(vi) the continued integration of the Progenics products and product candidate portfolio into our business following the Progenics Acquisition;

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

(viii) our ability to successfully launch aPROMISE, otherwise known as PYLARIFY AI, as a commercial product;

(ix) the potential reclassification by the FDA of certain of our products and product candidates from drugs to devices with the expense, complexity and potentially more limited competitive protection such reclassification could cause;

(x) the efforts and timing for clinical development of our product candidates and new clinical applications for our products, in each case, that we or our strategic partners may develop, including 1095 and flurpiridaz F 18;

and (xi) our ability to develop highly contextualized assessments of disease burden using artificial intelligence (“AI”).

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

(ii) our ability to continue to grow PYLARIFY as a commercial product, including (A) our ability to obtain FDA approval for additional positron emission tomography (“PET”) manufacturing facilities (“PMFs”) to manufacture PYLARIFY, (B) the ability of PMFs to manufacture PYLARIFY to meet product demand, (C) our ability to sell PYLARIFY to customers, (D) our ability to obtain and maintain adequate coding, coverage and payment for PYLARIFY, and (E) our ability to establish PYLARIFY as a leading PSMA PET imaging agent in a competitive environment in which other PSMA PET imaging agents have been approved and additional ones are in development;

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

(iv) our ability to have third party manufacturers manufacture our products and our ability to use our in-house manufacturing capacity;

(v) our ability to successfully launch PYLARIFY AI as a commercial product;

(vi) the continuing impact of the global COVID-19 pandemic on our business, financial condition and prospects;

(vii) the efforts and timing for clinical development of our product candidates and new clinical applications for our products, in each case, that we may develop, including 1095 and LMI 1195, or that our strategic partners may develop, including flurpiridaz fluorine-18 (“F 18”);

(viii) our ability to identify and acquire or in-license additional diagnostic and therapeutic product opportunities in oncology and other strategic areas;

and (ix) the potential reclassification by the FDA of certain of our products and product candidates from drugs to devices with the expense, complexity and potentially more limited competitive protection such reclassification could cause.

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

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We are an established leader and fully integrated provider committed to innovative imaging diagnostics, targeted therapeutics, and artificial intelligence solutions to Find, Fight and Follow serious medical conditions.

Clinicians use our agents and products in echocardiography, nuclear imaging, and oncologic therapeutics.

We believe that the resulting improved diagnostic information enables healthcare providers to better detect and characterize, or rule out, disease, potentially achieving better patient outcomes, reducing patient risk and limiting overall costs for payers and the entire healthcare system.

Our commercial products are used by cardiologists, nuclear medicine physicians, radiologists, oncologists, urologists, internal medicine physicians, technologists and sonographers working in a variety of clinical settings.

We sell our products to radiopharmacies, integrated delivery networks, hospitals, clinics and group practices.

We produce and market our agents and products throughout the U.S., selling primarily to radiopharmacies, integrated delivery networks, hospitals, clinics and group practices.

We sell our agents and products outside the U.S.

through a combination of direct distribution in Canada and third-party distribution relationships in Europe, Canada, Australia, Asia-Pacific and Latin America.

In the first quarter of fiscal year 2021, we completed the evaluation of our operating and reporting structure, including the impact on our business of the acquisition of Progenics, and the sale of our Puerto Rico subsidiary in the first quarter, which resulted in a change in our operating segments to one reportable business segment.

PYLARIFY Approval and Commercial Launch

On May 27, 2021, we announced that the FDA had approved PYLARIFY, an F 18-labeled positron emission tomography (“PET”) imaging agent targeting prostate-specific membrane antigen (“PSMA”).

PYLARIFY enables the visualization of primary prostate tumors as well as bone and soft tissue metastases, with potential high clinical utility in the detection of recurrent and/or metastatic prostate cancer.

We classify our products in three categories:

precision diagnostics, radiopharmaceutical oncology, and strategic partnerships and other revenue.

Our leading precision diagnostic products assist healthcare professionals (“HCPs”) Find and Follow diseases in non-oncologic conditions.

Our radiopharmaceutical oncology diagnostics and therapeutics help HCPs Find, Fight and Follow cancer.

Our strategic partnerships and other revenue category focuses on facilitating precision medicine through the use of biomarkers, digital solutions and radiotherapeutic platforms, and also includes royalty revenue from our license of RELISTOR.

Our commercial products are used by cardiologists, urologists, oncologists, internal medicine physicians, nuclear medicine physicians, radiologists, sonographers and technologists working in a variety of clinical settings.

We believe that our diagnostic products provide improved diagnostic information that enables HCPs to better detect and characterize, or rule out, disease, with the potential to achieve better patient outcomes, reduce patient risk and limit overall costs for payors and throughout the healthcare system.

We produce and market our products throughout the United States (the “U.S.”), selling primarily to clinics, group practices, hospitals, integrated delivery networks, and radiopharmacies.

We sell our products outside the U.S.

through a combination of direct distribution in Canada and third party distribution relationships in Europe, Canada, Australia, Asia-Pacific, Central America and South America.

Our headquarters are located in North Billerica, Massachusetts, with additional offices in Somerset, New Jersey;

Montreal, Canada and Lund, Sweden.

In the first quarter of 2021, we completed the evaluation of our operating and reporting structure, including the impact on our business of the acquisition of Progenics and the sale of our Puerto Rico subsidiary, which resulted in a change in our operating segments to one reportable business segment.

Key Factors Affecting Our Results

Our business and financial performance have been, and continue to be, affected by the following:

PYLARIFY Approval, Commercial Launch and Revenue Growth

On May 27, 2021, we announced that the FDA had approved PYLARIFY, an F 18-labeled PET imaging agent targeting prostate-specific membrane antigen (“PSMA”).

PYLARIFY is a product in our radiopharmaceutical oncology product category.

We commercially launched PYLARIFY in the U.S.

in June 2021.

PYLARIFY is a radioactive diagnostic agent indicated for PET imaging of PSMA-positive lesions in men with prostate cancer with suspected metastasis who are candidates for initial definitive therapy and with suspected recurrence based on elevated serum prostate-specific antigen (“PSA”) levels.

PYLARIFY works by binding to PSMA, a protein that is overexpressed on the surface of more than 90% of primary and metastatic prostate cancer cells.

PYLARIFY works with PET/CT technology to produce a combined PET/CT scan that enables the reader of the PET/CT scan to detect and locate the disease.

According to the American Cancer Society, prostate cancer is the second most common cancer in American men -- one in eight American men will be diagnosed with prostate cancer in their lifetimes and over 3.1 million American men are living with prostate cancer today.

Based on estimates from third party sources regarding the incidence of prostate cancer in men in the U.S., we believe the market potential for all PSMA PET imaging agents in the U.S.

could be up to 250,000 annual scans, comprised of 90,000 scans for patients with intermediate, unfavorable or high/very high risk of suspected metastases of prostate cancer;

130,000 scans for patients with suspected recurrence of prostate cancer;

and 30,000 scans for patients with metastatic castration-resistant prostate cancer (“mCRPC”) who may be under consideration for PSMA-targeted therapy for the treatment of adult patients with PSMA-positive mCRPC who have already been treated with other anticancer treatments (androgen receptor pathway inhibition and taxane-based chemotherapy).

However, because we are still early in the commercialization of PYLARIFY, we can give no assurance as to how clinical practice may evolve or what our ultimate market penetration may be.

In March 2022, we announced a strategic collaboration with Novartis to include PYLARIFY in prostate cancer trials with Pluvicto, Novartis’ recently approved PSMA-targeted therapeutic.

As part of the agreement with Novartis, we will supply PYLARIFY for the selection of patients with prostate cancer, and Novartis will provide all PYLARIFY-related clinical imaging data to us.

In addition, the Society for Nuclear Medicine and Molecular Imaging, or SNMMI, recently updated their appropriate use criteria, noting that PSMA PET imaging agents, including PYLARIFY, can be used for patient selection for PSMA-targeted radioligand therapy.

The approval of PYLARIFY was based on data from two Company-sponsored pivotal studies (“OSPREY” and “CONDOR”) designed to establish the safety and diagnostic performance of PYLARIFY across the prostate cancer disease continuum.

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CONDOR studied men with biochemical recurrent prostate cancer.

In patients with biochemical recurrent prostate cancer and non-informative baseline imaging, PYLARIFY demonstrated high correct localization and detection rates, including in patients with low prostate-specific antigen (“PSA”) blood level values (median PSA 0.8 ng/mL).

Upon approval, PYLARIFY was immediately available in parts of the U.S., such as the mid-Atlantic and the South.

Since its approval, PYLARIFY availability has expanded into additional regions, including six of the largest metropolitan areas in the U.S.

- New York, Los Angeles/San Diego, Chicago, Dallas, Houston, and Washington, D.C.

– as well as select locations in the Southeast, the Midwest, the Southwest, the Northeast and the Northwest.

We expect PYLARIFY availability to continue to expand across the U.S.

over the remainder of the year, with broad nationwide availability anticipated by year end.

The commercial launch of PYLARIFY is complex and expensive.

In patients with biochemical recurrent prostate cancer and non-informative baseline imaging, PYLARIFY demonstrated high correct localization and detection rates, including in patients with early recurrent disease with low, but rising, PSA blood levels (median PSA 0.8 ng/mL).

Upon commercial launch in June 2021, PYLARIFY was immediately available in select parts of the U.S.

Over the course of the remainder of 2021, PYLARIFY availability expanded into additional regions and is now broadly available nationwide.

We continue to expand our geographic coverage, customer contracting and market access coverage to serve our customers and the U.S.

prostate cancer community.

The commercial launch of PYLARIFY has been complex and expensive.

During 2021, we hired additional employees to assist us with the commercialization of PYLARIFY, including in sales, marketing, reimbursement, quality and medical affairs.

To manufacture PYLARIFY, we have assembled and are qualifying a nationwide network of PMFs with radioisotope-producing cyclotrons that make fluorine-18, which has a 110-minute half-life, so PYLARIFY is manufactured and distributed rapidly to end-users.

After being made on a cyclotron at a PMF, the F 18 is then combined with certain chemical ingredients in specially designed chemistry synthesis boxes to manufacture PYLARIFY, which is then transferred to a radiopharmacist who prepares and dispenses patient-specific doses of the final product.

Because each of the PMFs manufacturing these products is deemed by the FDA to be a separate manufacturing site, each has to be approved by the FDA.

Although we are able to provide PYLARIFY in the regions listed above, we can give no assurance that the FDA will continue to approve PMFs in accordance with our planned roll-out schedule.

If FDA approval of manufacturing sites is delayed, our future business, results of operations, financial condition and cash flows could be adversely affected.

In addition, obtaining adequate reimbursement for PYLARIFY will be critical, including not only coverage from Medicare, Medicaid and other government payors, as well as private payors, but also appropriate payment levels, which adequately cover the

manufacturing and distribution costs associated with an F 18-based agent.

We can give no assurance that pass-through status will be granted or that other adequate reimbursement can be secured to allow PYLARIFY to become successfully commercialized.

Key Factors Affecting Our Results

Our 2021 financial performance will reflect full year results of the Progenics business, whereas the prior year only incorporated results since the Closing Date.

We also expect that the approval of PYLARIFY in May 2021 and subsequent launch will result in increased revenues.

Our business and financial performance have been, and continue to be, affected by the following:

COVID-19 Pandemic

The global COVID-19 pandemic has had, and may continue to have, a material impact on our business.

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 certain procedures and treatments using our products.

For example, there has been a substantial reduction in pulmonary ventilation studies in which our product, Xenon, is used because of institutional concerns and professional society guidelines relating to the possible spread of COVID-19 to technicians and other patients, given that Xenon is both inhaled and exhaled by the patient.

As a result, Xenon sales have decreased significantly.

In March 2021, the Society of Nuclear Medicine and Medical Imaging (“SNMMI”), updated its guidance regarding in-hospital respiratory inhalation procedures administered (or performed) during the pandemic, modifying its previous position.

Based on advances in testing and procedural protocols since the onset of the pandemic as well as increasing vaccination rates, SNMMI now allows that under appropriate conditions for safe administration, pulmonary ventilation studies can be performed where necessary to reach a definitive diagnosis for a patient.

Notwithstanding this change in March 2021, our Xenon sales through the third quarter of 2021 continued to be at reduced levels, and we expect these reduced levels to continue for at least as long as COVID-19 precautions remain in place.

We can give no assurance that Xenon sales will return to historic levels.

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

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.

During the second quarter of 2020, Progenics also implemented certain cost reduction initiatives, and new enrollment in the ARROW Phase 2 study 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.

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, and there has been a rapid rollout and development of certain vaccines, the resurgence of COVID-19 infections did impact certain aspects of our business during the third quarter of 2021 and the pandemic could still have a future negative impact on our 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 we are currently unable to estimate the impact of COVID-19 on our overall 2021 operations and financial results, we ended the third quarter of 2021 with $91.5 million of cash and cash equivalents.

With our available liquidity and prudent expense management, we currently believe that we have sufficient financial resources to operate our business, support our customers, launch PYLARIFY as a new commercial product, and support the continued development of our product candidate pipeline, although we can give no assurances that we will have sufficient liquidity for all of these items, as the future trajectory of the pandemic is unknown and may affect our liquidity.

To manufacture PYLARIFY, we assembled and qualified a nationwide network of PMFs with radioisotope-producing cyclotrons that make F 18, which has a 110-minute half-life, so PYLARIFY is manufactured and distributed rapidly to end-users.

After being made on a cyclotron at a PMF, the F 18 is then combined with certain chemical ingredients in specially designed chemistry synthesis boxes to manufacture PYLARIFY.

The finished PYLARIFY is then quality control tested and transferred to a radiopharmacist who prepares and dispenses patient-specific doses of the final product.

Because each of the PMFs manufacturing these products is deemed by the FDA to be a separate manufacturing site, each has to be separately approved by the FDA.

Although PYLARIFY is now broadly available nationwide and we continue to qualify additional PMFs, we can give no assurance that the FDA will continue to approve PMFs in accordance with our planned roll-out schedule.

If FDA approval of manufacturing sites is delayed or withdrawn, our future business, results of operations, financial condition and cash flows could be adversely affected.

In addition to the network of PMFs, we have also been working with academic medical centers in the U.S.

that have radioisotope-producing cyclotrons and which have expressed an interest in manufacturing PYLARIFY.

Under this initiative, we enter into a fee-for-service arrangement under which the academic medical center’s PMF manufactures and supplies batches of PYLARIFY, and its radiopharmacy prepares patient-ready unit doses, in each case for and on behalf of us.

We then sell those unit doses to the academic medical center’s hospitals and clinics, and in some instances, to additional customers in the academic medical center’s geographic area, in each case, under separate purchase agreements.

The academic medical center’s PMF’s ability to manufacture and supply batches of PYLARIFY is subject to FDA approval, and we can give no assurance that the FDA will approve such PMFs in accordance with our planned roll-out schedule.

Our commercial launch also required obtaining adequate coding, coverage and payment for PYLARIFY, including not only coverage from Medicare, Medicaid and other government payors, as well as private payors, but also appropriate payment levels, to adequately cover our customers’ costs of using PYLARIFY in PSMA PET/CT imaging procedures.

We received notification that our Healthcare Procedure Coding System (“HCPCS”) code, which enables streamlined billing, went into effect as of January 1, 2022.

In addition, effective January 1, 2022, the Centers for Medicare and Medicaid Services (“CMS”) granted Transitional Pass-Through Payment Status in the hospital outpatient setting (“TPT Status”) for PYLARIFY, enabling traditional Medicare to provide an incremental payment for PET/CT scans performed with PYLARIFY in that setting.

TPT Status for PYLARIFY is expected to expire December 31, 2024.

After TPT Status expires, under current Medicare rules, PYLARIFY, similar to other diagnostic radiopharmaceuticals, would not be separately reimbursed in the hospital outpatient setting but rather would be included as part of the facility fee a hospital otherwise receives for a PET/CT imaging procedure, and the facility fee does not always adequately cover the total cost of the procedure.

We can give no assurance that any CMS reimbursement in the hospital outpatient setting that follows the expiration of TPT Status will be adequate to cover the cost of a PYLARIFY PET/CT imaging procedure.

We actively pursue patents in connection with PYLARIFY, both in the U.S.

and internationally.

for PYLARIFY, we have four Orange Book-listed patents, including composition of matter patents, which expire in 2030 and 2037.

Outside of the U.S., we are currently pursuing additional PYLARIFY patents to obtain similar patent protection as in the U.S.

PYLARIFY AI Clearance and Use

During 2021, we also announced that our subsidiary, EXINI, was granted 510(k) clearance by the FDA in the U.S.

and received CE marking in Europe for aPROMISE.

We commercially launched aPROMISE under the name PYLARIFY AI in the U.S.

in November 2021.

PYLARIFY AI is artificial intelligence medical device software developed to assist with the reading and quantification of PYLARIFY scans.

The technology automatically analyzes a PSMA PET/CT image to segment anatomical regions – 51 bones and 12 soft tissue organs.

This image segmentation enables automated localization, detection and quantification of potential PSMA-avid lesions in a PSMA PET/CT image, which data is then incorporated into the reporting system used by physicians.

Anticipated Continued Growth of DEFINITY and Expansion of Our Ultrasound Microbubble Franchise

We believe the market opportunity for our ultrasound microbubble enhancing agent, DEFINITY, continues to be significant.

DEFINITY has been our fastest growing and highest margin commercial product.

Historically, DEFINITY has been our fastest growing and highest margin commercial product.

We anticipate DEFINITY sales will continue to grow in the future.

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and internationally.

for DEFINITY, we now own 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 2023 and 2037.

for DEFINITY RT, we now own a total of five Orange Book-listed patents, including a composition of matter patent which expires in 2035.

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

for DEFINITY, we have five Orange Book-listed method of use patents, one of which expires in 2035 and four of which expire in 2037, as well as additional manufacturing patents that are not Orange Book-listed expiring in 2023 and 2037.

for DEFINITY RT, we have six Orange Book-listed patents, including a composition of matter patent which expires in 2035.

Outside of the U.S., we are currently pursuing additional DEFINITY and DEFINITY RT patents to obtain similar patent protection as in the U.S.

The Orange Book-listed patents include a patent on the use of VIALMIX RFID which expires in 2037;

additional VIALMIX RFID patent applications have been submitted in major markets throughout the world.

we have submitted additional VIALMIX RFID patent applications in major markets throughout the world.

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.

Under the Hatch-Waxman Act, the FDA can approve Abbreviated New Drug Applications (“ANDAs”) for generic versions of drugs if the ANDA applicant demonstrates, among other things, that (i) its generic candidate is the same as the innovator product by establishing bioequivalence and providing relevant chemistry, manufacturing and product data, and (ii) the marketing of that generic candidate does not infringe an Orange Book-listed patent or that an Orange Book-listed patent is invalid.

With respect to any Orange Book-listed patent covering the innovator product, the ANDA applicant must give a notice to the innovator (a “Notice”) that the ANDA applicant certifies that its generic candidate will not infringe the innovator’s Orange Book-listed patent or that the Orange Book-listed patent is invalid.

The innovator can then challenge the ANDA applicant in court within 45 days of receiving that Notice, and FDA approval to commercialize the generic candidate will be stayed (that is, delayed) for up to 30 months (measured from the date on which a Notice is received) while the patent dispute between the innovator and the ANDA applicant is resolved in court.

Under the Hatch-Waxman Act, the FDA can approve Abbreviated New Drug Applications (“ANDAs”) for generic versions of drugs if the ANDA applicant demonstrates, among other things, that (i) its generic candidate is the same as the innovator product by establishing bioequivalence and providing relevant chemistry, manufacturing and product data, and (ii) either the marketing of that generic candidate does not infringe the Orange Book-listed patent(s) or the Orange Book-listed patent(s) is invalid.

Similarly, the FDA can approve a Section 505(b)(2) New Drug Application (“505(b)(2)”) from an applicant that relies on some of the information required for marketing approval to come from studies which the applicant does not own or have a legal right of reference.

With respect to the Orange Book-listed patent(s) covering an innovator product, the ANDA applicant or the Section 505(b)(2) applicant (if relying on studies related to the innovator product) (together, the “Applicant”) must give a notice (a “Notice”) to the innovator of its certification that its generic candidate will not infringe the innovator’s Orange Book-listed patent(s) or that the Orange Book-listed patent(s) is invalid.

The innovator can then file suit against the Applicant within 45 days of receiving the Notice, and FDA approval to commercialize the generic candidate will be stayed (that is, delayed) for up to 30 months (measured from the date on which a Notice is received) while the patent dispute between the innovator and the Applicant is resolved in court.

The 30-month stay could potentially expire sooner if the courts determine that no infringement had occurred or that the challenged Orange Book-listed patent is invalid or if the parties otherwise settle their dispute.

As of the date of filing of this Quarterly Report on Form 10-Q, we have not received any Notice from an ANDA applicant.

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 November 2021 and the full 30-month stay was obtained, then the ANDA applicant would be precluded from commercialization until at least May 2024.

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.

• DEFINITY RT - In November 2020, the FDA approved our supplemental new drug application (“sNDA”) for DEFINITY RT.

DEFINITY RT is a modified formulation of DEFINITY that allows both storage and shipment at room temperature (DEFINITY’s previously approved formulation requires refrigerated storage).

The modified formulation provides clinicians an additional choice and allows for greater utility of this formulation in broader clinical settings.

We believe DEFINITY RT will become commercially available in the fourth quarter of 2021, although that timing cannot be assured.

Given its physical characteristics, we believe DEFINITY RT is also 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 paragraph entitled Additional Clinical Applications below).

• Vialmix RFID – In August 2020, we announced the FDA approved our sNDA for our next-generation activation device designed specifically for both DEFINITY and DEFINITY RT.

As of the date of filing of this Quarterly Report on Form 10-Q, we have not received any Notice from an Applicant.

If we were to (i) receive any such Notice in the future, (ii) bring a patent infringement suit against the Applicant within 45 days of receiving that Notice, and (iii) successfully obtain the full 30-month stay, then the 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 Applicant in May 2022 and the full 30-month stay were obtained, then the Applicant would be precluded from commercialization until at least November 2024.

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

In the event a 505(b)(2) applicant does not rely on studies related to the innovator product, the 30-month stay would not apply, but additional clinical studies may be required.

• DEFINITY RT - DEFINITY RT became commercially available in the fourth quarter of 2021.

A modified formulation of DEFINITY that allows both storage and shipment at room temperature, DEFINITY RT provides clinicians an additional choice and allows for greater utility of this formulation in broader clinical settings.

Given its physical characteristics, we

believe DEFINITY RT is also 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 paragraph entitled Microbubble Franchise below).

• VIALMIX RFID – VIALMIX RFID, our next-generation activation device designed specifically for both DEFINITY and DEFINITY RT, became commercially available in the fourth quarter of 2021.

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 and DEFINITY RT.

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

We believe VIALMIX RFID will become available in the fourth quarter of 2021, although that timing cannot be assured.

• Additional 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 ultrasound enhancing agent imaging generally.

Prior to 2021, we entered into the following collaborations:

(i) Cerevast Medical, Inc.

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

(ii) CarThera SAS (“CarThera”) for the use of our microbubbles in combination with SonoCloud, a proprietary implantable device in development for the treatment of recurrent glioblastoma;

and (iii) Insightec Ltd.

(“Insightec”) which will use our microbubbles in connection with the development of Insightec’s transcranial guided focused ultrasound device for the treatment of glioblastoma as well as other neurodegenerative conditions.

In April 2021, we announced a strategic collaboration with Allegheny Health Network (“AHN”) which will use our microbubbles in combination with AHN’s ultrasound-assisted non-viral gene transfer technology for the development of a proposed treatment

of xerostomia.

Xerostomia is a lack of saliva production leading to dry mouth and has a variety of causes, including radiotherapy and chemotherapy, the chronic use of drugs and rheumatic and dysmetabolic diseases.

• 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.

We believe this investment will allow us to better control DEFINITY manufacturing and inventory, reduce our costs in a potentially more price competitive environment, and provide us with supply chain redundancy.

We have filed our sNDA with the FDA and currently expect to have DEFINITY manufactured at this facility commercially available in early 2022, although the approval of our sNDA and that timing cannot be assured.

• DEFINITY in China - In March 2020, in connection with our Chinese development and distribution arrangement with Double-Crane Pharmaceutical Company (“Double-Crane”), we filed an Import Drug License application with the National Medical Products Administration, or the NMPA, for the use of DEFINITY for the echocardiography indication.

We believe this is an important milestone in our efforts to commercialize DEFINITY in China.

Double-Crane is also in the process of analyzing the clinical results relating to the liver and kidney indications and will also work with us to prepare an Import Drug License application for those indications.

The RFID tag, which is affixed to the vial label, enables the DEFINITY or DEFINITY RT vial to be appropriately activated with the VIALMIX RFID activation device.

Global Mo-99 Supply

We currently have Mo-99 supply agreements with Institute for Radioelements (“IRE”), running through December 31, 2022, with auto-renewal provisions subject to notice of non-renewal, and with NTP Radioisotopes (“NTP”) and the Australian Nuclear Science and Technology Organisation (“ANSTO”), running through December 31, 2021, and for which we are currently negotiating an extension.

We also have a Xenon supply agreement with IRE which runs through June 30, 2022, and which is subject to further extension.

We currently have Mo-99 supply agreements with Institute for Radioelements (“IRE”), running through December 31, 2022, with auto-renewal provisions that are terminable upon notice of non-renewal, and with NTP Radioisotopes (“NTP”), acting for itself and on behalf of its subcontractor, the Australian Nuclear Science and Technology Organisation (“ANSTO”), running through June 30, 2022, and for which we are currently negotiating an extension.

Although we have a globally diverse Mo-99 supply with IRE in Belgium, NTP in South Africa, and ANSTO in Australia, we still face supplier and logistical challenges in our Mo-99 supply chain.

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A prolonged disruption of service from one of our three Mo-99 processing sites or one of their main Mo-99-producing reactors could have a substantial negative effect on our business, results of operations, financial condition and cash flows.

We are also pursuing additional sources of Mo-99 from potential new producers to further augment our current supply.

In November 2014, we entered into a strategic arrangement with SHINE Medical Technologies LLC (“SHINE”) for the future supply of Mo-99.

Under the terms of the supply agreement, SHINE will provide Mo-99 produced using its proprietary LEU-solution technology for use in our TechneLite generators once SHINE’s facility becomes operational and receives all necessary regulatory approvals, which SHINE now estimates will occur in late 2022.

However, we cannot assure you that SHINE or any other possible additional sources of Mo-99 will result in commercial quantities of Mo-99 for our business, or that these new suppliers together with our current suppliers will be able to deliver a sufficient quantity of Mo-99 to meet our needs.

To augment our current supply of Mo-99, we have a strategic arrangement with SHINE Medical Technologies LLC (“SHINE”) for the future supply of Mo-99.

Under the terms of the supply agreement, entered into in November 2014, SHINE will provide Mo-99 produced using its proprietary LEU-solution technology for use in our TechneLite generators once SHINE’s facility becomes operational and receives all necessary regulatory approvals, which SHINE now estimates will occur in 2023.

The term of this arrangement provides for three years of supply of Mo-99.

However, we cannot assure you that SHINE will be able to produce commercial quantities of Mo-99 for our business, or that SHINE, together with our current suppliers, will be able to deliver a sufficient quantity of Mo-99 to meet our needs.

Inventory Supply

We obtain a substantial portion of our imaging agents from a third party supplier.

JHS is currently our sole source manufacturer of DEFINITY, NEUROLITE, Cardiolite and evacuation vials, the latter being an ancillary component for our TechneLite generators.

We are currently seeking approval from certain foreign regulatory authorities for JHS to manufacture certain of our products.

Until we receive these approvals, we will face continued limitations on where we can sell those products outside of the U.S.

In addition to JHS, we rely on SBL as our sole source manufacturer of DEFINITY RT.

Our manufacturing agreement with JHS relating to DEFINITY expires in February 2022, and our manufacturing agreements relating to NEUROLITE and Cardiolite expire in December 2023, in each case, with auto-renewal provisions subject to notice of non-renewal.

On July 27, 2021, we received a letter from JHS that it was providing notice of non-renewal of our manufacturing agreement relating to DEFINITY, but that JHS remained interested in negotiating a new agreement.

We are actively negotiating a new manufacturing agreement with JHS for DEFINITY, although there is no assurance that we will be able to reach an agreement on mutually acceptable terms or at all.

In the event we are not able to enter into an agreement on mutually acceptable terms or at all, we expect that we would exercise our right under our current agreement with JHS to request a terminal supply of DEFINITY in an amount sufficient to meet our supply needs for DEFINITY until our in-house manufacturing facility is operational and producing enough DEFINITY to meet our supply needs, although there is no assurance that there would be no disruption.

We have completed construction of specialized, in-house manufacturing capabilities at our North Billerica, Massachusetts facility for DEFINITY and, potentially, other sterile vial products, which will also allow us to optimize our costs and reduce our supply chain risk, including in the event we cannot enter into a new agreement with JHS for DEFINITY as noted above.

JHS is currently a significant supplier of DEFINITY and our sole source manufacturer of NEUROLITE, Cardiolite and evacuation vials, the latter being an ancillary component for our TechneLite generators.

On February 23, 2022, our wholly-owned subsidiary, LMI, entered into a Manufacturing and Supply Agreement (the “MSA”) with JHS, effective as of February 23, 2022, pursuant to which JHS will manufacture, and LMI will purchase, our DEFINITY, NEUROLITE, Cardiolite and evacuation vial products.

The new MSA supersedes all of the prior agreements of the parties.

The initial term of the MSA runs through December 31, 2027 and can be further extended by mutual agreement of the parties.

The MSA requires LMI to purchase from JHS specified percentages of its total requirements for DEFINITY, as well as specified quantities of NEUROLITE, Cardiolite and evacuation vial products, each year during the contract term.

Either party can terminate the MSA upon the occurrence of certain events, including the material breach or bankruptcy of the other party.

In addition to JHS, we rely on Samsung BioLogics as our sole source manufacturer of DEFINITY RT.

In 2021, we completed the construction of a specialized in-house manufacturing facility at our North Billerica campus for purposes of producing DEFINITY and, potentially, other sterile vial products.

On February 22, 2022, we received FDA approval of our sNDA, authorizing commercial manufacturing of DEFINITY at our new facility, and inventory that we had previously manufactured at this facility became commercially saleable.

We believe this facility will allow us to better manage DEFINITY manufacturing and inventory, reduce our costs in a potentially more price competitive environment, and provide us with supply chain redundancy.

Radiopharmaceuticals are decaying radioisotopes with half-lives ranging from a few hours to several days.

These products cannot be kept in inventory because of their limited shelf lives and are subject to just-in-time manufacturing, processing and distribution, which takes place at our facilities in North Billerica, Massachusetts and Somerset, New Jersey.

Integration of the Progenics Acquisition

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

Progenics’ portfolio of products and product candidates included, among other things, therapeutic agents designed to target cancer (AZEDRA, 1095 and PSMA TTC), diagnostic imaging agents designed to target PSMA for prostate cancer (PYLARIFY and 1404), RELISTOR for opioid-induced constipation, AI imaging technologies and leronlimab being developed for HIV infection.

Progenics’ revenue was generated from two principal sources:

first, royalties and development and commercial milestones from strategic partnerships, including royalties from Bausch Health Companies, Inc.

(“Bausch”) from sales of RELISTOR;

and second, AZEDRA sales.

The ultimate success of the Progenics Acquisition will depend on our ability to successfully combine the business of Progenics with our own and realize the anticipated benefits, including synergies, cost savings, innovation and operational efficiencies and revenue growth from the acquisition.

Our combined business is now larger and significantly more complex than our business was immediately prior to the consummation of the Progenics Acquisition.

Our ability to successfully manage this combined business will depend upon our ability to continue to integrate and manage the combined business with its increased scale and scope, and increased costs and complexity.

In addition, the CVRs issued as partial consideration for the Progenics Acquisition create additional operational obligations and accounting complexity.

See Part II, Item 1A.

“Risk Factors - The CVRs we issued as part of the Progenics Acquisition may result in substantial future payments and could divert the attention of our management;

in addition, the actual payments made in connection with the CVRs, if any, may not be consistent with the estimated fair value of the CVRs that we are required to prepare for accounting purposes.” We can give no assurance that the actual amounts paid, if any, in connection with the CVRs will be consistent with any recurring fair value estimate of such CVRs.

COVID-19 Pandemic

The global COVID-19 pandemic has had, and may continue to have, a material impact on our business.

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 hospital staffing challenges, vaccination mandates, employee absences due to illness, and a decline in the volume of certain procedures and treatments using our products.

Although many of the restrictions, including stay-at-home mandates, imposed in response to the COVID-19 pandemic have been lifted in much of the U.S., and there has been a rapid rollout and development of multiple vaccines and boosters, the resurgence of COVID-19 infections continued to impact certain aspects of our business during the first quarter of 2022.

For example, we believe sales of DEFINITY were impacted by elevated case counts and hospitalizations but improved over the course of the quarter, even amidst ongoing hospital nursing and sonographer shortages.

The pandemic could still have a future negative impact on our business, particularly if there are additional resurgences as a result of mutations or other variations to the virus that further increase its communicability or its impact on certain populations, geographic regions and the healthcare system, including elective procedures and hospital access.

Research and Development Expenses

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 Acquisition resulted in additional and substantial clinical development expense.

The PYLARIFY NDA filed with the FDA on September 29, 2020, was approved by the FDA in May 2021.

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 the fourth quarter of 2021, we completed an interim analysis of the ARROW Phase 2 study.

The Independent Data Monitoring Committee recommended the study continue without modifications.

We also are planning additional clinical development work for AZEDRA in two new potential therapeutic indications – neuroblastoma and gastroenteropancreatic neuroendocrine tumors – and LMI 1195 as a diagnostic agent for the management of neuroblastoma.

In addition, the Company has developed aPROMISE, our artificial intelligence-based, deep learning-enabled, medical device software, which we also refer to as PYLARIFY AI, and which is further described below under the heading “Additional Initiatives”.

Our investments in these additional clinical activities will increase our operating expenses and impact our results of operations and cash flow, and we can give no assurances as to whether any of these clinical development candidates will be approved.

Additional Initiatives

In addition to integrating the new assets and programs resulting from the Progenics Acquisition, 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.

Consistent with the Progenics Acquisition, 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, which resides in our strategic partnerships and other revenue product category, by entering into a strategic collaboration and license agreement with NanoMab, 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.

• In March 2021, we acquired from Ratio Therapeutics LLC (“Ratio”) (previously Noria Therapeutics, Inc.) exclusive, worldwide rights to NTI-1309, an innovative imaging biomarker that targets fibroblast activation protein (“FAP”), an emerging target with broad potential imaging applicability and use in oncology.

Under the terms of this agreement, Ratio will drive the early clinical development of NTI-1309.

We are integrating NTI-1309 into our portfolio of imaging biomarkers as part of our Pharma Services offering.

Upon further clinical development, we will assess options to bring NTI-1309 to market as a diagnostic or potentially a therapeutic agent.

• We have also expanded our Pharma Services offering to include piflufolastat F 18 for pharmaceutical companies developing PSMA-targeted therapies and have entered into clinical supply agreements with each of Regeneron, Bayer and POINT BioPharma for use of piflufolastat F 18 in prostate cancer drug development programs.

To remain a leader in the marketplace, we have historically made and will continue to make substantial investments in new product development and lifecycle management for existing products.

• For PYLARIFY, our development of PYLARIFY resulted in approval by the FDA in May 2021.

• For PYLARIFY AI, our development of PYLARIFY AI resulted in a 510(k) clearance granted by the FDA in July 2021.

• For 1095, we completed an interim analysis of the ARROW Phase 2 study in mCRPC patients in the fourth quarter of 2021 and are continuing that study without modifications.

We currently expect to complete enrollment in the ARROW Phase 2 study later in 2022.

• For LMI 1195, we plan to initiate a Phase 3 clinical trial for the use of LMI 1195 for the diagnosis and management of neuroblastoma tumors in pediatric and adult populations.

We expect to initiate approximately 20 clinical sites in the U.S.

to enroll approximately 100 patients with known or suspected neuroblastoma.

• We are also exploring additional lifecycle management opportunities for some of our current products, including AZEDRA.

Our investments in these additional clinical activities and lifecycle management opportunities will increase our operating expenses and impact our results of operations and cash flow, and we can give no assurances as to whether any of our clinical development candidates or lifecycle management opportunities will be successful.

Strategic Initiatives

We continue to seek ways to further expand our portfolio of products and product candidates and 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.

In particular, we believe that diagnostic and therapeutic product opportunities in oncology and other strategic areas will be critical to our future success, and we are committed to further augmenting our commercial portfolio with revenue opportunities of a similar magnitude as DEFINITY and PYLARIFY, either through strategic transactions or internal development.

As we continue to pursue expanding our strategic partnerships, our Pharma Services activities and strategic partnerships in oncology include:

• Prostate Cancer - We collaborate with pharmaceutical companies developing therapies and diagnostics in prostate cancer.

◦ In March 2022, we announced a collaboration with Novartis to include PYLARIFY in prostate cancer trials with Pluvicto.

As part of the agreement with Novartis, the Company will provide PYLARIFY for the selection of patients with prostate cancer, and Novartis will provide all PYLARIFY related clinical imaging data to the Company.

◦ In January 2022, we announced a collaboration with the Prostate Cancer Clinical Trial Consortium (“PCCTC”), a premier multicenter clinical research organization that specializes in prostate cancer research.

The intent of the strategic collaboration is to integrate our AI platform into PCCTC studies to advance the development and validation of novel AI-enabled biomarkers.

◦ In September 2021, we entered into a development and commercialization collaboration with RefleXion Medical, Inc.

to evaluate the use of piflufolastat F 18 to enable real-time therapeutic guidance of biology-guided radiotherapy in prostate cancer using the RefleXion X1TM platform.

• Our subsidiary, EXINI Diagnostics AB (“EXINI”), has developed PYLARIFY AI, which is designed to allow healthcare professionals and researchers to perform quantitative assessments of PSMA PET/CT in oncology.

Clinicians will have the option to utilize PYLARIFY AI with PYLARIFY to increase the efficiency and reproducibility of the PSMA PET/CT assessments.

Earlier this year, we announced that EXINI was granted 510(k) clearance by the FDA for PYLARIFY AI in the U.S.

and that EXINI received CE Mark clearance for PYLARIFY AI in Europe.

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

In addition, as described above, we continue to expand our microbubble franchise.

See “Anticipated Continued Growth of DEFINITY and Expansion of Our Ultrasound Microbubble Franchise–New Clinical Applications” for further details.

◦ Prior to 2021, we also entered into several other separate agreements, including with POINT Biopharma and Regeneron, under which we supply piflufolastat F 18 in connection with their clinical studies, and Curium, under which we licensed exclusive rights to Curium to develop and commercialize piflufolastat F 18 in Europe.

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

• Pan-Oncology - In March 2021, we acquired from Ratio Therapeutics LLC (previously Noria Therapeutics, Inc.) exclusive, worldwide rights to NTI-1309, an innovative imaging biomarker that targets fibroblast activation protein, an emerging target with broad potential imaging applicability and use in oncology.

Upon further clinical development, we will assess options to bring NTI-1309 to market as a diagnostic or potentially a therapeutic product.

Microbubble Franchise

In addition, we continue to expand our microbubble franchise.

In April 2021, we announced a strategic collaboration with Allegheny Health Network (“AHN”), which will use our microbubbles in combination with AHN’s ultrasound-assisted non-viral gene transfer technology for the development of a proposed treatment of xerostomia.

Xerostomia is a lack of saliva production leading to dry mouth and has a variety of causes, including radiotherapy and chemotherapy, the chronic use of drugs and rheumatic and dysmetabolic diseases.

Prior to 2021, we entered into microbubble collaborations with the following parties:

(i) Cerevast Medical, Inc.

(“Cerevast”), in which our microbubbles will be used in connection with Cerevast’s ocular ultrasound device to improve blood flow in occluded retinal veins in the eye;

(ii) CarThera SAS, for the use of our microbubbles in combination with SonoCloud, a proprietary implantable device in development for the treatment of recurrent glioblastoma;

and (iii) Insightec Ltd.

(“Insightec”), which will use our microbubbles in connection with the development of Insightec’s transcranial guided focused ultrasound device for the treatment of glioblastoma as well as other neurodegenerative conditions.

Generally, our costs in connection with the strategic partnerships relate to the supply of drug and other ancillary expenses and the benefits can include possible supply, milestone and royalty payments, additional intellectual property rights and strategic relationships.

We can give no assurance as to if or when or if any of these collaborations and other new initiatives will be successful or accretive to earnings.

Results of Operations

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Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2021 2020 Change $ Change % 2021 2020 Change $ Change %

(in thousands) 2022 2021 Change $ Change %

Revenues $ 208,880 $ 92,509 $ 116,371 125.8 %

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Total operating expenses 70,145 40,671 29,474 72.5 %

Gain on sale of assets — — — N/A 15,263 — 15,263 N/A

Operating loss (14,328) (5,250) (9,078) 172.9 % (25,487) (3,670) (21,817) 594.5 %

Gain on sale of assets — 15,263 (15,263) N/A

Operating income 58,925 15,622 43,303 277.2 %

Interest expense 1,509 2,718 (1,209) (44.5) %

Gain on extinguishment of debt — — — N/A (889) — (889) N/A

Other loss (income) 3,940 (596) 4,536 (761.1) % 3,209 (1,702) 4,911 (288.5) %

Loss before income taxes (19,837) (7,462) (12,375) 165.8 % (34,031) (8,636) (25,395) 294.1 %

Income tax (benefit) expense (6,422) (1,076) (5,346) 496.8 % (2,967) 1,425 (4,392) (308.2) %

Net loss $ (13,415) $ (6,386) $ (7,029) 110.1 % $ (31,064) $ (10,061) $ (21,003) 208.8 %

Comparison of the Periods Ended September 30, 2021 and 2020

Gain on extinguishment of debt — (889) 889 N/A

Other income (485) (549) 64 (11.7) %

Income before income taxes 57,901 14,342 43,559 303.7 %

Income tax expense 14,939 5,334 9,605 180.1 %

Net income $ 42,962 $ 9,008 $ 33,954 376.9 %

Comparison of the Periods Ended March 31, 2022 and 2021

We classify our revenues into three product categories:

precision diagnostics, radiopharmaceutical oncology, and strategic partnerships and other.

precision diagnostics, radiopharmaceutical oncology, and strategic partnerships and other revenue.

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

Radiopharmaceutical oncology consists primarily of PYLARIFY and AZEDRA.

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

Strategic partnerships and other revenue includes out-licensing arrangements, which includes $24.0 million of revenue recognized pursuant to the Novartis Agreement, partnerships that focus on facilitating precision medicine through the use of biomarkers, digital solutions and radiotherapeutic platforms, and on our other products, such as RELISTOR.

Revenues are summarized by product category on a net basis as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2021 2020 (1)

Change $ Change % 2021 2020 Change $ Change %

(in thousands) 2022 2021 Change $ Change %

DEFINITY $ 58,328 $ 55,971 $ 2,357 4.2 %

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Total precision diagnostics 86,198 85,755 443 0.5 %

Radiopharmaceutical oncology 8,890 3,323 5,567 167.5 % 13,203 7,474 5,729 76.7 %

Strategic partnerships and other 5,304 5,164 140 2.7 % 18,454 6,453 12,001 186.0 %

PYLARIFY 92,777 — 92,777 N/A

Other radiopharmaceutical oncology 1,327 1,500 (173) (11.5) %

Total radiopharmaceutical oncology 94,104 1,500 92,604 6,173.6 %

Strategic partnerships and other revenue 28,578 5,254 23,324 443.9 %

Total revenues $ 208,880 $ 92,509 $ 116,371 125.8 %

________________________________

(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 increase in revenues for the three months ended September 30, 2021, as compared to the prior year period, is primarily driven by increases in DEFINITY and TechneLite volume period over period as a result of the COVID-19 pandemic in the prior year and the commercial launch of PYLARIFY, offset, in part, by the divestiture of our Puerto Rico business during the first quarter of 2021.

The increase in revenues for the nine months ended September 30, 2021, as compared to the prior year period, is primarily driven by increases in DEFINITY and TechneLite volume period over period as a result of the COVID-19 pandemic in the prior year, the addition of the Progenics product portfolio, including the commercial launch of PYLARIFY.

This increase is partially offset by continued COVID-19 related reduced volumes in Xenon and the divestiture of our Puerto Rico business during the first quarter of fiscal year 2021.

The increase in revenues for the three months ended March 31, 2022, as compared to the prior year period, is primarily driven by the commercial launch of PYLARIFY and $24.0 million of revenue recognized pursuant to the Novartis Agreement, and an increase in DEFINITY sales volume period over period due to improving conditions relative to the COVID-19 pandemic in the prior year.

The increase is offset, in part, by lower sales volumes from other precision diagnostic products.

Rebates and Allowances

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These rebates and allowances result from performance-based offers that are primarily based on attaining contractually specified sales volumes and growth, Medicaid rebate programs for our products, administrative fees of group purchasing organizations and certain distributor related commissions.

The calculation of the accrual for these rebates and allowances is based on an estimate of the third-party’s buying patterns and the resulting applicable contractual rebate to be earned over a contractual period.

The calculation of the accrual for these rebates and allowances is based on an estimate of the third-party’s expected purchases and the resulting applicable contractual rebate to be earned over a contractual period.

An analysis of the amount of, and change in, reserves is summarized as follows:

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Payments or credits made during the period (6,657)

Balance, September 30, 2021 $ 9,415

The increase in gross profit for the three months ended September 30, 2021, as compared to the prior year period is primarily due to DEFINITY volume increases and PYLARIFY post commercial launch volume increases, which are partially offset by amortization expense of assets acquired in the Progenics Acquisition.

The increase in gross profit for the nine months ended September 30, 2021, as compared to the prior year period is primarily due to DEFINITY volume increases and an asset impairment loss of $7.3 million on other nuclear products that occurred in the prior year.

This increase was offset, in part, by lower Xenon unit volumes and increased radioisotope transportation costs, both due to COVID-19, as well as amortization expense of assets acquired in the Progenics Acquisition.

Balance, March 31, 2022 $ 10,793

The increase in gross profit for the three months ended March 31, 2022, as compared to the prior year period, is primarily due to PYLARIFY post commercial launch sales volume and the $24.0 million pursuant to the Novartis Agreement, which are partially offset by amortization expense of acquired intangible assets in the Progenics Acquisition.

Sales and Marketing

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Other costs in sales and marketing expenses include the development and printing of advertising and promotional material, professional services, market research and sales meetings.

Sales and marketing expenses increased $5.6 million and $21.0 million for the three and nine months ended September 30, 2021, respectively, as compared to the prior year period.

This was primarily driven by the integration of the Progenics sales and marketing organization, preparation activities for the launch of PYLARIFY and increased employee-related costs, as well as the reduced level of marketing promotional programs during the prior year due to the impact of the COVID-19 pandemic.

Sales and marketing expenses increased $6.2 million for the three months ended March 31, 2022 as compared to the prior year period.

This was primarily driven by the commercialization activities for the launch of PYLARIFY and increased employee-related costs (including the hiring of new employees during 2021 in connection with the commercialization activities for PYLARIFY), as well as the reduced level of marketing promotional programs and travel during the prior year due to the impact of the COVID-19 pandemic.

General and Administrative

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Other costs included in general and administrative expenses are professional fees for information technology services, external legal fees, consulting and accounting services as well as bad debt expense, certain facility and insurance costs, including director and officer liability insurance.

General and administrative expenses increased $10.3 million for the three months ended September 30, 2021 compared to the prior period.

This was primarily driven by the $9.5 million sublease impairment charge and $2.6 million fair value adjustment to the contingent asset and liabilities in the third quarter of 2021 (an increase of $1.8 million from the prior year period) (refer to Note 4, “Fair Value of Financial Instruments”, for further details on contingent consideration liabilities, including CVRs), offset by acquisition-related costs associated with the Progenics Acquisition in the prior year.

General and administrative expenses increased $32.3 million for the nine months ended September 30, 2021 compared to the prior year period.

This was primarily driven by the $28.5 million fair value adjustment to the contingent asset and liabilities (an increase of $27.7 million from the prior year period), $9.5 million sublease impairment charge and higher headcount related costs following the Progenics Acquisition, offset by acquisition-related costs associated with the Progenics Acquisition in the prior year and synergy capture in the current year.

General and administrative expenses increased $21.5 million for the three months ended March 31, 2022 compared to the prior period.

This was primarily driven by the $18.4 million net expense for the fair value adjustments to the contingent asset and liabilities in the first quarter of 2022 (an increase of $18.1 million from the prior year period) (refer to Note 4, “Fair Value of Financial Instruments”, for further details on contingent consideration liabilities, including CVRs) and increased employee-related costs, offset by acquisition-related costs associated with the Progenics Acquisition in the prior year.

Research and Development

Research and development expenses relate primarily to the development of new products to add to our portfolio and costs related to our medical affairs, medical information and regulatory functions.

Research and development expenses decreased $0.4 million for the three months ended September 30, 2021 as compared to the prior year period.

This was primarily driven by the filing fee related to the PYLARIFY New Drug Application and preparation activities for the launch of PYLARIFY during the prior year period;

offset by phasing of the ARROW Phase 2 study of 1095 and higher overall headcount related costs.

Research and development expenses increased $13.5 million for the nine months ended September 30, 2021 as compared to the prior year period.

This was primarily driven by the integration of the Progenics research and development organization now supporting our pipeline, which includes 1095, preparation activities for the launch of PYLARIFY and higher employee-related costs due to the impact of the COVID-19 pandemic during the prior year period;

offset by the filing fee related to the PYLARIFY New Drug Application during the prior year period.

Gain on Sale of Assets

We sold 100% of the stock of our Puerto Rico radiopharmacy subsidiary resulting in a pre-tax book gain of $15.3 million for the nine months ended September 30, 2021.

Research and development expenses increased $1.8 million for the three months ended March 31, 2022 as compared to the prior year period.

This was primarily driven by the level of activity of the ARROW Phase 2 study of 1095, investment in medical affairs related to PYLARIFY and higher overall headcount related costs, offset by the expenses related to filing fees for the PYLARIFY New Drug Application and preparation activities for the launch of PYLARIFY during the prior year period.

Interest Expense

Interest expense decreased by approximately $0.4 million for the nine months ended September 30, 2021 as compared to the prior year period due to lower interest rates on our long-term debt.

Gain on Extinguishment of Debt

For the nine months ended September 30, 2021, we realized a $0.9 million gain on extinguishment of debt related to the voluntary repayment of the outstanding principal on the Royalty-Backed Loan on March 31, 2021.

Income Tax (Benefit) Expense

The income tax benefit recorded for the three months ended September 30, 2021 was primarily due to the tax benefit of a release of uncertain tax position liability, and a pre-tax loss reported during the quarter partially offset by the accrual of interest associated with uncertain tax positions.

The income tax benefit recorded for the nine months ended September 30, 2021 was primarily due to the tax benefit of released of uncertain tax position liabilities and the pre-tax loss reported during the period, partially offset by the accrual of interest associated with uncertain tax positions and the impact of permanent item adjustments including the accrual of contingent consideration liabilities.

Interest expense decreased by approximately $1.2 million for the three months ended March 31, 2022 as compared to the prior year period due to lower interest rates on our long-term debt and the repayment of the Royalty-Backed Loan on March 31, 2021.

Income Tax Expense

The income tax expense recorded for the three months ended March 31, 2022 was primarily due to pre-tax profits reported during the quarter, partially offset by the benefit associated with stock compensation deductions.

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

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

Nine Months Ended

September 30,

Three Months Ended

Effective tax rate 25.8% 37.2%

Our effective tax rate in fiscal 2022 differs from the U.S.

statutory rate of 21% principally due to releases of uncertain tax position liabilities and the impact of non-deductible contingency reserve expense.

The decrease in the effective income tax rate for the nine months ended September 30, 2021 is primarily due to the reduction in tax benefit resulting from the accrual of non-deductible contingency reserve expense.

statutory rate of 21% principally due to the accrual of state taxes and the impact of non-deductible contingency reserve expense.

The decrease in the effective income tax rate for the three months ended March 31, 2022 is primarily due to the increased amount of stock compensation benefits recorded during that quarter.

Liquidity and Capital Resources

The following table provides information regarding our cash flows:

Nine Months Ended

September 30,

Three Months Ended

(in thousands) 2022 2021

Net cash provided by operating activities $ 10,264 $ 9,818

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

Net cash (used in) provided by investing activities $ (1,390) $ 13,303

Net cash used in financing activities $ (2,179) $ (34,791)

Net Cash Provided by Operating Activities

Net cash provided by operating activities of $40.0 million in the nine months ended September 30, 2021 was driven primarily by depreciation, amortization and accretion expense of $30.1 million, a change in fair value of contingent assets and liabilities of $28.5 million (refer to Note 4, “Fair Value of Financial Instruments”, for further details on contingent consideration liabilities, including CVRs), stock-based compensation expense of $11.8 million, impairment of long-lived assets of $9.5 million and a net increase of $2.4 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 an increase in sales collections, the timing of payments to large vendors, and an increase in fees related to PYLARIFY sales.

These net sources of cash were offset by a net loss of $31.1 million and a gain on sale of assets of $15.3 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 the COVID-19 impact on products and the timing of batch processes and accruals related to general and administrative expenses in connection with the acquisition of Progenics.

Net Cash Provided by (Used in) Investing Activities

Net cash provided by investing activities during the nine months ended September 30, 2021 was primarily due to cash proceeds of $15.8 million received from the sale of our Puerto Rico subsidiary, which was offset by $7.6 million of capital expenditures.

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 Progenics Acquisition.

Net cash provided by operating activities of $10.3 million in the three months ended March 31, 2022 was primarily comprised of net income adjusted for the net effect of non-cash items such as the change in fair value of contingent assets and liabilities of $18.4 million (refer to Note 4, “Fair Value of Financial Instruments”, for further details on contingent consideration liabilities, including CVRs).

The primary working capital sources of cash were the timing of payments to large vendors.

The primary working capital uses of cash were an increase in trade receivables from timing of sale orders and an increase in collection period as well as the timing of inventory purchases.

Net cash provided by operating activities of $9.8 million in the three months ended March 31, 2021 was driven primarily by net income of $9.0 million, depreciation, amortization and accretion expense of $8.1 million, stock-based compensation expense of $3.3 million, and deferred income taxes of $4.6 million.

These net sources of cash were offset by a gain on sale of assets of $15.3 million and a net decrease of $1.5 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 increased receivables from sales offset by a reduction in inventory due to obsolescence as well as the timing of inventory purchases.

Net Cash (Used in) Provided by Investing Activities

Net cash used in investing activities during the three months ended March 31, 2022 was primarily due to $3.2 million of capital expenditures offset by cash proceeds of $1.8 million received from the sale of our Puerto Rico subsidiary.

Net cash provided by investing activities during the three months ended March 31, 2021 was primarily due to cash proceeds of $15.8 million received from the sale of our Puerto Rico subsidiary, which was offset by $2.5 million of capital expenditures.

Net Cash Used in Financing Activities

Net cash used in financing activities during the nine months ended September 30, 2021 is primarily attributable to the payments on long-term debt and other borrowings of $40.8 million related to the 2019 Term Facility and Royalty-Backed Loan, including a voluntary repayment of the outstanding principal on the Royalty-Backed Loan and payments for minimum statutory tax withholding related to net share settlement of equity awards of $1.9 million offset by proceeds of $4.6 million from stock option exercises.

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 three months ended March 31, 2022 is primarily attributable to the payments on long-term debt and other borrowings of $2.6 million related to the 2019 Term Facility and payments for minimum statutory tax withholding related to net share settlement of equity awards of $5.5 million offset by proceeds of $5.4 million from stock option exercises.

Net cash used in financing activities during the three months ended March 31, 2021 is primarily attributable to the payments on long-term debt and other borrowings of $35.6 million related to the 2019 Term Facility and Royalty-Backed Loan, including a voluntary repayment of the outstanding principal on the Royalty-Backed Loan and payments for minimum statutory tax withholding related to net share settlement of equity awards of $1.6 million offset by proceeds of $2.0 million from stock option exercises.

External Sources of Liquidity

In June 2019, we refinanced our 2017 $275.0 million five-year term loan facility with the 2019 Term Facility.

In addition, we replaced our $75.0 million revolving facility with our five-year revolving credit facility (the “2019 Revolving Facility” and, together with the 2019 Term Facility, the “2019 Facility”).

The terms of the 2019 Facility are set forth in the Credit Agreement, dated as of June 27, 2019, by and among us, the lenders from time to time party thereto and Wells Fargo Bank, N.A., as administrative agent and collateral agent.

In addition, we replaced our $75.0 million revolving facility with our current five-year revolving credit facility (the “2019 Revolving Facility” and together with the 2019 Term Facility, the “2019 Facility”).

The terms of the 2019 Term Facility are set forth in the Credit Agreement, dated as of June 27, 2019, by and among us, the lenders from time to time party thereto and Wells Fargo Bank, N.A., as administrative agent and collateral agent, which was amended on June 19, 2020 (as amended, the “2019 Credit Agreement”).

We have the right to request an increase to the 2019 Term Facility or request the establishment of one or more new incremental term loan facilities, in an aggregate principal amount of up to $100.0 million, plus additional amounts, in certain circumstances.

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Under the terms of the 2019 Revolving Facility, the lenders thereunder agreed to extend credit to us from time to time until June 27, 2024 consisting of revolving loans in an aggregate principal amount not to exceed $200.0 million at any time outstanding.

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

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

The 2019 Revolving Facility includes a $20.0 million sub-facility for the issuance of letters of credit (the “Letters of Credit”).

The 2019 Revolving Facility includes a $10.0 million sub-facility for swingline loans (the “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, 2020 for further details on the 2019 Facility.

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 the Progenics Acquisition.

The Amendment provides for, among other things, modifications to our financial maintenance covenants.

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

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

2020 Amended Credit Agreement

Under the 2019 Credit Agreement, loans bear interest at LIBOR plus a spread that ranges from 1.50% to 3.00% or the Base Rate (as defined in the 2019 Credit Agreement) plus a spread that ranges from 0.50% to 2.00%, and the commitment fee ranges from 0.15% to 0.40%, in each case based on our Total Net Leverage Ratio (as defined in the 2019 Credit Agreement).

The maximum total net leverage ratio and interest coverage ratio permitted by the financial covenant in our 2019 Credit Agreement is displayed in the table below:

2019 Credit Agreement

Period Total Net Leverage Ratio

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Q2 2021 and thereafter 3.00 to 1.00

As of September 30, 2021, we were in compliance with all financial and other covenants under the Amendment.

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

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

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

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

As of March 31, 2022, we were in compliance with all financial and other covenants under the 2019 Credit Agreement.

Please refer to our Form 10-K for fiscal year ended December 31, 2021 for further details on the 2019 Facility and the 2019 Credit Agreement.

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

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

(“HCRP”) on November 4, 2016.

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

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

The Royalty-Backed Loan bore interest at a per annum rate of 9.5% and was scheduled to mature on June 30, 2025.

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

On November 4, 2016, Progenics, through its wholly-owned subsidiary, MNTX Royalties Sub LLC, entered into the Royalty-Backed Loan.

The Royalty-Backed Loan bore interest at an annual rate of 9.5% and was scheduled to mature on June 30, 2025.

On March 31, 2021, we voluntarily repaid in full the entire outstanding principal on the Royalty-Backed Loan in the amount of $30.9 million, which included a prepayment amount of $0.5 million, and terminated the agreement.

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Our future capital requirements will depend on many factors, including:

• The level of product sales and the pricing environment of our currently marketed products, particularly DEFINITY and any additional products that we may market in the future, including decreased product sales resulting from the COVID-19 pandemic;

• The level of product sales and the pricing environment of our currently marketed products, particularly DEFINITY and PYLARIFY, as well as any additional products that we may market in the future, including decreased product sales resulting from the COVID-19 pandemic;

• Revenue mix shifts and associated volume and selling price changes that could result from contractual status changes with key customers and additional competition;

• The costs of the PYLARIFY commercial launch and our ability to successfully commercialize PYLARIFY;

• The continued costs of the ongoing commercialization of PYLARIFY;

• The costs of acquiring or in-licensing, developing, obtaining regulatory approval for, and commercializing, new products, businesses or technologies, together with the costs of pursuing opportunities that are not eventually consummated;

• Our investment in the further clinical development and commercialization of products and development candidates, including AZEDRA, PYLARIFY, 1095, LMI 1195, aBSI and PSMA AI;

• Our investment in the further clinical development and commercialization of products and development candidates, including AZEDRA, 1095, and LMI 1195;

• The costs of investing in our facilities, equipment and technology infrastructure;

• The costs and timing of establishing manufacturing and supply arrangements for commercial supplies of our products and raw materials and components;

• Our ability to have product manufactured and released from JHS and other manufacturing sites in a timely manner in the future, including our ability to negotiate a new manufacturing agreement with JHS for DEFINITY, or to begin and ramp up our manufacturing of DEFINITY at our in-house manufacturing facility in an amount sufficient to meet our supply needs;

• The costs and timing of establishing or amending manufacturing and supply arrangements for commercial supplies of our products and raw materials and components;

• Our ability to have product manufactured and released from manufacturing sites in a timely manner in the future, or to manufacture products at our in-house manufacturing facilities in amounts sufficient to meet our supply needs;

• The costs of further commercialization of our existing products, particularly in international markets, including product marketing, sales and distribution and whether we obtain local partners to help share such commercialization costs;

• The extent to which we choose to establish collaboration, co-promotion, distribution or other similar arrangements for our marketed products;

• The legal costs relating to maintaining, expanding and enforcing our intellectual property portfolio, pursuing insurance or other claims and defending against product liability, regulatory compliance or other claims;

• The cost of interest on any additional borrowings which we may incur under our financing arrangements;

Until we successfully become dual sourced for our principal products, we are vulnerable to future supply shortages.

Disruption in our financial performance could also occur if we experience significant adverse changes in product or customer mix, broad economic downturns, adverse industry or company conditions or catastrophic external events, including pandemics such as COVID-19, natural disasters and political or military conflict.

• The impact of sustained inflation on our costs of goods sold and operating expenses.

We are vulnerable to future supply chain shortages, disruptions or delays, especially for our single sourced products, raw materials and components.

Disruption in our financial performance could also occur if we experience significant adverse changes in product or customer mix, broad economic downturns, sustained inflation, adverse industry or company conditions or catastrophic external events, including pandemics such as COVID-19, natural disasters and political or military conflict.

If we experience one or more of these events in the future, we may be required to further implement expense reductions, such as a delay or elimination of discretionary spending in all functional areas, as well as scaling back select operating and strategic initiatives.

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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 September 30, 2021, our only current committed external source of funds is our borrowing availability under our 2019 Revolving Facility.

We had $91.5 million of cash and cash equivalents at September 30, 2021.

At March 31, 2022, our only current committed external source of funds is our borrowing availability under our 2019 Revolving Facility.

We had $105.4 million of cash and cash equivalents at March 31, 2022.

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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The CVRs we issued in the Progenics Acquisition entitle holders thereof to future cash payments of 40% of PYLARIFY net sales over (i) $100.0 million in 2022 and (ii) $150.0 million in 2023, which, if payable, we currently intend to fund from our then-available cash.

In no event will our aggregate payments under the CVRs, together with any other non-stock consideration treated as paid in connection with the Progenics Acquisition, exceed 19.9% (which we estimate could be approximately $100.0 million) of the total consideration we pay in the Progenics Acquisition.

In no event will our aggregate payments under the CVRs, together with any other non-stock consideration treated as paid in connection with the Progenics Acquisition, exceed 19.9% (which we currently estimate could be approximately $100.0 million) of the total consideration we pay in the Progenics Acquisition.

Refer to Note 4, “Fair Value of Financial Instruments”, for further details on contingent consideration liabilities.

Based on our current operating plans, including our prudent expense management in response to the COVID-19 pandemic, we believe that our existing cash and cash equivalents, results of operations and availability under our 2019 Revolving Facility, as amended, will be sufficient to continue to fund our liquidity requirements for the foreseeable future.

Based on our current operating plans, we believe our balance of cash and cash equivalents, which totaled $105.4 million as of March 31, 2022, along with cash generated by ongoing operations and continued access to our 2019 Revolving Facility, will be sufficient to satisfy our cash requirements over the next twelve months and beyond.

Critical Accounting Policies and Estimates

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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 nine months ended September 30, 2021.

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 three months ended March 31, 2022.

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, 2021.

Off-Balance Sheet Arrangements

We are required to provide the U.S.

Nuclear Regulatory Commission and Massachusetts Department of Public Health financial assurance demonstrating our ability to fund the decommissioning of our North Billerica, Massachusetts production facility upon closure, though we do not intend to close the facility.

We are required to provide the Massachusetts Department of Public Health and New Jersey Department of Environmental Protection financial assurance demonstrating our ability to fund the decommissioning of our North Billerica, Massachusetts and Somerset, New Jersey production facilities upon closure, though we do not intend to close the facilities.

We have provided this financial assurance in the form of a $28.2 million surety bond.

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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