What changed in this filing

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Item 1. Financial Statements

2022-08-04 compared with 2022-04-29 · 110 added, 125 removed, 486 unchanged (33% of the section changed)

42 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Revenues $ 223,723 $ 101,064 $ 432,603 $ 193,573

7 unchanged sentences

Gain on sale of assets — — — 15,263

Operating income 58,925 15,622

Operating income (loss) 63,204 ( 26,781 ) 122,129 ( 11,159 )

Interest expense 1,469 1,937 2,978 4,655

1 unchanged sentence

Other income ( 310 ) ( 182 ) ( 795 ) ( 731 )

Income before income taxes 57,901 14,342

Income tax expense 14,939 5,334

Net income $ 42,962 $ 9,008

Net income per common share:

Income (loss) before income taxes 62,045 ( 28,536 ) 119,946 ( 14,194 )

Income tax expense (benefit) 18,987 ( 1,879 ) 33,926 3,455

Net income (loss) $ 43,058 $ ( 26,657 ) $ 86,020 $ ( 17,649 )

Net income (loss) per common share:

Basic $ 0.63 $ ( 0.39 ) $ 1.26 $ ( 0.26 )

8 unchanged sentences

Three Months Ended

Net income $ 42,962 $ 9,008

June 30, Six Months Ended

2022 2021 2022 2021

Net income (loss) $ 43,058 $ ( 26,657 ) $ 86,020 $ ( 17,649 )

Other comprehensive income:

2 unchanged sentences

Total other comprehensive income 413 240 2,809 1,048

Comprehensive income $ 45,358 $ 9,816

Comprehensive income (loss) $ 43,471 $ ( 26,417 ) $ 88,829 $ ( 16,601 )

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

2 unchanged sentences

(in thousands)

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

Common Stock Additional

12 unchanged sentences

Balance, March 31, 2022 68,570 $ 686 $ 691,516 $ ( 178,263 ) $ 1,911 $ 515,850

Three Months Ended March 31, 2021

Net income — — — 43,058 — 43,058

Other comprehensive income — — — — 413 413

Stock option exercises and employee stock plan purchases 61 1 1,422 — — 1,423

Vesting of restricted stock awards and units 108 1 ( 1 ) — — —

Shares withheld to cover taxes ( 13 ) ( 1 ) ( 823 ) — — ( 824 )

Stock-based compensation — — 7,412 — — 7,412

Balance, June 30, 2022 68,726 $ 687 $ 699,526 $ ( 135,205 ) $ 2,324 $ 567,332

Six Months Ended June 30, 2021

Common Stock Additional

12 unchanged sentences

Balance, March 31, 2021 67,434 $ 674 $ 669,623 $ ( 140,938 ) $ ( 1,240 ) $ 528,119

Net loss — — — ( 26,657 ) — ( 26,657 )

Other comprehensive income — — — — 240 240

Stock option exercises and employee stock plan purchases 116 1 2,042 — — 2,043

Vesting of restricted stock awards and units 51 1 ( 1 ) — — —

Shares withheld to cover taxes ( 9 ) — ( 193 ) — — ( 193 )

Stock-based compensation — — 4,588 — — 4,588

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

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

2 unchanged sentences

(in thousands)

Three Months Ended

Six Months Ended

Operating activities

Net income $ 42,962 $ 9,008

Net income (loss) $ 86,020 $ ( 17,649 )

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

Depreciation, amortization and accretion 23,893 17,749

ARO acceleration 293 —

Asset retirement obligation acceleration 500 —

Amortization of debt related costs 491 185

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Effect of foreign exchange rates on cash, cash equivalents and restricted cash ( 19 ) 120

Net increase (decrease) in cash, cash equivalents and restricted cash 6,846 ( 11,691 )

Net increase in cash, cash equivalents and restricted cash 72,919 10,948

Cash, cash equivalents and restricted cash, beginning of period 100,651 82,694

3 unchanged sentences

(in thousands)

Three Months Ended

Six Months Ended

Reconciliation to amounts within the condensed consolidated balance sheets

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Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Holdings and its direct and indirect wholly-owned subsidiaries, including Progenics (as of the Closing Date, as defined below), and have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.

The accompanying unaudited condensed consolidated financial statements include the accounts of Holdings and its direct and indirect wholly-owned subsidiaries, including Progenics, and have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.

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

1 unchanged sentence

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

The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ended December 31, 2022 or any future period.

The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ended December 31, 2022 or any future period.

The condensed consolidated balance sheet at December 31, 2021 has been derived from the audited consolidated financial statements at that date but does not include all the information and notes required by U.S.

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net sales generated by PYLARIFY in 2022 and 2023 in excess of $ 100.0 million and $ 150.0 million, respectively.

In no event will the Company’s aggregate payments in respect of the CVRs, together with any other non-stock consideration treated as paid in connection with the Progenics Acquisition, exceed 19.9 % of the total consideration the Company pays in the Progenics Acquisition (which the Company currently estimates could be approximately $ 100.0 million).

The Company expects to issue any applicable cash payments related to the CVRs as early as the first quarter of 2023 and the first quarter of 2024.

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

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

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

Each Progenics stock option with a per share exercise price greater than $ 4.42 (an “out-of-the-money Progenics stock option”) received in exchange for such out-of-the-money Progenics stock options a Replacement Stock Option converted at an exchange ratio determined based on the average of the

volume weighted average price per share of common stock of Progenics and Lantheus Holdings prior to the Effective Time, which exchange ratio was 0.31 , the same as the Exchange Ratio.

Based on the Company’s current projections of 2022 PYLARIFY net sales, the Company believes that all of its aggregate payment obligations under the CVRs (which the Company currently estimates could be approximately $ 99.7 million) will become payable in the first half of 2023, although the Company can give no assurances to that effect.

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

1 unchanged sentence

Recent Accounting Pronouncements

The Company has not adopted any new accounting standards during the three months ended March 31, 2022 .

The Company has not adopted any new accounting standards during the six months ended June 30, 2022 .

Revenue from Contracts with Customers

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

Major Products/Service Lines (in thousands) 2022 2021 2022 2021

2 unchanged sentences

License and royalty revenues (2)

5,941 7,502 34,812 12,692

Total revenues $ 223,723 $ 101,064 $ 432,603 $ 193,573

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(2) The Company recognized $ 24.0 million license revenue in the first quarter of 2022 related to an agreement with Novartis Pharma AG.

Please refer to Note 19, “Commitments and Contingencies” for further details on the license agreement.

The Company classifies its revenues into three product categories:

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

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

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

Radiopharmaceutical oncology consists primarily of PYLARIFY and AZEDRA.

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(“Endocyte”) and their affiliates (the “Novartis Agreement”) to settle certain disputes between the parties.

Under the Novartis Agreement, Novartis agreed to make a lump sum payment to the Company, as well as to reimburse the Company for certain fees and expenses in connection with the German litigation (please refer to Note 19 “Commitments and Contingencies”) and the Company agreed to license certain intellectual property to Novartis.

In addition, the Company agreed to supply PYLARIFY for clinical purposes at an arms-length value which will be recorded in the future as product is provided.

Under the Novartis Agreement, Novartis agreed to make a lump sum payment to the Company, as well as to reimburse the Company for certain fees and expenses in connection with certain German litigation, and the Company agreed to license certain intellectual property to Novartis.

In addition, the Company agreed to supply PYLARIFY for clinical purposes at an arms-length value which will be recorded revenue in the future as product is provided.

In accordance with the Company's ASC 606, Revenue from Contracts with Customers , assessment, Novartis is considered to be a customer.

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands) 2022 2021 2022 2021

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

March 31, 2022

June 30, 2022

(in thousands) Total Fair

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Total liabilities $ 86,200 $ — $ — $ 86,200

During the three months ended March 31, 2022, there were no transfers into or out of Level 3.

During the three and six months ended June 30, 2022, there were no transfers into or out of Level 3.

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

6 unchanged sentences

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

net sales generated by PYLARIFY in 2022 and 2023 in excess of $ 100.0 million and $ 150.0 million, respectively, subject to a maximum cap (which the Company currently estimates could be approximately $ 100.0 million).

net sales generated by PYLARIFY in 2022 and 2023 in excess of $ 100.0 million and $ 150.0 million, respectively, subject to a maximum cap.

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

Additionally, the Company assumed contingent consideration liabilities related to a previous acquisition completed by Progenics in 2013 (“2013 Acquisition”).

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

The estimated fair value of these had been determined based on Monte Carlo simulation models that included significant estimates and assumptions pertaining to commercialization events and sales targets.

Because of revised revenue forecasts for the balance of 2022, the Company updated the valuation technique for the CVRs from the Monte Carlo simulation model to a probability adjusted discounted cash flow model as the Company currently expects to pay out the full amount of the CVRs from available cash in the first half of 2023 based on U.S.

net sales generated by PYLARIFY in 2022 and, under either valuation technique, the estimated liability would be approximately the same.

The Company also assumed contingent consideration liabilities related to a previous acquisition completed by Progenics in 2013 (“2013 Acquisition”).

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

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The Company’s total potential payments related to the 2013 Acquisition are approximately $ 85.0 million.

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

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

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

2 unchanged sentences

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

The Company can give no assurance that the actual

amounts paid, if any, in connection with the contingent consideration liabilities, including the CVRs, will be consistent with any recurring fair value estimate of such contingent consideration liabilities.

The following tables summarize quantitative information and assumptions pertaining to the fair value measurement of assets and liabilities using Level 3 inputs at March 31, 2022.

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

The following tables summarize quantitative information and assumptions pertaining to the fair value measurement of assets and liabilities using Level 3 inputs at June 30, 2022.

Fair Value at Assumptions

(in thousands) March 31, 2022 December 31, 2021 Valuation Technique Unobservable Input March 31, 2022 December 31, 2021

(in thousands) June 30, 2022 December 31, 2021 Valuation Technique Unobservable Input June 30, 2022 December 31, 2021

Contingent receivable:

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Fair Value at Assumptions

(in thousands) March 31, 2022 December 31, 2021 Valuation Technique Unobservable Input March 31, 2022 December 31, 2021

(in thousands) June 30, 2022 December 31, 2021 Valuation Technique Unobservable Input June 30, 2022 December 31, 2021

Contingent consideration liability:

Net sales targets - PYLARIFY (CVRs) $ 91,700 $ 73,200 Monte Carlo simulation Period of expected milestone achievement and sales targets 2022 - 2023 2022 - 2023

Discount rate 18 % 17 %

Net sales targets - PYLARIFY (CVRs) $ 99,700 $ 73,200 Probability adjusted discounted cash flow model (as of 6/30/2022)

Monte Carlo simulation

(as of 12/31/2021) Period of expected milestone achievement and sales targets 2022 - 2023 2022 - 2023

Probability of success 100 % N/A

Discount rate N/A 17 %

1095 commercialization milestone 1,700 1,900 Probability adjusted discounted cash flow model

8 unchanged sentences

Financial Assets Financial Liabilities

(in thousands) Three Months Ended

March 31, Three Months Ended

(in thousands) Six Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

2 unchanged sentences

Fair value, end of period $ 7,700 $ 13,400 $ 111,500 $ 43,800

The change in fair value of the contingent financial asset and contingent financial liabilities, including the CVRs, resulted in an expense of $ 18.4 million for the three months ended March 31, 2022 and was primarily due to changes in revenue forecasts, changes in market conditions, an increase in discount rates and the passage of time.

The Company expects to issue any applicable cash payments related to the CVRs as early as the first quarter of 2023 and the first quarter of 2024.

As of March 31, 2022, the Company has $ 83.3 million in current liabilities and $ 8.4 million in long term liabilities to account for the expected payments related to the CVRs.

The change in fair value of the contingent financial asset and contingent financial liabilities, including the CVRs, resulted in an expense of $ 26.9 million for the six months ended June 30, 2022 and was primarily due to changes in revenue forecasts, changes in market conditions, an increase in discount rates (excluding the CVRs) and the passage of time.

The Company expects to make all applicable cash payments related to the CVRs in the first half of 2023.

As of June 30, 2022, the Company had $ 99.7 million in current liabilities to account for the expected payments related to the CVRs.

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

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

Cumulative adjustments to the tax provision are

recorded in the reporting period in which a change in the estimated annual effective tax rate is determined.

The Company’s income tax expense is presented below:

Three Months Ended

June 30, Six Months Ended

(in thousands) 2022 2021 2022 2021

Income tax expense $ 14,939 $ 5,334

Income tax expense (benefit) $ 18,987 $ ( 1,879 ) $ 33,926 $ 3,455

The Company regularly assesses its ability to realize its deferred tax assets.

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The Company assessed the need for a valuation allowance against certain state tax credit carryforwards added through the Progenics Acquisition.

The Company continues to retain other valuation allowances of $ 1.2 million against the net deferred tax assets of its U.K.

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

The Company continues to retain other valuation allowances of $ 1.2 million against the net deferred tax assets of Lantheus MI UK Limited, its U.K.

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

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

6 unchanged sentences

Inventory consisted of the following:

(in thousands) March 31,

(in thousands) June 30,

2022 December 31,

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As of December 31, 2021, the Company had $ 6.1 million of such product costs included in inventories related to DEFINITY that had been manufactured through the Company’s in-house manufacturing capabilities.

The Company received regulatory approval for the manufacture of DEFINITY at its new in-house manufacturing facility during the first quarter of 2022 and has no inventory pending regulatory approval as of March 31, 2022.

Property, Plant and Equipment, Net

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

(in thousands) March 31,

(in thousands) June 30,

2022 December 31,

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Total property, plant and equipment, net $ 119,004 $ 116,772

Depreciation and amortization expense related to property, plant and equipment, net, was $ 3.1 million and $ 3.0 million for the three months ended March 31, 2022 and 2021, respectively.

Depreciation and amortization expense related to property, plant and equipment, net, was $ 3.3 million and $ 3.2 million for the three months ended June 30, 2022 and 2021, respectively, and $ 6.4 million and $ 6.2 million for the six months ended June 30, 2022 and 2021, respectively.

Accrued Expenses and Other Liabilities and Other Long-Term Liabilities

Accrued expenses and other liabilities and other long-term liabilities are comprised of the following:

(in thousands) March 31,

(in thousands) June 30,

2022 December 31,

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During the fourth quarter of 2020, the Company entered into a stock purchase agreement (the “SPA”) with one of its existing radiopharmacy customers to sell all the stock of its Puerto Rico radiopharmacy subsidiary.

The assets were classified as held for sale

and the Company determined that the fair value of the net assets being sold significantly exceeded the carrying value as of December 31, 2020.

The assets were classified as held for sale and the Company determined that the fair value of the net assets being sold significantly exceeded the carrying value as of December 31, 2020.

The transaction was consummated on January 29, 2021.

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

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

The following table summarizes the major classes of assets and liabilities sold as of January 29, 2021, the date of sale:

(in thousands)

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Total liabilities held for sale

The sale resulted in a pre-tax book gain of $ 15.3 million, which was recorded within operating income in the condensed consolidated statements of operations for the three months ended March 31, 2021.

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

Asset Retirement Obligations

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The Company has production facilities which manufacture and process radioactive materials at its North Billerica, Massachusetts and Somerset, New Jersey sites.

As of March 31, 2022, the liability is measured at the present value of the obligation expected to be incurred, of approximately $ 26.4 million.

As of June 30, 2022, the liability is measured at the present value of the obligation expected to be incurred, of approximately $ 26.4 million.

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

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Accelerated costs 500

Balance at March 31, 2022 $ 21,514

Balance at June 30, 2022 $ 22,196

In December 2021, the Company evaluated the accretion timeline of an asset group due to a revision in the planned period of use at the North Billerica site.

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Intangibles, net, consisted of the following:

March 31, 2022

June 30, 2022

(in thousands) Useful Lives

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Total $ 489,960 $ ( 141,450 ) $ 348,510

The Company recorded amortization expense for its intangible assets of $ 8.3 million and $ 4.7 million for the three months ended March 31, 2022 and 2021, respectively.

The Company recorded amortization expense for its intangible assets of $ 8.3 million and $ 6.1 million for the three months ended June 30, 2022 and 2021, respectively, and $ 16.6 million and $ 10.8 million for the six months ended June 30, 2022 and 2021, respectively.

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

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Long-Term Debt, Net, and Other Borrowings

As of March 31, 2022, the Company’s maturities of principal obligations under its long-term debt and other borrowings are as follows:

As of June 30, 2022, the Company’s maturities of principal obligations under its long-term debt and other borrowings are as follows:

(in thousands) Amount

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Total long-term debt, net and other borrowings $ 155,664

At March 31, 2022, the Company’s interest rate under the five-year secured term loan facility, which matures on June 30, 2024 (the “2019 Term Facility” and the loans thereunder, the “2019 Term Loans”) was 2.2 %.

At June 30, 2022, the Company’s interest rate under the five-year secured term loan facility, which matures on June 30, 2024 (the “2019 Term Facility” and the loans thereunder, the “2019 Term Loans”) was 2.6 %.

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

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

At March 31, 2022, accumulated other comprehensive income included $ 1.0 million of pre-tax deferred gains that are expected to be reclassified to earnings during the next 12 months.

At June 30, 2022, accumulated other comprehensive income included $ 2.3 million of pre-tax deferred gains that are expected to be reclassified to earnings during the next 12 months.

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

(in thousands) March 31, 2022 December 31, 2021

(in thousands) June 30, 2022 December 31, 2021

Derivatives type Classification

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Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss), net of tax of $ 0.9 million and $ 0.2 million for the three months ended March 31, 2022 and 2021, respectively, consisted of the following:

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

The components of accumulated other comprehensive income (loss), net of tax of $ 1.1 million and $ 0.2 million for the six months ended June 30, 2022 and 2021, respectively, consisted of the following:

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

Balance at January 1, 2022 $ ( 754 ) $ 269 $ ( 485 )

Other comprehensive income before reclassifications 140 2,086 2,226

Other comprehensive (loss) income before reclassifications ( 84 ) 2,710 2,626

Amounts reclassified to earnings — 183 183

Balance at March 31, 2022 $ ( 614 ) $ 2,525 $ 1,911

Balance at June 30, 2022 $ ( 838 ) $ 3,162 $ 2,324

Balance at January 1, 2021 $ ( 630 ) $ ( 1,418 ) $ ( 2,048 )

Other comprehensive loss before reclassifications 102 533 635

Other comprehensive income before reclassifications 296 399 695

Amounts reclassified to earnings — 353 353

Balance at March 31, 2021 $ ( 528 ) $ ( 712 ) $ ( 1,240 )

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

Stock-Based Compensation

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

(in thousands) 2022 2021 2022 2021

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Operating and finance lease assets and liabilities are as follows:

(in thousands) Classification March 31,

(in thousands) Classification June 30,

2022 December 31,

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Total leased liabilities $ 17,900 $ 18,836

Net Income Per Common Share

The Company entered into an agreement in February 2022 to lease additional office space in Bedford, Massachusetts.

The facility is currently being renovated and the associated right-of-use asset and liability will be recorded once renovations are substantially complete.

The lease payments are expected to commence in the fourth quarter of 2022 when renovation of the facility is completed.

Net Income (Loss) Per Common Share

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

Three Months Ended

June 30, Six Months Ended

(in thousands, except per share amounts) 2022 2021 2022 2021

Net income $ 42,962 $ 9,008

Net income (loss) $ 43,058 $ ( 26,657 ) $ 86,020 $ ( 17,649 )

Basic weighted-average common shares outstanding 68,674 67,505 68,343 67,300

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Diluted weighted-average common shares outstanding 70,796 67,505 70,412 67,300

Basic income per common share $ 0.63 $ 0.13

Diluted income per common share $ 0.61 $ 0.13

Antidilutive securities excluded from diluted net income per common share 377 1,349

Basic income (loss) per common share $ 0.63 $ ( 0.39 ) $ 1.26 $ ( 0.26 )

Diluted income (loss) per common share $ 0.61 $ ( 0.39 ) $ 1.22 $ ( 0.26 )

Antidilutive securities excluded from diluted net income (loss) per common share 268 3,173 196 3,173

Other income consisted of the following:

Three Months Ended

June 30, Six Months Ended

(in thousands) 2022 2021 2022 2021

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

As of March 31, 2022, the Company did not have any material ongoing litigation in which the Company was a party.

During the first quarter of 2022, the Company was able to resolve certain litigation matters as set forth below:

On January 31, 2022, the Company entered into a global settlement agreement with Novartis, AAA, Endocyte and certain of their affiliates to settle certain disputes between the parties, as further described below:

German PSMA-617 Litigation

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

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

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

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

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

In connection with this dispute, MIP filed a Confirmation of Ownership with the United States Patent and Trademark Office (“USPTO”) for certain U.S.

patent applications filed by the University to support MIPs claim that it is the co-owner of these pending U.S.

patent applications (the “Ownership Claim”).

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

On August 24, 2020, the German District Court issued its decision dismissing MIP’s claims, stating that MIP failed to discharge its burden of proof in the matter.

MIP filed a Notice of Appeal of the German District Court’s decision on September 24, 2020 and filed its appeal brief on November 26, 2020.

The University and Endocyte each filed oppositions to MIP’s Notice of Appeal on March 12, 2021 and an oral hearing for the appeal was scheduled for September 28, 2022, at the Higher Regional Court Karlsruhe.

Pursuant to the terms of the Novartis Agreement, the German Litigation was dismissed and the Ownership Claim withdrawn.

Post-Grant Review Proceeding

On February 4, 2021, AAA, a wholly-owned subsidiary of Novartis and parent of Endocyte, filed a petition for post-grant review of U.S.

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

The ’461 patent is owned by MIP.

In the petition, AAA challenged the patentability of certain claims of the ’461 patent.

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

Pursuant to the terms of the Novartis Agreement, the PGR Proceeding was terminated.

Global Settlement Agreement

In addition to the dismissal of the German Litigation, the withdrawal of the Ownership Claim and the termination of the PGR Proceeding, under the Novartis Agreement, the parties, among other things, cross-licensed certain patent rights to one another, and Novartis made a $ 24.0 million lump sum payment to the Company and also reimbursed the Company for certain fees and expenses the Company is required to pay to the University in connection with the German Litigation.

The Company received the $ 24.0 million payment in April 2022.

RELISTOR European Opposition Proceedings

In October 2015, Progenics received notices of opposition to three European patents relating to methylnaltrexone:

EP1615646, EP2368553 and EP2368554.

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

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

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

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

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

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

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

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

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

The Opposition Division issued its final written opinion on November 11, 2021, indicating that the patent will be maintained in amended form.

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

Progenics appealed this decision on January 20, 2022 to hold open its option to file Grounds for Appeal.

Given that neither opponent filed a Notice of Appeal, Progenics withdrew its Notice of Appeal on February 23, 2022.

The Opposition Division communicated the Closure of Opposition Proceedings on March 7, 2022.

The patent will proceed to issuance, in amended form, with the payment of publication fees and submission of translated claims by June 11, 2022.

As of June 30, 2022, the Company did not have any material ongoing litigation in which the Company was a party.

Segment Information

1 unchanged sentence

The Company now operates as one business segment:

the development, manufacture and sale of innovative imaging diagnostics, targeted therapeutics, and artificial intelligence solutions to Find, Fight and Follow serious medical conditions.

the development, manufacture and sale of innovative imaging diagnostics, radiotherapeutics, and artificial intelligence solutions designed to enable clinicians to Find, Fight and Follow disease to deliver better patient outcomes.

This conclusion reflects the Company’s focus on the performance of the business on a consolidated worldwide basis.

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

The Company’s chief operating decision maker does not manage any part of the Company separately, and the allocation of resources and assessment of performance are based on the Company’s consolidated operating results.

The Company’s

chief operating decision maker does not manage any part of the Company separately, and the allocation of resources and assessment of performance are based on the Company’s consolidated operating results.

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

What changed 10-Q

Item 1. Financial Statements