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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
þ☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 2019
2020
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 001-36569
LANTHEUS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

Delaware
35-2318913
Delaware35-2318913
(State or other jurisdiction of incorporation or organization)(IRS Employer Identification No.)
331 Treble Cove Road North Billerica, MA01862
North Billerica,MA
(Address of principal executive offices)(Zip Code)
(978)
671-8001

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.01 per shareLNTHThe Nasdaq Global Market


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ☑    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  þ☑    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☑Accelerated filer☐
Large accelerated filer☐Accelerated filerþ
Non-accelerated filer☐Smaller reporting company☐
Emerging Growth Companyþ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   þ☐

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Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act)    Yes  ☐    No  þ☑
The registrant had 39,248,09266,813,380 shares of common stock, $0.01 par value, outstanding as of October 25, 2019.
July 24, 2020.

LANTHEUS HOLDINGS, INC.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Lantheus Holdings, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except par value)
September 30,
2019		 December 31,
2018		June 30,
2020		December 31,
2019
Assets   Assets
Current assets   Current assets
Cash and cash equivalents$78,062
 $113,401
Cash and cash equivalents$90,309  $92,919  
Accounts receivable, net40,632
 43,753
Accounts receivable, net46,883  43,529  
Inventory30,596
 33,019
Inventory35,334  29,180  
Other current assets5,096
 5,242
Other current assets8,630  7,283  
Total current assets154,386
 195,415
Total current assets181,156  172,911  
Property, plant and equipment, net113,531
 107,888
Property, plant and equipment, net122,903  116,497  
Intangibles, net7,786
 9,133
Intangibles, net389,512  7,336  
Goodwill15,714
 15,714
Goodwill57,765  15,714  
Deferred tax assets, net77,745
 81,449
Deferred tax assets, net67,441  71,834  
Other long-term assets33,247
 30,232
Other long-term assets60,918  21,627  
Total assets$402,409
 $439,831
Total assets$879,695  $405,919  
Liabilities and stockholders’ equity   Liabilities and stockholders’ equity
Current liabilities   Current liabilities
Current portion of long-term debt and other borrowings$10,166
 $2,750
Current portion of long-term debt and other borrowings$17,143  $10,143  
Accounts payable16,492
 17,955
Accounts payable16,301  18,608  
Accrued expenses and other liabilities32,928
 32,050
Accrued expenses and other liabilities42,892  37,360  
Total current liabilities59,586
 52,755
Total current liabilities76,336  66,111  
Asset retirement obligations12,560
 11,572
Asset retirement obligations13,602  12,883  
Long-term debt, net and other borrowings186,373
 263,709
Long-term debt, net and other borrowings210,010  183,927  
Other long-term liabilities42,724
 40,793
Other long-term liabilities64,164  28,397  
Total liabilities301,243
 368,829
Total liabilities364,112  291,318  
Commitments and contingencies (See Note 14)
 
Commitments and contingencies (See Note 17)Commitments and contingencies (See Note 17)
Stockholders’ equity   Stockholders’ equity
Preferred stock ($0.01 par value, 25,000 shares authorized; no shares issued and outstanding)—
 —
Common stock ($0.01 par value, 250,000 shares authorized; 39,229 and 38,466 shares issued and outstanding, respectively)392
 385
Preferred stock ($0.01 par value, 25,000 shares authorized; 0 shares issued and outstanding)Preferred stock ($0.01 par value, 25,000 shares authorized; 0 shares issued and outstanding)—  —  
Common stock ($0.01 par value, 250,000 shares authorized; 66,808 and 39,251 shares issued and outstanding, respectively)Common stock ($0.01 par value, 250,000 shares authorized; 66,808 and 39,251 shares issued and outstanding, respectively)668  393  
Additional paid-in capital248,694
 239,865
Additional paid-in capital657,669  251,641  
Accumulated deficit(146,923) (168,140)Accumulated deficit(140,148) (136,473) 
Accumulated other comprehensive loss(997) (1,108)Accumulated other comprehensive loss(2,606) (960) 
Total stockholders’ equity101,166
 71,002
Total stockholders’ equity515,583  114,601  
Total liabilities and stockholders’ equity$402,409
 $439,831
Total liabilities and stockholders’ equity$879,695  $405,919  
The accompanying notes are an integral part of these condensed consolidated financial statements.

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Lantheus Holdings, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share data)
Three Months Ended
September 30,		 Nine Months Ended
September 30,		Three Months Ended
June 30,		Six Months Ended
June 30,
2019 2018 2019 20182020201920202019
Revenues$85,776
 $88,900
 $257,991
 $257,103
Revenues$66,010  $85,705  $156,714  $172,215  
Cost of goods sold44,187
 44,015
 127,745
 126,063
Cost of goods sold40,162  41,132  92,864  83,558  
Gross profit41,589
 44,885
 130,246
 131,040
Gross profit25,848  44,573  63,850  88,657  
Operating expenses       Operating expenses
Sales and marketing10,151
 10,478
 31,496
 33,248
Sales and marketing6,305  10,948  16,435  21,345  
General and administrative18,061
 13,609
 43,943
 37,727
General and administrative20,670  13,293  37,369  25,882  
Research and development4,860
 4,316
 15,584
 12,520
Research and development4,418  5,795  8,466  10,724  
Total operating expenses33,072
 28,403
 91,023
 83,495
Total operating expenses31,393  30,036  62,270  57,951  
Operating income8,517
 16,482
 39,223
 47,545
Operating (loss) incomeOperating (loss) income(5,545) 14,537  1,580  30,706  
Interest expense2,356
 4,446
 11,491
 12,794
Interest expense1,914  4,543  3,860  9,135  
Loss on extinguishment of debt—
 —
 3,196
 —
Loss on extinguishment of debt—  3,196  —  3,196  
Other expense (income)804
 (799) (1,695) (2,055)
Income before income taxes5,357
 12,835
 26,231
 36,806
Other incomeOther income(756) (1,312) (1,106) (2,499) 
(Loss) income before income taxes(Loss) income before income taxes(6,703) 8,110  (1,174) 20,874  
Income tax expense501
 3,566
 5,014
 9,581
Income tax expense309  1,698  2,501  4,513  
Net income$4,856
 $9,269
 $21,217
 $27,225
Net income per common share:       
Net (loss) incomeNet (loss) income$(7,012) $6,412  $(3,675) $16,361  
Net (loss) income per common share:Net (loss) income per common share:
Basic$0.12
 $0.24
 $0.55
 $0.71
Basic$(0.16) $0.16  $(0.09) $0.42  
Diluted$0.12
 $0.24
 $0.53
 $0.69
Diluted$(0.16) $0.16  $(0.09) $0.41  
Weighted-average common shares outstanding:       Weighted-average common shares outstanding:
Basic39,123
 38,342
 38,901
 38,155
Basic43,135  38,972  41,284  38,789  
Diluted40,286
 39,402
 40,123
 39,467
Diluted43,135  40,239  41,284  40,064  
The accompanying notes are an integral part of these condensed consolidated financial statements.

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Lantheus Holdings, Inc.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(in thousands)
Three Months Ended
June 30,		Six Months Ended
June 30,
Three Months Ended
September 30,		 Nine Months Ended
September 30,		2020201920202019
Net (loss) incomeNet (loss) income$(7,012) $6,412  $(3,675) $16,361  
Other comprehensive (loss) income:Other comprehensive (loss) income:
2019 2018 2019 2018
Net income$4,856
 $9,269
 $21,217
 $27,225
Other comprehensive (loss) income:       
Foreign currency translation(33) (2) 111
 2
Foreign currency translation252  88  (194) 144  
Unrealized loss on cash flow hedges, net of taxUnrealized loss on cash flow hedges, net of tax(464) —  (1,452) —  
Total other comprehensive (loss) income(33) (2) 111
 2
Total other comprehensive (loss) income(212) 88  (1,646) 144  
Comprehensive income$4,823
 $9,267
 $21,328
 $27,227
Comprehensive (loss) incomeComprehensive (loss) income$(7,224) $6,500  $(5,321) $16,505  
The accompanying notes are an integral part of these condensed consolidated financial statements.

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Lantheus Holdings, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)
(in thousands)



Six Months Ended June 30, 2020
Common StockAdditional
Paid-In
Capital		Accumulated
Deficit		Accumulated
Other
Comprehensive
Loss		Total
Stockholders’
Equity
SharesAmount
Balance, January 1, 202039,251  $393  $251,641  $(136,473) $(960) $114,601  
Net income—  —  —  3,337  —  3,337  
Other comprehensive loss—  —  —  —  (1,434) (1,434) 
Stock option exercises and employee stock plan purchases33  —  366  —  —  366  
Vesting of restricted stock awards and units563  6  (6) —  —  —  
Shares withheld to cover taxes(97) (1) (1,546) —  —  (1,547) 
Stock-based compensation—  —  3,075  —  —  3,075  
Balance, March 31, 202039,750  $398  $253,530  $(133,136) $(2,394) $118,398  
Net loss—  —  —  (7,012) —  (7,012) 
Other comprehensive loss—  —  —  —  (212) (212) 
Stock option exercises and employee stock plan purchases7  —  50  —  —  50  
Vesting of restricted stock awards and units242  2  (2) —  —  —  
Shares withheld to cover taxes(36) (1) (484) —  —  (485) 
Issuance of common stock, net of $3,776 issuance costs26,845  269  394,065  —  —  394,334  
Fair value of replacement options related to pre-acquisition services—  —  7,125  —  —  7,125  
Stock-based compensation—  —  3,385  —  —  3,385  
Balance, June 30, 202066,808  $668  $657,669  $(140,148) $(2,606) $515,583  

 Nine Months Ended September 30, 2019Six Months Ended June 30, 2019
 Common Stock Additional
Paid-In
Capital		 Accumulated
Deficit		 Accumulated
Other
Comprehensive
Loss		 Total
Stockholders’
Equity		Common StockAdditional
Paid-In
Capital		Accumulated
Deficit		Accumulated
Other
Comprehensive
Loss		Total
Stockholders’
Equity
 Shares Amount SharesAmount
Balance, January 1, 2019 38,466
 $385
 $239,865
 $(168,140) $(1,108) $71,002
Balance, January 1, 201938,466  $385  $239,865  $(168,140) $(1,108) $71,002  
Net income —
 —
 —
 9,949
 —
 9,949
Net income—  —  —  9,949  —  9,949  
Other comprehensive income —
 —
 —
 —
 56
 56
Other comprehensive income—  —  —  —  56  56  
Stock option exercises and employee stock plan purchases 37
 —
 606
 —
 —
 606
Stock option exercises and employee stock plan purchases37  —  606  —  —  606  
Vesting of restricted stock awards and units 365
 4
 (4) —
 —
 —
Vesting of restricted stock awards and units365  4  (4) —  —  —  
Shares withheld to cover taxes (50) (1) (1,119) —
 —
 (1,120)Shares withheld to cover taxes(50) (1) (1,119) —  —  (1,120) 
Stock-based compensation —
 —
 2,720
 —
 —
 2,720
Stock-based compensation—  —  2,720  —  —  2,720  
Balance, March 31, 2019 38,818
 $388
 $242,068
 $(158,191) $(1,052) $83,213
Balance, March 31, 201938,818  $388  $242,068  $(158,191) $(1,052) $83,213  
Net income —
 —
 —
 6,412
 —
 6,412
Net income—  —  —  6,412  —  6,412  
Other comprehensive income —
 —
 —
 —
 88
 88
Other comprehensive income—  —  —  —  88  88  
Stock option exercises and employee stock plan purchases 9
 —
 120
 —
 —
 120
Stock option exercises and employee stock plan purchases9  —  120  —  —  120  
Vesting of restricted stock awards and units 253
 3
 (3) —
 —
 —
Vesting of restricted stock awards and units253  3  (3) —  —  —  
Shares withheld to cover taxes (37) (1) (943) —
 —
 (944)Shares withheld to cover taxes(37) (1) (943) —  —  (944) 
Stock-based compensation —
 —
 3,358
 —
 —
 3,358
Stock-based compensation—  —  3,358  —  —  3,358  
Balance, June 30, 2019 39,043
 $390
 $244,600
 $(151,779) $(964) $92,247
Balance, June 30, 201939,043  $390  $244,600  $(151,779) $(964) $92,247  
Net income —
 —
 —
 4,856
 —
 4,856
Other comprehensive loss —
 —
 —
 —
 (33) (33)
Stock option exercises and employee stock plan purchases 49
 1
 1,019
 —
 —
 1,020
Vesting of restricted stock awards and units 153
 2
 (2) —
 —
 —
Shares withheld to cover taxes (16) (1) (346) —
 —
 (347)
Stock-based compensation —
 —
 3,423
 —
 —
 3,423
Balance, September 30, 2019 $39,229
 $392
 $248,694
 $(146,923) $(997) $101,166




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



















Lantheus Holdings, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Continued)
(Unaudited)
(in thousands)



4
  Nine Months Ended September 30, 2018
  Common Stock Additional
Paid-In
Capital		 Accumulated
Deficit		 Accumulated
Other
Comprehensive
Loss		 Total
Stockholders’
Equity
  Shares Amount 
Balance, January 1, 2018 37,765
 $378
 $232,960
 $(209,013) $(1,034) $23,291
Net income —
 —
 —
 8,211
 —
 8,211
Forfeiture of dividend equivalent right —
 —
 —
 355
 —
 355
Other comprehensive income —
 —
 —
 —
 —
 —
Stock option exercises and employee stock plan purchases 94
 1
 719
 —
 —
 720
Vesting of restricted stock awards and units 174
 2
 (2) —
 —
 —
Shares withheld to cover taxes (36) (1) (708) —
 —
 (709)
Stock-based compensation —
 —
 1,796
 —
 —
 1,796
Balance, March 31, 2018 37,997
 $380
 $234,765
 $(200,447) $(1,034) $33,664
Net income —
 —
 —
 9,745
 —
 9,745
Other comprehensive income —
 —
 —
 —
 4
 4
Stock option exercises and employee stock plan purchases 111
 1
 625
 —
 —
 626
Vesting of restricted stock awards and units 286
 3
 (3) —
 —
 —
Shares withheld to cover taxes (96) (1) (1,721) —
 —
 (1,722)
Stock-based compensation —
 —
 2,216
 —
 —
 2,216
Balance, June 30, 2018 38,298
 $383
 $235,882
 $(190,702) $(1,030) $44,533
Net income —
 —
 —
 9,269
 —
 9,269
Other comprehensive loss —
 —
 —
 —
 (2) (2)
Stock option exercises and employee stock plan purchases 18
 —
 234
 —
 —
 234
Vesting of restricted stock awards and units 207
 2
 (2) —
 —
 —
Shares withheld to cover taxes (60) —
 (933) —
 —
 (933)
Stock-based compensation —
 —
 2,407
 —
 —
 2,407
Balance, September 30, 2018 38,463
 $385
 $237,588
 $(181,433) $(1,032) $55,508


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


Lantheus Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Six Months Ended
June 30,
20202019
Operating activities
Net (loss) income$(3,675) $16,361  
Adjustments to reconcile net (loss) income to net cash flows from operating activities:
Depreciation, amortization and accretion7,764  6,577  
Impairment of long-lived assets7,275  —  
Amortization of debt related costs338  639  
Loss on extinguishment of debt—  3,196  
Provision for bad debt206  57  
Provision for excess and obsolete inventory1,531  977  
Stock-based compensation6,460  6,078  
Deferred taxes1,067  2,387  
Long-term income tax receivable(1,109) (1,604) 
Long-term income tax payable and other long-term liabilities1,409  2,036  
Other408  (10) 
Increases (decreases) in cash from operating assets and liabilities:
Accounts receivable2,087  (1,755) 
Inventory(6,777) (365) 
Other current assets1,742  (118) 
Accounts payable(3,452) 2,881  
Accrued expenses and other liabilities(8,022) (5,816) 
Net cash provided by operating activities7,252  31,521  
Investing activities
Capital expenditures(4,953) (13,984) 
Lending on bridge loan(10,000) —  
Cash acquired in acquisition of business17,562  —  
Net cash provided by (used in) investing activities2,609  (13,984) 
Financing activities
Proceeds from issuance of long-term debt—  199,461  
Payments on long-term debt and other borrowings(7,032) (270,247) 
Equity issuance costs(345) —  
Deferred financing costs(1,225) (2,034) 
Proceeds from stock option exercises50  444  
Proceeds from issuance of common stock366  282  
Payments for minimum statutory tax withholding related to net share settlement of equity awards(2,032) (2,064) 
Net cash used in financing activities(10,218) (74,158) 
Effect of foreign exchange rates on cash, cash equivalents and restricted cash(112) 105  
Net decrease in cash, cash equivalents and restricted cash(469) (56,516) 
Cash, cash equivalents and restricted cash, beginning of period92,919  113,401  
Cash, cash equivalents and restricted cash, end of period$92,450  $56,885  



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 Nine Months Ended
September 30,
 2019 2018
Operating activities   
Net income$21,217
 $27,225
Adjustments to reconcile net income to net cash flows from operating activities:   
Depreciation, amortization and accretion9,840
 10,544
Amortization of debt related costs809
 959
Loss on extinguishment of debt3,196
 —
Provision for bad debt107
 288
Provision for excess and obsolete inventory1,699
 2,470
Stock-based compensation9,501
 6,419
Deferred taxes3,790
 7,220
Long-term income tax receivable(842) (2,220)
Long-term income tax payable and other long-term liabilities1,113
 2,397
Other229
 1,001
Increases (decreases) in cash from operating assets and liabilities:   
Accounts receivable3,078
 (7,205)
Inventory728
 (9,832)
Other current assets(196) (49)
Accounts payable1,454
 2,200
Accrued expenses and other liabilities2,240
 2,470
Net cash provided by operating activities57,963
 43,887
Investing activities   
Capital expenditures(17,320) (12,766)
Proceeds from sale of assets—
 1,000
Net cash used in investing activities(17,320) (11,766)
Financing activities   
Proceeds from issuance of long-term debt199,461
 —
Payments on long-term debt and other borrowings(272,821) (2,146)
Deferred financing costs(2,034) —
Proceeds from stock option exercises1,173
 1,152
Proceeds from issuance of common stock573
 428
Payments for minimum statutory tax withholding related to net share settlement of equity awards(2,410) (3,168)
Net cash used in financing activities(76,058) (3,734)
Effect of foreign exchange rates on cash and cash equivalents76
 (93)
Net (decrease) increase in cash and cash equivalents(35,339) 28,294
Cash and cash equivalents, beginning of period113,401
 76,290
Cash and cash equivalents, end of period$78,062
 $104,584
Lantheus Holdings, Inc.
Condensed Consolidated Statements of Cash Flows (Continued)
(Unaudited)
(in thousands)
Six Months Ended
June 30,
20202019
Reconciliation to amounts within the condensed consolidated balance sheets
  Cash and cash equivalents$90,309  $56,885  
  Restricted cash included in other long-term assets2,141  —  
      Cash, cash equivalents and restricted cash at end of period$92,450  $56,885  

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

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Lantheus Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note Regarding Company References and Trademarks
Unless the context otherwise requires, references to the “Company” and “Lantheus” refer to Lantheus Holdings, Inc. and its direct and indirect wholly-owned subsidiaries, references to “Holdings” refer to Lantheus Holdings, Inc. and not to any of its subsidiaries, and references to “LMI” refer to Lantheus Medical Imaging, Inc., the direct subsidiary of Holdings. Solely for convenience, the Company refers to trademarks, service marks and trade names without the TM, SM and ® symbols. Those references are not intended to indicate, in any way, that the Company will not assert, to the fullest extent permitted under applicable law, its rights to its trademarks, service marks and trade names.
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of Lantheus Holdings Inc. and its direct and indirect wholly-owned subsidiaries, including Progenics Pharmaceuticals, Inc., a Delaware corporation (“Progenics”) for the period from June 19 through June 30, 2020 (see “Acquisition of Progenics” below), and have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all of the information and notes required by generally accepted accounting principles in the United States of America (“U.S. GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal and recurring adjustments) considered necessary for a fair statement have been included. The results of operations for the three and ninesix months ended SeptemberJune 30, 20192020 are not necessarily indicative of the results that may be expected for the year ended December 31, 20192020 or any future period.
The condensed consolidated balance sheet at December 31, 20182019 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by U.S. GAAP for complete financial statements. These condensed consolidated financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto included in Item 8 of the Company’s most recent Annual Report on Form 10-K for the year ended December 31, 20182019 filed with the Securities Exchange Commission (“SEC”) on February 25, 2020.
Acquisition of Progenics
On June 19, 2020 (the “Closing Date”), pursuant to the Amended and Restated Agreement and Plan of Merger, dated as of February 20, 2019.2020 (the “Merger Agreement”), by and among Holdings, Plato Merger Sub, Inc., a wholly-owned subsidiary of Holdings (“Merger Sub”), and Progenics, Holdings completed the previously announced acquisition of Progenics, by means of a merger of Merger Sub with and into Progenics, with Progenics surviving such merger as a wholly-owned subsidiary of Holdings (the “Merger”).
In accordance with the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of Progenics common stock, par value $0.0013 per share, issued and outstanding immediately prior to the Effective Time (other than shares of Progenics common stock owned by Holdings, Progenics or any of their wholly-owned subsidiaries) was automatically cancelled and converted into the right to receive (i) 0.31 (the “Exchange Ratio”) of a share of Holdings common stock, par value $0.01 per share, and (ii) one contingent value right (a “CVR”) tied to the financial performance of PyL (18F-DCFPyL), Progenics’ prostate-specific membrane antigen targeted imaging agent designed to visualize prostate cancer currently a late stage clinical candidate (“PyL”). Each CVR will entitle its holder to receive a pro rata share of aggregate cash payments equal to 40% of U.S. net sales generated by PyL in 2022 and 2023 in excess of $100 million and $150 million, respectively. In no event will the Company’s aggregate payments in respect of the CVRs, together with any other non-stock consideration treated as paid in connection with the Progenics Transaction, exceed 19.9% (which we estimate could be approximately $100 million) of the total consideration the Company pays in the Progenics Transaction. No fractional shares of Holdings common stock have been or will be issued in the Merger, and Progenics’ former stockholders have received or will receive cash in lieu of any fractional shares of Holdings common stock.
In addition, in accordance with the Merger Agreement, at the Effective Time, each Progenics stock option with a per share exercise price less than or equal to $4.42 (an “in-the-money Progenics stock option”) received in exchange for each such in-the money Progenics stock option: (i) an option to purchase Holdings common stock (each, a “Replacement Stock Option”) converted based on the Exchange Ratio, and (ii) a vested or unvested CVR depending on whether the underlying in-the-money Progenics stock option was vested at the Effective Time. Each Progenics stock option with a per share exercise price greater than $4.42 (an “out-of-the-money Progenics stock option”) received in exchange for such out-of-the-money Progenics stock options a Lantheus Stock Option converted on an exchange ratio determined based on the average of the volume weighted average price per share of common stock of Progenics and Lantheus Holdings prior to the Effective Time, which exchange ratio was 0.31.
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As a result of the acquisition, Holdings issued 26,844,877 shares of Holdings common stock and 86,630,633 CVRs to former Progenics stockholders. Holdings also assumed 34,000 in-the-money Progenics stock options and 6,507,342 out-of-the-money Progenics stock options, each converted into Lantheus Stock Options as noted above. In addition, Lantheus assumed Progenics equity plans, which, on an as-converted basis, increased the number of Lantheus shares available for issuance by an aggregate of 4,211,290 shares prior to converting the stock options noted above, subject to certain limitations as to eligibility for issuance.
Please refer to Note 8, “Business Combinations”, for further details on the acquisition.
COVID-19
On March 11, 2020, the World Health Organization declared the novel coronavirus (“COVID-19”) a pandemic. The global spread of COVID-19 has created significant volatility, uncertainty and economic disruption. Governments in affected regions have implemented, and may continue to implement, safety precautions which include quarantines, travel restrictions, business closures, cancellations of public gatherings and other measures as they deem necessary. Many organizations and individuals, including the Company and its employees, have taken additional steps to avoid or reduce infection, including having non-essential employees work from home and limiting travel. These measures have disrupted normal business operations both in and outside of affected areas and have had significant negative impacts on businesses and economies worldwide. It is not clear when businesses or economies will return to their pre-COVID-19 operating status or productivity.
The Company experienced operational and financial impacts from the COVID-19 pandemic beginning late in the first quarter of 2020 and through the date of this filing, including the impact of stay-at-home mandates and advisories, and a decline in the volume of procedures and treatments using the Company’s products. As a result of the COVID-19 pandemic, the Company undertook a thorough analysis of all of its discretionary expenses. Beginning in the first quarter of 2020, the Company implemented certain cost reduction initiatives, including, among other things, reducing travel and promotional expenses, reducing the Company’s work week from 5 days to 4, reducing salaries by between 20% and 75%, and implementing a hiring freeze through the balance of 2020. In the latter half of June, the Company restored its work week back to 5 days and restored most salaries back to 100% (other than executive team members whose salaries were restored in early July and directors whose compensation will remain at reduced levels for the balance of the calendar year).
The severity of the on-going impact of the COVID-19 pandemic on the Company's business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic, and the extent and severity of the impact on the Company's customers and suppliers, all of which are uncertain and cannot be predicted. While the impact of COVID-19 on the Company’s results of operations and cash flows has been, and is expected to continue to be, material, given the continually evolving nature of the pandemic, the Company is currently unable to accurately predict the impact of COVID-19 on its overall 2020 operations and financial results or cash flows for the foreseeable future and whether the impact of COVID-19 could lead to potential future impairments.
2. Summary of Significant Accounting Policies
Derivative Instruments
The Company uses interest rate swaps to reduce the variability in cash flows associated with a portion of the Company’s forecasted interest payments on its variable rate debt.  To qualify for hedge accounting, the hedging instrument must be highly effective at reducing the risk from the exposure being hedged. Further, the Company must formally document the hedging relationship at inception and, on at least a quarterly basis, continually reevaluate the relationship to ensure it remains highly effective throughout the life of the hedge. The Company does not enter into derivative financial instruments for speculative or trading purposes.
Business Combinations
The Company accounts for business combinations using the acquisition method of accounting. The Company recognizes the assets acquired and liabilities assumed in business combinations on the basis of their fair values at the date of acquisition. The Company assesses the fair value of assets acquired, including intangible assets, and liabilities assumed using a variety of methods. Each asset acquired and liability assumed is measured at fair value from the perspective of a market participant. The method used to estimate the fair values of intangible assets incorporates significant assumptions regarding the estimates a market participant would make in order to evaluate an asset, including a market participant’s use of the asset and the appropriate discount rates. Acquired in-process research and development (“IPR&D”) is recognized at fair value and initially characterized as an indefinite-lived intangible asset, irrespective of whether the acquired IPR&D has an alternative future use. Any excess purchase price over the fair value of the net tangible and intangible assets acquired is allocated to goodwill. Transaction costs and restructuring costs associated with a business combination are expensed as incurred.
During the measurement period, which extends no later than one year from the acquisition date, the Company may record certain adjustments to the carrying value of the assets acquired and liabilities assumed with the corresponding offset to goodwill. After the
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measurement period, all adjustments are recorded in the condensed consolidated statements of operations as operating expenses or income.
Contingent Consideration Liabilities
The estimated fair value of contingent consideration liabilities, initially measured and recorded on the acquisition date, are considered to be a Level 3 instrument and are reviewed quarterly, or whenever events or circumstances occur that indicate a change in fair value. The contingent consideration liabilities are recorded at fair value at the end of each reporting period with changes in estimated fair values recorded in general and administrative expenses in the condensed consolidated statements of operations.
The estimated fair value is determined based on probability adjusted discounted cash flow and Monte Carlo simulation models that include significant estimates and assumptions pertaining to commercialization events and sales targets. The most significant unobservable inputs are the probabilities of achieving regulatory approval of the development projects and subsequent commercial success.
Significant changes in any of the probabilities of success would result in a significantly higher or lower fair value measurement. Significant changes in the probabilities as to the periods in which milestones will be achieved would result in a significantly lower or higher fair value measurement.
Intangible and Long-Lived Assets
The Company’s IPR&D represents intangible assets acquired in a business combination that are used in research and development activities but have not yet reached technological feasibility, regardless of whether they have alternative future use. The primary basis for determining the technological feasibility or completion of these projects is obtaining regulatory approval to market the underlying products in an applicable geographic region. Because obtaining regulatory approval can include significant risks and uncertainties, the eventual realized value of the acquired IPR&D projects may vary from their fair value at the date of acquisition. The Company classifies IPR&D acquired in a business combination as an indefinite-lived intangible asset until the completion or abandonment of the associated research and development efforts. Upon completion of the associated research and development efforts, the Company will determine the useful life and begin amortizing the assets to reflect their use over their remaining lives. Upon permanent abandonment, the Company writes-off the remaining carrying amount of the associated IPR&D intangible asset. IPR&D assets are tested at least annually or when a triggering event occurs that could indicate a potential impairment and any impairment loss is recognized in our condensed consolidated statements of operations.
Recent Accounting Pronouncements
StandardDescription
 
Effective Date

for Company

 		Effect on the Condensed Consolidated  Financial Statements
Recently Issued Accounting Standards Not Yet Adopted

Accounting Standards Adopted During the Six Months Ended June 30, 2020
ASU 2020-04, “Reference Rate Reform (Topic 848)”This ASU provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.January 1, 2020The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.
ASU 2016-13, Financial“Financial Instruments-Credit Losses (Topic 326)

”
This ASU will requirerequires financial instruments measured at amortized cost and accounts receivable to be presented at the net amount expected to be collected. The new model requires an entity to estimate credit losses based on historical information, current information and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU 2016-13 is effective for annual reporting periods beginning after December 15, 2019.

January 1, 2020

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

Accounting Standards Adopted During the Nine Months Ended September 30, 2019
ASU 2016-02, Leases (Topic 842)This ASU supersedes existing guidance on accounting for leases in “Leases (Topic 840)” and generally requires all leases to be recognized on the balance sheet. In July 2018, an amendment was made that allows companies the option of using the effective date of the new standard as the initial application date (at the beginning of the period in which it is adopted, rather than at the beginning of the earliest comparative period).January 1, 2019
See Note 11, "Leases" for the required disclosures related to the impact of adopting this standard.

The adoption of this standard resulted in the recording of an additional lease asset and lease liability of approximately $1.1 million as of January 1, 2019. The standard did not have a material impact on the Company’s condensed consolidated statements of operations, equity or cash flows.
financial statements.

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3. Revenue from Contracts with Customers
The following table summarizes revenue by revenue source and reportable segment as follows:
 Three Months Ended
September 30,		 Nine Months Ended
September 30,		Three Months Ended
June 30,		Six Months Ended
June 30,
Major Products/Service Lines by Segment (in thousands) 2019 2018 2019 2018Major Products/Service Lines by Segment (in thousands)2020201920202019
U.S. 

 

 

 

U.S.
Product revenue, net(1)

 $74,650
 $70,255
 $225,274
 $215,829
Product revenue, net(1)

$56,657  $75,190  $135,402  $150,624  
License and royalty revenues

 —
 —
 —
 —
 License and royalty revenues
742  —  742  —  
Total U.S. revenues 74,650
 70,255
 225,274
 215,829
Total U.S. revenues57,399  75,190  136,144  150,624  
International        International
Product revenue, net(1)

 10,587
 18,069
 31,123
 39,567
Product revenue, net(1)

8,270  9,987  19,738  20,536  
License and royalty revenues 539
 576
 1,594
 1,707
 License and royalty revenues341  528  832  1,055  
Total International revenues $11,126
 $18,645
 $32,717
 $41,274
Total International revenues8,611  10,515  $20,570  $21,591  
Total revenues $85,776
 $88,900
 $257,991
 $257,103
Total revenues$66,010  $85,705  $156,714  $172,215  

(1)The Company’s principal products include DEFINITY and TechneLite and are categorized within product revenue, net. The Company applies the
(1)The Company’s principal products include DEFINITY and TechneLite and are categorized within product revenue, net. The Company applies the
same revenue recognition policies and judgments for all of its principal products.
The Company’s performance obligations are typically part of contracts that have an original expected duration of one year or less. As such, under the optional exemption provided by ASC 606-10-50-14, the Company is not disclosing the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially satisfied) as of the end of the reporting period.
4. Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability of fair value measurements, financial instruments are categorized based on a hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:
•Level 1 — Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
•Level 2 — Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.) and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
•Level 3 — Unobservable inputs that reflect a Company’s estimates about the assumptions that market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available, including its own data.
The Company’s financial assets and liabilities measured at fair value on a recurring basis consist of money market funds.funds, interest rate swaps, a contingent receivable and contingent consideration liabilities. The Company invests excess cash from its operating cash accounts in overnight investments and reflects these amounts in cash and cash equivalents in the condensed consolidated balance sheets at fair value using quoted prices in active markets for identical assets. The fair value of the interest rate swaps are determined based on observable market-based inputs, including interest rate curves and reflects the contractual terms of these instruments, including the period to maturity. Please refer to Note 12, “Derivative Instruments”, for further details on the interest rate swaps. The Company recorded a contingent receivable and the contingent consideration liabilities resulting from the acquisition of Progenics at fair value based on inputs that are not observable in the market. Please refer to Note 8, “Business Combinations”, for further details on the acquisition.
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The tables below present information about the Company’s assets and liabilities measured at fair value on a recurring basis:
June 30, 2020
(in thousands)Total Fair
Value		Level 1Level 2Level 3
Assets:
   Money market$49,662  $49,662  $—  $—  
   Contingent receivable10,100  —  —  10,100  
Total assets$59,762  $49,662  $—  $10,100  
Liabilities:
   Interest rate swaps$1,953  $—  $1,953  $—  
   Contingent consideration liabilities(1)
16,300  —  —  16,300  
Total liabilities$18,253  $—  $1,953  $16,300  
December 31, 2019
(in thousands)Total Fair
Value		Level 1Level 2Level 3
Assets:
   Money market$39,530  $39,530  $—  $—  
Total assets$39,530  $39,530  $—  $—  

(1)Includes purchase consideration of $3.7 million related to CVRs and $12.6 million of assumed contingent consideration liabilities.
During the three and six months ended June 30, 2020, there were no transfers into or out of Level 3.
As part of the acquisition of Progenics, the Company acquired the right to receive certain future milestone and royalty payments due to Progenics from CytoDyn Inc., related to a prior sale of certain intellectual property. The Company has the right to receive $5.0 million upon regulatory approval and a 5% royalty on net sales of approved products. The Company considers the contingent receivable a Level 3 instrument (one with significant unobservable inputs) in the fair value hierarchy. The estimated fair value was determined based on probability adjusted discounted cash flows that included significant estimates and assumptions pertaining to regulatory events and sales targets. The most significant unobservable inputs are the probabilities of achieving regulatory approval of the development projects and subsequent commercial success.
As part of the acquisition of Progenics, the Company issued CVRs and recorded the fair value as part of consideration transferred. Refer to Note 1, “Basis of Presentation” for further details on the CVRs. Additionally, the Company assumed contingent consideration liabilities related to a previous acquisition completed by Progenics in 2013. These contingent consideration liabilities include potential payments of up to $70.0 million if the Company attains certain net sales targets for Azedra and 1095 and a $5.0 million 1095 commercialization milestone. The Company considers the contingent consideration liabilities a Level 3 instrument (one with significant unobservable inputs) in the fair value hierarchy. The estimated fair value was determined based on probability adjusted discounted cash flows and Monte Carlo simulation models that included significant estimates and assumptions pertaining to commercialization events and sales targets. The most significant unobservable inputs are the probabilities of achieving regulatory approval of the development projects and subsequent commercial success.
Significant changes in any of the probabilities of success or the probabilities as to the periods in which milestones will be achieved would result in a significantly higher or lower fair value measurement. The Company records the contingent consideration liability at fair value with changes in estimated fair values recorded in general and administrative expenses in the condensed consolidated statements of operations.
The following tables summarize quantitative information and assumptions pertaining to the fair value measurement of assets and liabilities using Level 3 inputs at June 30, 2020.

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(in thousands)(in thousands)Fair Value at June 30, 2020Valuation TechniqueUnobservable InputAssumption
Contingent receivable:Contingent receivable:
Regulatory milestoneRegulatory milestone$3,100  Probability adjusted discounted cash flow modelPeriod of expected milestone achievement2021
Probability of success90 %
Discount rate23 %
RoyaltiesRoyalties7,000  Probability adjusted discounted cash flow model
September 30, 2019Probability of success13% - 77%
(in thousands)
Total Fair
Value
 Level 1 Level 2 Level 3
Money market$24,087
 $24,087
 $—
 $—
Discount rate23 %
Total$24,087
 $24,087
 $—
 $—
Total$10,100  

(in thousands)Fair Value at June 30, 2020Valuation TechniqueUnobservable InputAssumption
Contingent consideration liability:
Net sales targets - PyL (CVRs)$3,700  Monte-Carlo simulationPeriod of expected milestone achievement2022 - 2023
Discount rate24 %
1095 commercialization milestone2,200  Probability adjusted discounted cash flow modelPeriod of expected milestone achievement2026
Probability of success45 %
Discount rate0.48 %
Net sales targets - AZEDRA and 109510,400  Monte-Carlo simulationProbability of success40% - 100%
Discount rate23% - 24%
Total$16,300  
For those financial instruments with significant Level 3 inputs, the following table summarizes the activities for the periods indicated (in thousands):

Financial AssetsFinancial Liabilities
(in thousands)Six Months Ended
June 30, 2020		Six Months Ended
June 30, 2020
Fair value, beginning of period$—  $—  
Progenics acquisition10,100  16,300  
Fair value, end of period$10,100  $16,300  
Changes in unrealized gains (losses) included in earnings$—  $—  
 December 31, 2018
(in thousands)
Total Fair
Value
 Level 1 Level 2 Level 3
Money market$61,391
 $61,391
 $—
 $—
Total$61,391
 $61,391
 $—
 $—
5. Income Taxes
The Company provides for income taxes at the end of each interim period based on the estimated effective tax rate for the full year, adjusted for any discrete events which are recorded in the period they occur. The Company’s effective tax rate in fiscal 20192020 differs from the U.S. federal statutory rate of 21% principally due to the impact of state taxes, non-deductible transaction costs, and the accrual of interest on uncertain tax positions, offset by tax benefits arising from stock compensation deductions, and by the reversal of an uncertain tax position in the third quarter which provided $1.5 million of net tax benefit. The reversal of the uncertain tax position also resulted in an equal reversal of indemnification receivable and, consequently, $1.5 million of expense was recorded to Other expense (income).positions. Cumulative adjustments to the tax provision are recorded in the interim period in which a change in the estimated annual effective tax rate is determined. The Company’s income tax expense is presented below:
           
Three Months Ended
June 30,		Six Months Ended
June 30,
(in thousands)2020201920202019
Income tax expense$309  $1,698  $2,501  $4,513  
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 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(in thousands)2019 2018 2019 2018
Income tax expense$501
 $3,566
 $5,014
 $9,581
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The Company regularly assesses its ability to realize its deferred tax assets. Assessing the realizability of deferred tax assets requires significant management judgment. In determining whether its deferred tax assets are more-likely-than-not realizable, the Company evaluatesevaluated all available positive and negative evidence, and weighsweighed the objective evidence and expected impact. The Company continues to recordhas recorded valuation allowances of $3.0 million against the net deferred tax assets of certain foreign subsidiaries, as well as a valuation allowance of $0.7 million against certain foreignnet state deferred tax assets.assets due to the potential expiration of certain state tax losses and tax credits prior to utilization.
In connection with the Company’s acquisition of the medical imaging business from Bristol MyersBristol-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. ABMS under which BMS agreed to indemnify the Company for any payments made to settle those uncertain tax positions with the taxing authorities. Accordingly, a long-term receivable is recorded to account for the expected value to the Company of future indemnification payments, net of actual tax benefits received.received, to be paid on behalf of the Company by BMS. The tax indemnification receivable is recognizedrecorded within other long-term assets. Changes in the tax indemnification asset are recognized within other income in the condensed consolidated statement of operations.
In accordance with the Company’s accounting policy, the change in the tax liability, penalties and interest associated with these obligations (net of any offsetting federal or state benefit) is recognized within income tax expense. Accordingly, asAs these reserves change, adjustments are included in income tax expense while the offsetting adjustment is included in other income. Assuming that the receivable from BMS continues to be considered recoverable by the Company, there will be no effect on net income and no net cash outflows related to these liabilities.
On June 19, 2020, the Company acquired the stock of Progenics Pharmaceuticals, Inc. in a transaction that is expected to qualify as a tax-deferred reorganization under Section 368 of the Internal Revenue Code of 1986, as amended. The transaction resulted in an ownership change of Progenics under Section 382 and a limitation on the utilization of Progenics’ pre-transaction tax attributes. All pre-transaction research credits and Orphan drug credits have been removed from the balance sheet, and the gross carrying value of the tax loss carryforwards reduced to their realizable value on the opening balance sheet, in accordance with the Section 382 limitation. Significant deferred tax liabilities arising from the purchase accounting basis step-up in identified intangibles were also recorded as part of the purchase accounting, resulting in a small net overall deferred tax liability for Progenics after the application of purchase accounting.
6. Inventory
Inventory consisted of the following:
(in thousands)June 30,
2020		December 31,
2019
Raw materials$15,629  $11,417  
Work in process12,991  9,450  
Finished goods6,714  8,313  
Total inventory$35,334  $29,180  
(in thousands)September 30,
2019		 December 31,
2018
Raw materials$12,168
 $11,100
Work in process8,658
 4,261
Finished goods9,770
 17,658
Total inventory$30,596
 $33,019

7. Property, Plant and Equipment, Net
Property, plant and equipment, net, consisted of the following:
(in thousands)June 30,
2020		December 31,
2019
Land$13,450  $13,450  
Buildings69,643  75,654  
Machinery, equipment and fixtures88,728  87,763  
Computer software20,931  20,739  
Construction in progress15,535  10,546  
208,287  208,152  
Less: accumulated depreciation and amortization(85,384) (91,655) 
Total property, plant and equipment, net$122,903  $116,497  
(in thousands)September 30,
2019		 December 31,
2018
Land$13,450
 $13,450
Buildings65,082
 64,444
Machinery, equipment and fixtures70,904
 69,298
Computer software20,303
 19,266
Construction in progress33,670
 24,169
 203,409
 190,627
Less: accumulated depreciation and amortization(89,878) (82,739)
Total property, plant and equipment, net$113,531
 $107,888
Depreciation and amortization expense related to property, plant and equipment, net, was $2.5$2.7 million and $2.5 million for the three months ended SeptemberJune 30, 2020 and 2019, respectively, and 2018,$5.7 million and $7.5 million and $7.6$5.0 million for the ninesix months ended SeptemberJune 30, 2020 and 2019, respectively.
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The Company tests long-lived assets for recoverability whenever events or changes in circumstances suggest that the carrying value of an asset or group of assets may not be recoverable.  During the three months ended March 31, 2020, as a result of a decline in expected future cash flows and 2018,the effect of COVID-19 related to certain other nuclear legacy manufacturing assets in the U.S. segment, the Company determined certain impairment triggers had occurred. Accordingly, the Company performed an undiscounted cash flow analysis as of March 31, 2020. Based on the undiscounted cash flow analysis, the Company determined that the manufacturing assets had net carrying values that exceeded their estimated undiscounted future cash flows. The Company then estimated the fair values of the asset group based on their discounted cash flows. The carrying value exceeded the fair value and as a result, the Company recorded a non-cash impairment of $7.3 million for the six months ended June 30, 2020 in cost of goods sold in the condensed consolidated statement of operations.
8. Business Combinations
On June 19, 2020, the Company completed the acquisition of Progenics, an oncology company developing innovative medicines and artificial intelligence to find, fight and follow cancer. The acquisition combines the commercialization, supply chain and manufacturing expertise of the Company with the currently commercialized products and R&D pipeline of Progenics. Progenics brings several commercial products and a pipeline of product candidates that will further diversify the Company’s commercial and clinical development portfolios.
Under the terms of the Merger Agreement, the Company acquired all of the issued and outstanding shares of Progenics common stock for a purchase price of $419.0 million by means of an all-stock transaction, which includes Replacement Stock Options for precombination services as well as CVRs.
The CVRs were accounted for as contingent consideration, the fair value of which was determined using a Monte-Carlo simulation. Additionally, the fair value of replacement options related to pre-acquisition services was recorded as a component of consideration transferred. Finally, as a result of the acquisition, Lantheus effectively settled an existing bridge loan with Progenics at the recorded amount (principal and accrued interest) of $10.1 million, representing the effective settlement of a preexisting relationship. This effective settlement of the bridge loan was treated as a component of consideration transferred. The Company determined that the bridge loan was at market terms and no gain or loss was recorded upon settlement.
The acquisition date fair value of the consideration transferred in the acquisition consisted of the following:
(in thousands)Amount
Issuance of common stock$398,110 
Fair value of replacement options7,125 
Fair value of bridge loan settled at close10,074 
Fair value of contingent considerations (CVRs)3,700 
Total consideration transferred(1)
$419,009 
(1)Non-cash investing and financing activities in the condensed consolidated statements of cash flows

The transaction was accounted for as a business combination which requires that assets acquired and liabilities assumed be recognized at their fair value as of the acquisition date. While the Company uses its best estimates and assumptions as part of the purchase price allocation process to value the assets acquired and liabilities assumed on the acquisition date, its estimates and assumptions are subject to refinement. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company’s results of operations. The purchase price allocation is preliminary and is subject to change, including for the valuation and amortization of intangible assets, income taxes and related valuation allowances and certain assets and liabilities among other items. The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the acquisition date. Any potential adjustments made could be material in relation to the preliminary values presented below.
The preliminary fair value of the assets acquired and liabilities assumed were as follows:
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(in thousands)Amount
Cash and cash equivalents$15,421 
Accounts receivable5,787 
Inventory915 
Other current assets3,250 
Property, plant and equipment14,972 
Identifiable intangible assets (weighted average useful life):
Currently marketed product (15 years)142,100 
Licenses (11.5 years)87,500 
Developed technology (9 years)3,000 
IPR&D150,900 
Other long-term assets37,631 
Accounts payable(1,616)
Accrued expenses and other liabilities(8,207)
Other long-term liabilities(30,778)
Long-term debt and other borrowings(40,200)
Deferred tax liabilities(3,717)
Goodwill42,051 
Total consideration transferred$419,009 

Intangible assets acquired consist of currently marketed products, licenses, developed technology and IPR&D. The fair value of the acquired intangible assets was determined based on estimated future revenues, royalty rates and discount rates, among other variables and estimates. The acquired intangible assets subject to amortization were assigned useful lives based on the expected use of the assets and the regulatory and economic environment within which they are being used and are being amortized on a straight-line basis over the respective estimated useful lives. The estimated fair values of the IPR&D assets were determined based on the present values of the expected cash flows to be generated by the respective underlying assets. The Company used a discount rate of 24.0% and cash flows that have been probability adjusted to reflect the risks of product commercialization, which the Company believes are appropriate and representative of market participant assumptions.
As part of the acquisition, the Company acquired the right to receive certain future milestone and royalty payments due to Progenics, related to a prior sale of certain intellectual property. The estimated fair value of the acquired contingent receivable of $10.1 million was determined by applying a probability adjusted discounted cash flow model based on estimated future expected payments and recorded in other long-term assets.
The goodwill recognized is attributable to future technologies that are not separately identifiable that could potentially add to the currently developed and pipeline products and Progenics’ assembled workforce. Future technologies did not meet the criteria for recognition separately from goodwill because they are part of the future development and growth of the business. Goodwill of $42.1 million recognized in connection with the acquisition is not deductible for tax purposes and has not yet been assigned to operating segments.
The Company recognized $7.5 million and $8.9 million of acquisition-related costs, including legal, accounting, compensation arrangements and other related fees that were expensed when incurred in the three and six months ended June 30, 2020, respectively. These costs are recorded in general and administrative expenses in the condensed consolidated statements of operations.
Progenics Pro Forma Financial Information
8.Progenics has been included in the Company’s consolidated financial statements since the acquisition date. Progenics contributed revenues of $1.0 million and a net loss of $3.2 million to the Company’s condensed consolidated statement of operations for the three and six months ended June 30, 2020.
The following unaudited pro forma financial information presents the Company’s results as if the Progenics acquisition had occurred on January 1, 2019:

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Six Months Ended
June 30, 2020		Six Months Ended
June 30, 2019
(in thousands)AmountAmount
Pro forma revenue$167,619  $186,462  
Pro forma net loss18,115  42,901  

The pro forma financial information for all periods presented adjusts for the effects of material business combination items, including amortization of acquired intangible assets, transaction-related costs, adjustments to interest expense related to the assumption of long-term debt, retention and severance bonuses and the corresponding income tax effects of each. These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the operating results of the Company that would have been achieved had the acquisition actually taken place on January 1, 2019. In addition, these results are not intended to be a projection of future results and do not reflect events that may occur after the acquisition, including, but not limited to, revenue enhancements, cost savings or operating synergies that the combined company may achieve as a result of the acquisition.
9. Asset Retirement Obligations
The Company considers its legal obligation to remediate its facilities upon a decommissioning of its radioactive-related operations as an asset retirement obligation. The Company has production facilities which manufacture and process radioactive materials at its North Billerica, Massachusetts and San Juan, Puerto Rico sites. As of June 30, 2020, the liability is measured at the present value of the obligation expected to be incurred, of approximately $26.9 million.
The following table provides a summary of the changes in the Company’s asset retirement obligations:
(in thousands)Amount
Balance at January 1, 2020$12,883 
Accretion expense719 
Balance at June 30, 2020$13,602 
The Company is required to provide the U.S. Nuclear Regulatory Commission and Massachusetts Department of Public Health financial assurance demonstrating the Company’s ability to fund the decommissioning of its North Billerica, Massachusetts production facility upon closure, although the Company does not intend to close the facility. The Company has provided this financial assurance in the form of a $28.2 million surety bond.
The fair value of a liability for asset retirement obligations is recognized in the period in which the liability is incurred. As of September 30, 2019, the liability is measured at the present value
10. Intangibles, Net
Intangibles, net, consisted of the obligationfollowing:
June 30, 2020
(in thousands)Amortization MethodCostAccumulated AmortizationNet
TrademarksStraight-Line$13,540  $(10,683) $2,857  
Customer relationshipsAccelerated98,903  (95,214) 3,689  
Currently marketed productStraight-Line142,100  (289) 141,811  
LicensesStraight-Line87,500  (235) 87,265  
Developed technologyStraight-Line3,000  (10) 2,990  
IPR&DN/A150,900  —  150,900  
   Total$495,943  $(106,431) $389,512  

December 31, 2019
(in thousands)Amortization MethodCostAccumulated AmortizationNet
TrademarksStraight-Line$13,540  $(10,407) $3,133  
Customer relationshipsAccelerated99,019  (94,816) 4,203  
   Total$112,559  $(105,223) $7,336  

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The Company recorded amortization expense for its intangible assets of $0.9 million and $0.5 million for the three months ended June 30, 2020 and 2019, respectively, and $1.3 million and $0.9 million for the six months ended June 30, 2020 and 2019, respectively.
The below table summarizes the estimated aggregate amortization expense expected to be incurred, of approximately $26.9 million, and is adjusted in subsequent periods as accretion expense is recorded. The corresponding asset retirement costs are capitalized as part ofrecognized on the carrying values of the related long-lived assets and depreciated over the assets’ useful lives.above intangible assets:
The following table provides a summary of the changes in the Company’s asset retirement obligations:
(in thousands)Amount
2020$9,534  
202118,813  
202218,684  
202318,074  
202417,998  
2025 and thereafter155,509  
   Total$238,612  
(in thousands)Amount
Balance at January 1, 2019$11,572
Revisions in estimated cash flows20
Accretion expense968
Balance at September 30, 2019$12,560
9.11. Long-Term Debt, Net, and Other Borrowings
In June 2019, the Company refinanced its previous $275 million five-year term loan agreement (the “2017 Term Facility”) with a new five-year $200 million term loan facility (the “2019 Term Facility” and the loans thereunder, the “2019 Term Loans”). In addition, the Company replaced its previous $75 million five-year revolving credit facility (the “2017 Revolving Facility”) with a new $200 million 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 asAs of June 27, 2019 (the “2019 Credit Agreement”), by and among Holdings, the Company, the lenders from time to time party thereto and Wells Fargo Bank, N.A., as administrative agent and collateral agent. The Company has 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 million, plus additional amounts, in certain circumstances.
The net proceeds of the 2019 Term Facility, together with approximately $73 million of cash on hand, were used to refinance in full the aggregate remaining principal amount of the loans outstanding under the 2017 Term Facility and pay related interest, transaction fees and expenses. No amounts were outstanding under the 2017 Revolving Facility at that time. The Company accounted

for the refinancing of the 2017 Term Facility as a debt extinguishment and the 2017 Revolving Facility as a debt modification by evaluating the refinancing on a creditor by creditor basis. The Company recorded a loss on extinguishment of debt of $3.2 million related to the write-off of unamortized debt issuance costs and debt discounts. In addition, the Company incurred and capitalized $2.8 million of new debt issuance costs and debt discounts related to the refinancing.
2019 Term Facility
The Term Loans under the 2019 Term Facility bear interest, with pricing based from time to time at the Company’s election at (i) LIBOR plus a spread ranging from 1.25% to 2.25% as determined by the Company’s total net leverage ratio (as defined in the 2019 Credit Agreement) or (ii) the Base Rate (as defined in the 2019 Credit Agreement) plus a spread ranging from 0.25% to 1.25% as determined by the Company’s total net leverage ratio. The use of the LIBOR is expected to be phased out by the end of 2021. The 2019 Credit Agreement allows for a replacement interest rate in the event the LIBOR is phased out. At September 30, 2019, the Company’s interest rate under the 2019 Term Facility was 3.79%.
The Company is permitted to voluntarily prepay the 2019 Term Loans, in whole or in part, without premium or penalty. The 2019 Term Facility requires the Company to make mandatory prepayments of the outstanding 2019 Term Loans in certain circumstances. The Term loan matures in June 2024.
As of September 30, 2019,2020, the Company’s maturities of principal obligations under its long-term debt and other borrowings are as follows:
(in thousands)Amount
Remainder of 2020$8,607  
202121,927  
202230,643  
202315,972  
2024148,750  
Total principal outstanding225,899  
Unamortized debt premium1,566  
Unamortized debt issuance costs(687) 
Finance lease liabilities375  
Total227,153  
Less: current portion(17,143) 
Total long-term debt, net and other borrowings$210,010  
(in thousands)Amount
Remainder of 2019$2,500
202010,000
202110,000
202211,250
202315,000
2024148,750
Total principal outstanding197,500
Unamortized debt discount(512)
Unamortized debt issuance costs(816)
Finance lease liabilities367
Total196,539
Less: current portion(10,166)
Total long-term debt, net and other borrowings$186,373

2019 Revolving Facility
UnderAt June 30, 2020, the terms of the 2019 Revolving Facility, the lenders thereunder agreed to extend credit to the Company from time to time until June 27, 2024 consisting of revolving loans (the “Revolving Loans” and, together with the Term Loans, the “Loans”) in an aggregate principal amount not to exceed $200 million (the “Revolving Commitment”) at any time outstanding. The 2019 Revolving Facility includes a $20 million sub-facility for the issuance of letters of credit (the “Letters of Credit”). The 2019 Revolving Facility includes a $10 million sub-facility for swingline loans (the “Swingline Loans”). The Letters of Credit, Swingline Loans and the borrowingsCompany’s interest rate under the 2019 RevolvingTerm Facility are expectedwas 3.4%.
On June 19, 2020, the Company amended its 2019 Credit Agreement (“the Amendment”) as a result of the impact of the COVID-19 pandemic on the business and operations of the Company and the near-term higher level of indebtedness resulting from the Company’s decision not to be usedimmediately repay the Progenics debt secured by the RELISTOR royalties following the Company’s acquisition of Progenics. The Company accounted for working capitalthe Amendment as a debt modification and other general corporate purposes.capitalized $1.2 million of associated costs.
The Revolving Loans underAmendment provides for, among other things, modifications to LMI’s financial maintenance covenants. The covenant related to Total Net Leverage Ratio (as defined in the 2019 Revolving Facility bear interest, with pricing basedAmended Credit Agreement) has been waived from time to time at the Company’s election at (i) LIBOR plus a spread ranging from 1.25% to 2.25% as determined bydate of the Company’sAmendment through December 31, 2020. The maximum total net leverage ratio or (ii) the Base Rate plus a spread ranging from 0.25% to 1.25% as determined by the Company’s total net leverage ratio. The 2019 Revolving Facility also includes a commitment fee, which ranges from 0.15% to 0.30% as determined by the Company’s total net leverage ratio.
The Company is permitted to voluntarily prepay the Revolving Loans, in whole or in part, or reduce or terminate the Revolving Commitment, in each case, without premium or penalty. On any business day on which the total amount of outstanding Revolving Loans and Letters of Credit exceeds the total Revolving Commitment, the Company must prepay the Revolving Loans in an amount equal to such excess. As of September 30, 2019, there were no outstanding borrowings under the 2019 Revolving Facility.
2019 Facility Covenants
The 2019 Facility contains a number of affirmative, negative, reporting and financial covenants, in each case subject to certain exceptions and materiality thresholds. The 2019 Facility requires the Company to be in quarterly compliance, measured on a trailing

four quarter basis, with two financial covenants. The minimum interest coverage ratio, commencing with the fiscal quarter ending September 30, 2019, must be at least 3.00 to 1.00. The maximum total net leverage ratio permitted by the financial covenant is displayed in the table below:
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2019 Facility Financial Covenant2020 Amended Credit Agreement
PeriodTotal Net Leverage Ratio
Q4 2019 to Q2 2020Q1 20214.005.50 to 1.00
Q3 2020 to Q2 20213.75 to 1.00
Thereafter3.50 to 1.00
PeriodInterest Coverage Ratio
Q2 2020 to Q1 20212.00 to 1.00
Thereafter3.00 to 1.00
The Company may elect to increase the maximum total net leverage ratio by 0.50 to 1.00 (subject toAmendment also introduces a maximum of 4.25 to 1.00) up to two separate times during the term of the 2019 Facility in connection with any Material Acquisitionnew financial covenant requiring Consolidated Liquidity (as defined in the Amended Credit Agreement) to be no less than $150.0 million. The Consolidated Liquidity covenant is tested on a continuing basis beginning on the date of the Amendment and ending on the date on which LMI delivers a compliance certificate for the fiscal quarter ending March 31, 2021.
For the period beginning on the date of the Amendment and ending on the Adjustment Date (as defined in the Amended Credit Agreement) for the fiscal quarter ending March 31, 2021, loans under the Amended Credit Agreement bear interest at LIBOR plus 3.25% or the Base Rate plus 2.25%. On and after the Adjustment Date for the fiscal quarter ending on March 31, 2021, loans bear interest at LIBOR plus a spread that ranges from 1.50% to 3.00% or the Base Rate plus a spread that ranges from 0.50% to 2.00%, in each case based on LMI’s Total Net Leverage Ratio.
The 2019commitment fee applicable to the Revolving Facility contains usualis 0.50% until the Adjustment Date for the fiscal quarter ending March 31, 2021. On and customary restrictionsafter the Adjustment Date for the fiscal quarter ending on March 31, 2021, the abilitycommitment fee ranges from 0.15% to 0.40% based on LMI’s Total Net Leverage Ratio.
On June 19, 2020, as a result of the acquisition, the Company and its subsidiaries to: (i) incur additional indebtedness (ii) create liens; (iii) consolidate, merge, sellassumed Progenics outstanding debt as of such date in the amount of $40.2 million. Progenics, through a wholly-owned subsidiary MNTX Royalties Sub LLC (“MNTX Royalties”), entered into a $50.0 million loan agreement (the “Royalty-Backed Loan”) with a fund managed by HealthCare Royalty Partners III, L.P. (“HCRP”) on November 4, 2016. Under the terms of the Royalty-Backed Loan, the lenders have no recourse to Progenics or otherwise dispose of all or substantially allany of its assets; (iv) sell certain assets; (v) pay dividends on, repurchase or make distributions in respect of capital stock or makeassets other restricted payments; (vi) make certain investments; (vii) repay subordinated indebtedness prior to stated maturity; and (viii) enter into certain transactions with its affiliates.
Upon an event of default, the administrative agent under the Credit Agreement will havethan the right to declarereceive royalty payments from the Loanscommercial sales of RELISTOR products owed under Progenics’ license agreement with Salix Pharmaceuticals, Inc., a wholly-owned subsidiary of Bausch Health Companies Inc. (“Bausch”). The RELISTOR royalty payments will be used to repay the principal and other obligations outstanding immediately dueinterest on the loan. The Royalty-Backed Loan bears interest at a per annum rate of 9.5% and payablematures on June 30, 2025. On June 22, 2020, HCRP waived the automatic acceleration of the Royalty-Backed Loan that otherwise would have been triggered by the consummation of the Progenics Transaction and all commitments immediately terminated or reduced.MNTX Royalties agreed not to prepay the loan until after December 31, 2020.
The 2019 Facility is guaranteedUnder the terms of the loan agreement, payments of interest and principal, if any, are made on the last day of each calendar quarter out of RELISTOR royalty payments received since the immediately-preceding payment date. On each payment date, 50% of RELISTOR royalty payments received since the immediately-preceding payment date in excess of accrued interest on the loan are used to repay the principal of the loan, with the balance retained by Holdings and Lantheus MI Real Estate, LLC, and obligations under the 2019 Facility are generally secured by first priority liens over substantiallyCompany. Starting on September 30, 2021, all of the assetsRELISTOR royalties received since the immediately-preceding payment date will be used to repay the interest and outstanding principal balance until the balance is fully repaid.
12. Derivative Instruments
The Company uses interest rate swaps to reduce the variability in cash flows associated with a portion of eachthe Company’s forecasted interest payments on its variable rate debt. In March 2020, the Company entered into interest rate swap contracts to fix the LIBOR rate on a notional amount of LMI, Holdings$100.0 million through May 31, 2024. This agreement involves the receipt of floating rate amounts in exchange for fixed rate interest payments over the life of the agreement without an exchange of the underlying principal amount. The interest rate swaps were designated as cash flow hedges. In accordance with hedge accounting, the interest rate swaps are recorded on the Company’s condensed consolidated balance sheets at fair value, and Lantheus MI Real Estate, LLC (subject to customary exclusions set forthchanges 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 documents) owned asaffected earnings or it will become probable that the forecasted transaction would not occur. At June 30, 2020, accumulated other comprehensive loss included $0.6 million of pre-tax deferred losses that are expected to be reclassified to earnings during the next 12 months.
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The following table presents the location and fair value amounts of derivative instruments reported in the condensed consolidated balance sheet:
(in thousands)June 30, 2020December 31, 2019
Derivatives typeClassification
Liabilities:
   Interest rate swapAccrued expenses and other liabilities$1,953 $— 
13. Accumulated Other Comprehensive Loss
The components of Accumulated Other Comprehensive Loss, net of tax of $0.5 million and $0.0 million for the six months ended June 27,30, 2020 and June 30, 2019, or thereafter acquired.respectively, consisted of the following:
(in thousands)Foreign currency translationUnrealized loss on cash flow hedgesAccumulated other comprehensive loss
Balance at January 1, 2020$(960) $—  $(960) 
Other comprehensive loss before reclassifications(194) (1,528) (1,722) 
Amounts reclassified to earnings—  76  76  
Balance at June 30, 2020$(1,154) $(1,452) $(2,606) 
Balance at January 1, 2019$(1,108) $—  $(1,108) 
Other comprehensive income before reclassifications144  —  144  
Amounts reclassified to earnings—  —  —  
Balance at June 30, 2019$(964) $—  $(964) 
10.
14. Stock-Based Compensation
The following table presents stock-based compensation expense recognized in the Company’s accompanying condensed consolidated statements of operations:
          
Three Months Ended
June 30,		Six Months Ended
June 30,
(in thousands)2020201920202019
Cost of goods sold$645  $531  $1,263  $971  
Sales and marketing394  508  647  959  
General and administrative1,994  1,881  3,809  3,455  
Research and development352  438  741  693  
Total stock-based compensation expense$3,385  $3,358  $6,460  $6,078  
19
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(in thousands)2019 2018 2019 2018
Cost of goods sold$568
 $322
 $1,539
 $812
Sales and marketing518
 193
 1,477
 892
General and administrative1,948
 1,540
 5,403
 3,741
Research and development389
 352
 1,082
 974
Total stock-based compensation expense$3,423
 $2,407
 $9,501
 $6,419
11. Leases
AdoptionTable of ASC Topic 842, “Leases”
The Company adopted ASC 842 on January 1, 2019, using the prospective approach which provides a method for recording existing leases at adoption using the effective date of the standard as its initial application date. ASC 842 generally requires all leases to be recognized on the balance sheet. In addition, the Company elected the relief package of practical expedients permitted under the transition guidance within the new standard, which, among other things, allowed the Company not to reassess whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases and initial direct costs for any existing leases. The reported results for 2019 reflect the application of ASC 842 guidance while the reported results for 2018 were prepared under the guidance of ASC 840, Leases. The adoption of ASC 842 resulted in the recording of an additional lease asset and lease liability of approximately $1.1 million as of January 1, 2019. ASC 842 did not materially impact the Company’s condensed consolidated results of operations, equity or cash flows as of the adoption date or for the periods presented.

Leases
The Company determines if an arrangement is a lease at inception. The Company has operating and finance leases for vehicles, corporate offices and certain equipment.
Operating lease right-of-use (“ROU”) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. Lease agreements with lease and non-lease components are accounted for separately. As the Company’s leases do not provide an implicit rate, the Company used the incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.
Leases with an initial term of 12 months or less are not recorded on the balance sheet as the Company has elected to apply the short-term lease exemption. The Company recognizes lease expense for these leases on a straight-line basis over the lease term.
Operating and finance lease assets and liabilities are as follows:
Contents
(in thousands)ClassificationSeptember 30, 2019
Assets  
OperatingOther long-term assets$979
FinanceProperty, plant and equipment, net391
Total leased assets $1,370
Liabilities  
Current                      
     OperatingAccrued expenses and other liabilities$190
     FinanceCurrent portion of long-term debt and other borrowings166
Noncurrent  
     OperatingOther long-term liabilities862
     FinanceLong-term debt, net and other borrowings201
Total leased liabilities $1,419
The components of lease expense were as follows:
(in thousands)Three Months Ended
September 30, 2019		 Nine Months Ended
September 30, 2019
Operating lease expense$55
 $167
Finance lease expense   
      Amortization of ROU assets47
 106
      Interest on lease liabilities4
 7
Short-term lease expense23
 68
Total lease expense$129
 $348

Other information related to leases were as follows:
September 30, 2019
Weighted-average remaining lease term (Years):
      Operating leases5.0
      Finance leases2.6
Weighted-average discount rate:
      Operating leases5.1%
      Finance leases5.5%
(in thousands)Nine Months Ended
September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
      Operating cash flows from operating leases171
      Operating cash flows from finance leases7
      Financing cash flows from finance leases134
ROU assets obtained in exchange for lease obligations:
      Operating leases—
      Finance leases361
Future minimum lease payments under non-cancellable leases as of September 30, 2019 were as follows:
(in thousands)Operating Leases Finance Leases
Remainder of 2019$59
 $36
2020238
 151
2021238
 130
2022238
 78
2023238
 —
Thereafter178
 —
  Total future minimum lease payments1,189
 395
Less: interest137
 28
  Total$1,052
 $367

12.15. Net (Loss) Income Per Common Share
A summary of net (loss) income per common share is presented below:
Three Months Ended
June 30,		Six Months Ended
June 30,
(in thousands, except per share amounts)2020201920202019
Net (loss) income$(7,012) $6,412  $(3,675) $16,361  
Basic weighted-average common shares outstanding43,135  38,972  41,284  38,789  
Effect of dilutive stock options—  98  —  80  
Effect of dilutive restricted stock—  1,169  —  1,195  
Diluted weighted-average common shares outstanding43,135  40,239  41,284  40,064  
Basic (loss) income per common share$(0.16) $0.16  $(0.09) $0.42  
Diluted (loss) income per common share$(0.16) $0.16  $(0.09) $0.41  
Antidilutive securities excluded from diluted net income per common share1,649  31  1,517  55  
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(in thousands, except per share amounts)2019 2018 2019 2018
Net income$4,856
 $9,269
 $21,217
 $27,225
        
Basic weighted-average common shares outstanding39,123
 38,342
 38,901
 38,155
Effect of dilutive stock options85
 31
 82
 70
Effect of dilutive restricted stock1,078
 1,029
 1,140
 1,242
Diluted weighted-average common shares outstanding40,286
 39,402
 40,123
 39,467
        
Basic income per common share$0.12
 $0.24
 $0.55
 $0.71
Diluted income per common share$0.12
 $0.24
 $0.53
 $0.69
        
Antidilutive securities excluded from diluted net income per common share48
 355
 44
 346
13.16. Other Income
Other income consisted of the following:
Three Months Ended
June 30,		Six Months Ended
June 30,
(in thousands)2020201920202019
Foreign currency (losses) gains$94  $47  $(220) $89  
Tax indemnification income, net554  802  1,109  1,604  
Interest income105  276  214  559  
Other3  187  3  247  
Total other income$756  $1,312  $1,106  $2,499  
17. Commitments and Contingencies
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(in thousands)2019 2018 2019 2018
Foreign currency (losses) gains$(96) $89
 $(7) $(198)
Tax indemnification (expense) income(762) 692
 842
 2,220
Interest income54
 18
 613
 33
Other—
 —
 247
 —
Total other (expense) income$(804) $799
 $1,695
 $2,055
14. Legal Proceedings and Contingencies
From time to time, the Company is a party to various legal proceedings arising in the ordinary course of business. In addition, the Company has in the past been, and may in the future be, subject to investigations by governmental and regulatory authorities, which expose it to greater risks associated with litigation, regulatory or other proceedings, as a result of which the Company could be required to pay significant fines or penalties. The costs and outcome of litigation, regulatory or other proceedings cannot be predicted with certainty. Somecertainty, and some lawsuits, claims, actions or proceedings may be disposed of unfavorably to the Company and could have a material adverse effect on the Company’s results of operations or financial condition. In addition, intellectual property disputes often have a risk of injunctive relief which, if imposed against the Company, could materially and adversely affect its financial condition or results of operations.
The If a matter is both probable to result in material liability and the amount of loss can be reasonably estimated, the Company recently was awarded damagesestimates and discloses the possible material loss or range of loss. If such loss is not probable or cannot be reasonably estimated, a liability is not recorded in its arbitration with Pharmalucence in connection with a Manufacturing and Supply Agreement dated November 12, 2013, under which Pharmalucence agreed to manufacture and supply DEFINITY for the Company. The commercial arrangement contemplated by that agreement was repeatedly delayed and ultimately never successfully realized. After extended settlement discussions between Sun Pharma, the ultimate parent of Pharmalucence, and the Company, which did not lead to a mutually acceptable outcome, on November 10, 2017, the Company filed an arbitration demand (and later an amended arbitration demand) with the American Arbitration Association against Pharmalucence, alleging breach of contract, breach of the covenant of good faith and fair dealing, tortious misrepresentation and violation of the Massachusetts Consumer Protection Law, also known as Chapter 93A. In October 2019, the Company was awarded a total of approximately $3.5 million, consisting of damages, pre-judgment interest, and certain arbitration fees, compensation and expenses. Pharmalucence has filed a motion to reduce the award to $2.3 million (to correct for a purported “computational error”). The Company will record thecondensed consolidated financial statement impact of the arbitration award when the proceeds are received.statements.

As of SeptemberJune 30, 2019, except as disclosed above2020, the Company had nothe following material ongoing litigation in which the Company was a party. party:
RELISTOR Subcutaneous Injection
Between November 19, 2015 and September 18, 2017, Progenics, Salix, Valeant (now Bausch) and Wyeth filed multiple lawsuits against Mylan Pharmaceuticals and certain of its affiliates (collectively, “Mylan”) in the United States District Court for the District of New Jersey for infringement of certain U.S. patents based upon Mylan’s filing of multiple ANDAs seeking to obtain approval to market a generic version of RELISTOR subcutaneous injection before some or all of those patents expire. These actions were later consolidated into two separate actions in the District of New Jersey.
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On May 1, 2018, in the lead action, the Court granted Plaintiffs’ motion for partial summary judgment as to the validity of a particular claim that Mylan had admitted it infringed. On May 23, 2018, the Court entered an order for final judgment in favor of Plaintiffs and against Mylan on that particular claim. As a result, trial on the merits in the lead action was adjourned, allowing trial, if necessary, to be consolidated with the lagging, second action. Fact discovery has concluded in the lagging case, but deadlines for expert discovery have not yet been set.
On May 25, 2018, Mylan filed a Notice of Appeal to the United States Court of Appeals for the Federal Circuit (“CAFC”). On April 8, 2020, the CAFC issued its decision reversing the Court’s grant of summary judgment and remanding for further proceedings. On June 22, 2020, Plaintiffs filed a petition for rehearing/rehearing en banc, and on July 24, 2020 that petition was denied.
RELISTOR Tablets - Actavis
Between December 6, 2016 and December 8, 2017, Progenics, Salix, Bausch, and Wyeth filed suit against Actavis, Actavis LLC, Teva Pharmaceuticals USA, Inc., and Teva Pharmaceuticals Industries Ltd. (collectively, “Actavis”) in the United States District Court for the District of New Jersey for infringement of certain U.S. patents based upon Actavis’s filing of an ANDA seeking to obtain approval to market a generic version of RELISTOR tablets before some or all of those patents expire. The actions were later consolidated into a single action in the District of New Jersey.
On May 6-9, 2019, a bench trial was held, and on July 17, 2019, the Court issued an Order finding the asserted claims of a certain U.S. patent valid and infringed. The Court additionally ordered that the effective date of any approval of Actavis’s ANDA may not be earlier than the expiration date of that patent. Actavis filed an appeal of the Court’s decision with the CAFC on August 13, 2019. The matter is currently pending on appeal at the CAFC and merits briefing is underway. Actavis’s opening brief was filed February 6, 2020. The deadline for Plaintiffs to file their responsive brief is currently September 15, 2020.
On June 13, 2019, Progenics, Salix, Bausch, and Wyeth filed another suit against Actavis in the United States District Court for the District of New Jersey for infringement of a separate, and at that time, recently granted U.S. patent based upon Actavis’s filing of an ANDA seeking to obtain approval to market a generic version of RELISTOR tablets before this patent expires. Litigation in this action is underway, and fact discovery has not yet begun.
RELISTOR European Opposition Proceedings
In addition to the above described ANDA notifications, in October 2015, Progenics received notices of opposition to three European patents relating to methylnaltrexone. Notices of opposition were filed separately by each of Actavis Group PTC ehf and Fresenius Kabi Deutschland GmbH. Between May 11, 2017 and July 4, 2017, the opposition division provided notice that the three European patents would be revoked. Each of these matters are on appeal with the European Patent Office. Oral proceedings are set to occur on September 22, 2020, November 17, 2020 and November 18, 2020. For each of the above-described RELISTOR proceedings, Progenics and Bausch continue to cooperate closely to vigorously defend and enforce RELISTOR intellectual property rights. Pursuant to the RELISTOR license agreement between Progenics and Bausch, Bausch has the first right to enforce the intellectual property rights at issue and is responsible for the costs of such enforcement. Because the outcome of litigation is uncertain and in these RELISTOR proceedings the Company haddoes not control the enforcement of the intellectual property rights at issue, no material ongoing regulatoryassurance can be given as to how or otherwhen any of these RELISTOR proceedings will ultimately be resolved.
German PSMA-617 Litigation
On November 8, 2018, Molecular Insight Pharmaceuticals, Inc., a subsidiary of Progenics (“MIP”), filed a complaint against the University of Heidelberg (the “University”) in the District Court of Mannheim in Germany. In this Complaint, MIP claimed that the discovery and no knowledgedevelopment of any investigationsPSMA-617 was related to work performed under a research collaboration sponsored by governmentMIP. MIP alleged that the University breached certain contracts with MIP and that MIP is the co-owner of inventions embodied in certain worldwide patent filings related to PSMA-617 that were filed by the University in its own name. On February 27, 2019, Endocyte, Inc., a wholly owned subsidiary of Novartis AG, filed a motion to intervene in the German litigation. Endocyte is the exclusive licensee of the patent rights that are the subject of the German proceedings.
On November 27, 2018, MIP requested that the European Patent Office (“EPO”) stay the examination of a certain European Patent (EP) and related Divisional Applications, pending a decision from the German District Court on MIP’s Complaint. On December 10, 2018, the EPO granted MIP’s request and stayed the examination of the patent and patent applications effective November 27, 2018. MIP filed a Confirmation of Ownership with the United States Patent and Trademark Office (“USPTO”) in the corresponding US patent applications. MIP’s filing with the USPTO takes the position that, in light of the collaboration and contracts between MIP and the University, MIP is the co-owner of these pending U.S. patent applications. On March 6, 2020, MIP filed with the USPTO a notice stating that the Power of Attorney in certain pending US patent applications was signed by less than all applicants or regulatory authoritiesowners of the applications.
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On February 27, 2019, the German District Court set €0.4 million as the amount MIP must deposit with the Court as security in the event of an unfavorable final decision on the merits of the dispute. The Court held the first oral hearing in the case on August 6, 2019. The Court considered procedural matters and granted the parties the right to make further submissions. A further oral hearing occurred July 23, 2020, during which the CompanyCourt heard live testimony from several witnesses.
Progenics is a target,vigorously enforcing its rights in either case,this German proceeding. Because Progenics is the plaintiff, if unsuccessful in this proceeding, Progenics may also have liability for Court fees and fees and disbursements of defendant’s and intervenor’s counsel, such fees and disbursements to be at least partially covered by the aforementioned cash security deposited with the Court. Because the outcome of litigation is uncertain, no assurance can be given as to how or when this German proceeding will ultimately be resolved.
Litigation Related to the Merger
Nine purported stockholders of Progenics filed ten lawsuits alleging, among other things, that Progenics and the members of the Progenics Board of Directors violated Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 17 C.F.R. § 244.100 and Rule 14a-9 promulgated under the Exchange Act, by misstating or omitting certain allegedly material information in the S-4 Registration Statement filed with the Securities and Exchange Commission (“SEC”) on November 12, 2019, the amended S-4 Registration Statement filed with the SEC on March 16, 2020, and/or the Schedule 14A proxy statement filed with the SEC on March 19, 2020 related to the Merger. Two of the actions alleged that the Company and Plato Merger Sub, Inc. (“Merger Sub”) violated Section 14(a) and/or Section 20(a) of the Exchange Act. One of the actions further alleged that the members of the Progenics Board breached their fiduciary duties of care, loyalty and good faith to the stockholders of Progenics related to the Merger, that Progenics, the Company and Merger Sub aided and abetted such breaches of fiduciary duty, and that the Company and Merger Sub violated Section 14(a) of the Exchange Act. All such lawsuits have been voluntarily dismissed, with the last of the cases dismissed on June 23, 2020.
Whistleblower Complaint
In July 2019, Progenics received notification of a complaint submitted by Dr. Syed Mahmood, the former Vice President of Medical Affairs for Progenics, to the Occupational Safety and Health Administration of the United States Department of Labor (“DOL”), alleging that the termination of his employment by Progenics was in violation of Section 806 of the Sarbanes-Oxley Act of 2002 (“SOX”). Dr. Mahmood sought reinstatement to his former position of Vice President of Medical Affairs, back pay, front pay in lieu of reinstatement, interest, attorneys’ fees and costs incurred, and special damages. In March 2020, Dr. Mahmood filed a complaint in the U.S. District Court for the Southern District of New York (as permitted by SOX because the DOL had not issued a decision within 180 days). Dr. Mahmood’s federal complaint asserts claims of violation of Section 806 of SOX. The DOL action has been dismissed and the matter will proceed in federal district court. Progenics’ Answer to the Complaint is presently due by August 26, 2020.
The Company believes could have a materialthe claims in this matter are without merit, and adverse effect on its current business.the Company has meritorious defenses to the claims. The Company intends to vigorously defend against the claims.
The Company is unable to estimate the potential liability with respect to the legal matters noted above. There are numerous factors that make it difficult to estimate reasonably possible loss or range of loss at the various stages of the legal proceedings noted above, including the significant number of legal and factual issues still to be resolved in those various legal proceedings.
15.
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18. Segment Information
The Company reports two2 operating segments, U.S. and International, based on geographic customer base. The results of these operating segments are regularly reviewed by the Company’s chief operating decision maker, the President and Chief Executive Officer. The Company’s segments derive revenues through the manufacture, marketing, selling and distribution of medical imaging products, focused primarily on cardiovascularinnovative diagnostic imaging.and therapeutic agents and products. All goodwill has been allocated to the U.S. operating segment.segment, except for the goodwill recognized in connection with the Progenics acquisition which has not yet been assigned to operating segments. The Company does not identify or allocate assets to its segments.
Selected information regarding the Company’s segments is provided as follows:
Three Months Ended
June 30,		Six Months Ended
June 30,
(in thousands)2020201920202019
Revenue by product from external customers
U.S.
  DEFINITY$39,544  $53,466  $94,554  $103,182  
  TechneLite15,591  16,865  34,947  36,923  
  Other nuclear5,804  9,127  14,866  18,651  
  Rebates and allowances(3,540) (4,268) (8,223) (8,132) 
Total U.S. Revenues57,399  75,190  136,144  150,624  
International
  DEFINITY821  1,163  2,602  2,558  
  TechneLite3,318  3,241  7,060  7,328  
  Other nuclear4,473  6,119  10,911  11,715  
  Rebates and allowances(1) (8) (3) (10) 
Total International Revenues8,611  10,515  20,570  21,591  
Worldwide
  DEFINITY40,365  54,629  97,156  105,740  
  TechneLite18,909  20,106  42,007  44,251  
  Other nuclear10,277  15,246  25,777  30,366  
  Rebates and allowances(3,541) (4,276) (8,226) (8,142) 
Total Revenues$66,010  $85,705  $156,714  $172,215  
Three Months Ended
June 30,		Six Months Ended
June 30,
(in thousands)2020201920202019
Operating (loss) income
U.S.$(6,001) $12,689  $(1,013) $27,273  
International456  1,848  2,593  3,433  
Total operating (loss) income(5,545) 14,537  1,580  30,706  
Interest expense1,914  4,543  3,860  9,135  
Loss on extinguishment of debt—  3,196  —  3,196  
Other income(756) (1,312) (1,106) (2,499) 
(Loss) income before income taxes$(6,703) $8,110  $(1,174) $20,874  
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 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(in thousands)2019 2018 2019 2018
Revenues from external customers       
U.S.$74,650
 $70,255
 $225,274
 $215,829
International11,126
 18,645
 32,717
 41,274
Total revenues from external customers$85,776
 $88,900
 $257,991
 $257,103
Operating income       
U.S.$6,389
 $12,897
 $33,662
 $41,345
International2,128
 3,585
 5,561
 6,200
Total operating income8,517
 16,482
 39,223
 47,545
Interest expense2,356
 4,446
 11,491
 12,794
Loss on extinguishment of debt—
 —
 3,196
 —
Other expense (income)804
 (799) (1,695) (2,055)
Income before income taxes$5,357
 $12,835
 $26,231
 $36,806

16. Subsequent Event
On October 1, 2019, the Company entered into a definitive Merger Agreement (the “Merger Agreement”) to acquire Progenics Pharmaceuticals, Inc. (NASDAQ: PGNX) (“Progenics”) in an all-stock transaction (the “Progenics Transaction”). Progenics is an oncology company developing innovative medicines and artificial intelligence to find, fight and follow cancer. Under the termsTable of the Merger Agreement, the Company will acquire all of the issued and outstanding shares of Progenics common stock at a fixed exchange ratio. Progenics shareholders will receive 0.2502 shares of the Company’s common stock for each share of Progenics common stock, representing an approximately 35% aggregate ownership stake in the combined company. The exchange ratio implies a 21.5% premium to Progenics’ 30-day volume weighted-average closing stock price as of October 1, 2019. The transaction was unanimously approved by the Boards of Directors of both companies and is subject to the terms and conditions set forth in the Merger Agreement, including, among other things, the affirmative vote of a majority of the outstanding shares of common stock of Progenics and a majority of votes cast by the holders of the common stock of the Company, and the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), which has been obtained by grant of early termination of the HSR Act waiting period on October 25, 2019.  The transaction is expected to close in the first quarter of 2020. Upon completion of the acquisition, which is intended to be tax-free to Progenics’ stockholders for U.S. federal income tax purposes, the combined company will continue to be headquartered in North Billerica, Massachusetts and will trade on the NASDAQ under the ticker symbol LNTH. See the Company’s Current Report on the Form 8-K dated October 1, 2019 for further information regarding the Merger Agreement and the proposed Progenics acquisition.Contents
See Note 14, “Legal Proceedings and Contingencies” for further discussion on the Pharmalucence arbitration.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Note Regarding Forward-Looking Statements
Some of the statements contained in this Quarterly Report on Form 10-Q are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements, including, in particular, statements about our plans, strategies, prospects and industry estimates are subject to risks and uncertainties. These statements identify prospective information and include words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “should,” “could,” “predicts,” “hopes” and similar expressions. Examples of forward-looking statements include statements we make relating to our outlook and expectations including, without limitation, in connection with: (i) the impact of the global COVID-19 pandemic on our business, financial conditions or prospects; (ii) continued market expansion and penetration for our commercial products, particularly DEFINITY, in the face of segment competition and potential generic competition as a result of patent and regulatory exclusivity expirations; (ii)(iii)  the global Molybdenum-99 (“Moly”Mo-99”) supply; (iii)(iv) our products manufactured at Jubilant HollisterStier (“JHS”); (iv)(v) our efforts in new product development;development, including for PyL, the Progenics prostate cancer diagnostic imaging agent, and (v)new clinical applications for our proposed acquisitionproducts; (vi) the integration of the Progenics product and product candidate portfolio following the consummation of the Progenics transaction (the “Progenics Transaction”) of Progenics Pharmaceuticals, Inc (“Progenics”).; (vii) our capacity to use in-house manufacturing; and (viii) our ability to commercialize our products in new ex-U.S. markets. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, such statements are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. These statements are neither statements of historical fact nor guarantees or assurances of future performance. The matters referred to in the forward-looking statements contained in this Quarterly Report on Form 10-Q may not in fact occur. We caution you, therefore, against relying on any of these forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions and the following:
•The impact of the global COVID-19 pandemic on our business, financial condition or prospects, including a decline in the volume of procedures and treatments using our products, potential delays and disruptions to global supply chains, manufacturing activities, logistics, operations, clinical development programs, employees and contractors, the business activities of our suppliers, distributors, customers and other business partners, as well as the effects on worldwide economies, financial markets, social institutions, labor markets and healthcare systems;
•Our ability to continue to grow the appropriate use of DEFINITY in suboptimal echocardiograms in the face of segment competition from other echocardiography contrast agents, including Optison from GE Healthcare Limited (“GE Healthcare”) and Lumason from Bracco Diagnostics Inc. (“Bracco”), and potential generic competition as a result of patent and regulatory exclusivity expirations;
•The instability of the global MolyMo-99 supply, including (i) periodic outages at the NTP Radioisotopes (“NTP”) processing facility in South Africa in 2017, 2018 and 2019, and (ii) an on-going outagea recently resolved production volume limitations at the Australian Nuclear Science and Technology Organisation’s (“ANSTO”) new MolyMo-99 processing facility in Australia, in each case resulting in our inability to fill some or all of the demand for our TechneLite generators on certain manufacturing days during the outage periods;
•Our dependence upon third parties for the manufacture and supply of a substantial portion of our products, raw materials and components, including DEFINITY at JHS;
•Risks related to the integration of the Progenics Transaction, including:
•The integration of the Progenics Transaction may involve unexpected costs, liabilities or delays;
•The ability of our combined business to retain and hire key personnel and maintain relationships with customers, suppliers and others with whom we or Progenics do business,
•Unanticipated risks to our integration plan including in connection with timing, talent, and the potential need for additional resources;
•New or previously unidentified manufacturing, regulatory, or research and development issues in the Progenics business;
•Risks that the anticipated benefits of the Progenics Transaction or other commercial opportunities may otherwise not be fully realized or may take longer to realize than expected;
•Risks that contractual contingent value rights (“CVRs”) we issued as part of the Progenics Transaction may result in substantial future payments and could divert the attention of our management; and
•The impact of legislative, regulatory, competitive and technological changes on the combined business;
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•Risks related to the commercialization of AZEDRA, including in connection with market acceptance and reimbursement, that may cause the product not to meet revenue or operating income expectations;
•Risks related to RELISTOR, commercialized by Bausch, and that the revenues generated for us thereby may not meet expectations;
•The extensive costs, time and uncertainty associated with the development of new product development,products, such as PyL, including further product development relying on external development partners or potentially developeddeveloping internally;
•Our ability to identify and acquire or in-license additional products, businesses or technologies to drive our future growth;
•Our ability to protect our intellectual property and the risk of claims that we have infringed on the intellectual property of others;

Risks associated with our on-going internal clinical development of DEFINITY for a left ventricular ejection fraction (“LVEF”) indication;
•Risks associated with the technology transfer programs to secure production of our products at additional contract manufacturer sites, including a modified formulation of DEFINITY at Samsung BioLogics (“SBL”) in South Korea;
•Risks associated with our investment in, and construction of, additional specialized manufacturing capabilities at our North Billerica, Massachusetts facility, including our ability to bring the new capabilities online by 2021;
•Our dependence on key customers for certain of our medical imaging products, and our ability to maintain and profitably renew our contracts with those key customers, including GE Healthcare, Cardinal Health (“Cardinal”), United Pharmacy Partners (“UPPI”), GE Healthcare and Jubilant Radiopharma formerly known as Triad Isotopes, Inc. (“Jubilant Radiopharma”) and PharmaLogic Holdings Corp (“PharmaLogic”);
Risks associated with revenues and unit volumes for Xenon in pulmonary studies as a result of increased competition from Curium;
•Risks associated with our lead agent in development, PyL, including:
•Our ability to file our New Drug Application (“NDA”) with the U.S. Food and Drug Administration (“FDA”) later in 2020;
•Our ability to obtain FDA approval of PyL in 2021; and
•Our ability to successfully commercialize PyL in North America and on a global basis (other than Europe, where the agent has been previously out-licensed to Curium, and in Australia and New Zealand, where we do not have commercialization rights).
•Risks associated with flurpiridaz F 18, which in 2017 we out-licensed to GE Healthcare, including:
The•GE Healthcare’s ability to successfully complete the Phase 3 development program;program, including delays in enrollment that have resulted from the COVID-19 pandemic;
The•GE Healthcare’s ability to obtain Food and Drug Administration (“FDA”) approval; and
The•GE Healthcare’s ability to gain post-approval market acceptance and adequate reimbursement;
•Risks associated with 1095, including delays in enrollment that have resulted from the COVID-19 pandemic and our development agent, LMI 1195, for patient populations that would benefit from molecular imaging ofability to successfully complete the norepinephrine pathway, including, among other things, designing and timely completing two Phase 3 clinical trials for the diagnosis and management of neuroendocrine tumors2 study in pediatric and adult populations, respectively;mCRPC;
•Risks associated with the manufacturing and distribution of our products and the regulatory requirements related thereto;
•The dependence of certain of our customers upon third-party healthcare payors and the uncertainty of third-party coverage and reimbursement rates;
•The existence and market success of competitor products;
•Uncertainties regarding the impact of U.S. and state healthcare reform measures and proposals on our business, including measures and proposals related to reimbursement for our current and potential future products, controls over drug pricing, drug pricing transparency and generic drug competition;
•Our being subject to extensive government regulation and oversight, our potential inabilityability to comply with those regulations and the costs of compliance;
•Potential liability associated with our marketing and sales practices;
•The occurrence of any serious or unanticipated side effects with our products;
•Our exposure to potential product liability claims and environmental, health and safety liability;
•Our ability to introduce new products and adapt to an evolving technology and medical practice landscape;
•Risks associated with prevailing economic or political conditions and events and financial, business and other factors beyond our control;
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•Risks associated with our international operations;operations, including potential global disruptions in air transport due to COVID-19, which could adversely affect our international supply chains for radioisotopes and other critical materials as well as international distribution channels for our commercial products;
•Our ability to adequately qualify, operate, maintain and protect our facilities, equipment and technology infrastructure;
•Our ability to hire or retain skilled employees and key personnel;
•Our ability to utilize, or limitations in our ability to utilize, net operating loss carryforwards to reduce our future tax liability;
•Risks related to our outstanding indebtedness and our ability to satisfy those obligations;
•Costs and other risks associated with the Sarbanes-Oxley Act and the Dodd-Frank Act, including in connection with becoming a large accelerated filer as of December 31, 2019;
•Risks related to the ownership of our common stock; and
Risks related to the Progenics Transaction, including:
We or Progenics may be unable to obtain stockholder approval as required;
Conditions to the closing of the Progenics Transaction may not be satisfied;
The Progenics Transaction may involve unexpected costs, liabilities or delays;

The effect of the announcement of the Progenics Transaction on the ability of our or Progenics’ business to retain and hire key personnel and maintain relationships with customers, suppliers and others with whom we or Progenics do business, or on our or Progenics’ operating results and business generally;
Our or Progenics’ respective businesses may suffer as a result of uncertainty surrounding the Progenics Transaction and disruption of management’s attention due to the Progenics Transaction;
The outcome of any legal proceedings related to the Progenics Transaction;
The occurrence of any event, change or other circumstances that could give rise to the termination of our agreement with Progenics;
The risk that we or Progenics may be unable to obtain governmental and regulatory approvals required for the Progenics Transaction, or that required governmental and regulatory approvals may delay the Progenics Transaction or result in the imposition of conditions that could reduce the anticipated benefits from the proposed transaction or cause the parties to abandon the transaction;
Risks that the anticipated benefits of the Progenics Transaction or other commercial opportunities may otherwise not be fully realized or may take longer to realize than expected;
We or Progenics may be adversely affected by other economic, business, and/or competitive factors;
The impact of legislative, regulatory, competitive and technological changes;
Expectations for future clinical trials, the timing and potential outcomes of clinical studies and interactions with regulatory authorities;
Other risks to the consummation of the Progenics Transaction, including the risk that the Progenics Transaction will not be consummated within the expected time period or at all; and
•Other factors that are described in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018,2019, in Part II, Item 1A. “Risk Factors” in our Quarterly ReportsReport on Form 10-Q for the periodsperiod ended March 31, 2019 and June 30, 2019,2020, and in Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q.
Factors that could cause or contribute to such differences include, but are not limited to, those that are discussed in other documents we file with the SEC. Any forward-looking statement made by us in this Quarterly Report on Form 10-Q speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
Available Information
Our global Internet site is www.lantheus.com. We routinely make available important information, including copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after those reports are electronically filed with, or furnished to, the SEC, free of charge on our website at www.investor.lantheus.com. We recognize our website as a key channel of distribution to reach public investors and as a means of disclosing material non-public information to comply with our disclosure obligations under SEC Regulation FD. Information contained on our website shall not be deemed incorporated into, or to be part of this Quarterly Report on Form 10-Q, and any website references are not intended to be made through active hyperlinks.
Our reports filed with, or furnished to, the SEC are also available on the SEC’s website at www.sec.gov, and for Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, in an XBRL (ExtensibleiXBRL (Inline Extensible Business Reporting Language) format. XBRLiXBRL is an electronic coding language used to create interactive financial statement data over the Internet. The information on our website is neither part of nor incorporated by reference in this Quarterly Report on Form 10-Q.
The following discussion and analysis of our financial condition and results of operations should be read together with the condensed consolidated financial statements and the related notes included in Item 1 of this Quarterly Report on Form 10-Q as well as the other factors described in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018,2019, and Part II, Item 1A.IA. “Risk Factors” in our Quarterly ReportsReport on Form 10-Q for the periodsperiod ended March 31, 2019 and June 30, 2019,2020, and Part II, Item IA. “Risk Factors” in this Quarterly Report on Form 10-Q.
Overview

Our Business
We are a global leader in the development, manufacture and commercialization of innovative diagnostic medical imagingand therapeutic agents and products that assist clinicians in the diagnosis and treatment of cardiovascularheart disease, cancer and other diseases. Clinicians useFor our imagingdiagnostic agents, and products across a range of imaging modalities, including echocardiography and nuclear imaging. Wewe believe that the resulting improved diagnostic information enables healthcare providers to better detect and characterize, or rule out, disease, potentially achieving improved patient outcomes, reducing patient risk and limiting overall costs for payers and the entire healthcare system.
Our commercial products are used by cardiologists, nuclear physicians, radiologists, oncologists, 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 sell our products globally and operate our business in two reportable segments, which are further described below:
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•U.S. Segment produces and markets our medical imaging agents and products throughout the U.S. In the U.S., we primarily sell our products to radiopharmacies, integrated delivery networks, hospitals, clinics and group practices.
•International Segment operations consist of production and distribution activities in Puerto Rico and some direct distribution activities in Canada. Additionally, within our International Segment, we have established and maintain third-party distribution relationships under which ourdifferent products are marketed and sold in Europe, Canada, Australia, Asia-Pacific and Latin America.
Acquisition of Progenics
On June 19, 2020, pursuant to the Merger Agreement among Holdings, Merger Sub and Progenics, we completed the acquisition of Progenics, by means of a merger of Merger Sub with and into Progenics, with Progenics surviving the merger as a wholly-owned subsidiary of Holdings. Immediately thereafter, Holdings contributed the shares of Progenics to LMI so that Progenics is now a wholly-owned subsidiary of LMI.
Progenics is an oncology company focused on the development and commercialization of innovative targeted medicines and artificial intelligence to find, fight and follow cancer. Progenics’ portfolio of products and product candidates includes therapeutic agents designed to target cancer (AZEDRA, 1095 and PSMA TTC), as well as imaging agents designed to target PSMA for prostate cancer (PyL and 1404). Progenics’ current revenue is generated from two principal sources: first AZEDRA sales, and second, royalties, development and commercial milestones from strategic partnerships, in particular royalties from Bausch from sales of RELISTOR.
In accordance with the Merger Agreement, each share of Progenics common stock, par value $0.0013 per share, issued and outstanding immediately prior to the transaction was automatically cancelled and converted into the right to receive (i) 0.31 (the “Exchange Ratio”) of a share of Holdings common stock, par value $0.01 per share, and (ii) one CVR. Former Progenics stockholders received cash in lieu of any fractional shares of Holdings common stock.
In addition, in accordance with the Merger Agreement, each Progenics stock option with a per share exercise price less than or equal to $4.42 (an “in-the-money Progenics stock option”) received (i) an option to purchase Holdings common stock (each, a “Lantheus Stock Option”) converted based on the Exchange Ratio, and (ii) a vested or unvested CVR depending on whether the underlying in-the-money Progenics stock option was vested at the time of the transaction. Each Progenics stock option with a per share exercise price greater than $4.42 (an “out-of-the-money Progenics stock option”) received a Lantheus Stock Option converted on an exchange ratio determined based on the average of the volume weighted average price per share of common stock of Progenics and Holdings prior to the transaction, which exchange ratio was 0.31.
Holdings issued 26,844,877 shares of Holdings common stock and 86,630,633 CVRs to former Progenics stockholders in connection with the Merger. Holdings also assumed 34,000 in-the-money Progenics stock options and 6,507,342 out-of-the-money Progenics stock options, each converted into Lantheus Stock Options at the exchange ratios noted above.
As a result of the Progenics Transaction, Lantheus added the following products and product candidates to its portfolio:

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Product / Product CandidateDescriptionStatusMarketRights
Ultra-Orphan Theranostic
AZEDRA (iobenguane I 131) 555 MBq/mL injectionUnresectable, locally advanced or metastatic pheochromocytoma or paragangliomaApprovedU.SProgenics
Prostate Cancer Theranostics
PyL (18F-DCFPyL)PSMA-targeted PET/CT imaging agent for prostate cancerPreparing NDAWorldwide (ex. EU, AU, & NZ)Progenics
PyL (18F-DCFPyL)PSMA-targeted PET/CT imaging agent for prostate cancerDiscussions with European Medicines Agency (EMA)EuropeCurium
1095 (I 131 1095)PSMA-targeted small molecule therapeutic for treatment of metastatic prostate cancerPhase 2WorldwideProgenics
PSMA TTC (BAY 2315497)PSMA-targeted antibody conjugate therapeutic for treatment of metastatic prostate cancerPhase 1WorldwideBayer
1404Technetium-99m PSMA-targeted SPECT/CT imaging agent for prostate cancerDiscussions with EMAEuropeROTOP
Digital Technology
PSMA AIImaging analysis technology that uses artificial intelligence and machine learning to assist readers in the quantification and standardized reporting of PSMA-targeted imagingInvestigational Use OnlyWorldwideProgenics
Automated Bone Scan Index (aBSI)Automated reading and quantification of bone scans of prostate cancer patients using artificial intelligence and deep learningApproved in the U.S. and E.U. 510(k) cleared in the U.S. CE marked (E.U. countries)Worldwide (ex. Japan)Progenics
Automated Bone Scan Index (BONENAVI)Automated reading and quantification of bone scans of prostate cancer patients using artificial intelligence and deep learningApprovedJapanFUJIFILM
Other Programs
RELISTOR Subcutaneous Injection (methylnaltrexone bromide)OIC in adults with chronic non-cancer pain or advanced-illness adult patientsApprovedWorldwideBausch
RELISTOR Tablets (methylnaltrexone bromide)OIC in adults with chronic non-cancer painApprovedU.S.Bausch
Leronlimab (PRO 140)HIV InfectionCytoDyn intends to request Type A meeting with FDA to discuss BLAU.S.CytoDyn

See Part I, Item 1A. “Risk Factors” in our Annual Report on form 10-K for the year ended December 31, 2019, and Part II, Item 1A. “Risk Factors” in our Quarterly Report on Form 10-Q for the period ended March 31, 2020 for information regarding certain risks associated with our proposed acquisition of Progenics.
Our ProductExpanded Portfolio
Our product portfolio includes an ultrasound contrast agent, nuclear imagingcommercial products and a nuclear therapeutic product. Our principal productsnow include the following:
•DEFINITY is a microbubble contrast agent used in ultrasound exams of the heart, also known as echocardiography exams. DEFINITY contains perflutren-containing lipid microspheres and is indicated in the U.S. for use in patients with suboptimal echocardiograms to assist in imaging the left ventricular chamber and left endocardial border of the heart in ultrasound procedures.
We believe we are currently the leading provider of ultrasound microbubble contrast agents in the world.
•TechneLite is a Technetium (“Tc-99m”) generator that provides the essential nuclear material used by radiopharmacies to radiolabel Cardiolite, Neurolite and other Technetium-basedTc-99m-based radiopharmaceuticals used in nuclear medicine procedures. TechneLite uses MolyMo-99 as its active ingredient.
•Neurolite is an injectable, Tc-99m-labeled imaging agent used with SPECT technology to identify the area within the brain where blood flow has been blocked or reduced due to stroke.
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•Xenon Xe 133 Gas (“Xenon”) is a radiopharmaceutical gas that is inhaled and used to assess pulmonary function and also to image cerebral blood flow. Our Xenon is manufactured by a third party as a bi-product of Mo-99 production and is processed and finished by us. We believe we are currently the leading provider of Xenon in the U.S.
•FDG is an injectable, fluorine-18-radiolabeled imaging agent used with PET technology to identify and characterize tumors in patients undergoing oncologic diagnostic procedures. We manufacture and distribute FDG from our Puerto Rico radiopharmacy.
•Cardiolite, also known by its generic name sestamibi, is an injectable, Tc-99m-labeled imaging agent used in myocardial perfusion imaging (“MPI”) procedures to assess blood flow to the muscle of the heart using SPECT. Cardiolite was approved by the FDA in 1990 and its market exclusivity expired in July 2008. Included in Cardiolite revenues are branded Cardiolite and generic sestamibi revenues.
•Thallium TI 201 is an injectable radiopharmaceutical imaging agent used in MPI studies to detect cardiovascular disease. We manufacture Thallium using cyclotron technology.
•Gallium (Ga 67) is an injectable radiopharmaceutical imaging agent used to detect certain infections and cancerous tumors, especially lymphoma. We manufacture Gallium using cyclotron technology.
•AZEDRA (iobenguane I 131) is a radiotherapeutic, approved for the treatment of adult and pediatric patients 12 years and older with iobenguane scan positive, unresectable, locally advanced or metastatic pheochromocytoma or paraganglioma who require systemic anticancer therapy. AZEDRA is the first and only FDA-approved therapy for this indication.
•RELISTOR (methylnaltrexone bromide) is a treatment for opioid-induced constipation (“OIC”) that decreases the constipating side effects induced by opioid pain medications such as morphine and codeine without diminishing their ability to relieve pain. RELISTOR is approved in two forms: a subcutaneous injection (12 mg and 8 mg) and an oral tablet (450 mg once daily).
•Quadramet is an injectable radiopharmaceutical used to treat severe bone pain associated with osteoblastic metastatic bone lesions. We serve as the direct manufacturer and supplier of Quadramet in the U.S.
•Automated Bone Scan Index (“aBSI”) calculates the disease burden of prostate cancer by quantifying the hotspots on bone scans and automatically calculating the bone scan index value, representing the disease burden of prostate cancer shown on the bone scan. This quantifiable and reproducible calculation of the bone scan index value is intended to aid in the diagnosis and treatment of men with prostate cancer and may have utility in monitoring the course of the disease. The Japanese rights to the stand-alone aBSI have been transferred and sold to FUJIFILM Toyama Chemical Co. Ltd. (“FUJIFILM”) under the name BONENAVI®. The cloud based aBSI was cleared by the FDA for clinical use in the U.S. on August 5, 2019. In February 2020, Progenics received CE marking for the standalone workstation model of aBSI, meeting the quality standards set by the European Economic Area.
•Cobalt (Co 57) is a non-pharmaceutical radiochemical used in the manufacture of sources for the calibration and maintenance of SPECT imaging cameras.
Sales of our microbubble contrast agent, DEFINITY, are made in the U.S. and Canada through a DEFINITY direct sales team. In the U.S., our nuclear imaging products, including TechneLite, Xenon, Neurolite and Cardiolite, are primarily distributed through commercial radiopharmacies, the majority of which are controlled by or associated with GE Healthcare, Cardinal, UPPI, GE HealthcareJubilant Radiopharma and Jubilant Radiopharma.PharmaLogic. A small portion of our nuclear imaging product sales in the U.S. are made through our direct sales force to hospitals and clinics that maintain their own in-house radiopharmaceutical preparation capabilities. We own one radiopharmacy in Puerto Rico where we sell our own products as well as products of third parties to end-users. AZEDRA is also sold in the U.S. through an AZEDRA direct sales team. RELISTOR was licensed to Bausch, and we collect quarterly royalties based on their sales.
We also maintain our own direct sales force in Canada for certain of our products. In Europe, Australia, Asia-Pacific and Latin America, we generally rely on third-party distributors to market, sell and distribute our nuclear imaging and contrast agent products, either on a country-by-country basis or on a multi-country regional basis. Our headquarters are located in North Billerica, MA with offices in New York, NY, Somerset, NJ, San Juan, PR, Montreal, Canada and Lund, Sweden.
The following table sets forthProduct Candidates
In addition to our revenues:commercial products, we now have an extensive portfolio of product candidates in clinical development, including:
•PyL (also known as 18F-DCFPyL) is a fluorine 18-based PSMA-targeted PET imaging agent that enables visualization of both bone and soft tissue metastases, with potential high clinical utility in the detection of recurrent and/or metastatic prostate
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 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(in thousands)2019 % of
Revenues		 2018 % of
Revenues		 2019 % of
Revenues		 2018 % of
Revenues
DEFINITY$52,395
 61.1 % $43,755
 49.2 % $158,135
 61.3 % $134,508
 52.3 %
TechneLite21,747
 25.4 % 30,618
 34.4 % 65,998
 25.6 % 75,491
 29.4 %
Other nuclear15,541
 18.1 % 17,555
 19.8 % 45,907
 17.8 % 56,422
 22.0 %
Rebates and allowances(3,907) (4.6)% (3,028) (3.4)% (12,049) (4.7)% (9,318) (3.6)%
Total revenues$85,776
 100.0 % $88,900
 100.0 % $257,991
 100.0 % $257,103
 100.0 %
cancer, as well as staging of high risk disease. Progenics has completed a clinical development program that consisted of two pivotal clinical studies, which were designed to provide robust, prospective, well-controlled, and pathology- or composite truth standard-verified data to establish the safety and diagnostic performance of PyL across the disease continuum of prostate cancer. The results from these studies provide data in support of the potential of PyL to reliably detect and localize disease, including in patients with low PSA values, and may help enable appropriate disease management, thus supporting the potential use for detection of recurrent or metastatic prostate cancer. Progenics completed two successful pre-NDA meetings with the FDA in the first quarter of 2020, and we intend to submit the PyL NDA to the FDA later in 2020.

Progenics Transaction
•Flurpiridaz F 18 is a fluorine 18-based PET MPI agent to assess blood flow to the heart. On October 1, 2019,April 25, 2017, we enteredannounced entering into a Mergerdefinitive, exclusive Collaboration and License Agreement with GE Healthcare for the agent’s continued Phase 3 development and worldwide commercialization. The second Phase 3 trial is now underway; however, because of the COVID-19 pandemic, enrollment in the global clinical development program has been delayed. GE Healthcare now expects to acquirecomplete enrollment by mid-2021 and, assuming regulatory approval, begin commercialization in early 2023.
•LMI 1195 is a fluorine 18-based PET imaging agent for the norepinephrine pathway. We are currently designing two Phase 3 clinical trials for the use of LMI 1195 for the diagnosis and management of neuroendocrine tumors in pediatric and adult populations, respectively. The FDA has granted an Orphan Drug designation for the use of LMI 1195 in the management indication. We have also received notice of eligibility for a rare pediatric disease priority review voucher for a subsequent human drug application so long as LMI 1195 is approved by the FDA for its rare pediatric disease indication prior to September 30, 2022.
•1095 (also known as I-131-1095) is a PSMA-targeted iodine-131 labeled small molecule that is designed to deliver a dose of beta radiation directly to prostate cancer cells with minimal impact on the surrounding healthy tissues. Following the removal of the import alert on Centre for Probe Development & Commercialization (“CPDC”), Progenics Pharmaceuticals, Inc. (NASDAQ: PGNX)initiated eleven clinical sites in an all-stock transaction.the U.S along with the six active sites in Canada to support enrollment in the Company’s multicenter, randomized, controlled, ARROW Phase 2 study in metastatic castration-resistant prostate cancer (“mCRPC”). Because of the COVID-19 pandemic, Progenics paused new enrollment in the Phase 2 trial to minimize the risk to subjects and healthcare providers during the pandemic. For subjects who are active and have been randomized for the study, they continue to receive treatment doses and are being monitored for safety and efficacy in a manner that is permissible by each clinical site.
•PSMA TTC is a thorium-227 labeled PSMA-targeted antibody therapeutic. PSMA TTC is designed to deliver a dose of alpha radiation directly to prostate cancer cells with minimal impact on the surrounding healthy tissues. Bayer AG (“Bayer”) has exclusive worldwide rights to develop and commercialize products using our PSMA antibody technology in combination with Bayer’s alpha-emitting radionuclides. Bayer is conducting a Phase 1 trial of PSMA TTC in subjects with mCRPC.
•1404 is a Tc-99m labeled small molecule which binds to PSMA and is used as a SPECT/CT imaging agent to diagnose and detect localized prostate cancer as well as soft tissue and bone metastases. ROTOP has exclusive rights to develop, manufacture and commercialize 1404 in Europe.
•PSMA AI is an oncology company developing innovative medicines andimaging analysis technology that uses artificial intelligence and machine learning to find, fightassist readers in the quantification and follow cancer.standardized reporting of PSMA-targeted imaging. Progenics recently completed a performance study of automated segmentation algorithms with PyL/CT images from the PyL research access initiative. The study demonstrated the efficiency and effectiveness of a fully automated segmentation algorithm of the 49 bones and 12 soft tissue regions of the whole body from PyL-PSMA PET/CT images. This work provides automated generation of lesion quantification, localization and staging, leading to highly contextualized assessments of disease burden.
•Leronlimab (PRO 140) is an investigational humanized IgG4 mAb that blocks CCR5, a cellular receptor that is important in HIV infection, tumor metastases, and other diseases including certain liver diseases. It is owned by CytoDyn Inc. (“CytoDyn”) pursuant to our agreement with CytoDyn, as described below. In May 2020, CytoDyn announced it submitted a Biologics License Application (“BLA”) to the FDA for approval of Leronlimab in combination therapy for HIV infection. On July 13, 2020, CytoDyn announced that it had received a refusal to file letter from the FDA for the BLA and that CytoDyn intends to request a Type A meeting with the FDA to discuss the FDA’s request for additional information.
Strategic Partnerships
In connection with our commercial products and product candidates, we now have a number of strategic partnerships, including:
•Bausch Agreement -- Under its agreement with Salix Pharmaceuticals, Inc., a wholly-owned subsidiary of Bausch, Progenics received a $40 million development milestone upon U.S. marketing approval for subcutaneous RELISTOR in non-cancer pain patients in 2014, a $50 million development milestone for the U.S. marketing approval of an oral formulation of RELISTOR in July 2016, and a $10.0 million sales milestone for RELISTOR achieving U.S. net sales in excess of $100.0 million in 2019. We are also eligible to receive additional one-time sales milestone payments upon achievement of specified U.S. net sales targets, including:

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U.S. Net Sales Levels in any Single Calendar YearPayment ($)
(In thousands)
In excess of $150 million15,000
In excess of $200 million20,000
In excess of $300 million30,000
In excess of $750 million50,000
In excess of $1 billion75,000

Each sales milestone payment is payable one time only, regardless of the number of times the condition is satisfied, and all six payments could be made within the same calendar year. We are also eligible to receive royalties from Bausch and its affiliates based on the following royalty scale: 15% on worldwide net sales up to $100 million, 17% on the next $400 million in worldwide net sales, and 19% on worldwide net sales over $500 million each calendar year, and 60% of any upfront, milestone, reimbursement or other revenue (net of costs of goods sold, as defined, and territory-specific research and development expense reimbursement) Bausch receives from sublicensees outside the U.S.
•GE Healthcare Agreement – Under our April 2017 Collaboration and License Agreement, GE Healthcare will complete the worldwide development of flurpiridaz F 18, pursue worldwide regulatory approvals, and, if successful, lead a worldwide launch and commercialization of the agent, with us collaborating on both development and commercialization through a joint steering committee. We also have the right to co-promote the agent in the U.S. GE Healthcare’s development plan initially focuses on obtaining regulatory approval in the U.S., Japan, Europe and Canada. Under the agreement, we received an upfront cash payment of $5 million and are eligible to receive up to $60 million in regulatory and sales milestone payments, tiered double-digit royalties on U.S. sales, and mid-single digit royalties on sales outside of the U.S.
•Curium Agreement – Curium has licensed exclusive rights to develop and commercialize PyL in Europe. Under the terms of the Mergercollaboration, Curium is responsible for the development, regulatory approvals and commercialization of PyL in Europe, and we are entitled to royalties on net sales of PyL. Curium is in discussions with EMA regarding the development path in Europe.
•Bayer Agreement – Under Progenics’ April 2016 agreement with a subsidiary of Bayer granting Bayer exclusive worldwide rights to develop and commercialize products using our PSMA antibody technology, in combination with Bayer’s alpha-emitting radionuclides, Progenics received an upfront payment of $4.0 million and milestone payments totaling $5.0 million. We could receive up to an additional $44.0 million in potential clinical and development milestones. We are also entitled to single-digit royalties on net sales, and potential net sales milestone payments up to an aggregate of $130.0 million.
•CytoDyn Agreement -- Leronlimab (PRO 140) is an investigational humanized IgG4 mAb that blocks CCR5, a cellular receptor that is important in HIV infection, tumor metastases, and other diseases including certain liver diseases. Progenics sold Leronlimab to CytoDyn in 2012, which sale included milestone and royalty payment obligations to Progenics. Under the 2012 agreement, CytoDyn is responsible for all development, manufacturing and commercialization efforts. Pursuant to such agreement, Progenics received $5.0 million in upfront and milestone payments, and we will acquire allhave the right to receive an additional $5.0 million upon the first U.S. or E.U. approval for the sale of the issueddrug, and outstanding sharesa 5% royalty on the net sales of approved products.
•ROTOP Agreement -- In May 2019, Progenics common stock atentered into an exclusive license agreement with ROTOP, a fixed exchange ratio.Germany-based developer of radiopharmaceuticals for nuclear medicine diagnostics, to develop, manufacture and commercialize 1404 in Europe. Under the terms of the collaboration, ROTOP is responsible for the development, regulatory approvals and commercialization of 1404 in Europe while we are entitled to double-digit, tiered royalties on net sales of 1404 in Europe. ROTOP is in discussions with EMA regarding the development path in Europe.
•FUJIFILM Agreement -- In June 2019, Progenics shareholders will receive 0.2502 shares of our common stockentered into a transfer agreement with FUJIFILM for each share of Progenics common stock, representing an approximately 35% aggregate ownership stake in the combined company. The exchange ratio implies a 21.5% premium to Progenics’ 30-day volume weighted-average closing stock price as of October 1, 2019. The transaction was unanimously approved by the Boards of Directors of both companies and is subjectrights to the terms and conditions set forthaBSI product in Japan for use under the Merger Agreement, including, among other things,name BONENAVI. Under the affirmative vote of a majorityterms of the outstanding sharestransfer agreement, FUJIFILM acquired, by a combination of common stock ofpurchase and license, the Japanese software, source code, supporting data and all Japanese patents associated with the aBSI product from Progenics for use in Japan. In exchange, Progenics received $4.0 million in an upfront payment and a majority of votes cast byFUJIFILM agreed to pay Progenics support and service fees for aBSI and other AI products over the holders of the common stock of the Company, and the expiration or early termination of the applicable waiting period under the HSR Act, which, as noted above,next three years in Japan. BONENAVI has been obtained by grantlicensed to FUJIFILM for use in Japan since 2011.
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Table of early termination of the HSR Act waiting period on October 25, 2019.  The transaction is expected to close in the first quarter of 2020. Upon completion of the acquisition, which is intended to be tax-free to Progenics’ stockholders for U.S. federal income tax purposes, the combined company will continue to be headquartered in North Billerica, Massachusetts and will trade on the NASDAQ under the ticker symbol LNTH. See the Company’s Current Report on Form 8-K dated October 1, 2019 for further information regarding the Merger Agreement and the proposed Progenics acquisition.Contents
See Part I, Item 1A. “Risk Factors” for information regarding certain risks associated with our proposed acquisition of Progenics.
Key Factors Affecting Our Results
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 will 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 procedures and treatments using our products. We cannot predict the magnitude or duration of the pandemic’s impact on our business.
As a result of the COVID-19 pandemic, we undertook a thorough analysis of all of our discretionary expenses. In the first quarter of 2020 we implemented certain cost reduction initiatives, including, among other things, reducing travel and promotional expenses and implementing a hiring freeze through the balance of 2020. In addition, effective April 13, 2020, we reduced our work week from five days to four days in order to better align manufacturing, supply, distribution and other activities with reduced product demand. We also reduced pay for our personnel, including a 75% reduction for Mary Anne Heino, our President and Chief Executive Officer, a 35% reduction for members of our executive team, a 25% reduction for our vice presidents, and across-the-board reductions of 20% of salaries for our other salaried employees and 20% of hours for our hourly employees for that same time period. In addition, our Board of Directors has also reduced director and committee member compensation by 35% for the second half of the year and has elected to receive all remaining compensation payable in 2020 in the form of time-based restricted stock units that will vest on the first anniversary of the grant date, rather than in cash. In the latter half of June 2020, we restored our work week back to five days and restored most salaries back to 100% (other than executive team members whose salaries were restored in early July and directors whose compensation will remain at reduced levels for the balance of the calendar year).
We can give no assurances that we will not have to take additional cost reduction measures if the pandemic continues to adversely affect the volume of procedures and treatments using our products.
During the second quarter of 2020, Progenics also implemented certain cost reduction initiatives, including reducing promotional spending and furloughing a portion of its field-based AZEDRA commercial operations and medical employees. Progenics also furloughed several of its clinical employees. The commercial and medical employees were returned to full service with Progenics as of June 22, 2020. In addition, Progenics paused new enrollment in the Phase 2 trial of 1095 in mCRPC patients to minimize the risk to subjects and healthcare providers during the pandemic.
GE Healthcare, our development and commercialization partner for flurpiridaz F 18, also delayed enrollment in the second Phase 3 clinical trial because of the pandemic and has informed us that it now intends to resume enrollment in the third quarter of 2020.
While we are currently unable to estimate the impact of COVID-19 on our overall 2020 operations and financial results, we ended the second quarter of 2020 with $90.3 million of cash and cash equivalents. With our available liquidity and prudent expense management, we believe we will be able to maintain a state of preparedness to resume full business activities to support our customers as external conditions allow, although we can give no assurances that we will have sufficient liquidity if the pandemic continues to adversely affect the volume of procedures and treatments using our products for an extended period of time.
Anticipated Continued Growth of DEFINITY and Expansion of Our Ultrasound Microbubble Franchise
We believe the market opportunity for our ultrasound microbubble contrast agent, DEFINITY, continues to be significant. DEFINITY is our fastest growing and highest margin commercial product. We anticipate DEFINITY sales will continue to grow and that DEFINITY will constitute a greater share of our overall product mix in 2019 as compared to prior years.over the longer term. As we continue to educate the physician and healthcare provider community about the benefits and risks of DEFINITY, we believe we will be able to continue to grow the appropriate use of DEFINITY in suboptimal echocardiograms. In a U.S. market with three echocardiography contrast agents approved by the FDA, we estimate that DEFINITY had over 80% of the market as of December 31, 2018.2019.
As we continue to pursue expanding our microbubble franchise, our activities include:
•Patents - We continue to actively pursue additional patents in connection with DEFINITY, both in the U.S. and internationally. In the U.S., wethree of our recently issued method of use patents covering DEFINITY were listed in the Orange Book. We now have ana total of four Orange Book-listed method of use patent expiringpatents, one of which expires in March2035 and three of which expire in 2037, andas well as additional manufacturing patents that are not Orange Book-listed expiring in 2021, 2023 and 2037. Outside of the U.S., while our DEFINITY patent protection and regulatory exclusivity have generally expired, we are currently prosecuting additional patents to try to obtain similar method of use and manufacturing patent protection as granted in the U.S.
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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. 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. 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 2019August 2020 and the full 30 month stay was obtained, then the ANDA applicant would be precluded from commercialization until at least May 2022.January 2023. If we received a

Notice some number of months in the future and the full 30 month stay was obtained, the commercialization date would roll forward in the future by the same calculation.
LVEF Indication - We are currently conducting two well-controlled Phase 3 studies designed to demonstrate improved accuracy of LVEF measurements with DEFINITY-enhanced echocardiography versus unenhanced echocardiography. The truth standard in these studies is cardiac magnetic resonance imaging. The studies are being conducted at 20 U.S. sites and will eventually enroll a total of approximately 300 subjects. We believe DEFINITY could improve the accuracy of LVEF measurements, giving clinicians greater confidence in patient management decisions. An LVEF indication could substantially increase the addressable market for contrast-enhanced echocardiography. We believe that DEFINITY, as the market leader, would benefit from the expanded addressable market. Based on current enrollment in our on-going LVEF Phase 3 studies, we currently believe that we will be able to complete the Phase 3 studies by year end 2019, and, if subsequently approved by the FDA, the LVEF indication could become commercially available to us as early as 2020, although that timing cannot be assured.
•Modified Formulation - We are developing at SBL a modified formulation of DEFINITY. We believe this modified formulation will provide an enhanced product profile enabling storage as well as shipment at room temperature (DEFINITY’s current formulation requires refrigerated storage), will give clinicians additional choice, and will allow for greater utility of this formulation in broader clinical settings. We were recently grantedhave a composition of matter patent on the modified formulation which runs through December 2035. If the modified formulation is approved by the FDA, then this patent would be eligible to be listed in the Orange Book. We currently believe that, if approved by the FDA, the modified formulation could become commercially available in 2020,early 2021, although that timing cannot be assured. Given its physical characteristics, the modified formulation may also be betterwell suited for inclusion in kits requiring microbubbles for other indications and applications (including in kits developed by third parties of the type described in the next paragraph).
•New Clinical Applications - As we continue to look for other opportunities to expand our microbubble franchise, we are evaluating new indications and clinical applications beyond echocardiography and contrast imaging generally. For example, in April 2019, we recently announced a strategic development and commercial collaboration with Cerevast Medical, Inc. (“Cerevast”) in which our microbubble will be used in connection with Cerevast’s ocular ultrasound device to target improving blood flow in occluded retinal veins in the eye. Retinal vein occlusion is one of the most common causes of vision loss worldwide.
In December 2019, we announced a strategic commercial supply agreement with CarThera for the use of our microbubbles in combination with SonoCloud, a proprietary implantable device in development for the treatment of recurrent glioblastoma. Glioblastoma is a lethal and devastating form of brain cancer with median survival of 15 months after diagnosis.
•In-House Manufacturing - We are currently buildinghave completed construction of specialized, in-house manufacturing capabilities at our North Billerica, Massachusetts facility for DEFINITY and, potentially, other sterile vial products. We believe the investment in these efforts 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 currently expect to be in a position to use this in-house manufacturing capability by earlyin 2021, although that timing cannot be assured.
See Part I, Item 1A. “Risk Factors—The growth of•DEFINITY in China - On March 19, 2020 in connection with our business is substantially dependent on our ability to continue to growChinese development and distribution arrangement with Double Crane Pharmaceutical Company, we filed an Import Drug License application with the appropriateNational Medical Products Administration, or the NMPA, for the use of DEFINITY for the echocardiography indication. We believe this is an important milestone in suboptimal echocardiogramsour efforts to commercialize DEFINITY in China. Double Crane is also in the faceprocess of increased segment competition from other existing echocardiography agentsanalyzing the clinical results relating to the liver and potential generic competitors as a result of future patentkidney indications and regulatory exclusivity expirations,” “—If we are unablewill also work with us to protect our intellectual property, our competitors could develop and market products with features similar to our products, and demandprepare an Import Drug License application for our products may decline,” “—Our dependence upon third parties for the manufacture and supply of a substantial portion of our products could prevent us from delivering our products to our customers in the required quantities, within the required timeframes, or at all, which could result in order cancellations and decreased revenues,” and “—Item 1. Business—Our Product Portfolio—DEFINITY and the Expansion of Our Ultrasound Microbubble Franchise,” of our Annual Report on Form 10-K for the year ended December 31, 2018.those indications.
Global Moly Mo-99 Supply
We currently have MolyMo-99 supply agreements with Institute for Radioelements (“IRE”), running through December 31, 2019,2022, and renewable by us on a year-to-year basis thereafter, and with ANSTONTP and NTP,ANSTO, running through December 31, 2020.2021. We also have a Xenon supply agreement with IRE which runs through June 30, 2022, and which is subject to further extension.
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Although we have a globally diverse MolyMo-99 supply with IRE in Belgium, ANSTO in Australia and NTP in South Africa and ANSTO in Australia, we still face supplier and logistical challenges in our MolyMo-99 supply chain. The NTP processing facility has had periodic outages in 2017, 2018 and 2019. When NTP was not producing, we relied on MolyMo-99 supply from both IRE and ANSTO to limit the impact of the NTP outages.  In the second quarter of 2019, ANSTO experienced facilitytechnical issues in its existing MolyMo-99 processing facility which resulted in a decrease in MolyMo-99 available to us.  In addition, as ANSTO transitioned from its existing MolyMo-99 processing facility to its new MolyMo-99 processing facility in the second quarter of 2019, ANSTO experienced start-up and transition challenges, which also resulted in a decrease in MolyMo-99 available to us.  Further, starting in late June 2019 and through the date of this filing,until April 2020, ANSTO’s new MolyMo-99 processing facility has experienced unscheduledhad production outages,volume limitations imposed on it by the Australian Radiation Protection and Nuclear Safety Agency which limited our ability to receive Mo-99 from ANSTO. During that time we are now relyingrelied on IRE and NTP to limit the impact of those ANSTO outages.outages and volume limitations. As ANSTO increases its production volume over the course of 2020, we expect to receive increasing supply from ANSTO. Because of the COVID-19 pandemic, in the second quarter of 2020 we experienced challenges receiving regularly scheduled orders of Mo-99 from our global suppliers due to the partial or complete delay or cancellation of international flights by our airfreight carriers. As of the filing of this report, these COVID-19-related transportation challenges have been largely eliminated. Because of these various supply chain constraints, depending on reactor and processor schedules and operations, we have not been able to fill some or all of the demand for our TechneLite generators on certain manufacturing days.

ANSTO’s new MolyMo-99 processing facility could eventually increase ANSTO’s MolyMo-99 production capacity from approximately 2,000 curies per week to 3,500 curies per week with additional committed financial and operational resources. We recently received approval from both the FDA and Health Canada for our use of Moly supplied from ANSTO’s new Moly processing facility in manufacturing our TechneLite generators. At full ramp-up capacity, ANSTO’s new facility could provide incremental supply to our globally diversified MolyMo-99 supply chain and therefore mitigate some risk among our MolyMo-99 suppliers, although we can give no assurances to that effect. In addition, we also have a strategic arrangement with SHINE Medical Technologies, Inc. (“SHINE”), a Wisconsin-based company, for the future supply of Moly.Mo-99. Under the terms of that agreement, SHINE will provide us MolyMo-99 once SHINE’s facility becomes operational and receives all necessary approvals, which SHINE now estimates will occur in 2022.
See Part II, Item 1A. “Risk Factors—The global supply of Moly is fragile and not stable. Our dependence on a limited number of third party suppliers for Moly could prevent us from delivering some of our products to our customers in the required quantities, within the required timeframe, or at all, which could result in order cancellations and decreased revenues” of this Quarterly Report on Form 10-Q and Part 1, Item 1A. “Risk Factors—The instability of the global supply of Moly, including supply shortages, has resulted in increases in the cost of Moly, which has negatively affected our margins, and more restrictive agreements with suppliers, which could further increase our costs” of our Annual Report on Form 10-K for the year ended December 31, 2018.
Inventory Supply
We obtain a substantial portion of our imaging agents from a third-party suppliers.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 are also currently working to secure additional alternative suppliers for our key products as part of our ongoing supply chain diversification strategy. We have ongoing development and technology transfer activities for a modified formulation of DEFINITY with SBL, which is located in South Korea. We currently believe that if approved by the FDA, the modified formulation could be commercially available in 2020,2021, although that timing cannot be assured. We arehave also buildingcompleted construction of specialized, in-house specialized manufacturing capabilities at our North Billerica, Massachusetts facility, as part of a larger strategy to create a competitive advantage in specialized manufacturing, which will also allow us to optimize our costs and reduce our supply chain risk. We can give no assurance as to when or if we will be successful in these efforts or that we will be able to successfully manufacture any additional commercial products at our North Billerica, Massachusetts facility. See Part I, Item 1A. “Risk Factors—Our dependence upon third parties for the manufacture and supply of a substantial portion of our products could prevent us from delivering our products to our customers in the required quantities, within the required timeframes, or at all, which could result in order cancellations and decreased revenues” of our Annual Report on Form 10-K for the year ended December 31, 2018.
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 North Billerica, Massachusetts facility.
Research and Development Expenses
To remain a leader in the marketplace, we have historically made substantial investments in new product development. As a result,In addition to our flurpiridaz F 18 clinical development program, the positive contributionsexpenses of those internally funded research and development programs have been a key factor in our historical results and success. On April 25, 2017, we announced entering into a definitive, exclusive Collaboration and License Agreement withwhich are now being borne by GE Healthcare, for the continued Phase 3 development and worldwide commercialization of flurpiridaz F 18. As part of our microbubble franchise strategy, for our proposed LVEF indication for DEFINITY, we are currently conducting two well-controlled Phase 3 studies designed to demonstrate improved accuracy of LVEF measurements with DEFINITY-enhanced echocardiography versus unenhanced echocardiography. For LMI 1195 our PET-based molecular imaging agent for the norepinephrine pathway, we are, among other things, currently designing two Phase 3 clinical trials for the use of LMI 1195program for the diagnosis and management of neuroendocrine tumors in pediatric and adult populations, respectively. Thethe final plans for which are still being developed, the Progenics Transaction brings additional and substantial clinical development expense. Progenics completed two successful pre-NDA meetings with the FDA has granted an Orphan Drug designation for the use of LMI 1195 in the management indication. We have also received noticefirst quarter of eligibility for a rare pediatric disease priority review voucher for a subsequent human drug application so long as LMI 1195 is approved by2020, and we intend to submit the PyL NDA to the FDA later in 2020. For 1095, the ARROW Phase 2 study in mCRPC patients has been paused to minimize risk to subjects and healthcare providers during the pandemic. In addition, the Company’s development activities for its rare pediatric disease indication prior to September 30, 2022.PSMA AI are on-going. 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 or when LMI 1195 wouldany of these clinical development candidates will be approved. See Part I, Item 1A. “Risk Factors-The process of developing new drugs and obtaining regulatory approval is complex, time-consuming and costly, and the outcome is not certain” of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2019.
New Initiatives

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WeIn addition to integrating the new assets and programs resulting from the Progenics Transaction, we continue to evaluateseek ways to further expand our portfolio of products and product candidates, evaluating a number of different opportunities to acquire or in-license additional products, product candidates, businesses and technologies to drive our future growth. WeAs the Progenics Transaction indicates, we are particularly interested in expanding our presence in oncology.oncology, in radiotherapeutics as well as diagnostics. In addition to the Progenics Transaction described above,May 2019 we recently entered into a strategic collaboration and license agreement with NanoMab Technology Limited, a privately-held biopharmaceutical company focusing on the development of next generation radiopharmaceuticals for cancer precision medicine. We believe this collaboration will provide the first broadly-available imaging biomarker research tool to pharmaceutical companies and academic centers conducting research and development on PD-L1 immuno-oncology treatments, including combination therapies. We can give no assurance as to when or if this collaboration will be successful or accretive to earnings.
See Part I, Item 1A. “Risk Factors-Our business depends on our ability to successfully introduce new products and adapt to a changing technology and medical practice landscape” and “-Our future growth may depend on our ability to identify and acquire or in-license additional products, businesses or technologies, and if we do not successfully do so, or otherwise fail to integrate any new products, lines of business or technologies into our operations, we may have limited growth opportunities and it could result in significant impairment charges or other adverse financial consequences” of our Annual Report on Form 10-K for the year ended December 31, 2018. See also Part II, Item 1A. “Risk Factors - The process of developing new drugs and obtaining regulatory approval is complex, time-consuming and costly, and the outcome is not certain” of our Quarterly Report on form 10-Q for the quarter ended March 31, 2019.
Results of Operations
The following is a summary of our consolidated results of operations:
Three Months Ended
June 30,		Six Months Ended
June 30,
(in thousands)2020201920202019
Revenues$66,010  $85,705  $156,714  $172,215  
Cost of goods sold40,162  41,132  92,864  83,558  
Gross profit25,848  44,573  63,850  88,657  
Operating expenses
Sales and marketing6,305  10,948  16,435  21,345  
General and administrative20,670  13,293  37,369  25,882  
Research and development4,418  5,795  8,466  10,724  
Total operating expenses31,393  30,036  62,270  57,951  
Operating (loss) income(5,545) 14,537  1,580  30,706  
Interest expense1,914  4,543  3,860  9,135  
Loss on extinguishment of debt—  3,196  —  3,196  
Other income(756) (1,312) (1,106) (2,499) 
(Loss) income before income taxes(6,703) 8,110  (1,174) 20,874  
Income tax expense309  1,698  2,501  4,513  
Net (loss) income$(7,012) $6,412  $(3,675) $16,361  







35
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(in thousands)2019 2018 2019 2018
Revenues$85,776
 $88,900
 $257,991
 $257,103
Cost of goods sold44,187
 44,015
 127,745
 126,063
Gross profit41,589
 44,885
 130,246
 131,040
Operating expenses       
Sales and marketing10,151
 10,478
 31,496
 33,248
General and administrative18,061
 13,609
 43,943
 37,727
Research and development4,860
 4,316
 15,584
 12,520
Total operating expenses33,072
 28,403
 91,023
 83,495
Operating income8,517
 16,482
 39,223
 47,545
Interest expense2,356
 4,446
 11,491
 12,794
Loss on extinguishment of debt—
 —
 3,196
 —
Other expense (income)804
 (799) (1,695) (2,055)
Income before income taxes5,357
 12,835
 26,231
 36,806
Income tax expense501
 3,566
 5,014
 9,581
Net income$4,856
 $9,269
 $21,217
 $27,225
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Comparison of the Periods Ended SeptemberJune 30, 20192020 and 20182019
Revenues
Segment revenues are summarized by product as follows:
Three Months Ended
June 30,		Six Months Ended
June 30,
(in thousands)20202019Change
$		Change
%		20202019Change
$		Change
%
U.S.
DEFINITY$39,544  $53,466  $(13,922) (26.0)%$94,554  $103,182  $(8,628) (8.4)%
TechneLite15,591  16,865  (1,274) (7.6)%34,947  36,923  (1,976) (5.4)%
Other nuclear5,804  9,127  (3,323) (36.4)%14,866  18,651  (3,785) (20.3)%
Rebates and allowances(3,540) (4,268) 728  (17.1)%(8,223) (8,132) (91) 1.1 %
Total U.S. revenues57,399  75,190  (17,791) (23.7)%136,144  150,624  (14,480) (9.6)%
International
DEFINITY821  1,163  (342) (29.4)%2,602  2,558  44  1.7 %
TechneLite3,318  3,241  77  2.4 %7,060  7,328  (268) (3.7)%
Other nuclear4,473  6,119  (1,646) (26.9)%10,911  11,715  (804) (6.9)%
Rebates and allowances(1) (8) 7  (87.5)%(3) (10) 7  (70.0)%
Total International revenues8,611  10,515  (1,904) (18.1)%20,570  21,591  (1,021) (4.7)%
Worldwide
DEFINITY40,365  54,629  (14,264) (26.1)%97,156  105,740  (8,584) (8.1)%
TechneLite18,909  20,106  (1,197) (6.0)%42,007  44,251  (2,244) (5.1)%
Other nuclear10,277  15,246  (4,969) (32.6)%25,777  30,366  (4,589) (15.1)%
Rebates and allowances(3,541) (4,276) 735  (17.2)%(8,226) (8,142) (84) 1.0 %
Total revenues$66,010  $85,705  $(19,695) (23.0)%$156,714  $172,215  $(15,501) (9.0)%
  Three Months Ended
September 30,		 Nine Months Ended
September 30,
(in thousands) 2019 2018 Change
$		 Change
%		 2019 2018 
Change
$
 
Change
%
U.S.                
DEFINITY $50,917
 $42,472
 $8,445
 19.9 % $154,099
 $131,081
 $23,018
 17.6 %
TechneLite 18,281
 19,374
 (1,093) (5.6)% 55,204
 56,780
 (1,576) (2.8)%
Other nuclear 9,355
 11,436
 (2,081) (18.2)% 28,006
 37,284
 (9,278) (24.9)%
Rebates and allowances (3,903) (3,027) (876) 28.9 % (12,035) (9,316) (2,719) 29.2 %
Total U.S. revenues 74,650
 70,255
 4,395
 6.3 % 225,274
 215,829
 9,445
 4.4 %
International       

        
DEFINITY 1,478
 1,283
 195
 15.2 % 4,036
 3,427
 609
 17.8 %
TechneLite 3,466
 11,244
 (7,778) (69.2)% 10,794
 18,711
 (7,917) (42.3)%
Other nuclear 6,186
 6,119
 67
 1.1 % 17,901
 19,138
 (1,237) (6.5)%
Rebates and allowances (4) (1) (3) 300.0 % (14) (2) (12) 600.0 %
Total International revenues 11,126
 18,645
 (7,519) (40.3)% 32,717
 41,274
 (8,557) (20.7)%
Total revenues $85,776
 $88,900
 $(3,124) (3.5)% $257,991
 $257,103
 $888
 0.3 %
The increasedecrease in the U.S. segment revenues for the three months ended SeptemberJune 30, 2019,2020, as compared to the prior year period is primarily due to an $8.4a $13.9 million increasedecrease in DEFINITY revenue as a result of higherlower unit volumes. This increasevolumes as a result of COVID-19. TechneLite revenue was $1.3 million lower driven by COVID-19 impact, partially offset by supplier disruptions in 2019. Other Nuclear revenue was lower than the prior year primarily associated with lower Xenon volume as a result of COVID-19, which was offset, in part, by a $1.1 million decrease in TechneLite revenue driven by temporary supplier disruptions, $2.1 million lower Xenon and other nuclear product volume as well as an increase inreduced rebate and allowance provisions.provisions of $0.7 million.
The increasedecrease in the U.S. segment revenues for the ninesix months ended SeptemberJune 30, 2019,2020, as compared to the prior year period is primarily due to a $23.0an $8.6 million increasedecrease in DEFINITY revenue as a result of higherlower unit volumes. This increasevolumes as a result of COVID-19 that was concentrated in the second quarter, offset by first quarter performance. TechneLite revenue was $2.0 million lower driven by COVID-19 impact, partially offset by supplier disruptions in part, by decreases2019. Other Nuclear revenue was lower than the prior year primarily associated with $4.1 million lower Xenon revenue with lower volume as a result of COVID-19.
The Progenics business contributed approximately $1.0 million of revenue to the U.S. segment for the three and other nuclear product volume, an increase in rebate and allowance provisions and lower TechneLite revenue driven by temporary supplier disruptions.six months ended June 30, 2020.
The decrease in the International segment revenues for the three months ended SeptemberJune 30, 2019,2020, as compared to the prior year period is primarily due to a decrease of $7.8 million in TechneLite revenue due primarily to opportunistic incremental demand in the prior year period and temporary supplier disruptions in the current period. This was offset, in part, by an increase of $0.2 million in DEFINITY revenuelower volume as a result in higher volume.of COVID-19.
The decrease in the International segment revenues for the ninesix months ended SeptemberJune 30, 2019,2020, as compared to the prior year period is primarily due to lower volume as a decreaseresult of $7.9 million in TechneLite revenue due primarily toCOVID-19 as well as opportunistic incremental demand of TechneLite in the prior year period and temporary supplier disruptions in the current period, lower volumesperiod.
36
Table of other nuclear products and a negative exchange rate impact of approximately $0.4 million, offset in part, by higher DEFINITY revenue driven by increased volume.Contents
Rebates and Allowances
Estimates for rebates and allowances represent our estimated obligations under contractual arrangements with third parties. Rebate accruals and allowances are recorded in the same period the related revenue is recognized, resulting in a reduction to revenue and the establishment of a liability which is included in accrued expenses. 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 or commission rate(s) to be earned over a contractual period.

An analysis of the amount of, and change in, reserves is summarized as follows:
(in thousands)Rebates and
Allowances
Balance, January 1, 2020$6,985 
Provision related to current period revenues8,216 
Adjustments relating to prior period revenues10 
Payments or credits made during the period(8,266)
Balance, June 30, 2020$6,945 
(in thousands)
Rebates and
Allowances
Balance, January 1, 2019$4,654
Provision related to current period revenues11,969
Adjustments relating to prior period revenues80
Payments or credits made during the period(11,376)
Balance, September 30, 2019$5,327


Gross Profit
Gross profit is summarized by segment as follows:
 Three Months Ended
September 30,		 Nine Months Ended
September 30,		Three Months Ended
June 30,		Six Months Ended
June 30,
(in thousands) 2019 2018 Change
$		 Change
%		 2019 2018 Change
$		 Change
%		(in thousands)20202019Change
$		Change
%		20202019Change
$		Change
%
U.S. $38,614
 $40,193
 $(1,579) (3.9)% $122,198
 $121,163
 $1,035
 0.9 %U.S.$24,697  $42,033  $(17,336) (41.2)%$59,760  $83,584  $(23,824) (28.5)%
International 2,975
 4,692
 (1,717) (36.6)% 8,048
 9,877
 (1,829) (18.5)%International1,151  2,540  (1,389) (54.7)%4,090  5,073  (983) (19.4)%
Total gross profit $41,589
 $44,885
 $(3,296) (7.3)% $130,246
 $131,040
 $(794) (0.6)%Total gross profit$25,848  $44,573  $(18,725) (42.0)%$63,850  $88,657  $(24,807) (28.0)%
The decrease in the U.S. segment gross profit for the three months ended SeptemberJune 30, 2019,2020, as compared to the prior year period is primarily due to lower DEFINITY, TechneLite, Xenon and other nuclear product unit volumes as well as an increasedue to COVID-19. This was offset by a decrease in rebate and allowance provisions. This was offset by higher DEFINITY volume.
The increasedecrease in the U.S. segment gross profit for the ninesix months ended SeptemberJune 30, 2019,2020, as compared to the prior year period is primarily due to higherlower DEFINITY, volume. This was offset by lower TechneLite, and Xenon unit volumes due to COVID-19 and an asset impairment loss on other nuclear product unit volumes, as well as an increase in rebate and allowance provisions.products.
The decrease in the International segment gross profit for the three and ninesix months ended SeptemberJune 30, 2019,2020, as compared to the prior year period is primarily due to lower volumes of TechneLiteDEFINITY and other nuclear products, offset in part, by higher DEFINITY gross profit driven by increased volume.product unit volumes due to COVID-19.
Sales and Marketing
Sales and marketing expenses consist primarily of salaries and other related costs for personnel in field sales, marketing and customer service functions. 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 expense is summarized by segment as follows:
          
Three Months Ended
June 30,		Six Months Ended
June 30,
(in thousands)20202019Change
$		Change
%		20202019Change
$		Change
%
U.S.$5,830  $10,369  $(4,539) (43.8)%$15,437  $20,338  $(4,901) (24.1)%
International475  579  (104) (18.0)%998  1,007  (9) (0.9)%
Total sales and marketing$6,305  $10,948  $(4,643) (42.4)%$16,435  $21,345  $(4,910) (23.0)%
37
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(in thousands)2019 2018 Change
$		 Change
%		 2019 2018 Change
$		 Change
%
U.S.$9,571
 $9,862
 $(291) (3.0)% $29,909
 $31,343
 $(1,434) (4.6)%
International580
 616
 (36) (5.8)% 1,587
 1,905
 (318) (16.7)%
Total sales and marketing$10,151
 $10,478
 $(327) (3.1)% $31,496
 $33,248
 $(1,752) (5.3)%
Table of Contents
The decrease in the U.S. segment sales and marketing expenses for the three and ninesix months ended SeptemberJune 30, 2019,2020, as compared to the prior year period is primarily due to reduced marketing promotional programs and travel due to COVID-19 impact, as well as lower employee-related costscosts. The Progenics business contributed approximately $0.3 million of expense to the U.S. segment for the three and market research activities.six months ended June 30, 2020.
The decrease in the International segment sales and marketing expenses for the three and nine months ended SeptemberJune 30, 2019,2020, as compared to the prior year period is primarily due to lower employee-related costs.

The International segment sales and marketing expenses for the six months ended June 30, 2020 is flat as compared to the prior year.
General and Administrative
General and administrative expenses consist of salaries and other related costs for personnel in executive, finance, legal, information technology and human resource functions. 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 expense is summarized by segment as follows:
          
Three Months Ended
September 30,		 Nine Months Ended
September 30,		Three Months Ended
June 30,		Six Months Ended
June 30,
(in thousands)2019 2018 Change
$		 Change
%		 2019 2018 Change
$		 Change
%		(in thousands)20202019Change
$		Change
%		20202019Change
$		Change
%
U.S.$17,926
 $13,339
 $4,587
 34.4 % $43,597
 $37,175
 $6,422
 17.3 %U.S.$20,522  $13,323  $7,199  54.0 %$37,077  $25,671  $11,406  44.4 %
International135
 270
 (135) (50.0)% 346
 552
 (206) (37.3)%International148  (30) 178  (593.3)%292  211  81  38.4 %
Total general and administrative$18,061
 $13,609
 $4,452
 32.7 % $43,943
 $37,727
 $6,216
 16.5 %Total general and administrative$20,670  $13,293  $7,377  55.5 %$37,369  $25,882  $11,487  44.4 %
The U.S. segment general and administrative expenses increased for the three and six months ended SeptemberJune 30, 2019 increased as compared to the prior year period primarily due to acquisition-related costs associated with the pending acquisition of Progenics which was offset, in part, by lower information technology costs as a result of prior year efficiency projects.
The U.S. segment general and administrative expenses for the nine months ended September 30, 2019 increased2020 as compared to the prior year period. The primary driver was an increase in acquisition-related costs associated with the pending acquisition of Progenics and higher employee-related costs. This increase was offset in part, by lower campus consolidationemployee-related costs driven by COVID related measures. In addition, the Progenics business contributed approximately $2.9 million of expense to the U.S. segment for the three and information technology costs as a result of prior year efficiency projects.six months ended June 30, 2020.
The International segment general and administrative expenses increased for the three and six months ended SeptemberJune 30, 2019 decreased as compared to the prior year period due to lower employee-related costs.
The International segment general and administrative expenses decreased for the nine months ended September 30, 2019,2020 as compared to the prior year period driven primarily by an insurance benefit received in the current period.2019 which was partly offset by lower employee related costs in 2020.
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. We do not allocate research and development expenses incurred in the U.S. to our International segment.
Research and development expense is summarized by segment as follows:
          
Three Months Ended
September 30,		 Nine Months Ended
September 30,		Three Months Ended
June 30,		Six Months Ended
June 30,
(in thousands)2019 2018 Change
$		 Change
%		 2019 2018 Change
$		 Change
%		(in thousands)20202019Change
$		Change
%		20202019Change
$		Change
%
U.S.$4,729
 $4,095
 $634
 15.5 % $15,031
 $11,300
 $3,731
 33.0 %U.S.$4,345  $5,652  $(1,307) (23.1)%$8,258  $10,302  $(2,044) (19.8)%
International131
 221
 (90) (40.7)% 553
 1,220
 (667) (54.7)%International73  143  (70) (49.0)%208  422  (214) (50.7)%
Total research and development$4,860
 $4,316
 $544
 12.6 % $15,584
 $12,520
 $3,064
 (24.5)%Total research and development$4,418  $5,795  $(1,377) (23.8)%$8,466  $10,724  $(2,258) 21.1 %
The increasedecrease in the U.S. segment research and development expenses for the three and six months ended SeptemberJune 30, 2019,2020, as compared to the prior year period is primarily due to clinical research expenses related to DEFINITY studies.
The increase in the U.S. segment research and development expenses for the nine months ended September 30, 2019, as compared to the prior year period is primarily due to driven by clinical research expenses related to DEFINITY studies a one-time payment relatingcompleting and lower employee related expenses. The Progenics business contributed approximately $1.2 million of expense to a collaborationthe U.S. segment for the three and license agreement entered into in Q2 2019 and higher employee-related costs.six months ended June 30, 2020.
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The decrease in the International segment research and development expenses for the three and ninesix months ended SeptemberJune 30, 2019,2020, as compared to the prior year period is primarily driven by a European Phase 4 study for one of our products in the prior year.regulatory costs related to Brexit matters.

Interest Expense
Interest expense decreased by approximately $1.3$5.3 million for the ninesix months ended SeptemberJune 30, 20192020 as compared to the prior year period due to the refinancing of our existing indebtedness.indebtedness in the second quarter of 2019 which reduced our underlying principal amount and decreased interest rates on our long-term debt.
Loss on Extinguishment of Debt
For the nine months ended September 30, 2019, we incurred a $3.2 million loss on extinguishment of debt in connection with the refinancing of our existing indebtedness.
Income Tax Expense
Income tax expense is summarized as follows:
Three Months Ended
September 30,		 Nine Months Ended
September 30,		Three Months Ended
June 30,		Six Months Ended
June 30,
(in thousands)2019 2018 Change
$		 Change
%		 2019 2018 Change
$		 Change
%		(in thousands)20202019Change
$		Change
%		20202019Change
$		Change
%
Income tax expense$501
 $3,566
 $(3,065) (86.0)% $5,014
 $9,581
 $(4,567) (47.7)%Income tax expense$309  $1,698  $(1,389) (81.8)%$2,501  $4,513  $(2,012) (44.6)%
The income tax expense for the three and ninesix months ended SeptemberJune 30, 2019 and 20182020 was primarily due to the income generated in the periodrecording of non-deductible transaction costs and the accrual of interest associated with uncertain tax positions, offset by tax benefits arising from stock compensation deductions and, with respect to the three and nine months ended September 30, 2019, also offset by the reversal of an uncertain tax position.positions.
We regularly assess our ability to realize our deferred tax assets. Assessing the realizability of deferred tax assets requires significant management judgment. In determining whether our deferred tax assets are more-likely-than-not realizable, we evaluate all available positive and negative evidence, and weigh the objective evidence and expected impact. We continue to recordAs of June 30, 2020, we recorded valuation allowances of $3.0 million against the net deferred tax assets of certain foreign subsidiaries, as well as a valuation allowance of $0.7 million against certain of our foreign net state deferred tax assets.assets due to the potential expiration of certain state tax losses and tax credits prior to utilization.
On June 19, 2020, we acquired the stock of Progenics Pharmaceuticals, Inc. in a transaction that is expected to qualify as a tax-deferred reorganization under Section 368 of the Internal Revenue Code of 1986, as amended. The transaction resulted in an ownership change of Progenics under Section 382 and a limitation on the utilization of Progenics’ pre-transaction tax attributes. All pre-transaction research credits and Orphan drug credits have been removed from the balance sheet, and the gross carrying value of the tax loss carryforwards reduced to their realizable value on the opening balance sheet, in accordance with the Section 382 limitation. Significant deferred tax liabilities arising from the purchase accounting basis step-up in identified intangibles were also recorded as part of the purchase accounting, resulting in a small net overall deferred tax liability for Progenics after the application of purchase accounting.
Our effective tax rate for each reporting period is presented as follows:
  Nine Months Ended
September 30,
  2019 2018
Effective tax rate 19.1% 26.0%
Six Months Ended
June 30,
20202019
Effective tax rate(213.0)%21.6%
Our effective tax rate in fiscal 20192020 differs from the U.S. statutory rate of 21% principally due to the impact of U.S. state taxes, non-deductible transaction costs, and the accrual of interest on uncertain tax positions, offset by tax benefits arising from stock compensation deductions, and by the reversal of an uncertain tax position in the third quarter which provided $1.5 million of net tax benefit.positions.
The decrease in the effective income tax rate for the ninesix months ended SeptemberJune 30, 20192020 as compared to the prior year period is primarily due to the lower amount of pre-tax income driving an increased 2019 tax benefits arisingrate impact from the reversalaccrual of an unrecognizedinterest on uncertain tax positionpositions in the current period and an increase in stock compensation deductions.non-deductible transaction costs.
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Liquidity and Capital Resources
Cash Flows
The following table provides information regarding our cash flows:
Nine Months Ended
September 30,		Six Months Ended
June 30,
(in thousands)2019 2018(in thousands)20202019
Net cash provided by operating activities$57,963
 $43,887
Net cash provided by operating activities$7,252  $31,521  
Net cash used in investing activities$(17,320) $(11,766)
Net cash provided by (used in) investing activitiesNet cash provided by (used in) investing activities$2,609  $(13,984) 
Net cash used in financing activities$(76,058) $(3,734)Net cash used in financing activities$(10,218) $(74,158) 
Net Cash Provided by (Used in) Operating Activities
Net cash provided by operating activities of $58.0$7.3 million in the ninesix months ended SeptemberJune 30, 20192020 was driven primarily by net income of $21.2 million plus $9.8$7.8 million of depreciation, amortization and accretion expense, impairment of long-lived assets of $7.3 million, stock-based compensation expense of $9.5$6.5 million, and changes in deferred taxes of $3.8 million and debt extinguishment expense of $3.2$1.1 million. These net sources of cash were further increased by a net increase of $7.3 million related to movements in our working capital accounts during the period. The overall increases in cash from our working capital accounts were primarily driven by improved collections related to our accounts receivables and the timing of purchases.
Net cash provided by operating activities of $43.9 million in the nine months ended September 30, 2018 was driven primarily by net income of $27.2 million plus $10.5 million of depreciation, amortization and accretion expense, changes in deferred taxes of $7.2 million and $6.4 million of stock-based compensation expense. These net sources of cash were offset by a net loss of $3.7 million and a net decrease of $12.4$14.4 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 timingpayment of inventory purchases during the periodprior year annual bonuses as well as higher accounts receivable aschange in inventory related to COVID-19 impact on products and the timing of batch processes.
Net cash provided by operating activities of $31.5 million in the six months ended June 30, 2019 was driven primarily by net income of $16.4 million plus $6.6 million of depreciation, amortization and accretion expense, debt extinguishment expense of $3.2 million, stock-based compensation expense of $6.1 million and changes in deferred taxes of $2.4 million. These net sources of cash were offset by a resultnet decrease of opportunistic incremental demand for TechneLite$5.2 million related to movements in our International segment.working capital accounts during the period. The overall decreases in cash from our working capital accounts were primarily driven by the payment of prior year annual bonuses.
Net Cash Used inProvided by Investing Activities
Net cash used in investing activities during the ninesix months ended SeptemberJune 30, 20192020 reflected $17.3$17.6 million of acquired cash related to the non-cash acquisition of Progenics offset by $10.0 million in lending on a note receivable to Progenics prior to the acquisition and $5.0 million in capital expenditures.
Net cash used in investing activities during the ninesix months ended SeptemberJune 30, 20182019 reflected $12.8$14.0 million in capital expenditures offset by the cash proceeds of $1.0 million received from the sale of land.expenditures.
Net Cash Used in Financing Activities
Net cash used in financing activities during the ninesix months ended SeptemberJune 30, 2020 is primarily attributable to the payments on long-term debt and other borrowings of $7.0 million related to the 2019 Term Facility and Royalty-Backed Loan and payments for minimum statutory tax withholding related to net share settlement of equity awards of $2.0 million.
Net cash used in financing activities during the six months ended June 30, 2019 is primarily attributable to the net cash outflow of approximately $73 million in connection with the refinancing of our previous 2017 Facility payments on long-term debt of $2.5 million related to the 2019 Term Facility and payments for minimum statutory tax withholding related to net share settlement of equity awards of $2.4$2.1 million. Starting in 2019, we require certain senior executives to cover tax liabilities resulting from the vesting of their equity awards pursuant to sell-to-cover transactions under 10b5-1 plans.
Net cash used in financing activities during the nine months ended September 30, 2018 reflected payments for minimum statutory tax withholding related to net share settlement of equity awards of $3.2 million, payments on long-term debt of $2.1 million, offset by proceeds of $1.2 million from the exercise of stock options.
External Sources of Liquidity
In June 2019, we refinanced our 2017 $275 million five-year term loan facility with the 2019 Term Facility. In addition, we replaced our $75 million revolving facility with the 2019 Revolving 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.agent (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 million, plus additional amounts, in certain circumstances.
We are permitted to voluntarily prepay the 2019 Term Loans, in whole or in part, without premium or penalty. The 2019 Term Facility requires us to make mandatory prepayments of the outstanding 2019 Term Loans in certain circumstances. The 2019 Term Facility amortizes at 5.00% per year through September 30, 2022 and 7.5% thereafter, until its June 27, 2024 maturity date.
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 million at any time outstanding. The 2019 Revolving Facility includes a $20 million sub-facility for the issuance of Letters of Credit. The 2019 Revolving Facility includes
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a $10 million sub-facility for Swingline Loans. The Letters of Credit, Swingline Loans and the borrowings under the 2019 Revolving Facility are expected to be used for working capital and other general corporate purposes.
Please refer to Note 9, Long-term debt, net and other borrowings,our Form 10-K for fiscal year ended December 31, 2019 for further details on the 2019 Facility.
On April 6, 2020, the Company drew down $100.0 million under its 2019 Revolving Facility, and subsequently repaid such amounts on June 9, 2020.
On June 19, 2020, we amended our 2019 Credit Agreement (“the Amendment”) as a result of the impact of the COVID-19 pandemic on our business and operations and the near-term higher level of indebtedness resulting from our decision not to immediately repay the Progenics debt secured by the RELISTOR royalties following our acquisition of Progenics.
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) has been waived from the date of the Amendment through December 31, 2020. The maximum total net leverage ratio and interest coverage ratio permitted by the financial covenant is displayed in the table below:
2020 Amended Credit Agreement
PeriodTotal Net Leverage Ratio
Q1 20215.50 to 1.00
Q2 20213.75 to 1.00
Thereafter3.50 to 1.00
PeriodInterest Coverage Ratio
Q2 2020 to Q1 20212.00 to 1.00
Thereafter3.00 to 1.00
The Amendment also introduces a new financial covenant requiring Consolidated Liquidity (as defined in the Amended Credit Agreement) to be no less than $150.0 million. The Consolidated Liquidity covenant is tested on a continuing basis beginning on the date of the Amendment and ending on the date on which we deliver a compliance certificate for the fiscal quarter ending March 31, 2021.
For the period beginning on the date of the Amendment and ending on the Adjustment Date (as defined in the Amended Credit Agreement) for the fiscal quarter ending March 31, 2021, loans under the Amended Credit Agreement bear interest at LIBOR plus 3.25% or the Base Rate plus 2.25%. On and after the Adjustment Date for the fiscal quarter ending on March 31, 2021, loans bear interest at LIBOR plus a spread that ranges from 1.50% to 3.00% or the Base Rate plus a spread that ranges from 0.50% to 2.00%, in each case based on our Total Net Leverage Ratio.
The commitment fee applicable to the Revolving Facility is 0.50% until the Adjustment Date for the fiscal quarter ending March 31, 2021. On and after the Adjustment Date for the fiscal quarter ending on March 31, 2021, the commitment fee ranges from 0.15% to 0.40% based on our Total Net Leverage Ratio.
On June 19, 2020, as a result of the Progenics Transaction, 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 have no recourse to Progenics or any of its assets other than the right to receive royalty payments from the commercial sales of RELISTOR products owed under Progenics’ license agreement with Salix Pharmaceuticals, Inc., a wholly-owned subsidiary of Bausch. The RELISTOR royalty payments will be used to repay the principal and interest on the loan. The Royalty-Backed Loan bears interest at a per annum rate of 9.5% and matures on June 30, 2025. On June 22, 2020, HCRP waived the automatic acceleration of the Royalty-Backed Loan that otherwise would have been triggered by the consummation of the Progenics Transaction and MNTX Royalties agreed not to prepay the loan until after December 31, 2020.
Under the terms of the loan agreement, payments of interest and principal, if any, are made on the last day of each calendar quarter out of RELISTOR royalty payments received since the immediately-preceding payment date. On each payment date, 50% of RELISTOR royalty payments received since the immediately-preceding payment date in excess of accrued interest on the loan are used to repay the principal of the loan, with the balance retained by us. Starting on September 30, 2021, all of the RELISTOR royalties
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received since the immediately-preceding payment date will be used to repay the interest and outstanding principal balance until the balance is fully repaid.
Our ability to fund our future capital needs will be affected by our ability to continue to generate cash from operations and may be affected by our ability to access the capital markets, money markets or other sources of funding, as well as the capacity and terms of our financing arrangements.

We may from time to time repurchase or otherwise retire our debt and take other steps to reduce our debt or otherwise improve our balance sheet. These actions may include prepayments of our term loans or other retirements or refinancing of outstanding debt, privately negotiated transactions or otherwise. The amount of debt that may be retired, if any, could be material and would be decided at the sole discretion of our Board of Directors and will depend on market conditions, our cash position and other considerations.
Funding Requirements
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;
•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 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;
The pricing environment and the level of product sales of our currently marketed products, particularly DEFINITY and any additional products that we may market in the future;
Revenue mix shifts and associated volume and selling price changes that could result from contractual status changes with key customers and additional competition;
•Our investment in the further clinical development and commercialization of existing products and development candidates;candidates, including the newly acquired Progenics assets AZEDRA, PyL, 1095 and PSMA AI;
•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;
•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; and
•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. If we experience one or more of these events in the future, we may be required to implement further 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.
If our capital resources become insufficient to meet our future capital requirements, we would need to finance our cash needs through public or private equity offerings, debt financings, assets securitizations, sale-leasebacks or other financing or strategic alternatives, to the extent such transactions are permissible under the covenants of our Credit Agreement. Additional equity or debt financing, or other transactions, may not be available on acceptable terms, if at all. If any of these transactions require an amendment or waiver under the covenants in our Credit Agreement, which could result in additional expenses associated with obtaining the amendment or waiver, we will seek to obtain such a waiver to remain in compliance with those covenants. 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.
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At SeptemberJune 30, 2019,2020, our only current committed external source of funds is our borrowing availability under our 2019 Revolving Facility. We had $78.1$90.3 million of cash and cash equivalents at SeptemberJune 30, 2019.2020. Our 2019 Facility, as amended, contains a number of affirmative, negative, reporting and financial covenants, in each case subject to certain exceptions and materiality thresholds. Incremental borrowings under the 2019 Revolving Facility, as amended, may affect our ability to comply with the covenants in the 2019 Facility, as amended, including the financial covenants restricting consolidated net leverage and interest coverage. Accordingly, we may be limited in utilizing the full amount of our 2019 Revolving Facility, as amended, as a source of liquidity.
In addition, on October 1, 2019, we entered into the Merger Agreement to acquire Progenics in an all-stock transaction. Under the terms of the Merger Agreement, we will acquire all of the issued and outstanding shares of Progenics common stock at a fixed exchange ratio. Progenics shareholders will receive 0.2502 shares of our common stock for each share of Progenics common stock, representing an approximately 35% aggregate ownership stake in the combined company. The Progenics Transaction was unanimously approved by the Boards of Directors of both companies and is subject to the terms and conditions set forth in the

agreement, including, among other things, the affirmative vote of a majority of the outstanding shares of common stock of Progenics and a majority of votes cast by the holders of the common stock of the Company, and the expiration or early termination of the applicable waiting period under the HSR Act, which, as noted above, has been obtained by grant of early termination of the HSR Act waiting period on October 25, 2019.  The Progenics Transaction is expected to close in the first quarter of 2020. Althoughconnection with the Progenics Transaction, is structured as a stock-for-stock exchange,which we will incurclosed in June 2020, we incurred legal, accounting, financial advisory, consulting and printing fees, and transition, integration and other costs which we intend to fundfunded from our available cash and the available cash of Progenics. SeeThe CVRs we issued in the Company’s Current Report on Form 8-K dated October 1, 2019Progenics Transaction entitle holders thereof to future cash payments of 40% of PyL net sales over (i) $100 million in 2022 and (ii) $150 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 Transaction, exceed 19.9% (which we estimate could be approximately $100 million) of the total consideration we pay in the Progenics Transaction. Refer to Note 4, “Fair Value of Financial Instruments”, for further information regarding the Merger Agreement and the proposed Progenics acquisition.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.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements require us to make estimates and judgments that affect our reported assets and liabilities, revenues and expenses, and other financial information. Actual results may differ materially from these estimates under different assumptions and conditions. 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 ninesix months ended SeptemberJune 30, 2019.2020, except as set forth below. For further information, refer to our summary of significant accounting policies and estimates in our Annual Report on Form 10-K filed for the year ended December 31, 2018.2019.
Business Combinations
We account for business combinations using the acquisition method of accounting. We recognize the assets acquired and liabilities assumed in business combinations on the basis of their fair values at the date of acquisition. We assess the fair value of assets acquired, including intangible assets, and liabilities assumed using a variety of methods. Each asset acquired and liability assumed is measured at fair value from the perspective of a market participant. The method used to estimate the fair values of intangible assets incorporates significant assumptions regarding the estimates a market participant would make in order to evaluate an asset, including a market participant’s use of the asset and the appropriate discount rates. Acquired in-process research and development (“IPR&D”) is recognized at fair value and initially characterized as an indefinite-lived intangible asset, irrespective of whether the acquired IPR&D has an alternative future use. Any excess purchase price over the fair value of the net tangible and intangible assets acquired is allocated to goodwill. Transaction costs and restructuring costs associated with a business combination are expensed as incurred.
The fair values assigned to tangible and intangible assets acquired and liabilities assumed are based on our estimates and assumptions, as well as other information we have compiled, including valuations that utilize customary valuation procedures and techniques. If the actual results differ from the estimates and assumptions used in these estimates, it could result in a possible impairment of the intangible assets and goodwill, a required acceleration of the amortization expense of finite-lived intangible assets or the recognition of additional consideration, which would be expensed.
During the measurement period, which extends no later than one year from the acquisition date, we may record certain adjustments to the carrying value of the assets acquired and liabilities assumed with the corresponding offset to goodwill. After the measurement period, all adjustments are recorded in the condensed consolidated statements of operations as operating expenses or income.
Intangible and Long-Lived Assets
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We test intangible and long-lived assets for recoverability whenever events or changes in circumstances suggest that the carrying value of an asset or group of assets may not be recoverable. We measure the recoverability of assets to be held and used by comparing the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If those assets are considered to be impaired, the impairment equals the amount by which the carrying amount of the assets exceeds the fair value of the assets. Any impairments are recorded as permanent reductions in the carrying amount of the assets. Long-lived assets, other than goodwill and other intangible assets, that are held for sale are recorded at the lower of the carrying value or the fair market value less the estimated cost to sell.
Intangible assets, consisting of trademarks, customer relationships, currently marketed products, licenses and developed technology are amortized in a method equivalent to the estimated utilization of the economic benefit of the asset.
Our IPR&D represents intangible assets acquired in a business combination that are used in research and development activities but have not yet reached technological feasibility, regardless of whether they have alternative future use. The primary basis for determining the technological feasibility or completion of these projects is whether we have obtained regulatory approval to market the underlying products in an applicable geographic region. Because obtaining regulatory approval can include significant risks and uncertainties, the eventual realized value of the acquired IPR&D projects may vary from their fair value at the date of acquisition. We classify IPR&D acquired in a business combination as an indefinite-lived intangible asset until the completion or abandonment of the associated research and development efforts. Upon completion of the associated research and development efforts, we will determine the useful life and begin amortizing the assets to reflect their use over their remaining lives. Upon permanent abandonment, we write-off the remaining carrying amount of the associated IPR&D intangible asset. We test our IPR&D assets at least annually or when a triggering event occurs that could indicate a potential impairment and we recognize any impairment loss in our condensed consolidated statements of operations.
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 have provided this financial assurance in the form of a $28.2 million surety bond.
Since inception, we have not engaged in any other off-balance sheet arrangements, including structured finance, special purpose entities or variable interest entities.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
For quantitative and qualitative disclosures about market risk, except as set forth below, see Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of our Annual Report on Form 10-K for the year ended December 31, 2018.2019. Our exposures to market risk have not changed materially since December 31, 2018.2019.
Foreign CurrencyInterest Rate Risk
We have entered into foreign currency forward contracts primarilyThe Company uses interest rate swaps to reduce the effectsvariability in cash flows associated with a portion of fluctuating foreign currencythe Company’s forecasted interest payments on its variable rate debt. As of June 30, 2020, the Company had entered into interest rate swap contracts to fix the LIBOR rate on a notional amount of $100.0 million through May 31, 2024. The average fixed LIBOR rate on the interest rate swaps as of June 30, 2020 was approximately 0.82%. This agreement involves the receipt of floating rate amounts in exchange rates. We may enter into additional foreign currency forward contracts when deemed appropriate. We do not enter into foreign currency forward contracts for speculative or trading purposes.fixed rate interest payments over the life of the agreement without an exchange of the underlying principal amount. Please refer to Note 12, “Derivative Instruments”, for further details on the interest rate swaps.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), its principal executive officer and principal financial officer, respectively, has evaluated the effectiveness of the Company’s disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act. Based on that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) were effective as of the period covered by this report.
Changes in Internal Controls Over Financial Reporting
As of June 30, 2020, management is in the process of evaluating and integrating the internal controls of the acquired Progenics business into the Company's existing operations. During the quarter, the Company implemented controls over the accounting and disclosures related to the business combination and integration of the Progenics business. There were no other material changes in ourthe
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Company's internal control over financial reporting during the quarter ended SeptemberJune 30, 20192020, that havehas materially affected, or areis reasonably likely to materially affect, the Company's internal control over financial reporting. Additionally, as a result of the COVID-19 pandemic, certain employees began working remotely in March. Notwithstanding these changes to the working environment, we have not identified any material changes in our internal control over financial reporting due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 situation to determine any potential impact on the design and operating effectiveness of our internal controls over financial reporting.

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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we arethe Company is a party to various legal proceedings arising in the ordinary course of business. In addition, we havethe Company has in the past been, and may in the future be, subject to investigations by governmental and regulatory authorities, which expose usit to greater risks associated with litigation, regulatory or other proceedings, as a result of which wethe Company could be required to pay significant fines or penalties. The costs and outcome of litigation, regulatory or other proceedings cannot be predicted with certainty, and some lawsuits, claims, actions or proceedings may be disposed of unfavorably to us.the Company and could have a material adverse effect on the Company’s results of operations or financial condition. In addition, intellectual property disputes often have a risk of injunctive relief which, if imposed against us,the Company, could materially and adversely affect ourits financial condition or results of operations.
In OctoberAs of June 30, 2020, the Company had the following material ongoing litigation to which the Company was a party:
RELISTOR Subcutaneous Injection
Between November 19, 2015 and September 18, 2017, Progenics, Salix, Valeant (now Bausch) and Wyeth filed multiple lawsuits against Mylan Pharmaceuticals and certain of its affiliates (collectively, “Mylan”) in the United States District Court for the District of New Jersey for infringement of certain U.S. patents based upon Mylan’s filing of multiple ANDAs seeking to obtain approval to market a generic version of RELISTOR subcutaneous injection before some or all of those patents expire. These actions were later consolidated into two separate actions in the District of New Jersey.
On May 1, 2018, in the lead action, the Court granted Plaintiffs’ motion for partial summary judgment as to the validity of a particular claim that Mylan had admitted it infringed. On May 23, 2018, the Court entered an order for final judgment in favor of Plaintiffs and against Mylan on that particular claim. As a result, trial on the merits in the lead action was adjourned, allowing trial, if necessary, to be consolidated with the lagging, second action. Fact discovery has concluded in the lagging case, but deadlines for expert discovery have not yet been set.
On May 25, 2018, Mylan filed a Notice of Appeal to the United States Court of Appeals for the Federal Circuit (“CAFC”). On April 8, 2020, the CAFC issued its decision reversing the Court’s grant of summary judgment and remanding for further proceedings. On June 22, 2020, Plaintiffs filed a petition for rehearing/rehearing en banc, and on July 24, 2020, that petition was denied.
RELISTOR Tablets - Actavis
Between December 6, 2016 and December 8, 2017, Progenics, Salix, Bausch, and Wyeth filed suit against Actavis, Actavis LLC, Teva Pharmaceuticals USA, Inc., and Teva Pharmaceuticals Industries Ltd. (collectively, “Actavis”) in the United States District Court for the District of New Jersey for infringement of certain U.S. patents based upon Actavis’s filing of an ANDA seeking to obtain approval to market a generic version of RELISTOR tablets before some or all of those patents expire. The actions were later consolidated into a single action in the District of New Jersey.
On May 6-9, 2019, we were awarded damages in our arbitration with Pharmalucence in connection with a Manufacturingbench trial was held, and Supply Agreement, dated November 12, 2013, under which Pharmalucence agreed to manufactureon July 17, 2019, the Court issued an Order finding the asserted claims of a certain U.S. patent valid and supply DEFINITY for us.infringed. The commercial arrangement contemplated byCourt additionally ordered that agreement was repeatedly delayed and ultimately never successfully realized. After extended settlement discussions between Sun Pharma, the ultimate parenteffective date of Pharmalucence, and us, which didany approval of Actavis’s ANDA may not lead to a mutually acceptable outcome, on November 10, 2017, webe earlier than the expiration date of that patent. Actavis filed an arbitration demand (and later an amended arbitration demand)appeal of the Court’s decision with the American Arbitration AssociationCAFC on August 13, 2019. The matter is currently pending on appeal at the CAFC and merits briefing is underway. Actavis’s opening brief was filed February 6, 2020. The deadline for Plaintiffs to file their responsive brief is currently September 15, 2020.
On June 13, 2019, Progenics, Salix, Bausch, and Wyeth filed another suit against Pharmalucence, alleging breachActavis in the United States District Court for the District of contract, breachNew Jersey for infringement of a separate, and at that time, recently granted U.S. patent based upon Actavis’s filing of an ANDA seeking to obtain approval to market a generic version of RELISTOR tablets before this patent expires. Litigation in this action is underway, and fact discovery has not yet begun.
RELISTOR European Opposition Proceedings
In addition to the above described ANDA notifications, in October 2015, Progenics received notices of opposition to three European patents relating to methylnaltrexone. Notices of opposition were filed separately by each of Actavis Group PTC ehf and Fresenius Kabi Deutschland GmbH. Between May 11, 2017 and July 4, 2017, the opposition division provided notice that the three European patents would be revoked. Each of these matters are on appeal with the European Patent Office. Oral proceedings are set to occur on September 22, 2020, November 17, 2020 and November 18, 2020. For each of the covenantabove-described RELISTOR proceedings, Progenics and Bausch continue to cooperate closely to vigorously defend and enforce RELISTOR intellectual property rights. Pursuant to the RELISTOR license agreement between Progenics and Bausch, Bausch has the first right to enforce the intellectual property rights at issue and is responsible for the costs of good faith such enforcement. Because the outcome of litigation is uncertain
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and fair dealing, tortious misrepresentation and violationin these RELISTOR proceedings the Company does not control the enforcement of the Massachusetts Consumer Protection Law, also knownintellectual property rights at issue, no assurance can be given as Chapter 93A.to how or when any of these RELISTOR proceedings will ultimately be resolved.
German PSMA-617 Litigation
On November 8, 2018, Molecular Insight Pharmaceuticals, Inc., a subsidiary of Progenics (“MIP”), filed a complaint against the University of Heidelberg (the “University”) in the District Court of Mannheim in Germany. In Octoberthis Complaint, MIP claimed that the discovery and development of PSMA-617 was related to work performed under a research collaboration sponsored by MIP. MIP alleged that the University breached certain contracts with MIP and that MIP is the co-owner of inventions embodied in certain worldwide patent filings related to PSMA-617 that were filed by the University in its own name. On February 27, 2019, we were awardedEndocyte, Inc., a totalwholly owned subsidiary of approximately $3.5 million, consisting of damages, pre-judgment interest, and certain arbitration fees, compensation and expenses. Pharmalucence hasNovartis AG, filed a motion to reduceintervene in the award to $2.3 million (to correct for a purported “computational error”). We will recordGerman litigation. Endocyte is the financial statement impactexclusive licensee of the settlement awardpatent rights that are the subject of the German proceedings.
On November 27, 2018, MIP requested that the European Patent Office (“EPO”) stay the examination of a certain European Patent (EP) and related Divisional Applications, pending a decision from the German District Court on MIP’s Complaint. On December 10, 2018, the EPO granted MIP’s request and stayed the examination of the patent and patent applications effective November 27, 2018. MIP filed a Confirmation of Ownership with the United States Patent and Trademark Office (“USPTO”) in the corresponding US patent applications. MIP’s filing with the USPTO takes the position that, in light of the collaboration and contracts between MIP and the University, MIP is the co-owner of these pending U.S. patent applications. On March 6, 2020, MIP filed with the USPTO a notice stating that the Power of Attorney in certain pending US patent applications was signed by less than all applicants or owners of the applications.
On February 27, 2019, the German District Court set €0.4 million as the amount MIP must deposit with the Court as security in the event of an unfavorable final decision on the merits of the dispute. The Court held the first oral hearing in the case on August 6, 2019. The Court considered procedural matters and granted the parties the right to make further submissions. A further oral hearing occurred July 23, 2020, during which the Court heard live testimony from several witnesses.
Progenics is vigorously enforcing its rights in this German proceeding. Because Progenics is the plaintiff, if unsuccessful in this proceeding, Progenics may also have liability for Court fees and fees and disbursements of defendant’s and intervenor’s counsel, such fees and disbursements to be at least partially covered by the aforementioned cash security deposited with the Court. Because the outcome of litigation is uncertain, no assurance can be given as to how or when this German proceeding will ultimately be resolved.
Litigation Related to the proceedsMerger
Nine purported stockholders of Progenics filed ten lawsuits alleging, among other things, that Progenics and the members of the Progenics Board of Directors violated Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 17 C.F.R. § 244.100 and Rule 14a-9 promulgated under the Exchange Act, by misstating or omitting certain allegedly material information in the S-4 Registration Statement filed with the Securities and Exchange Commission (“SEC”) on November 12, 2019, the amended S-4 Registration Statement filed with the SEC on March 16, 2020, and/or the Schedule 14A proxy statement filed with the SEC on March 19, 2020 related to the Merger. Two of the actions alleged that the Company and Plato Merger Sub, Inc. (“Merger Sub”) violated Section 14(a) and/or Section 20(a) of the Exchange Act. One of the actions further alleged that the members of the Progenics Board breached their fiduciary duties of care, loyalty and good faith to the stockholders of Progenics related to the Merger, that Progenics, the Company and Merger Sub aided and abetted such breaches of fiduciary duty, and that the Company and Merger Sub violated Section 14(a) of the Exchange Act. All such lawsuits have been voluntarily dismissed, with the last of the cases dismissed on June 23, 2020.
Whistleblower Complaint
In July 2019, Progenics received notification of a complaint submitted by Dr. Syed Mahmood, the former Vice President of Medical Affairs for Progenics, to the Occupational Safety and Health Administration of the United States Department of Labor (“DOL”), alleging that the termination of his employment by Progenics was in violation of Section 806 of the Sarbanes-Oxley Act of 2002 (“SOX”). Dr. Mahmood sought reinstatement to his former position of Vice President of Medical Affairs, back pay, front pay in lieu of reinstatement, interest, attorneys’ fees and costs incurred, and special damages. In March 2020, Dr. Mahmood filed a complaint in the U.S. District Court for the Southern District of New York (as permitted by SOX because the DOL had not issued a decision within 180 days). Dr. Mahmood’s federal complaint asserts claims of violation of Section 806 of SOX. The DOL action has been dismissed and the matter will proceed in federal district court. Progenics’ Answer to the Complaint is presently due by August 26, 2020.
The Company believes the claims in this matter are received.without merit, and the Company has meritorious defenses to the claims. The Company intends to vigorously defend against the claims.
As
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Table of September 30, 2019, except as disclosed above we had no material ongoing litigation in which we were a party. In addition, we had no material ongoing regulatory or other proceeding and no knowledge of any investigations by governmental or regulatory authorities in which we are a target, in either case that we believe could have a material and adverse effect on our current business.Contents
Item 1A. Risk Factors
There have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 20182019 and our Quarterly ReportsReport on Form 10-Q for the periodsquarter ended March 31, 2019 and June 30, 2019,2020, except as set forth below.below which generally relate to the COVID-19 pandemic and the Progenics business and assets we have recently acquired:
The Progenics Transaction may not occur,COVID-19 pandemic could have a material impact on our business, results of operation and if it does, it may not be accretivefinancial condition, operating results, cash flows and prospects.
In December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan China. Less than four months later, in March 2020, the World Health Organization declared COVID-19 a pandemic. While the outbreak initially was largely concentrated in China and caused significant disruptions in its economy, the virus has now spread to many other countries and regions, and every state within the United States, including Massachusetts, where our primary offices and manufacturing facility are located, as well as New York, New Jersey, Puerto Rico, Canada and Sweden, where our other offices and manufacturing facilities are located.
Towards the end of the first quarter of 2020 we began to experience, and through the date of this filing we are continuing to experience, impacts to our business and operations related to the COVID-19 pandemic, including the impact of stay-at-home mandates and advisories, and a decline in the volume of procedures using our products. In response to the pandemic, healthcare providers have, and may cause dilutionneed to further, reallocate resources, such as physicians, staff and facilities, as they prioritize limited resources and personnel capacity to focus on the treatment of patients with COVID-19 and implement limitations on access to hospitals and other medical institutions due to concerns about the potential spread of COVID-19 in such settings. These actions have significantly delayed the provision of other medical care including procedures involving our products, having an adverse effect on our revenue. These measures and challenges may continue for the duration of the COVID-19 pandemic, and such duration is uncertain and may significantly reduce our revenue and cash flows while the pandemic continues and thereafter until we and our customers are able to resume normal business operations. We cannot predict the magnitude or duration of the pandemic’s impact on our business.
In connection with the COVID-19 pandemic, the following risks could have a material effect on our business, financial condition, results of operations and prospects:
•The delay or cancellation by hospitals and clinics of the procedures in which our products are used as a result of their COVID-19 response efforts and the duration of such effects, thereby reducing sales of our products for an unknown period of time;
•The inability or unwillingness of some patients to visit hospitals or clinics in order to undergo procedures in which our products are used, thereby reducing sales of our products for an unknown period of time;
•The inability of some patients to pay for procedures and/or the co-pay associated with those procedures in which our products are used due to job loss or lack of insurance, thereby reducing sales of our products for an unknown period of time;
•The inability of our distributors, radiopharmacy customers, hospitals, clinics and other customers to conduct their normal operations, including supplying or conducting procedures in which our products are used, because of their COVID-19 response efforts, or the reduced capacity or productivity of their employees and contractors as a result of possible illness, quarantine or other inability to work, thereby reducing sales of our products for an unknown period of time;
•The reduction in pulmonary ventilation studies in which our Xenon-133 gas is used because of institutional concerns about a hospital’s ability to adequately decontaminate equipment used to administer those studies during the COVID-19 pandemic, thereby reducing Xenon-133 sales for an unknown period of time;
•The inability of global suppliers of raw materials or components used in the manufacture of our products, or contract manufacturers of our products, to supply and/or transport those raw materials, components and products to us in a timely and cost effective manner due to shutdowns, interruptions or delays, limiting and potentially precluding the production of our finished products, impacting our ability to supply customers, reducing our sales, increasing our costs of goods sold, and reducing our absorption of overhead;
•The partial or complete delay or cancellation of international or domestic flights by our airfreight carriers, resulting in our inability to receive raw materials, components and products from our global suppliers or to ship and deliver our finished products to our earnings per share,domestic and international customers in a timely or cost effective manner, thereby potentially increasing our freight costs as we seek alternate, potentially more expensive, methods to ship raw materials, components or products, and negatively impacting our sales;
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•The reduced capacity or productivity of our complex, on-campus operations as a result of possible illness, quarantine or other inability of our employees and contractors to work, despite all of the preventative measures we continue to undertake to protect the health and safety of our workforce;
•The illiquidity or insolvency of our suppliers, contract manufacturers or freight carriers whose business activities could be shut down, interrupted or delayed;
•The illiquidity or insolvency of our distributors or customers, or their inability to pay our invoices in full or in a timely manner, due to the reduction in their revenues caused by the cancellation or delay of procedures and other factors, which could potentially reduce our cash flow, reduce our liquidity and increase our bad debt reserves;
•A portion of our raw materials or finished product inventory may expire due to reduced demand for our drugs;
•Delays in our ability, and the ability of our development partners to conduct, enroll and complete clinical development programs such as our ARROW Phase 2 study in mCRPC, the flurpiridaz F 18 Phase 3 clinical development program currently being conducted by GE Healthcare, or the Phase 1 trial of PSMA TTC being conducted by Bayer AG;
•Delays of regulatory reviews and approvals, including with respect to our product candidates, by the FDA or other health or regulatory authorities;
•Decreased sales of those of our products that are promotionally sensitive, like DEFINITY, due to the reduction of in-person sales and marketing activities and training caused by travel restrictions, quarantines, other similar social distancing measures and more restrictive hospital access policies;
•Our ability to maintain employee morale and motivate and retain management personnel and other key employees as a result of our previous work week and salary reductions;
•A disruption or delay in regulatory approval for, and operation of, our new, on-campus manufacturing facility, which would delay implementation of our supply diversification strategy for certain of our key products and impact our ability to benefit from a lower cost of goods for those products;
•A reduction in revenue with continued incurrence of high fixed costs relating to our already-existing, complex and expensive radiopharmaceutical manufacturing facility could adversely affect our cash flows, liquidity and ability to comply with the financial covenants in our 2019 Facility, and there can be no assurance that any required waiver or consent related to any such failure to comply would be granted by our current lenders similar to the waiver of total net leverage ratio in exchange for a consolidated liquidity covenant recently included in the Amendment;
•The increased reliance on our personnel working from home, which may negatively affectimpact productivity, or disrupt, delay or otherwise adversely impact our business;
•A delay in achieving, or inability to achieve, successful integration of Lantheus and Progenics, or the market price of our common stock.
Although we currently anticipate that the Progenics Transaction will occur and will be accretive to adjusted earnings per share by 2022 and GAAP-reported earnings per share by 2023, these expectations are based on assumptions about our and Progenics’ business and preliminary estimates, which may change materially. Certain other expenses to be paid in connection with the Progenics Transaction may cause dilution to our earnings per share or decrease or delay the expected accretive effect of the Progenics Transaction and could cause a decrease in the market price of our common stock. In addition, the Progenics Transaction may not occur or we could encounter additional transaction-related costs or other factors such as the failure to realize all of the benefits anticipated in the Progenics Transaction, including synergies, cost savings, innovation and operational efficienciesother anticipated benefits of the acquisition due to impact of the COVID-19 pandemic on the operations, financial condition and prospects of our Company;
•The instability to worldwide economies, financial markets, social institutions, labor markets and the healthcare systems as a result of the COVID-19 pandemic, which could result in an economic downturn that could adversely impact our business, results of operations and financial condition, as well as that of our suppliers, distributors, customers or other business partners; and
•A recurrence of the COVID-19 pandemic after social distancing and other similar measures have been relaxed.
The extent to which the COVID-19 pandemic impacts our business and our results of operations and financial condition will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge in connection with the severity of the virus, the ability to treat and ultimately prevent it, its potential recurrence, and actions that may be taken to contain its impact.
We rely on Bausch to develop and commercialize RELISTOR, exposing us to significant risks.
We rely on Bausch to pursue and complete further development and obtain regulatory approvals for RELISTOR worldwide and to effectively commercialize the product and manage pricing, sales and marketing practices and inventory levels in the distribution channel. The revenue growthderived from royalty and milestone payments from our RELISTOR collaboration with Bausch can fluctuate significantly from period to period, and our past revenue is therefore not necessarily indicative of our future revenue. We are and will be dependent upon Bausch and any other business partners with which we may collaborate in the future to perform and fund development, including clinical testing of RELISTOR, making related regulatory filings and manufacturing and marketing products, including for new indications and in new formulations, in their respective territories. Revenue from the combination. Allsale of RELISTOR depends entirely upon the efforts of Bausch and its sublicensees, which have significant discretion in determining the
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efforts and resources they apply to sales of RELISTOR. Bausch may not be effective in obtaining approvals for new indications or formulations, marketing existing or future products or arranging for necessary sublicense or distribution relationships. Our business relationships with Bausch and other partners may not be scientifically, clinically or commercially successful. For example, Bausch has a variety of marketed products and its own corporate objectives, which may not be consistent with our best interests, and may change its strategic focus or pursue alternative technologies in a manner that results in reduced or delayed revenue to us. Bausch may also have commercial and financial interests that are not fully aligned with ours in a given territory or territories - which may make it more difficult for us to fully realize the value of RELISTOR. We may have future disagreements with Bausch, which has significantly greater financial and managerial resources which it could draw upon in the event of a dispute. Such disagreements could lead to lengthy and expensive litigation or other dispute-resolution proceedings as well as extensive financial and operational consequences to us and have an adverse effect on our business, results of operations and financial condition. In addition, independent actions may be taken by Bausch concerning product development, marketing strategies, manufacturing and supply issues, and rights relating to intellectual property.
We are also dependent on Bausch for compliance with regulatory requirements as they apply to RELISTOR.
The RELISTOR commercialization program continues to be subject to risk.
Future developments in the commercialization of RELISTOR may result in Bausch or any other business partner with which we may collaborate in the future taking independent actions concerning product development, marketing strategies or other matters, including termination of its efforts to develop and commercialize the drug.
Under our license agreement with Bausch, Bausch is responsible for obtaining supplies of RELISTOR, including contracting with contract manufacturing organizations (“CMOs”) for supply of RELISTOR active pharmaceutical ingredient and subcutaneous and oral finished drug product. These arrangements may not be on terms that are advantageous and, as a result of our royalty and other interests in RELISTOR’s commercial success, will subject us to risks that the counterparties may not perform optimally in terms of quality or reliability.
Bausch’s ability to optimally commercialize either oral or subcutaneous RELISTOR in a given jurisdiction may be impacted by applicable labeling and other regulatory requirements. If clinical trials indicate, or regulatory bodies are concerned about, actual or possible serious problems with the safety or efficacy of RELISTOR, Bausch may stop or significantly slow further development or commercialization of RELISTOR. In such an event, we could be faced with either further developing and commercializing the drug on our own or with one or more substitute collaborators, either of which paths would subject us to the development, commercialization, collaboration and/or financing risks.
We are also aware of other approved and marketed products, as well as product candidates in pre-clinical or clinical development that are intended to target the side effects of opioid pain therapy and are direct competitors to RELISTOR. For instance, there are three approved products that target opioid-induced constipation: MOVANTIK® (naloxegol), AMITIZA® (lubiprostone), and Symproic® (naldemedine) which could compete with RELISTOR. The competitors who have developed these products and product candidates may have superior resources that allow them to implement more effective approaches to sales and marketing. There is no guarantee that RELISTOR will be able to compete commercially with these products. Additionally, there has been growing public concern regarding the use of opioid drugs. Any efforts by the FDA or other governmental authorities to restrict or limit the use of opioids may negatively impact the market for RELISTOR. In addition, there is a substantial risk that the revenue targets for receiving additional RELISTOR milestone payments will not be met. As a result, there is no assurance that we will realize the potential revenue represented by future RELISTOR milestone payments.
Any such significant action adverse to the further development and commercialization of RELISTOR could have an adverse impact on our business.
Our patents are subject to generic challenge, and the validity, enforceability and commercial value of these factorspatents are highly uncertain.
Our ability to obtain and defend our patents impacts the commercial value of our products and product candidates. Third parties have challenged and are likely to continue challenging the patents that have been issued or licensed to us. Patent protection involves complex legal and factual questions and, therefore, enforceability is uncertain. Our patents may be challenged, invalidated, held to be unenforceable, or circumvented, which could cause dilution to our earnings per share or decrease or delay the expected accretive effectnegatively impact their commercial value. For example, Progenics (along with Bausch and Wyeth LLC) received notifications of the Progenics Transactiona Paragraph IV certification for RELISTOR (methylnaltrexone bromide) subcutaneous injection and cause a decreasefor RELISTOR (methylnaltrexone bromide) Tablets, for certain patents that are listed in the FDA Orange Book. The certifications resulted from filings by entities such as Mylan Pharmaceuticals Inc., Actavis LLC and Par Sterile Products, LLC of ANDAs with the FDA, challenging such patents for RELISTOR subcutaneous injection and seeking to obtain approval to market pricea generic version of our common stock.RELISTOR subcutaneous injection and filings by Actavis
The Progenics Transaction is subject
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Laboratories FL, Inc. seeking to conditions,obtain approval to market a generic version of RELISTOR Tablets before some or all of these patents expire. Furthermore, patent applications filed outside the United States may be challenged by other parties, for example, by filing third-party observations that argue against patentability or an opposition. Such opposition proceedings are increasingly common in the EU and are costly to defend. For example, we received notices of opposition to three European patents relating to methylnaltrexone.
Although we and Bausch are cooperating to defend against both the ANDA challenges and the European oppositions and intend to continue to vigorously enforce RELISTOR intellectual property rights, such litigation is inherently subject to significant risks and uncertainties, and there can be no assurance that the outcome of these litigations will be favorable to us or Bausch. An unfavorable outcome in these cases could result in the rapid genericization of RELISTOR products or could result in the shortening of available patent life. Any such outcome could have an adverse impact on our financial performance and stock price.
Pursuant to the RELISTOR license agreement between us and Bausch, Bausch has the first right to enforce the intellectual property rights at issue and is responsible for the costs of such enforcement. At the same time, we may incur substantial further costs in supporting the effort to uphold the validity of patents or to prevent infringement. Patent disputes are frequent, costly and can preclude, delay or increase the cost of commercialization of products. Progenics has previously been and is currently involved in patent litigation, and we expect to be subject to patent litigation in the future.
Our AZEDRA commercialization program is subject to significant risk.
It is very difficult to estimate the commercial potential of recently approved products, due to factors such as safety and efficacy compared to other available treatments (including potential generic drug alternatives with similar efficacy profiles), changing standards of care, third party payer reimbursement, patient and physician preferences, readiness of a clinical site to administer a new product and the availability of competitive alternatives that may emerge either during the approval process or after commercial introduction. Frequently, products that have shown promising results in clinical trials suffer significant setbacks even after they are approved for commercial sale.
On July 30, 2018, Progenics received FDA approval of our NDA for AZEDRA. There is no guarantee that AZEDRA will be a commercial success. Further, future uses of AZEDRA commercially may reveal that AZEDRA is ineffective, unacceptably toxic, has other undesirable side effects, is difficult to manufacture on a commercial scale, is not cost-effective or economically viable, infringes on proprietary rights of another party or is otherwise not fit for further use.
AZEDRA, designated as an Orphan Drug is intended to treat a rare disease with a small patient population. While we have received FDA approval, we are still in discussions with payors regarding pricing for AZEDRA. If pricing for AZEDRA is not accepted in the market at an appropriate level it may not generate enough revenue to make it economically viable. There have been recent examples of the market reacting poorly to the high cost of certain drugs. If the market reacts similarly to AZEDRA, it could result in negative publicity and reputational harm to us. Further, the Legislative and Executive branches of our federal government have indicated support for possible new measures related to drug pricing, which could increase the pricing pressures related to AZEDRA and further limit its economic viability.
If AZEDRA is determined to be unsafe or ineffective in humans, not economically viable or we are unable to successfully commercialize it, our business could be adversely affected.
We may not be satisfied,able to maintain Orphan Drug exclusivity for AZEDRA and, even if we do, that exclusivity may not prevent the FDA, from approving competing products.
Under the Orphan Drug Act, the FDA may designate a product as an Orphan Drug if it is a drug intended to treat a rare disease or completedcondition, which is generally defined as a patient population of fewer than 200,000 individuals annually in the United States, or a patient population greater than 200,000 in the United States where there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the United States. AZEDRA currently has the Orphan Drug designation in the United States.
In the United States, Orphan Drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages and user-fee waivers. In addition, if a product that has Orphan Drug designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to Orphan Drug exclusivity, which means the FDA may not approve any other application to market the same drug for the same indication for a period of seven years, except in limited circumstances, such as a showing of clinical superiority over the product with orphan exclusivity or where the manufacturer is unable to assure sufficient product quantity.
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We may not be able to maintain Orphan Drug exclusivity for AZEDRA. In addition, exclusive marketing rights in the United States may be limited if we seek approval for an indication broader than the orphan-designated indication or may be lost if the FDA later determines that the request for designation was materially defective or if we are unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition. Even after an Orphan Drug is approved, the FDA can subsequently approve the same drug with the same active moiety for the same condition if the FDA concludes that the later drug is safer, more effective or makes a major contribution to patient care. A loss of the Orphan Drug exclusivity for AZEDRA may have an adverse impact on our ability to adequately commercialize AZEDRA.
Failure to obtain marketing approval in foreign jurisdictions would prevent AZEDRA from being marketed abroad.
Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside of the United States does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA. In order to market and sell AZEDRA in the European Union and many other foreign jurisdictions, we or our potential third-party collaborators must obtain separate marketing approvals and comply with numerous and varying regulatory requirements. The approval process varies among countries and can involve additional testing. The time required to obtain approval may differ substantially from that required to obtain FDA approval. The regulatory approval process outside of the United States generally includes all of the risks associated with obtaining FDA approval. In addition, in many countries outside of the United States, it is required that the product be approved for reimbursement before the product can be approved for sale in that country. We or our potential third-party collaborators may not obtain approvals from regulatory authorities outside of the United States on a timely basis, if at all. FailureHowever, a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process in other countries. We may not be able to completefile for marketing approvals and may not receive necessary approvals to commercialize AZEDRA in any market outside of the United States.
Manufacturing resources could limit or adversely affect our ability to commercialize products.
We or our partners may engage third parties to manufacture our product candidates. We or our partners may not be able to obtain adequate supplies from third-party manufacturers in a timely fashion for development or commercialization purposes, and commercial quantities of products may not be available from CMOs at acceptable costs. For example, until December 2019, the CPDC was subject to an Import Alert by the FDA, which restricted the CPDC’s ability to ship products to the U.S. Although the CPDC has since been cleared by the FDA to ship products to the U.S., there can be no guarantee that the CPDC, or any other third-party manufacturer that we may partner with in the future, will not be subject to similar restrictions in the future.
In order to commercialize our product candidates successfully, we need to be able to manufacture or arrange for the manufacture of products in commercial quantities, in compliance with regulatory requirements, at acceptable costs and in a timely manner. Manufacture of our product candidates, can be complex, difficult to accomplish even in small quantities, difficult to scale-up for large-scale production and subject to delays, inefficiencies and low yields of quality products. The manufacture of radiopharmaceuticals is relatively complex and requires significant capital expenditures. Although Progenics Transactionrecently acquired the assets comprising the AZEDRA radiopharmaceutical manufacturing facility, we continue to rely on CMOs for our product candidates. The cost of manufacturing our product candidates may make them prohibitively expensive. If adequate supplies of any of our product candidates or related materials are not available on a timely basis or at all, our clinical trials or commercialization of our product candidates could have material adverse effectsbe seriously delayed, since these materials are time consuming to manufacture and cannot be readily obtained from third-party sources. We continue to rely on a limited number of highly specialized manufacturing and development partners, including single source manufacturers for certain of our product candidates. If we were to lose one or more of these key relationships, it could materially adversely affect our business. Establishing new manufacturing relationships, or creating our own manufacturing capability, would require significant time, capital and management effort, and the transfer of product-related technology and know-how from one manufacturer to another is an inherently complex and uncertain process.
Patents have a limited life and expire by law.
In addition to uncertainties as to scope, validity, enforceability and changes in law, patents by law have limited lives. Upon expiration of patent protection, our drug candidates and/or products may be subject to generic competition, which could adversely affect pricing and sales volumes of the affected products.
With regard to our RELISTOR-related intellectual property, the composition-of-matter patent for the active ingredient of RELISTOR, methylnaltrexone, has expired. University of Chicago, as well as we and our collaborators, have extended the methylnaltrexone patent estate with additional patents and pending patent applications covering various inventions relating to the product. Bausch has listed in the Orange Book eight U.S. patents relating to subcutaneous RELISTOR, which have expiration dates ranging from 2024 to 2030, and nine U.S. patents relating to RELISTOR tablet, which have expiration dates ranging from 2029 to 2031. In May 2018, Progenics entered into settlement agreements that granted non-exclusive limited licenses with respect to certain RELISTOR subcutaneous injection applications, effective on the earlier of January 1, 2028 and September 30, 2030 or
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other circumstances described in the settlement agreements, including in connection with future ANDA filers. Four Canadian patents (two expiring in 2024, one in 2027 and one in 2029) have been listed with Health Canada relating to subcutaneous RELISTOR.
The completionoriginal patents surrounding the AZEDRA program were licensed from the University of Western Ontario (“UWO”). The patent family directed to processes for making polymer precursors, as well as processes for making the final product, expired in 2018 in the U.S. and Canada. Other licensed patent families from UWO relate to alternative approaches for preparing AZEDRA, which if implemented would expire in 2024, worldwide. Progenics owns pending applications worldwide directed to manufacturing improvements and the resulting compositions which, if issued, would expire in 2035.
Patent protection for the composition-of-matter patent on the PyL compound, radiolabeled form of the Progenics Transactioncompound, as well as methods of use expire in 2030 in the United States. Corresponding patent family members are pending or issued worldwide, all with expirations of 2029. Process improvement patent applications are pending worldwide which, if issued, would expire in 2037.
Company-owned patents relating to 1095 have expiration ranges of 2027 to 2031 in the U.S. We view as most significant the composition-of-matter patent on this compound, as well as radiolabeled forms, which expires in 2027 in the U.S., as well as Europe. Additional U.S. patents are directed to stable compositions and radiolabeling processes which expire in 2030 and 2031, respectively.
We own patents relating to automated detection of bone cancer metastases. The patents on this technology expire in 2028 outside of the United States. The U.S. patent under reexamination was reissued with an expiration of 2032. Applications are pending relating to automated medical image analysis.
Owned and in-licensed patents relating to the 1404 product candidate have expiration ranges of 2020 to 2029; we view as most significant the composition-of-matter patent on the compound, as well as technetium-99 labeled forms, which expires in 2029 worldwide.
With respect to PSMA antibody, currently issued composition-of-matter patents comprising co-owned and in-licensed patents have expirations of 2022 and 2023 in the U.S. Corresponding foreign counterpart patents will expire in 2022. We view all of these patents as significant.
We depend on intellectual property licensed from third parties and unpatented technology, trade secrets and confidential information. If we lose any of these rights, including by failing to achieve milestone requirements or to satisfy other conditions, our business, results of operations and financial condition could be harmed.
Many of our product candidates incorporate intellectual property licensed from third parties. For example, PyL utilizes technology licensed to us from Johns Hopkins University. We could lose the right to patents and other intellectual property licensed to us if the related license agreement is terminated due to a breach by us or otherwise. Our ability to commercialize products incorporating licensed intellectual property would be impaired if the related license agreements were terminated. In addition, we are required to make substantial cash payments, achieve milestones and satisfy other conditions, including filing for and obtaining marketing approvals and introducing products, to maintain rights under our intellectual property licenses. Due to the nature of these agreements and the uncertainties of development, we may not be able to achieve milestones or satisfy conditions to which we have contractually committed, and as a result may be unable to maintain our rights under these licenses. If we do not comply with our license agreements, the licensors may terminate them, which could result in our losing our rights to, and therefore being unable to commercialize, related products.
We also rely on unpatented technology, trade secrets and confidential information. Third parties may independently develop substantially equivalent information and techniques or otherwise gain access to our technology or disclose our technology, and we may be unable to effectively protect our rights in unpatented technology, trade secrets and confidential information. We require each of our employees, consultants and advisors to execute a confidentiality agreement at the commencement of an employment or consulting relationship with us. These agreements may, however, not provide effective protection in the event of unauthorized use or disclosure of confidential information. Any loss of trade secret protection or other unpatented technology rights could harm our business, results of operations and financial condition.
If we do not achieve milestones or satisfy conditions regarding some of our product candidates, we may not maintain our rights under related licenses.
We are required to make substantial cash payments, achieve milestones and satisfy other conditions, including filing for and obtaining marketing approvals and introducing products, to maintain rights under certain intellectual property licenses. Due to the nature of these agreements and the uncertainties of research and development, we may not be able to achieve milestones or satisfy
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conditions to which we have contractually committed, and as a result may be unable to maintain our rights under these licenses. If we do not comply with our license agreements, the licensors may terminate them, which could result in our losing our rights to, and therefore being unable to commercialize, related products.
If we infringe third-party patent or other intellectual property rights, we may need to alter or terminate a product development program.
There may be patent or other intellectual property rights belonging to others that require us to alter our products, pay licensing fees or cease certain activities. If our products infringe patent or other intellectual property rights of others, the owners of those rights could bring legal actions against us claiming damages and seeking to enjoin manufacturing and marketing of the affected products. If these legal actions are successful, in addition to any potential liability for damages, we could be required to obtain a license in order to continue to manufacture or market the affected products. We may not prevail in any action brought against us, and any license required under any rights that we infringe may not be available on acceptable terms or at all. We are aware of intellectual property rights held by third parties that relate to products or technologies we are developing. For example, we are aware of other groups investigating PSMA or related compounds and monoclonal antibodies directed at PSMA, PSMA-targeted imaging agents and therapeutics, and methylnaltrexone and other peripheral opioid antagonists, and of patents held, and patent applications filed, by these groups in those areas. While the validity of these issued patents, the patentability of these pending patent applications and the applicability of any of them to our products and programs are uncertain, if asserted against us, any related patent or other intellectual property rights could adversely affect our ability to commercialize our products.
Research, development and commercialization of a biopharmaceutical product often require choosing between alternative development and optimization routes at various stages in the development process. Preferred routes may depend on subsequent discoveries and test results and cannot be predicted with certainty at the outset. There are numerous third-party patents in our field, and we may need to obtain a license under a patent in order to pursue the preferred development route of one or more of our products or product candidates. The need to obtain a license would decrease the ultimate profitability of the applicable product. If we cannot negotiate a license, we might have to pursue a less desirable development route or terminate the program altogether.
We have been and expect to continue to be dependent on collaborators for the development, manufacturing and sales of certain products and product candidates, which expose us to the risk of reliance on these collaborators.
In conducting our operations, we currently depend, and expect to continue to depend, on numerous collaborators. Key among these collaborations, are those with Bayer to develop and commercialize products using our PSMA antibody technology and with Fuji for the development and commercialization of 1404 and bone BSI in Japan. In addition, certain clinical trials for our product candidates may be conducted by government-sponsored agencies, and consequently will be dependent on governmental participation and funding. These arrangements expose us to the same considerations we face when contracting with third parties for our own trials.
If any of our collaborators breach or terminate its agreement with us or otherwise fail to conduct successfully and in a timely manner the collaborative activities for which they are responsible, the preclinical or clinical development or commercialization of the affected product candidate or research program could be delayed or terminated. We generally do not control the amount and timing of resources that our collaborators devote to our programs or product candidates. We also do not know whether current or future collaboration partners, if any, might pursue alternative technologies or develop alternative products either on their own or in collaboration with others, including our competitors, as a means for developing treatments for the diseases or conditions targeted by our collaborative arrangements. Our collaborators are also subject to a numbersimilar development, regulatory, manufacturing, cyber-security and competitive risks as us, which may further impede their ability to successfully perform the collaborative activities for which they are responsible. Setbacks of conditions, including, among others, the approval of the Merger Agreement by a majority of votes cast by the holders of the common stock of the Company and a majority of the outstanding shares of Progenics common stock, the receipt of U.S. federal antitrust clearance, the absence of any law or order prohibiting the consummation of the Progenics Transaction or the issuance of the shares ofthese types to our common stock as deal consideration, the effectiveness of a registration statement covering the issuance of shares of our common stock to the stockholders of Progenics, the absence ofcollaborators could have a material adverse effect on us or Progenics,our business, results of operations and other conditions customary forfinancial condition.
We are involved in various legal proceedings that are uncertain, costly and time-consuming and could have a transactionmaterial adverse impact on our business, financial condition and results of this type, which makeoperations.
From time to time we are involved in legal proceedings and disputes and may be involved in litigation in the completion offuture. These proceedings are complex and extended and occupy the Progenics Transaction and timing thereof uncertain. In addition, the Merger Agreement contains certain termination rights for both us and Progenics, including, among other things (i) if the Progenics Transaction is not consummated on or before the “outside date” of July 1, 2020, (ii) if the required approvalresources of our stockholdersmanagement and employees. These proceedings are also costly to prosecute and defend and may involve substantial awards or the Progenics stockholders isdamages payable by us if not obtained, (iii) if the other party willfully breaches its non-solicitation obligationsfound in the Merger Agreement, (v) if the other party materially breaches its representations, warranties or covenants and fails to cure such breach, (vi) if any law or

order prohibiting the Progenics Transaction or the issuance of the shares of our common stock forming part of the merger consideration has become final and non-appealable, or (vii) if the board of directors of the other party fails to include such party’s recommendation in favor of the Progenics Transaction in the joint proxy statement/prospectus or changes its recommendation in connection with the Progenics Transaction. If the Progenics Transaction is not completed, our ongoing business may be materially adversely affected and, without realizing any of the benefits that we could have realized had the Progenics Transaction been completed, we will be subject to a number of risks, including the following:

The market price of our common stock could decline;
We could owe substantial termination fees to Progenics under certain circumstances;
Time and resources committed by our management to matters relating to the Progenics Transaction could otherwise have been devoted to pursuing other beneficial opportunities;
favor. We may experience negative reactions from the financial markets or from our customers, suppliers or employees; and
We willalso be required to pay our costs relatingsubstantial amounts or grant certain rights on unfavorable terms in order to the Progenics Transaction,settle such asproceedings. Defending against or settling such claims and any unfavorable legal accounting, financial advisory, consulting and printing fees, whetherdecisions, settlements or not the Progenics Transaction is completed.
Upon termination of the Merger Agreement, we will be required to pay to Progenicsorders could have a termination fee of $18.34 million if:  (i) we willfully breach our nonsolicitation obligations in the Merger Agreement; (ii) our Board changes its recommendation in support of the merger as a result of a superior proposal or intervening event; or (iii) our stockholders do not approve the issuance of common stock in connection with the merger (if at such time Progenics has the right to terminate the Merger Agreement because we willfully breached our nonsolicitation obligations in the Merger Agreement or our board changed its recommendation in support of the merger as a result of a superior proposal or intervening event).  In addition, we will be required to pay to Progenics the termination fee if we receive an acquisition proposal, the Merger Agreement is later terminated under certain circumstances and within twelve months after termination we enter into an agreement with respect to (or consummate) an acquisition proposal for 50% or more of our stock or assets.
In addition, if the Progenics Transaction is not completed, we could be subject to litigation related to any failure to complete the Progenics Transaction or related to any enforcement proceeding commenced against us to perform our obligations under the Merger Agreement. If any such risk materializes, it could adversely impact our ongoing business. Similarly, delays in the completion of the Progenics Transaction could, among other things, result in additional transaction costs, loss of revenue or other negative effects associated with uncertainty about completion of the Progenics Transaction and cause us not to realize some or all of the benefits that we expect to achieve if the Progenics Transaction is successfully completed within its expected timeframe. We cannot assure you that the conditions to the closing of the Progenics Transaction will be satisfied or waived or that the Progenics Transaction will be consummated.
We and Progenics are each subject to business uncertainties and contractual restrictions while the Progenics Transaction is pending, which could adversely affect the business and operations of us or the combined company.
In connection with the pendency of the Progenics Transaction, it is possible that some customers, suppliers and other persons with whom we or Progenics has a business relationship may delay or defer certain business decisions or might decide to seek to terminate, change or renegotiate their relationships with us or Progenics, as the case may be, as a result of the Progenics Transaction, which could negatively affect our current or the combined company’s future revenues, earnings and cash flows, as well as the market price of our common stock, regardless of whether the Progenics Transaction is completed. Under the terms of the Merger Agreement, we and Progenics are each subject to certain restrictions on the conduct of our businesses prior to completing the Progenics Transaction, which could adversely affect each party’s ability to execute certain of its business strategies. Such limitations could adversely affect each party’s business and operations prior to the completion of the Progenics Transaction. Each of the risks described above may be exacerbated by delays or other adverse developments with respect to the completion of the Progenics Transaction.
Uncertainties associated with the Progenics Transaction may cause a loss of management personnel and other key employees, and we and Progenics may have difficulty attracting and motivating management personnel and other key employees, which could adversely affect the future business and operations of the combined company.
We and Progenics are each dependent on the experience and industry knowledge of our respective management personnel and other key employees to execute our business plans. The combined company’s success after the completion of the Progenics Transaction will depend in part upon the ability of each of us and Progenics to attract, motivate and retain key management personnel and other key employees. Prior to completion of the Progenics Transaction, current and prospective employees of each of us and Progenics may experience uncertainty about their roles within the combined company following the completion of the Progenics Transaction, which may have anmaterial adverse effect on the ability of each of us and Progenics to attract, motivate or retain management personnel and other key employees. In addition, no assurance can be given that the combined company will be able to

attract, motivate or retain management personnel and other key employees of each of us and Progenics to the same extent that we and Progenics have previously been able to attract or retain their own employees.
The Progenics Transaction is subject to the expiration or termination of applicable waiting periods and the receipt of approvals, consents or clearances from regulatory authorities that may impose conditions that could have an adverse effect on us or the combined company or, if not obtained, could prevent completion of the Progenics Transaction.
Before the Progenics Transaction may be completed, any approvals, consents or clearances required in connection with the Progenics Transaction must have been obtained, in each case, under applicable law. Consummation of the Progenics Transaction is conditioned upon, among other things, the expiration or termination of the waiting period (and any extensions thereof) applicable to the Progenics Transaction under the HSR Act, which has been obtained by grant of early termination of the HSR Act waiting period on October 25, 2019. Notwithstanding the grant of early termination, at any time before or after the Progenics Transaction is consummated, the Antitrust Division of the United States Department of Justice, the Federal Trade Commission or U.S. state attorneys general could take action under the antitrust laws in opposition to the Progenics Transaction, including seeking to enjoin completion of the Progenics Transaction, condition completion of the Progenics Transaction upon the divestiture of assets, or impose restrictions on post-merger operations. Any such requirements or restrictions may prevent or delay completion of the Progenics Transaction or may reduce the anticipated benefits of the Progenics Transaction.
The Merger Agreement limits our ability to pursue alternatives to the merger and may discourage other companies from trying to acquire us.
The Merger Agreement contains a “no solicitation” covenant that restricts our ability to solicit, initiate, seek or support, or knowingly encourage or facilitate, any inquiries or proposals with respect to certain acquisition proposal relating to the Company; engage or participate in negotiations with respect to any acquisition proposal; provide a third party confidential information with respect to, or have or participate in any discussions with, any person relating to any acquisition proposals; or enter into any acquisition agreement with respect to certain unsolicited proposals relating to an acquisition proposal. In the event we receive an unsolicited acquisition proposal, we must promptly communicate the receipt of such proposal and provide copies of material communications and information, including the terms and conditions of such proposal, to the other party. If, in response to such proposals and subject to certain conditions, we intend to effect a change in our board of directors’ recommendation to stockholders, we must provide Progenics an opportunity to offer to modify the terms of the Merger Agreement in response to such competing acquisition proposal before our board may withdraw or qualify its respective recommendation. The Merger Agreement further provides that in the event of a termination of the Merger Agreement under certain specified circumstances, including a termination by Progenics following a change in recommendation by our board or a willful and material breach of the no-solicitation provision applicable to us, we may be required to pay Progenics a termination fee equal to $18,340,000.
These provisions could discourage a potential third-party acquirer that might have an interest in acquiring all or a significant portion of the Company from considering or proposing that acquisition, even if it were prepared to pay consideration with a higher per share cash or total value than the total value proposed to be paid in the merger. These provisions might also result in a potential third-party acquirer proposing to pay a lower price in an acquisition proposal than it might otherwise have proposed to pay because of the added expense of the termination fee and other fees and expenses that may become payable in certain circumstances.
Current stockholders will have a reduced ownership and voting interest in the Company after the Progenics Transaction and will exercise less influence over the management of the combined company.
Upon completion of the Progenics Transaction, we expect to issue approximately [•] shares of our common stock to Progenics stockholders. As a result, it is expected that, immediately after completion of the Progenics Transaction, former Progenics stockholders will own approximately 35% of our outstanding shares of common stock. In addition, shares of our common stock may be issued from time to time following the Progenics Transaction to holders of Progenics equity awards on the terms set forth in the Merger Agreement. Consequently, our current stockholders in the aggregate will have less influence over the management and policies of the Company than they currently have.
We and Progenics may be targets of securities class action and derivative lawsuits that could result in substantial costs and may delay or prevent the Progenics Transaction from being completed.
Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into merger agreements. Even if the lawsuits are without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on our and Progenics’ respective liquidity and financial condition. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting completion of the Progenics Transaction, then that injunction may delay or prevent the Progenics Transaction from being completed, or from being completed within the expected timeframe, which may adversely affect our business, financial

position condition and results of operation. As of the date of filing of this report, we are not aware of any securities class action lawsuits or derivative lawsuits having been filed in connection with the Progenics Transaction.
Completion of the Progenics Transaction may trigger change in control or other provisions in certain agreements to which Progenics or its subsidiaries are a party, which may have an adverse impact on the combined company’s business and results of operations.
The completion of the Progenics Transaction may trigger change in control and other provisions in certain agreements to which Progenics or its subsidiaries are a party. If we and Progenics are unable to negotiate waivers of those provisions, the counterparties may exercise their rights and remedies under the agreements, potentially terminating the agreements or seeking monetary damages. Even if we and Progenics are able to negotiate waivers, the counterparties may require a fee for such waivers or seek to renegotiate the agreements on terms less favorable to Progenics or the combined company. Any of the foregoing or similar developments may have an adverse impact on the combined company’s business and results of operations.
The combined company may be unable to successfully integrate the Progenics business into our business and realize the anticipated benefits of the Progenics Transaction.
The success of the Progenics Transaction will depend, in part, on the combined company’s ability to successfully combine the business of Progenics with our business, which currently operate as independent public companies, and realize the anticipated benefits, including synergies, cost savings, innovation and operational efficiencies and revenue growth from the combination. If the combined company is unable to achieve these objectives within the anticipated time frame, or at all, the anticipated benefits may not be realized fully or at all, or may take longer to realize than expected and the value of its common stock may be harmed. Additionally, as a result of the Progenics Transaction, rating agencies may take negative actions against the combined company's credit ratings, which may increase the combined company’s financing costs. The Progenics Transaction involves the integration of Progenics’s business into our existing business, which is expected to be a complex, costly and time-consuming process. We and Progenics have not previously completed a transaction comparable in size or scope to the Progenics Transaction. The integration may result in material challenges, including, without limitation:

The diversion of management’s attention from ongoing business concerns and performance shortfalls at one or both of the companies as a result of the devotion of management’s attention to the Progenics Transaction;
Managing a larger combined company;
Maintaining employee morale and attracting, motivating and retaining management personnel and other key employees;
The possibility of faulty assumptions underlying expectations regarding the integration process;
Retaining existing business and operational relationships and attracting new business and operational relationships;
Integrating corporate and administrative infrastructures in geographically separate organizations and eliminating duplicative expenses;
Unanticipated issues in integrating information technology, communications and other systems;
Unanticipated changes in federal or state laws or regulations; and
Unforeseen expenses or delays associated with the Progenics Transaction.
Many of these factors will be outside of the combined company’s control and any one of them could result in delays, increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy, which could materially affect the combined company’s financial position, results of operations and cash flows. We and Progenics have operated, and until completion of the Progenics Transaction will continue to operate, independently. We and Progenics are currently permitted to conduct only limited planning for the integration of the two companies following the Progenics Transaction and have not yet determined the exact nature of how the businesses and operations of the two companies will be combined after the combination. The actual integration of Progenics with our business may result in additional or unforeseen expenses, and the anticipated benefits of the integration plan may not be realized. These integration matters could have an adverse effect on (i) each of us and Progenics during this transition period and (ii) the combined company for an undetermined period after completion of the Progenics Transaction. In addition, any actual cost savings of the Progenics Transaction could be less than anticipated.
The future results of the combined company may be adversely impacted if the combined company does not effectively manage its expanded operations following the completion of the Progenics Transaction.
Following the completion of the Progenics Transaction, the size of the combined company’s business will be significantly larger than the current size of our business. The combined company’s ability to successfully manage this expanded business will depend, in part, upon management’s ability to design and implement strategic initiatives that address not only the integration of two independent stand-alone companies, but also the increased scale and scope of the combined business with its associated increased costs and complexity. The combined company may not be successful or may not realize the expected operating efficiencies, cost savings and other benefits currently anticipated from the Progenics Transaction.

The combined company is expected to incur substantial expenses related to the completion of the Progenics Transaction and the integration of the Progenics business with our business.
The combined company is expected to incur substantial expenses in connection with the completion of the Progenics Transaction, including seeking approval from our stockholders, and the integration of the Progenics business with our business. There are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated, including purchasing, accounting and finance, sales, payroll, pricing, revenue management, marketing and benefits. The substantial majority of these costs will be non-recurring expenses related to the Progenics Transaction, facilities and systems consolidation costs. The combined company may incur additional costs to maintain employee morale and to attract, motivate or retain management personnel or key employees. We will also incur transaction fees and costs related to formulating integration plans for the combined business, and the execution of these plans may lead to additional unanticipated costs. Additionally, as a result of the Progenics Transaction, rating agencies may take negative actions with regard to the combined company’s credit ratings, which may increase the combined company’s financing costs. These incremental transaction and acquisition-related costs may exceed the savings the combined company expects to achieve from the elimination of duplicative costs and the realization of other efficiencies related to the integration of the businesses, particularly in the near term and in the event there are material unanticipated costs.
We will no longer qualify as an “emerging growth company” after December 31, 2019, and as a result, we will have to comply with increased disclosure and compliance requirements.
We are currently an “emerging growth company” as defined in the JOBS Act, but, based oncause the market value of our common stock heldto decline.
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In particular, the pharmaceutical and medical device industries historically have generated substantial litigation concerning the manufacture, use and sale of products and we expect this litigation activity to continue. As a result, we expect that patents related to our products will routinely be challenged, and our patents may not be upheld. In order to protect or enforce patent rights, we may initiate litigation against third parties. If we are not successful in defending an attack on our patents and maintaining exclusive rights to market one or more of our products still under patent protection, we could lose a significant portion of sales in a very short period. We may also become subject to infringement claims by non-affiliates exceeded $700 million asthird parties and may have to defend against charges that we violated patents or the proprietary rights of third parties. If we infringe the intellectual property rights of others, we could lose our right to develop, manufacture or sell products, or could be required to pay monetary damages or royalties to license proprietary rights from third parties.
In addition, in the U.S., it has become increasingly common for patent infringement actions to prompt claims that antitrust laws have been violated during the prosecution of the last business daypatent or during litigation involving the defense of our second fiscal quarterthat patent. Such claims by direct and indirect purchasers and other payers are typically filed as class actions. The relief sought may include treble damages and restitution claims. Similarly, antitrust claims may be brought by government entities or private parties following settlement of 2019, we will no longer qualifypatent litigation, alleging that such settlements are anti-competitive and in violation of antitrust laws. In the U.S. and Europe, regulatory authorities have continued to challenge as an “emerging growth company” but will instead be deemed a large accelerated filer as of December 31, 2019.
As a large accelerated filer, we willanti-competitive so-called “reverse payment” settlements between branded and generic drug manufacturers. We may also be subject to certain disclosureother antitrust litigation involving competition claims unrelated to patent infringement and compliance requirements that apply to other public companies but that did not previously apply toprosecution. A successful antitrust claim by a private party or government entity against us due to our status as an emerging growth company. These requirements include, but are not limited to:

The requirement that our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act of 2002;
Compliance with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements;
The requirement that we provide full and more detailed disclosures regarding executive compensation; and
The requirement that we hold a non-binding advisory vote on executive compensation and obtain stockholder approval of any golden parachute payments not previously approved.
We expect that the loss of emerging growth company status and compliance with the additional requirements of being a large accelerated filer will increase our legal, accounting and financial compliance costs and costs associated with investor relations activities, and cause management and other personnel to divert attention from operational and other business matters to devote substantial time to public company reporting requirements. In addition, if we are not able to comply with changing requirements in a timely manner, the market price of our stock could decline and we could be subject to sanctions or investigations by the stock exchange on which our common stock is listed, the Securities and Exchange Commission or other regulatory authorities, which would require additional financial and management resources.
As of the end of this year, we will be required to implement additional procedures and practices related to internal control over financial reporting, and we may identify deficiencies that we may not be able to remediate in time to meet the necessary deadline.
Pursuant to Section 404 of the Sarbanes-Oxley Act, management of our Company is required to report upon the effectiveness of our internal control over financial reporting. Since we will be deemed a large accelerated filer, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting on an annual basis beginning with our Annual Report on Form 10-K for the year ended December 31, 2019. The rules governing the standards that must be met for our management and independent registered public accounting firm to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation of our existing controls and the incurrence of significant additional expenditures. In connection with our and our independent registered public accounting firm’s evaluations of our internal control over financial reporting, we may need to upgrade systems, including information technology; implement additional financial and management controls, reporting systems, and procedures; and hire additional accounting and finance staff.

Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations. In addition, any testing by us or our independent registered public accounting firm conducted in connection with Section 404 of the Sarbanes-Oxley Act may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negativematerial adverse effect on the trading priceour business, financial condition and results of our common stock. Internal control deficiencies could also result in a restatement of our financial results in the future. We could become subject to stockholder or other third party litigation, as well as investigations by the SEC or other regulatory authorities, which could require additional financial and management resourcesoperations and could result in fines, trading suspensions, payment of damages or other remedies. Further, any delay in compliance withcause the auditor attestation provisions of Section 404 could subject us to a variety of administrative sanctions, including ineligibility for short-form resale registration, action by the SEC and the suspension or delistingmarket value of our common stock to decline.
Marketplace acceptance depends in part on competition in our industry, which could reduce the trading priceis intense, and competing products in development may adversely affect acceptance of our common stock and could harm our business.
Risks Related to Our Current Products and Revenuesproducts.
The global supply of Moly is fragile and not stable. Our dependence on a limited number of third party suppliers for Moly could prevent us from delivering someextent to which any of our future products to our customersachieves market acceptance will depend on competitive factors. Competition in the required quantities, within the required timeframe, or at all, which could result in order cancellationsbiopharmaceutical industry is intense and decreased revenues.
A critical ingredient of TechneLite is Moly.characterized by ongoing research and development and technological change. We currently purchase finished Molyface competition from three of the four main processing sitesmany for-profit companies and major universities and research institutions in the world, namely ANSTO in Australia, IRE in BelgiumU.S. and NTP in South Africa. These processing sites provide us Molyabroad. We face competition from five of the six main Moly-producing reactors in the world, namely OPAL in Australia, BR2 in Belgium, LVR-15 in the Czech Republic, HFR in The Netherlands,companies marketing existing products or developing new products for diseases and SAFARI in South Africa.
The NTP processing facility has had periodic outages in 2017, 2018 and 2019. When NTP was not producing, we relied on Moly supply from both IRE and ANSTO to limit the impact of the NTP outages. As ANSTO transitioned from its existing Moly processing facility to its new Moly processing facility in the second quarter of 2019, ANSTO Moly production volumes decreased. In the second quarter of 2019, ANSTO experienced facility issues in its existing Moly processing facility which resulted in a decrease in Moly available to us. In addition, as ANSTO transitioned from its existing Moly processing facility to its new Moly processing facility in the second quarter of 2019, ANSTO experienced start-up and transition challenges, which also resulted in a decrease in Moly available to us. Further, starting in late June 2019 and through the date of this filing, ANSTO’s new Moly processing facility has experienced unscheduled production outages, and we are now relying on IRE and NTP to limit the impact of those ANSTO outages. Because of these supply chain constraints, depending on reactor and processor schedules and operations, we have not been able to fill some or all of the demand forconditions targeted by our TechneLite generators on certain manufacturing days, consequently decreasing revenue and cash flow from this product line during the outage periods as compared to prior periods.
ANSTO’s new Moly processing facility, could eventually increase ANSTO’s production capacity from approximately 2,000 curies per week to 3,500 curies per week with additional committed financial and operational resources. We recently received approval from both the FDA and Health Canada for our use of Moly supplied from ANSTO’s new Moly processing facility in manufacturing our TechneLite generators. At full ramp-up capacity, ANSTO’s new facility could provide incremental supply to our globally diversified Moly supply chain and therefore mitigate some risk among our Moly suppliers, although we can give no assurances to that effect and a prolonged disruption of service from one of our three Moly processing sites or one of their main Moly-producing reactors could have a substantial negative effect on our business, results of operations, financial condition and cash flows.
technologies. We are also pursuing additional sources of Moly from potential new producers around the world to further augment our current supply. In November 2014, we entered into a strategic arrangement with SHINE for the future supply of Moly. Under the terms of the supply agreement, SHINE will provide Moly 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 2022. However, we cannot assure you that SHINE or any other possible additional sources of Moly will result in commercial quantities of Moly for our business, or that these new suppliers together with our current suppliers will be able to deliver a sufficient quantity of Moly to meet our needs.
U.S., Canadian and international governments have encouraged the developmentaware of a number of alternative Moly production projectsproducts and product candidates which compete or may potentially compete with PSMA-targeted imaging agents and therapeutics, or our other product candidates. We are aware of several competitors, such as Johnson & Johnson subsidiary Janssen Biotech, Inc.; Novartis AG; Pfizer, Inc. in collaboration with Astellas Pharma US, Inc.; Aytu Bioscience, Inc.; Bracco Diagnostics, Inc.; Bayer HealthCare Pharmaceuticals Inc. and Telix Pharmaceuticals, which have received approval for or are developing treatments or diagnostics for prostate cancer. Any of these competing approved products or product candidates, or others which may be developed in the future, may achieve a significant competitive advantage relative to AZEDRA, PyL, 1095, 1404 or other product candidates.
Competition with respect to our technologies and product candidates is based on, among other things, product efficacy, safety, reliability, method of administration, availability, price and clinical benefit relative to cost; timing and scope of regulatory approval; sales, marketing and manufacturing capabilities; collaborator capabilities; insurance and other reimbursement coverage; and patent protection. Competitive disadvantages in any of these factors could materially harm our business and financial condition. Many of our competitors have substantially greater research and development capabilities and experience and greater manufacturing, marketing, financial and managerial resources than we do. These competitors may develop products that are superior to those we are developing and render our products or technologies non-competitive or obsolete. Our product candidates under development may not compete successfully with existing reactorsproducts or product candidates under development by other companies, universities and technologies as well as new technologies. However, weother institutions. Drug manufacturers that are first in the market with a therapeutic for a specific indication generally obtain and maintain a significant competitive advantage over later entrants and therefore, the speed with which industry participants move to develop products, complete clinical trials, approve processes and commercialize products is an important competitive factor. If our product candidates receive marketing approval but cannot say when, or if,compete effectively in the Moly produced from these projects will become available. As a result, there is a limited amountmarketplace, our operating results and financial position would suffer.
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Table of Moly available which could limit the quantity of TechneLite that we could manufacture, sell and distribute, resulting in a further substantial negative effect on our business, results of operations, financial condition and cash flows.Contents

Most of the global suppliers of Moly rely on Framatone-CERCA in France to fabricate uranium targets and in some cases fuel for research reactors from which Moly is produced. Absent a new supplier, a supply disruption relating to uranium targets or fuel could have a substantial negative effect on our business, results of operations, financial condition and cash flows.



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Repurchases
The following table presents information with respect to purchases of common stock we made during the quarter ended SeptemberJune 30, 2019.2020. The Company does not currently have a share repurchase program in effect. The 2015 Equity Incentive Plan, adopted by the Company on June 24, 2015, as amended on April 26, 2016 and as further amended on April 27, 2017 and April 24, 2019 (the “2015 Plan”), provides for the withholding of shares to satisfy minimum statutory tax withholding obligations. It does not specify a maximum number of shares that can be withheld for this purpose. The shares of common stock withheld to satisfy minimum tax withholding obligations may be deemed to be “issuer purchases” of shares that are required to be disclosed pursuant to this Item 2. These shares are then sold in compliance with Rule 10b5-1 into the market to allow the Company to satisfy the tax withholding requirements in cash.
PeriodTotal Number of 
Shares Purchased		Average Price Paid 
per Share		Total Number of 
Shares Purchased as
Part of Publicly
Announced Programs		Approximate Dollar
Value of Shares that 
May Yet Be Purchased Under
the Program
April 2020**29,792  $13.43  **
May 2020**4,907  $12.57  **
June 2020**1,600  $13.59  **
Total36,299  *
Period 
Total Number of 
Shares Purchased
 
Average Price Paid 
per Share
 
Total Number of 
Shares Purchased as
Part of Publicly
Announced Programs
 
Approximate Dollar
Value of Shares that 
May Yet Be Purchased Under
the Program
July 2019** 512
 $26.07
 * *
August 2019** 2,267
 $29.01
 * *
September 2019** 13,327
 $27.82
 * *
Total 16,106
   *  
        ________________________________

*These amounts are not applicable as the Company does not have a share repurchase program in effect.
**Reflects shares withheld to satisfy minimum statutory tax withholding amounts due from employees related to the receipt of stock which resulted from the exercise or vesting of equity awards.
*  These amounts are not applicable as the Company does not have a share repurchase program in effect.
** Reflects shares withheld to satisfy minimum statutory tax withholding amounts due from employees related to the receipt of stock which resulted from the exercise or vesting of equity awards.
Dividend Policy
We did not declare or pay any dividends, and we do not currently intend to pay dividends in the foreseeable future. We currently expect to retain future earnings, if any, for the foreseeable future, to repay indebtedness and to finance the growth and development of our business.business and to repay indebtedness. Our ability to pay dividends is restricted by our financing arrangements. See Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-External Sources of Liquidity” for further information.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.

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Table of Contents
Item 6. Exhibits
INCORPORATED BY REFERENCE
EXHIBIT
NUMBER		DESCRIPTION OF EXHIBITSFORMFILE
NUMBER		EXHIBITFILING
DATE
10.18-K001-3656910.1April 14, 2020
10.2*
10.38-K001-3656910.1June 22, 2020
10.4S-8333-2394914.4June 26, 2020
10.5S-8333-2394914.5June 26, 2020
10.6†10-Q000-2314310.37(16)May 10, 2011
10.7†8-K000-2314310.46 (21)January 5, 2016
10.8†8-K000-2314310.53(24)November 7, 2016
31.1*
31.2*
32.1**
101.INS*Inline XBRL Instance Document
101.SCH*Inline XBRL Taxonomy Extension Schema Document
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*Cover Page Interactive Data File (embedded within the Inline XBRL document)
INCORPORATED BY REFERENCE
EXHIBIT
NUMBER
DESCRIPTION OF EXHIBITSFORM
FILE
NUMBER
EXHIBIT
FILING
DATE
31.1*
Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a).
31.2*
Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a).
32.1**
Certification pursuant to 18 U.S.C. Section 1350.
101.INS*XBRL Instance Document
101.SCH*XBRL Taxonomy Extension Schema Document
101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*XBRL Taxonomy Extension Label Linkbase Document
101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document
* Filed herewith.
** Furnished herewith.
† Confidential treatment granted as to certain portions omitted and filed separately with the Commission.
+ Indicates management contract or compensatory plan or arrangement.



57
*Filed herewith.
**Furnished herewith.
+Indicates management contract or compensatory plan or arrangement.

Table of Contents



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
LANTHEUS HOLDINGS, INC.
By:/s/ MARY ANNE HEINO
Name:Mary Anne Heino
Title:
President and Chief Executive Officer
(Principal Executive Officer)
Date:OctoberJuly 31, 20192020
LANTHEUS HOLDINGS, INC.
By:/s/ ROBERT J. MARSHALL, JR.
Name:Robert J. Marshall, Jr.
Title:
Chief Financial Officer and Treasurer

(Principal Financial Officer and Principal Accounting Officer)
Date:OctoberJuly 31, 20192020



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