Earnings Call Transcript - LNTH Q3 2023

Operator, Operator

Good morning. Welcome to the Lantheus Third Quarter 2023 Financial Results Conference Call. This is your operator for today's call. Please note that all lines have been placed on mute to prevent any background noise. This call is being recorded for replay purposes. A replay of the webcast will be available in the Investors section of the company's website approximately two hours after the completion of the call and will be archived for at least 30 days. I will now turn the call over to your host for today, Mark Kinarney, Vice President of Investor Relations. Mark?

Mark Kinarney, Vice President of Investor Relations

Thank you. Good morning, and welcome to today's call. With me are Mary Anne Heino, our CEO; Paul Blanchfield, our President; and Bob Marshall, our Chief Financial Officer. Mary Anne will begin the call with introductory remarks and then turn the call over to Paul to provide a strategic and operational update. Bob will cover our financial results and provide updated guidance. Mary Anne will provide closing remarks and then we will open the call for Q&A. This morning, we issued a press release which was furnished to the Securities and Exchange Commission under Form 8-K reporting our third quarter 2023 results. The release and today's slide presentation are in the Investors section of our website at lantheus.com. I would like to remind you that any comments made during our call today could include forward-looking statements. Actual results may differ materially from these statements due to a variety of risks and uncertainties. Please note that we assume no obligation to update our commentary or any forward-looking statements, except as required by applicable law, even if actual results or future expectations change materially. Please refer to our SEC filings for a detailed discussion of these risks and uncertainties. Discussions during the call will also include certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures is also included in the Investors section of our website. It is my pleasure to now turn the call over to our CEO, Mary Anne.

Mary Anne Heino, CEO

Thank you, Mark, and good morning to everyone. This was another terrific quarter for Lantheus. We reported revenue of $319.9 million, up 33.7% year-over-year, and progressed our internal R&D and our business development efforts to expand our pipeline. I'm proud to report we have impacted the lives of more than 4.7 million patients year-to-date. We believe our market-leading position in PSMA imaging and our advancing pipeline, combined with our unique capabilities, will continue to support our position as the leading radiopharmaceutical-focused company. PYLARIFY is the clear market leader in PSMA PET imaging. Growth during the quarter was driven by brand preference for PYLARIFY due to its clinical and commercial value proposition. We believe PYLARIFY offers the best combination with our proprietary PSMA-targeted ligand and the F18 isotope. Turning to the total market opportunity, we estimate the current addressable market for the PSMA PET imaging agents to be $1.6 billion and believe this market potential will grow to more than $3 billion by 2028. As such, we remain encouraged by the current and future growth potential of PYLARIFY. PNT2002, our investigational PSMA-targeted radiotherapeutic asset, represents another significant opportunity for growth within our prostate cancer franchise. PNT2002 is designed to treat patients with metastatic castrate-resistant prostate cancer, or mCRPC, who have experienced disease progression following treatment with an androgen receptor pathway inhibitor, or ARPI. We are excited about the progress we have made with our partner POINT Biopharma and look forward to the topline data from the Phase 3 SPLASH trial in the fourth quarter of 2023. As we consider the radiopharmaceutical landscape, we view the proposed acquisition of POINT by Eli Lilly as further validation of the opportunity we see for PNT2002 and PNT2003 and the increasing role of radiopharmaceuticals in life sciences. In addition to prostate cancer, we have a number of exciting assets, including PNT2003, our late-stage radiotherapeutic product candidate for neuroendocrine tumors. Another asset is MK-6240, our investigational Tau imaging agent, intended to assist the diagnosis and staging of Alzheimer's disease patients, which was recently granted Fast Track designation by the FDA. And finally, our fibroblast activation protein, or FAP, targeted PET diagnostic imaging agent is being clinically investigated in multiple tumor types. To supplement our ongoing R&D efforts, we will continue to leverage our significant radiopharmaceutical expertise and resources to target business development opportunities. With that, I'll now turn the call over to Paul.

Paul Blanchfield, President

Thank you, Mary Anne, and good morning, everyone. During the third quarter, PYLARIFY delivered sales of $215.4 million, representing almost 50% year-over-year growth. We attribute this strong performance to the prostate cancer community's recognition of PYLARIFY's clinical and commercial value. Year-over-year growth was driven by existing accounts, new accounts, and additional PSMA activations. Sequentially, growth was again driven by our existing accounts, offset by seasonal trends consistent with those reported across the healthcare sector, as well as greater holiday impact and one less selling day. This resulted in relatively consistent weekly dose demand in June, July, and August, followed by more robust growth in September, which carried over to October. We expect PYLARIFY, which has been used in more than 250,000 scans since launch, to maintain its position as the number-one ordered PSMA PET imaging agent because of three main clinical attributes. First, PYLARIFY delivers reliable diagnostic performance with accurate detection rates without a high false-positive rate. Second, our robust pivotal clinical data shows a change in intended management in patients with biochemically recurrent prostate cancer. Third, PYLARIFY demonstrated consistently high reader agreement and reliability in our pivotal trial. We also believe the adoption and utilization of PYLARIFY are further supported by our commercial value proposition, including: PYLARIFY is the number one ordered PSMA PET imaging agent in the US and is a proven diagnostic backed by real-world experience, including over 250,000 scans across 47 states; widespread availability with PYLARIFY being the only PSMA PET imaging agent that is available through a diverse, multi-partner F18 network, which ensures convenient and reliable supply; and broad market access with more than 90% of covered lives having access to PSMA PET with PYLARIFY. For these reasons, we believe PYLARIFY will continue to be the clear market leader in PSMA PET imaging. We are encouraged by the recent developments in the reimbursement landscape. In July, the Centers for Medicare & Medicaid Services, or CMS, put forth several proposals for comment regarding possible changes, including separate payment for diagnostic radiopharmaceuticals. Lantheus, along with numerous industry organizations submitted comments, and we expect CMS to publish final 2024 regulations shortly. Simultaneously, we continue to collaborate with industry and advocacy organizations to pass the FIND Act to ensure all prostate cancer patients continue to have access to innovative radiopharmaceuticals, including PYLARIFY. Regardless of the outcome of the CMS regulations and status of the FIND Act, we are confident in PYLARIFY's future growth prospects. We see a significant growth opportunity for PSMA PET imaging. While we believe the current addressable market remains about 350,000 scans, or $1.6 billion, we have updated our estimates for the total addressable market to be approximately 600,000 scans or more than $3 billion by 2028. To realize this potential, we anticipate radioligand therapeutics will move into earlier lines of therapy, including both pre-chemo mCRPC and hormone-sensitive prostate cancer, which would increase the need for PSMA PET imaging for both patient selection and monitoring. Additionally, we expect to see increased adoption of PSMA PET imaging in the intermediate favorable patient population as physicians realize its clinical benefits and additional data is generated. Finally, we expect the incidents and prevalence of prostate cancer to grow approximately 2% to 3% per year. Due to these factors, we believe there is significant opportunity for PYLARIFY to grow in both the near and long term. Switching to our microbubble business, DEFINITY maintained its strong momentum with third quarter sales of $67.3 million, up almost 11% year-over-year. We expect increasing procedure volumes and our promotional efforts to enable sustainable growth. We continue to work closely with our partner POINT Biopharma to progress PNT2002 clinical and regulatory manufacturing and commercial readiness work streams, including establishing an expanded access program, otherwise known as a compassionate use program. We look forward to topline SPLASH study data in the fourth quarter of 2023. We have also seen positive developments for MK-6240, our clinical-stage PET Tau imaging agent intended to assist the diagnosis of Alzheimer's disease. During the third quarter, we signed agreements with four prominent pharmaceutical companies to provide MK-6240 as a biomarker. With these additional agreements, MK-6240 is now being used in more than 90 active clinical trials. We believe that Tau imaging has the potential to play an important role in patient staging, selection, and monitoring for future treatments and could be a surrogate endpoint for treatment efficacy. I will now turn the call over to Bob.

Bob Marshall, CFO

Thank you, Paul, and good morning. I will provide highlights for the third quarter financials, focusing on adjusted results unless otherwise noted. Revenue for the third quarter was $319.9 million, an increase of $80.7 million, or 33.7% over the prior-year period. Earnings per share for the third quarter were $1.47, an increase of $0.48, or 48% over the prior year. Turning now to the details, beginning with radiopharmaceutical oncology. The category contributed revenue of $216.3 million, up 49.5% year-over-year, with PYLARIFY at $215.4 million with consistent sequential quarterly growth when adjusting for seasonal and holiday impacts and one fewer billing day in the quarter, as was noted by Paul. Precision diagnostics recorded revenue of $96.3 million, up 8.2% from the prior-year quarter. Sales of DEFINITY were $67.3 million, 10.9% higher compared to the prior-year quarter. TechneLite revenue was $23.3 million, up 5.3% from the prior year, due mainly to opportunistic sales. Lastly, strategic partnerships and other revenue was $7.3 million, driven primarily by a milestone and dose revenue from MK-6240 within pharma solutions. As a reminder, we sold our rights to the RELISTOR licensed intangible asset associated with net sales royalties mid-year and don't expect to be recording any further revenue with the exception of any potential future milestone payments. Gross profit margin for the third quarter was 67.2%, an increase of 100 basis points over the third quarter 2022 on a similar basis. As has been the case in recent quarters, the increase is due mainly to favorable volume and product mix led by PYLARIFY and DEFINITY, partially offset by the margin headwind of 93 basis points attributable to the RELISTOR royalty asset sale. Operating expenses were 10 basis points unfavorable from the prior year at 23.5% of net revenue and $19.2 million higher on an absolute dollar basis, which is in line with previously guided expense levels. Commercial investment continues to focus on driving PYLARIFY branding, awareness and adoption, alongside ramping efforts to prepare for the launch of PNT2002, inclusive of market research and overall commercialization readiness. G&A expense increases year-over-year relate to our ERP implementation, which remains on track, as well as investments in cyber, compliance, enterprise risk management analysis, and employee engagement. Adjusted operating profit for the quarter was $139.5 million, an increase of 36.5% over the same period prior year. Total adjustments in the quarter totaled $24.6 million before taxes. Of this amount, $14 million and $11.7 million of expense are associated with non-cash stock and incentive plans, and acquired intangible amortization respectively. Also in the quarter, we recorded a gain of $51.8 million on the sale of the RELISTOR royalty asset within other income and expense. The remainder is related to acquisition and other non-recurring expenses. Our effective tax rate was 23.8% in the quarter. The resulting reported net income for the third quarter was $132.0 million, and net income of $103.1 million on an adjusted basis, an increase of 45.9% over the prior-year quarter. GAAP fully diluted earnings per share were $1.88 and earnings of $1.47 on an adjusted basis, an increase of 48% over the prior-year quarter. Now turning to cash flow. Third quarter operating cash flow was $116.7 million as compared to $93.6 million in Q3 2022. Capital expenditures totaled $14.6 million, in line with expectations. Free cash flow, which we define as operating cash flow less capital expenditures, was $102.1 million, an increase of $14.6 million over the prior-year period. During the quarter, the company received net proceeds from the RELISTOR royalty asset sale in the amount of $97.8 million, which has been recorded in net cash flows from investing activities. Cash and cash equivalents, net of restricted cash, now stand at $614.1 million. We continue to have access to our $350 million undrawn bank revolver and are very comfortable with our strong liquidity position. Turning now to our updated guidance for the full year. We are tightening our full year revenue estimate to be in a range of $1.255 billion to $1.27 billion from the prior range of $1.245 billion to $1.27 billion. In doing so, we are lifting the lower end of our prior PYLARIFY revenue range to $840 million to $860 million from $835 million to $860 million. As was the case last quarter, we expect DEFINITY to continue its momentum and also expect MK-6240 to contribute $15 million to $20 million of revenue rather than the prior guidance of $15 million. Turning now to earnings. Adjusted EPS will be in a range of $5.80 to $5.85 versus the prior range of $5.60 to $5.70. With that, let me turn the call back over to Mary Anne.

Mary Anne Heino, CEO

Thank you, Bob. Our third quarter results were driven by the commercial growth of our market-leading products. We believe our differentiated capabilities, commitment to innovation and excellence, and our significant capital resources position Lantheus to remain the leading radiopharmaceutical-focused company as we work to find, fight, and follow disease to deliver better patient outcomes. With that, Bob, Paul, and I are now ready to take your questions. Operator, please go ahead.

Operator, Operator

For your next question, we will now hear from Roanna Ruiz from Leerink. Roanna, your line is open, please ask your question.

Roanna Ruiz, Analyst

Great. Good morning, everyone.

Paul Blanchfield, President

Good morning.

Roanna Ruiz, Analyst

So among the assumptions going into your new future total addressable market assumption of over $3 billion, I was curious what are the largest drivers in terms of how many scans would be added to build up to the 600,000 scans, I think you mentioned on the call. And just how are you considering new PSMA PET competition in there along with your strategies for PYLARIFY growth going forward?

Paul Blanchfield, President

Sure. I'm glad to address that, Roanna. Thank you for your question. We currently have an addressable market of about 350,000, which we estimate to be around $1.6 billion this year. We acknowledge the feedback from you and our investors regarding the future potential, and today we've outlined the total addressable market that we project will reach approximately 600,000 scans by 2028. In the investor presentation this morning, we indicated that the primary driver of growth is expected to be the expansion of radioligand therapy into earlier treatment lines, moving from the post-chemotherapy or third line to the second and first lines, also known as pre-chemotherapy, as well as the metastatic hormone-sensitive prostate cancer population. This shift could increase the potential scans from 30,000 for patient selection and monitoring to around 210,000 scans. While the number of scans per patient remains relatively consistent, a larger patient population will be eligible for radioligand therapy. Thus, this is anticipated to be the most significant contributor to our expectations by 2028, based on our projections for future radioligand therapeutic approvals, including potentially PNT2002. The second major driver will be in the recurrent setting, influenced by rising overall incidence and prevalence as men live longer, alongside a slight increase in the number of scans per patient over their lifetime. Lastly, initial staging for suspected metastases is expected to experience an incidence increase of about 2% to 3% annually, accompanied by an assumption of greater penetration into the intermediate favorable population. Therefore, we see the potential for this market to reach $3 billion by 2028, which excites us about the future of PSMA PET imaging and PYLARIFY in particular. We believe that, with our ongoing commercial and clinical value proposition highlighted today and actively promoted in the marketplace, we can and will be the market leader for years to come.

Mary Anne Heino, CEO

Roanna, in many of the comments that Paul just shared are outlined on Slide 9 of the deck that we used with this call and which will also be on our website if you want to refer back for more of those data points.

Operator, Operator

Thank you. And for your next question, it comes from the line of Richard Newitter from Truist Securities. Richard, your line is open. Please ask your question.

Richard Newitter, Analyst

Hi, thanks for taking the questions. Congrats on a solid quarter, and thanks for the increased detail on the addressable TAM. So, I guess, you highlighted a lot of expanders there to go from $1.6 billion to $3 billion over time, but not all of these, obviously, are going to be accessible, Paul, as you just pointed out overnight. So I guess just the question I had is, as we look at '24, is there enough runway with the $1.6 billion TAM and the initial TAM expanders at the front end of that '23 to '28 timeframe to grow PYLARIFY next year? I think the consensus is looking for high single-digit growth, about $940 million. I'm just looking to see, is that a reasonable starting point? And can we expect growth next year in PYLARIFY? Thanks.

Paul Blanchfield, President

First of all, I appreciate the question. Today, we're naturally talking about the third quarter, and in due course, we will be talking about 2024. I think we're incredibly pleased with PYLARIFY's growth launch to date. We grew year-over-year, as I mentioned, almost 50% of what we're able to do. The current addressable market is about $1.6 billion. But overall, we still see continued growth potential in both the near and the long term for us to be able to see continued growth. And indeed, we do expect to see continued growth of PYLARIFY next year and for multiple years to come, but we haven't put an exact number on that. We will naturally provide guidance as we do every year when we report our fourth quarter earnings in February of next year.

Mary Anne Heino, CEO

And the one point I would add, Rich, and you heard in answering Roanna's question, you heard Paul say, we still have a very conservative estimate as to the number of scans per patient. A lot of what we'd outlined for growth is really just based on new patient populations coming into the pool for consideration. But certainly, as physicians continue to appreciate the clinical utility of using PSMA PET imaging, especially with PYLARIFY, we would expect also to see the number of scans per patient grow.

Operator, Operator

And for your next question, it comes from the line of Matt Taylor from Jefferies. Matt, your line is open. Please ask your question.

Matt Taylor, Analyst

Hi, thanks for taking the question. Good morning. So, this could be for any of you, I guess, but I did want to touch on POINT. You mentioned the Lilly deal as validation. And I saw in the presentation you were talking about doing some investments in market research and launch readiness. So I guess, maybe you could just illustrate for us what you're doing to get ready for it? And any reads that you have from seeing the Pluvicto data a couple of weeks ago and what that could mean for POINT and your opportunity there?

Mary Anne Heino, CEO

So, Rich, I'm going to start, and then I'm going to turn it over to Paul. Because what I'd like to declare right now is that we will follow the same model for PNT2002 that we did with PYLARIFY. And that is the testament to how ready we were for that market, how we entered that market, how we reacted or related with all the stakeholders in the market. We really see that as having been very successful in creating a wonderful market model that can be replicated with PNT2002. And in some ways, it will be easier because we're at this point now, we're already familiar with largely the entire audience, certainly with the channel. And so we will leverage all those relationships as we prepare for that launch. Before I turn it over to Paul, he can make some more comments on our commercial readiness. I will speak to the PSMAfore data in saying that we're glad to see data on these types of products being reported. Now certainly, there will be more data analysis by Novartis, and we are eagerly awaiting our own readout of the SPLASH data, which will be in the fourth quarter of 2023. But we think both these modalities show great promise for the treatment. Can everyone hear me?

Matt Taylor, Analyst

Yes, I can still hear you.

Mary Anne Heino, CEO

Okay, thank you. We believe there's strong therapeutic promise for these products. We'll wait to see the exact data and to also, of course, analyze our own SPLASH data in fourth quarter 2023. And with that, I'll turn it over to Paul to finish our comments about our commercial readiness for PNT2002.

Paul Blanchfield, President

Thanks, Mary Anne, and thanks for the question, Matt. So, as highlighted today, we continue to work with POINT across clinical and regulatory, across manufacturing as well as commercial readiness. And so we are working closely, indeed daily, with our colleagues from POINT to ensure that we are ready for a best-in-class launch of PNT2002. That will naturally include a number of traditional work. It's understanding the market, it's patient mapping. It is effectively market research to understand this. I would also note that while we're focused on the commercial side of things, bringing a radiopharmaceutical to market is also reliant on a fully integrated supply chain. And so understanding and working with our customers to be able to get them ready to be able to treat with potentially another Lutetium product is also in the mix. And so, we've got a number of activities there that have kicked off in 2023, and we would expect to continue into 2024 and beyond.

Operator, Operator

All right, thank you. And for your next question, it comes from the line of Anthony Petrone from Mizuho Group. Anthony, your line is open. Please ask your question.

Anthony Petrone, Analyst

Hi, thank you for the question. Congratulations on the quarter. Maybe just one on PNT2002, the opportunity there you sized PYLARIFY, but just wondering if you could provide an outlook on PMT2002 versus the expectations and the market sizing that Novartis has out there?

Mary Anne Heino, CEO

So again, I'm going to turn it over to Paul to offer commentary. But I would point you to Slide number 9 in the deck that we just released, because that does speak to as one of the categories those patients who are being candidates for radioligand therapy.

Paul Blanchfield, President

Thank you for the question, Anthony. As we've recently highlighted, Bob and I discussed this at an investor conference in September. We previously mentioned that the market potential for PNT2002 in the U.S. is around $3.5 billion, a figure we announced last year when we revealed the POINT collaboration. While we haven't formally updated that number, we believe the overall potential for radioligand therapy in mCRPC patients could be significantly larger. Based on Pluvicto's year-to-date performance, they are projected to achieve approximately $1 billion in sales in their first full year, despite facing supply challenges that limited the addition of new patients. In their recent earnings call, they indicated they are now actively adding new patients. For a product in the post-chemo setting to potentially reach $1 billion in its first full year without full supply shows there is a considerable opportunity here, especially since this is primarily a third-line or post-chemo treatment. We believe that expanding PSMA therapeutics to include both pre- and post-chemo will offer substantial opportunities, which both we and our partners at POINT are very excited about. We look forward to sharing top-line data for the SPLASH trial in the fourth quarter of 2023.

Anthony Petrone, Analyst

That's helpful. And one quick follow-up would be just synergies. If we assume PYLARIFY and PNT2002 is under the same umbrella, just maybe a little bit on how go-to-market would play out. It looks to us that PNT2002, if approved, would be basically synergistic to the existing PYLARIFY sales force? And would you contemplate maybe bundling those two solutions? Thanks again.

Paul Blanchfield, President

Thank you for the question, Anthony. There are certainly benefits to having a franchise that includes both a PSMA therapeutic and a PSMA diagnostic, as eligibility for a PSMA therapeutic requires prior scanning with a PSMA diagnostic. I think we have clear synergies and advantages due to our strong market position. This was one of the reasons it made sense for POINT and Lantheus to collaborate last fall when we announced our agreement. Having both under one franchise allows us to engage effectively with our customers. However, we understand that the needs of a therapeutic are distinct from those of a diagnostic. Therefore, we will continue investing to support the therapeutic and maximize the potential of PNT2002 and PYLARIFY, especially as they are highly relevant for urology and possibly medical oncology. We are committed to investing adequately to support the launch of PNT2002 and the significant market potential it offers.

Operator, Operator

Your next question comes from Andy Hsieh from William Blair. Andy, your line is open. Please go ahead with your question.

Andy Hsieh, Analyst

Okay, great. Thanks for taking my question and congratulations on continued execution. I want to ask about data coming out of ESMO and the regulatory dynamics. It seems like Novartis has to wait until 2024 to make a submission decision due to the apparent detriment on overall survival with a hazard ratio of 1.16. And when you look at the internal pipeline, does that open the door for PNT2002 to potentially leapfrog Novartis as the first filer in the pre-chemo setting?

Mary Anne Heino, CEO

So it's impossible at this point to estimate what the regulatory filing timelines will be for both products. As we've noted, I think, very repeatedly, we are eagerly awaiting the SPLASH data readout in the fourth quarter of 2023, and that will really form all of our strategy. What I will say is I think that there is a willing and open attitude of the FDA to bring these modalities to market. And I think that is something that both we and Novartis are also focused on making these treatments available and accessible to patients. And we're very confident, and as I said, again, we're looking forward to seeing the SPLASH data. Once we have it, we'll be able to compare it more fully to the PSMAfore data and to have that inform our regulatory strategy and what we would see as the regulatory timeline for both these products.

Operator, Operator

And for your next question, it comes from Justin Walsh at JonesTrading. Justin, your line is open. Please go ahead with your question.

Justin Walsh, Analyst

Hi. Thanks for taking the question. It might be a little early to get a solid answer on this, but I'm wondering if you can help contextualize how you view the size of the potential mid- to long-term market for an asset like MK-6240.

Mary Anne Heino, CEO

That is really a great question and one that is top of mind for us. We look at what's happening in Alzheimer's disease and the progress of the therapeutic candidates there. And then also the scientific communities, I would say, analysis and consideration of amyloid versus Tau imaging and what it infers about patients and where they are in their staging and where they are in their clinical timeline. And for many reasons of what are really emerging data, we see great potential for Tau imaging agents in their role in helping to not only diagnose but more importantly, stage Alzheimer's patients. And while I'm not willing to give a dollar figure around that market now, I will say that we are very, very impressed with what the size of that market can be. And again, we are not the only company with the Tau imaging agent under development or approved. But we think that MK-6240 offers some advantages in performance that will be important to the market. Just as a note, on an annual basis, there were 6.5 million patients who are diagnosed, and it is wonderfully still a very highly prevalent population as well. So it's a very large market, and we are really thrilled about having the opportunity to serve it.

Operator, Operator

And for your next question, it comes from the line of Larry Solow from CJS Securities. Larry, your line is open. Please ask your question.

Larry Solow, Analyst

Great, thanks. Good morning, everybody. I have a couple of follow-up questions. Most of my inquiries have been addressed. On PYLARIFY, Paul, you mentioned year-over-year growth coming from both new and existing accounts. It seems like the growth is a bit slower, but you indicated that it's primarily from existing accounts. Can you provide an update on your current status and your potential to reach new accounts that are still untapped? Additionally, you talked about the PMF facility expansion. Can you update us on how that's progressing?

Paul Blanchfield, President

Yeah, sure. Thanks, Larry. I appreciate the question. So we made a distinction, year-over-year, if we compare the third quarter of '23 to the third quarter of '22, growth was driven by existing accounts as well as new accounts and additional PMF activations. If we speak sequentially, the vast majority of growth was driven by existing accounts. In that were over 50 PMFs, where about 54 PMFs currently activated. We do continue to activate new PMFs, specifically in geographic areas where additional dose time flexibility is important. But the driver has been and continues to be, if we look kind of quarter-over-quarter and certainly into the future, will be the activation of existing accounts where we already have imaging centers, whether they be freestanding or hospital or government facilities that have access to and are regularly offering PYLARIFY and where it is certainly being requested by name. The real work that we've been on for the last year is to continue to activate the referring community. That would be urology, that would be medical oncology, radiation oncology, for them to understand who the target patient is, the frequency in which those patients could be scanned, and we still see significant room for growth in that space. The vast majority of accounts have adopted some sort of PSMA PET imaging, a market that's annualizing approximately $1.3 billion, meaning there's not too many accounts out there that are not already adopting. There may be some small mobile facilities where either due to geographics or just timing of offering we have to be able to add. But I would call that effectively de minimis going forward. Really, the growth in this market is going to continue to be the activation of referring physicians, ensuring that they understand the breadth of our label and the significant potential that PSMA PET imaging can make to clinical practice as evidenced by the change in intended management data, where this is not just a diagnostic; this can truly inform patient management. And we think that clinical benefit plus our broader commercial benefits will continue to support our growth going forward.

Operator, Operator

Thank you. And for your next question, it comes from the line of Yuan Zhi from B. Riley. Yuan, your line is open. Please ask your question.

Yuan Zhi, Analyst

Good morning. Thank you for taking our questions and congrats on the quarter. Can you please clarify the total cost of a PSMA PET scan on average? I mean the cost of the agents and the procedure in either hospital setting or outpatient setting? Thank you.

Paul Blanchfield, President

Yuan, first of all, thank you for the question. I may ask a follow-up question to you if you will. But the total cost of the procedure is certainly going to vary. So if you think about the cost of procedure to either a hospital or a freestanding imaging center, there's naturally a cost of the tracer, which would effectively be PYLARIFY for the vast majority of PSMA PET scans, and then there are certainly three other commercial agents and two other academic agents available. Commercially, the agents are priced relatively close together. And so when we look at what that is, that's a fairly consistent cost across the marketplace. Now to estimate the cost of the procedure, there's a fixed cost that's going to be associated with the PET/CT scanner, which is usually an investment in the millions of dollars, but then will last many years. And then there's naturally the staff associated and otherwise. I can't estimate what that is. That is different for each imaging center and hospital. But overall, PET/CT has been adopted in this marketplace for decades. It continues to grow. And I think we've seen the benefits of PYLARIFY cause a number of institutions to even think about increasing the number of PET/CT scanners that they have to be able to better support the patients they serve and the referring physicians that come to them. I don't know if that helps answer the question.

Mary Anne Heino, CEO

I would just add that the market created by FDG has significantly contributed to the PET scanning market, particularly in oncology, in the United States. It is well established, and the financial elements are clearly understood, though they vary between each product. As Paul pointed out, while the medical procedures for conducting a PET scan may be similar across different products, the cost of the tracer differs.

Operator, Operator

Thank you. And for your next question, it comes from the line of David Turkaly from JMP Securities. David, your line is open. Please ask your question.

David Turkaly, Analyst

Great. Good morning. Maybe just a real quick one for Bob. Thanks for pointing out some of the impacts in the quarter. But if we looked at the seasonal trends, the holiday, and then the one less selling day. Is there any way you could put like an approximate dollar amount on what you think that cost you in the quarter?

Bob Marshall, CFO

The way I'll answer that, David, is maybe by sort of normalizing or adjusting to the sequential growth rate. So, if you make the adjustments, and we do see this, and we pointed out coming out of the last quarter that, we would see increasing sort of impacts from holidays, particularly going to July 4 in this case and Labor Day. And then, we will see it again when we get to Thanksgiving and then the week between Christmas and New Year's. But if we look at the impact of the things that we highlighted, we would have expected that the adjusted growth rate sequentially to be something in the mid-single digits, which is why we kind of use the language around a consistent quarterly sequential growth rate. Because if you look at the growth rate from Q1 to Q2, and now Q2 to Q3, and then the implied guidance, if you will, in Q4, they're all very similar kinds of growth rates.

Paul Blanchfield, President

David, maybe I'll just add. I think when we look at the dynamics of the quarter, and as I highlighted on the prepared remarks, June, July, and August had relatively consistent volumes on a weekly basis, taking out the holiday weeks, if you will. But where we saw growth continue at more historical levels was the August to September and the September to October. And we believe that's consistent with what we see across the industry. Indeed, DEFINITY, which we've been at for 22-plus years, our third quarter is always our weakest quarter and is even down sequentially. And where you look at other procedural-based reporting organizations, July and August are relatively slow. Now in the past couple of years, we may not have been able to see that and our financials may not have depicted that as much because the growth trajectory of PYLARIFY at 100%-plus growth, activating new PMS, adding new accounts, that doesn't necessarily stick out. But if you look at last year as an example, our sequential growth Q2 to Q3 was also the lowest sequential growth of the year. And so that's consistent with what Bob just highlighted.

Operator, Operator

Thank you. And we have a follow-up question from Roanna Ruiz from Leerink. Please go ahead.

Roanna Ruiz, Analyst

Just a quick one for me. I'm not sure if I heard it on the call. But have you mentioned the current market share for PYLARIFY in the quarter relative to last quarter? I think last quarter it was around 70% penetrated.

Paul Blanchfield, President

Thanks, Roanna. We had not mentioned it. We have not gotten the question. Overall, I think PYLARIFY remains the clear market leader and number one PSMA PET imaging agent with over 250,000 scans since launch. We believe our share was relatively consistent in the quarter at approximately 70%. I do use the term approximate, recognizing that only one of the four commercial players actually reports PSMA PET revenues. But overall, we now added competition in the quarter; we believe that impact was relatively minimal. And so we are comfortable that our continued commercial and clinical value proposition, as well as the significant growth potential as highlighted by the $3 billion plus potential by 2028, will continue to ensure that PYLARIFY continues to grow and also remains the clear market leader for many years to come.

Mary Anne Heino, CEO

Is there a follow-up question from Rich?

Richard Newitter, Analyst

Hi, can you hear me?

Mary Anne Heino, CEO

We can now.

Richard Newitter, Analyst

Thank you for the follow-up. I appreciate the comments about seasonality regarding PYLARIFY; they are helpful. Bob, you mentioned some selling day challenges or holiday impacts between the third and fourth quarters. However, your revised guidance for PYLARIFY suggests a midpoint quarter-over-quarter growth rate of around 6%. I'm curious if this growth is primarily driven by a strong fourth quarter that compensates for the holiday effects, especially considering the weaker performance in July and August during the third quarter. What contributes to this acceleration?

Bob Marshall, CFO

Paul Blanchfield, President

Operator, Operator

Thank you. And we have a follow-up question from Roanna Ruiz from Leerink. Please go ahead.

Roanna Ruiz, Analyst

Paul Blanchfield, President

Mary Anne Heino, CEO

Is there a follow-up question from Rich?

Richard Newitter, Analyst

Hi, can you hear me?

Mary Anne Heino, CEO

We can now.

Richard Newitter, Analyst

Thank you for the follow-up. I appreciate the comments on PYLARIFY's seasonality, which are helpful. Bob, you mentioned there are still some selling day issues or holidays affecting the transition from the third quarter to the fourth quarter. However, your updated guidance for PYLARIFY suggests a quarter-over-quarter growth rate of about 6% at the midpoint. I'm curious if this growth is primarily due to a fourth-quarter pickup that compensates for any holiday impacts, which may have resulted from a weaker performance in July and August during the third quarter. What factors are driving this reacceleration?

Bob Marshall, CFO

Paul Blanchfield, President

Operator, Operator

Thank you. And we have a follow-up question from Roanna Ruiz from Leerink. Please go ahead.

Roanna Ruiz, Analyst

Paul Blanchfield, President

Mary Anne Heino, CEO

And thank you for your question and for your patience. We look forward to our continued discussions and any further questions you may have.

Operator, Operator

Thank you. And this concludes the Q&A session. I'd like to turn the call back over to Mary Anne Heino for closing remarks.

Mary Anne Heino, CEO

Thank you, everyone. We appreciate your participation in today's call.

Operator, Operator

...and you may now disconnect, and have a wonderful day.