Q2 2021 OPKO Health Inc Earnings Call
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Ladies and gentlemen, please standby for them.
Optical health.
Second quarter 2021 financial results.
Conference call, we will begin women debt against these standby.
<unk> will begin in a few minutes. Thank you.
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Yeah.
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Okay.
Good afternoon, ladies and gentlemen, and welcome to the optical health.
Health second quarter, 2021 financial results conference call.
At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time, Inc.
If anyone should require assistance during the conference. Please press Star then zero on your Touchtone telephone.
As a reminder.
During this conference call is being recorded I would now like to turn the conference over to your host Ms. Yvonne breaks up Alley Chi Ma'am. Please go ahead.
Thank you operator and good afternoon. This is Yvonne Briggs with Ali Jay. Thank you all for joining today's call to discuss I'd go health financial results for the second quarter of 2021.
I'd like to remind you that any statements made during this call by management other than statements of historical fact will be considered forward looking and as such will be subject to risks and uncertainties that could materially affect the company's expected results.
Those forward looking statements include without limitation the various risks described.
In the company's SEC filings, including the annual report on form 10-K for the year ended December 31, 'twenty 'twenty and in subsequently filed SEC reports.
Importantly, this conference call contains time sensitive information that is accurate only as of the date of the live broadcast today July.
On the ninth 'twenty 'twenty 1.
Except as required by law <unk> undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances. After the date of this call.
Before we begin let me review the format for today's call Dr. Phillip Frost Chairman and.
My Twin Executive Officer will open the call Steve Rubin <unk> Executive Vice President will provide a business update and pipeline review and then Dr. Jon Cohen will discuss bio reference laboratories.
After that Adam local Opco CFO will review the company's second quarter financial results and then we'll open.
And cheap call to question.
Now I'd like to turn the call over to Dr. Frost.
Good afternoon, and thank you for joining our call today.
We're here to discuss for second quarter results, which were right on plan with your financial guidance items provided during our last quarterly call.
I'll start with bio reference laboratory.
And up.
During Q2 Bureau generated solid results, even as overall demand for COVID-19 testing declined.
<unk> continues to meet their testing needs of many significant customers, who are now focused on large scale screening and support of the transition from volume.
Diagnosis for surveillance.
Due to <unk> ability to provide accurate test results efficiently.
Remains with test provider of choice for large public school systems as well as all the major sports leagues, who are continuing to test this year and possibly into 2000.
For jewelry too.
Furthermore, first thing in the travel industry is likely to continue into next year and we were pleased to announce our agreement with Royal Caribbean Route.
This so far as we know is the first COVID-19 testing program for the cruise industry.
Due to increase.
<unk> of the high quality of for sufficient service <unk> core business, along with its specialty testing in oncology urology women's health and genetics.
All continued to rebound toward print current thermic levels.
It's gratifying to see BRL convert many new COVID-19 relationships.
For went into ongoing customers for its core diagnostics offering.
I'll, let John speak to the great strides were making with Scarlet health and on demand diagnostic service to expand digital health access to their patient stores, Inc.
We're enthusiastic about this initiative as we continue to position diagnostic services.
<unk> is a key component in the continuum of care to improve patient outcomes.
As for our pharmaceutical business, we look forward to symmetric on the upcoming Purdue for day in October.
For all of our determinations from the European and Japanese regulatory authorities next year.
As I mentioned recently during our annual meeting we've undertaken several initiatives to restore growth to a real deep fried choice.
Including rebalancing, our sales regions more focused physician training and.
On targeting.
And updating our message to highlight the benefits.
For initiating treatment earlier in the disease cycle.
We were pleased for our recently announced our agreement with the Korea therapeutics to develop and commercialize reality in mainland China, Hong Kong, Macau and Taiwan.
And for sure rates for COVID-19 have recently increased.
About the country and enrollment levels for a reality trial in COVID-19, outpatients have picked up.
The primary efficacy endpoints for the trial include raising and maintaining serum total 25 hydroxy vitamin D levels within the targeted range of 50 to 100 nanograms per ml and time to rest.
Resolution of key COVID-19 symptoms.
Numerous independent studies have reported an inverse correlation between vitamin D status and COVID-19 risks and severity.
Reality can represent a great option for patients to quickly and safely raised 25 day to sufficient levels.
<unk>, especially in cases of CK day in obesity.
Finally, I'd like to mention that as part of our strategy to out license certain early stage pharmaceutical assets we have.
Executing on agreement with camp for for the development and commercialization of we're on target on that technology.
We continue.
Levels pursue other license opportunities like this 1 in order to monetize on leverage our early stage assets on.
Now I'll turn the call over to Steve Rubin, who will provide further commentary on our pharmaceutical business Steve.
Good afternoon, everyone and thank you all for joining us today.
As Phil mentioned.
Quite pleased with our second quarter financial results by reference laboratories core business is trending back to pre pandemic volumes, while still leveraging its COVID-19 testing capabilities with certain large customers.
<unk> is our once weekly long acting recombinant human growth hormone for the treatment.
We are a pediatric patients with growth hormone deficiency for ghd and.
And as you know Pfizer a global commercial partner for <unk> submitted the initial biologics license application to the FDA.
Which was accepted and assigned <unk> action date in October 2021.
In addition, Pfizer expects decisions from both the European Commission and Japanese regulators next year.
Under our agreement with Pfizer <unk> is eligible to receive up to $275 million on achievement of certain regulatory and pricing milestones. These milestones ranged from 20 million to 90 day in each.
<unk> and her catalyzed by regulatory approval in the U S and regulatory and pricing determinations and other major markets.
In addition, upon launch we are entitled to regional to your gross profit sharing on sales of about so much rugen on Pfizer's daily Ghd drug Gina trumpet.
With respect to <unk>.
Hey, Avi the numbers for the quarter breakdown as follows total.
Prescriptions per rial day in Q2, 2021 as reported by <unk>.
We're approximately 11700, representing a decrease of approximately 36% compared with Q2 of 2020 and a decrease of approximately 5 percentage.
Each compared with Q1 of 2021.
Reality sales continued to be impact impacted by challenges in onboarding new patients. Although this trend is starting to reverse.
New patient starts decreased by 5.2% in Q2 for Q1.
Since the product was launched nearly 26000.
700 patients have had biology prescribed by approximately 3800 positions more than $100.150, physicians or nearly 4% on the total number of prescribers, where new reality prescribers in Q2.
As Phil mentioned, we continue to implement strategies to restore growth.
Percentage for reality, including training, our sales force and virtual selling techniques enhancing our digital marketing efforts through social media platforms, and redeploying sales personnel debt geographies with lower COVID-19 infection rates.
To expand Ray all of these market opportunity last month, we announced an executed agreement.
Growth in the Coyote therapeutics for the development and commercialization of our you all day in greater China.
The agreement covers reality in mainland, China, Hong Kong, Macau, and Taiwan for the treatment of secondary hyperparathyroidism in patients with stage III or for <unk>.
We are excited to partner with Nicoya.
Yes, given their expertise and network in this significant market, where more than 19 million people have stage III or for <unk>.
Mccoy will be responsible for all regulatory approvals and commercial activities. In addition to upfront and milestone payments of $10 million in the first 12 months Opco is eligible to receive.
With $115 million upon the achievement of certain development regulatory and sales based milestones.
<unk> will also pay out go tiered double digit royalties on product sales.
Our ongoing phase II trial with free all of the as a treatment for COVID-19, outpatient is now 86% enrolled only 23 more patients.
We've upped that need to be enrolled in order to reach the target of approximately 160 <unk>.
Enrollment has been slow during the past few months due to a low in the pandemic and increase in vaccinations, but is showing recent signs of picking up as the delta variance spreads in areas, where we have active study sites.
The primary efficacy endpoints include raising.
<unk> and maintaining serum total 25 hydroxy vitamin D. Within the range of 50 to 100 nanogram per Mil and time to resolution of COVID-19 symptoms as self reported each day by subjects using our questionnaire designed and validated to evaluate in clinical trials of presence severity and duration.
Asian of symptoms associated with viral infections.
Topline data from this randomized double blind placebo controlled trial or.
We're still expecting later this year.
Moving to our other programs about 2 weeks ago, we were pleased to announce our partnership with camp for the development manufacture and commercialization of therapeutics utilizing.
Our <unk> antagonism technology, which is an ugly on nucleotide platform developed under Opco Corona <unk>.
<unk> 4 is prioritizing <unk> lead in tag on that compound to progress in the clinical trials for the treatment of <unk> syndrome under.
Under the terms of the agreement <unk> received an upfront payment along with a 5% equity.
In camp for we are also eligible to receive up to $93.5 million in additional shares upon the achievement of certain development and sales milestone.
<unk> for will pay off low double digit royalties on product sales.
As part of our strategic initiatives, we will continue to seek other license opportunities to monetize our URL.
Early stage assets.
We are constantly evaluating our assets in order to maximize our return on investment last month, we announced the sale of Opco sterile fill and finish manufacturing facility in Ireland to horizon Therapeutics for $65 million in cash. This facility was no longer core asset of our ongoing operations and the sale.
Interested in an opportunity to strengthen our balance sheet as well as improve efficiencies now let me turn the call over to Jon Cohen to discuss our BRL business John.
Thanks, Steve and good.
Afternoon, everyone.
Bio references core clinical business continues to make progress to return.
Sales for the normalized pre pandemic levels as more patients are visiting their physicians in person and salespeople are allowed back into the offices and for.
That many of our clinical accounts have already returned to pre pandemic levels by references core testing volume at the end of the second quarter was up 55% versus the prior.
Toward year period, specifically on a womens health specialty testing business has been coming back nicely in the last couple of months with the clinical women's health business with an increased volume by 25% on revenue, 35% when comparing Q2.2021 versus Q2.2020.
Our oncology business also continues to make great progress with significant growth compared to 2019 solid tumor is 140% over 2019, Hematological malignancies liquid tumors is 105 per cent over 2019 cancer genomics was 107% over 2019.
<unk> and myeloid is 209% since 2019, we continue to make investments in all these areas, particularly in the myeloid offerings with some new testing options.
Our partnership initiatives, including large medical groups F..2 H these acos and health systems continue experience most over month.
Pieces in patient visits we have added several new Acos and signed lab service agreements with several new hospitals. This quarter. In addition, our business development efforts and partnering with large physician groups managing their physician office labs is paying off with increased volumes.
Our payer relations.
<unk> teams as increased our access across the country and during the second quarter, we received our renewal for the Unitedhealthcare preferred lab network for an additional 3 years.
In addition.
Bio reference on GBS are now providers for high Mark of Delaware 236000 lives formerly exclusive.
For Labcorp.
At the beginning of the year, we formally launched Scarlet health.
On demand diagnostic service to expand digital health assets solid brings our diagnostic services to patients preferred locations, which may be in their home or other office for an on demand safe and convenient diagnostic experience.
Currently we are at 73 markets with Scarlet, we are continuing to invest significantly in scarlet by adding new markets with the goal to reach 60% of the U S population in the next several months and 80% by early next year, we are seeing significant demand for the skull service across a multitude.
A commercial verticals.
Now, let me turn my attention to Covid testing.
No COVID-19 cases have come off their highs with the administration of the vaccine nationwide. We continue to see significant interest in surveillance testing in our sports programs school programs and travel industry partners.
2 we believe that many of these entities will continue their COVID-19 screening programs through the end of this year and in certain cases into 'twenty 'twenty 2.
In addition, we have seen an increase in volumes over the last 2 weeks as a result of the delta variance spreading across the country I will speak more of the variance Delta variant in a couple of minutes.
To date, we have performed over 17 million COVID-19, molecular tests in a second.
What are we performed $2.9 million Covid test, we are averaging about 20000 tests a day in July and are closely monitoring developments and demand shifts.
In late March we.
Other companywide lab operations assessment acquisition logistics procurement customer service cost reduction initiatives to rightsize, our cost structure to match the declining COVID-19 testing volumes and to drive efficiency gains in our core clinical lines of business. We are finding many savings opportunities, especially.
On the overall labor and reagent inventory management originally associated with Covid expansion.
This quarter, we renewed our contractual relationships with the National Football League Major League soccer for next season, and Major League baseball testing for this season.
We also announced the first national program for.
Kicked on testing for the cruise industry testing crew and guests for the Royal Caribbean cruise lines.
As I have mentioned on previous calls our point of care testing capabilities have played an increasingly significant role in COVID-19 offerings. As we are experiencing a shift towards demand for screening capabilities on site.
We now have.
With Covid 140 point of care sites in operation around the country on a resulted over 240000 point of care tests in Q2.
In terms of our COVID-19 school testing program to support a return and for it to in person classroom instruction. We are currently working with multiple school districts, including.
2 of the 3 of the largest school systems in the country, including New York City and Chicago. These.
These agreements cover testing services for more than 1500 schools to perform tests on public school students principals and teachers to date, we have tested over 650000 students. We continue to see strong interest in.
School based testing programs.
I'd like to briefly discuss the Sars Covid 2 delta variant rapidly spreading across the country. The term varian refers to genetic variations on the Sars Covid, 2 which has been emerging on circulating around the world throughout the COVID-19 pandemic viruses will constantly change.
On the mutation and new variance of the virus are expected to occur over time, new variants will emerge and others will disappear. These variants have may have act differently and require different treatments, most notably on the B 117 Alpha B 135 on data the 6.117 Delta and <unk> gamma variants, which seem.
To spread more reasons more easily and quickly than other variants and are leading to more cases of COVID-19 in unvaccinated individuals' an increase in the number of cases, we'll put strain on the health care resources lead to more hospitalizations as we're now seeing across the country and potentially more deaths. These variance are considered variance of concern by the CD.
D C variance for which there is evidence of the increase in Transmissibility and potentially more severe disease. The delta Varian is estimated to comprise up to 80% of new Covid testing as of July 19.
<unk> bio references COVID-19 testing platforms do not specifically reported detection of any specific.
Our platforms are not affected by the various spike protein variance, including Delta for example, if in individuals infected with the Delta variant the individuals receive a positive protein for the COVID-19 result, the result will not specify any type of area.
Our genetic testing volume of gene D X grew over 80.
4% for the second quarter versus the prior period prior year period, driven by our industry, leading exome test test offerings. There is substantial interest in our genome service across our existing client base driven by our rapid genome offering.
In late June of this year bio reference announced the appointment of Kathryn Xu.
Barry is president and Chief Executive Officer of Gene D X on a global genomic subsidiary.
Kathryn joined G&A ex from <unk> Corporation, where she served most recently as the Chief commercial officer. We are delighted to have for lead the <unk> organization and now let me turn it over to our CFO Adam.
Thank you John for the fifth straight quarter, we've reported consolidated income from operations across both of our segments. Our operating companies continue to execute on their plans.
Our diagnostics segment reported revenue from services of $397 million compared to 200.
$1 million for the 2020 period.
This increase reflects the continued demand for COVID-19 testing as well as the recovery of our routine clinical and genetic testing volumes as John mentioned, our clinical test volumes are continue to be below historical levels, but are significantly higher than 2020.
50 of our genetic testing volumes are higher than 2020 and 2019 levels.
The diagnostics segment reported operating income of $30 million compared to operating income of $41 million during 2020.
Recall that the 2020 period benefited from 2 <unk>.
Significant items. The first was nearly $11 million from the successful Medicare appeal for the for case score.
Was the $6 million, we received under the cares Act total costs and expenses were $367.2 million.
Compared to 2020, which had 216.
$2 million of costs and expenses.
The increase primarily reflects the increased testing volumes.
In addition, we have continued to invest in our commercial activities as John outlined related to our base business, including our efforts within Scarlett, resulting in increased selling.
<unk> general and administrative expenses.
Moving to our pharmaceutical segment, we reported revenues of $45.2 million for the second quarter of 2021 compared to $44 million for the 2020 period product revenue increased $6.3 million to 35.
$5.7 million driven by a strong performance by our Latin American operations International revenue increases were partially offset by a decrease in sales of Rowdy rail day has continued to be negatively impacted by the physician office restrict physician offices restricting products sales representatives.
For making sales calls as well as a decrease in Medicare patients utilizing reality in.
In Q2.2021 revenue from the transfer of intellectual property was $9.5 million compared to $14.7 million for the 2020 period for 2021 period includes $5 million.
<unk>, new from our recently announced partnership with Nicoya for reality in the Chinese market.
The overall decrease is the result of the completion of our <unk> phase III clinical trial and the associated amortization of the upfront payment we received from Pfizer.
Loss from operations from our pharmaceutical.
Segment was $13.7 million for the second quarter of 2021 compared to $6 million for the 2020 period overall research and development expense for the first quarter of 2021 was for.
For the second quarter of 2021 was $14.8 million compared to $14.1 million in 2020.
On a consolidated basis, the second quarter of 2021 had operating profit of $5.6 million compared to $27.2 million for the 2020 period.
During the second quarter of 2021, we exchanged $55.4 million of our 4.5% convertible notes.
Per common shares, resulting in a noncash and nonrecurring other expense of $11 million. As a reminder, the 2020 period benefited benefited from the <unk> score Medicare appeal of $11 million and $6 million in cares Act funding as well as the mark to market activity of.
Several of our strategic investments, which had shares appreciate during the quarter, resulting in $18.2 million of other income.
Considering these items, we reported a net loss in the second quarter of 2021 of $16.2 million or <unk> <unk> per share compared to net income of 33.
$7 million or <unk> <unk> per share for the 2020 period.
Our cash balance as of June 32021 was $65.8 million.
<unk> of our cash cash on hand, our Unutilized line of credit with JP Morgan and the proceeds from our sale of 1 of our ear Gen.
Please provide us with a strong balance sheet and adequate capital resources.
As we look into the second half of 2021, our focus has shifted to.
Growing our base business and maximizing the margins we earn on our Covid testing, while controlling our operating costs.
Given the uncertain.
Jen for C of the testing demands for Covid, including the most recent growth in demand as a result of the Delta there yet we are limiting our forward looking guidance to the third quarter and have built the following assumptions into our forecast, we anticipate performing between 1 and $1.5 million Covid PCR point of care.
Care and antibody tests during the quarter.
As John mentioned, we have capacity well in excess of these levels should demand for testing increase our range of guidance reflects testing demand from our physician office clients testing for schools sports entertainment and employer channels.
Certain for testing from the general public through our partnerships with state and local governments and pharmacy chains increase we could exceed our volume expectations.
We assume our base business for routine clinical testing will remain at current levels, which is overall behind 2019 levels. We.
We.
<unk> sales to remain behind 2020 until our sales force is fully able to return to their promotional activities and we grow our non Medicare patient utilization, including.
Including those assumptions, we expect revenue for the third quarter of 2021 to be between 270 and $300 million, including.
Ship from services of $230 million to $270 million.
Revenue from products sales of $30 to $35 million in other revenue of $3 million to $5 million, we expect costs and expenses of $300 million to $335 million.
Resulting in an overall operating loss between $5 million.
And operating income of $5 million.
At various points between the revenue and expense assumptions forecasted operating income includes a gain of approximately $30 million, resulting from the position of our ear Gen facility.
Operating profit also includes approximately $20 million of noncash dip.
Appreciated and amortization expense as well as an expected investment in research and development of $18 million to $22 million.
With that I will open up the call for questions.
Operator.
Ladies and gentlemen, if you have a question at this time Please press star.
Sorry, Linda number.
On you touched on telephone you for your question has been answered or you wish to remove yourself from the queue. Please press the pound key once again, if you want to ask a question beef. That's fine then the number 1 on your Touchtone telephone.
Your first question comes from the line of.
My only.
Cash from Jefferies. Your line is open.
Hi, everyone. Thanks for taking my questions.
First question is on just the commentary on the base business.
You've provided a little bit more granularity in the past on.
Compared.
Third to pre Covid levels, and so I'm just wondering if you can do that at this point and talk a little bit more about that trajectory.
Going forward for the base business and also if you can comment more on that genetic testing to which it sounds like that's doing.
Doing well and so what are your growth expectations.
The genetic testing.
John you want to take any Wilmington.
So you can start I'll jump back on sure.
We were down on the base business against 2019 somewhere somewhere around in the low teens.
<unk> for I think it was 13 or 14% overall I think our expectation of the base business is going to going to slowly return as we look at it for.
For the overall bio reference base.
<unk> to your point.
Had a pretty strong quarter up significantly against last year, but also.
Teens are significantly against 22019 levels and that remains our expectations I don't that'll continue to grow and accelerate.
We go throughout the year.
Yeah, I would I would.
Reiterate that.
Our strategic position in 2019 right before Covid.
It was to make a specific investments in women's health on oncology continue for case for with urology and the genetic business and at all of those investments are now paying off debt.
The other part was we call it strategic ventures, whereas the investment in <unk>.
In a vertical to bring on health systems referenced business hustle.
Hospital business Acos health care space, and that's also bearing fruit so the.
You know as the as debt position.
Practices moved towards.
A differentiator decider low we call it meaning the CEO and COO of large medical groups that are making decisions, but we will continue to see that switch.
The way, we strategically placed ourselves.
Got it Okay. That's helpful and I also wanted to ask a question on <unk> as well.
When you get approval.
When you get approval later this year for that 1 in the United States, where you disclose more details on the.
Gross profit share and potentially provide guidance on what to expect for our junior Trump and so much Oregon after that.
Yes.
Definitely provide some better clarity I think it obviously has to do with the timing of the approvals and the launches so until until we have those we're not going to add anything.
On top of it right now mark, but once we have an approval, we'll provide some better clarity on expectations.
Got it okay. Thank you and I'll hop back in the queue.
Your next question comes from the line of Mcdonald with volume.
From H C. Wainwright your line is open.
Okay.
Hi, This is months from H C. Wainwright, thanks for taking my questions.
The first kind of centers around.
The Delta Varian I was wondering to your knowledge. If there are any COVID-19 tests on the market that can differentiate the varian.
Your customers are asking for it and whether you think it's.
Meaningful at this point to provide this differentiation.
So so we are we do get asked occasionally by customers. We cooperate obviously with every state department of health.
We send them positive COVID-19 for yet.
For our samples if they ask for it for a specific.
Genomic sequencing.
Frequently that's for epidemiological purposes, which is what we obviously participate with them to do.
Right now I'm sure you know the vaccine has had a significant positive effects on the delta variance on all the others as I mentioned the testing has.
It has not changed so.
Although there is a request it's mostly as a result of.
Really the state departments of health wanting to know the spread of the virus as I said right now over 80 per cent of the tests that are positive all of the other delta there.
But it doesn't impact on therapy.
Doesn't it.
Pacific on what patients will do as a result of it.
Okay understood and then with regards to the multiplex test for COVID-19 and flu.
Are you or are you planning to commodify the surveillance data that you capture.
Well, while they're there.
I guess the question you're asking is is there will there will it as available Covid slashed glue.
Testing.
On the May also be available at some point.
Point of care rapid testing.
We have to date seen almost no.
Yeah, just essentially no ordering of it no..1 has asked for it yet I think that could change in the fall what'll happen is people will probably show up in flu like symptoms.
There will be as they'll get either they'll get both or they'll get a.
Our flu tests, which will either be positive or negative for that reflects the COVID-19. It's just.
It's totally right now unpredictable in terms of what the flu season is going to look like.
But it is available.
Okay. It makes sense and just finally regarding the camp for a deal on regarding drove a syndrome is he our attention to shift away from neurology indications.
Or developing compounds.
With the anti low not.
Platform are you planning to reprise these streams once again once you gain kind of proof of principle.
Okay. Okay.
On.
The antagonist platform right now.
There are provisions in.
In our license agreement, where we could either suggest additional compounds or take them on ourselves with another partner, but.
To begin with.
The way, it's structured as Cam for has the platform the lead compound is <unk>.
And then followed by others and we have requirements on both development and <unk>.
Commercialization of other drugs within the platform in that agreement.
Okay. Thank you I appreciate your time.
Yes.
Your next question comes from the line of Jeffrey Cohen from Ladenburg Thalmann. Your line is open.
Oh, Hi, folks how are you thanks for taking the questions.
Firstly could you talk about the.
Product revenue from Q2 simple little stronger than we estimated was there anything in particular to call out there.
So our our Latin American businesses just are they they want a few.
Tenders during the quarter that it will allow them to increase their overall overall businesses, we do expect it to.
To be a strong business for us and growth business for us going forward for that.
The main driver there Jeff.
Okay.
You mentioned.
Cash Q2 <unk>.
And then you spoke about next quarter, reflecting a gain of $30 million.
So the.
The cash debt.
As reflected in the second quarter or will be reflected in the third quarter it'll be in the third quarter. So we don't have that cash debt.
Okay.
Perfect I got it and 1 more if I may on any insight into the composition of the piece you are vs antibody Doctor Cohen, and maybe talk a little bit about that and how you expect the pickup.
The composition to be reflected going forward.
Yeah, I I there is there.
64 on demand for antibody testing is I think by all indications not what anybody would have predicted early on I think.
We're fairly conservative in our estimates of what that would look like.
If you've followed the.
For the CDC slash.
Administrations.
There is for its relative to their views of antibody they have been fairly negative about antibody testing as a reflection of.
Immunology immunological status. So there is very little data to indicate unfortunately, whether or not high or low levels of antibodies are really.
Convert over to whether or not something that's truly immune or not so what I mean by that if someone has a low antibody level that does not that does not mean that they don't have a high T cell memory.
That really is much more important so the result of all that is is that not a lot of it being ordered currently now.
Reported that could change with what's going on with the Delta Varian, where people may say, well I really would like to know what they.
Antibody status is or if there is a recommendation for 8.
Another dose of the vaccine there will be some people, who will say well do I need the next dose or not.
Antibodies give me.
Well antibody levels gives me enough indication about whether or not I should take the next dose those are all the that's what everybody is talking about but the answer is nobody knows what the antibody testing.
We will look like in the next couple of months.
Got it that's Super helpful. And then lastly for me.
At night on many things specific to call out on the.
Below the line item on investment loss and income tax provision of note for the quarter.
For income taxes, it's again taxes, principally that we're paying in.
Incurring in our international businesses.
Those continue to.
On a 2 well on be taxpayers on the other income and expenses it really relates to a 100% 2 hour.
And convertible note exchange, which was the fair value of the underlying shares.
Taking out the $55 million on debt.
Okay, and the investment loss.
Uh huh.
11.
Do we wait for the quarter.
And.
That's the other income expense line, that's the $11 million.
Got it okay perfect. Thanks for taking my questions sure.
3.
Your next question comes from the line of Edward Handoff from Piper Sandler Your line is open.
Thank you very much guidance and thanks for taking my question a couple of housekeeping ones if I may.
$55 million and debt was that converted into a number of shares and where do you expect to record.
Recognize the year John.
King.
P&L.
So the debt was exchanged for common shares and that's the day loss recorded.
Gain from <unk> will be an operating income line item it'll be a day.
It'll be an offset to operating.
Yes.
Okay, great and how many shares on it.
A telephone have it at my fingertips, it's in the Q that we just don't want it but I'm worried that on thanks, So much I'll talk.
Your next and your last question comes from the line of Yale Jen from Laidlaw and company. Your line is open.
Thanks for taking the questions.
They've got to hit the first 1 is in terms of the pharmaceutical.
Business you guys have done a lot of.
Our licensing.
<unk> expenses activity Oh, you got all day.
On playing any licensing doesn't flow over.
Yeah.
So yeah, we're always certainly.
[noise] open to opportunity if it's there I mean, I guess, we're not looking for any early stage.
Projects at this point, but certainly there is something that is synergistic for example, something that would supplement the renal side or something that we already have a sales force that would be of interest to us but it.
Currently we are not looking for any additional development starts on projects.
We have a fair amount of early stage already.
As you know.
Yes.
And maybe 1 more question on the other.
Our bio reference side at the operating.
Actually income pipeline I noticed that last year you got about.
250.
50 million on this 1.
This year, it's about this quarter, it's about $397 million and last year had to do.
Quarter has $2.2 million.
Covid tests and this quarter it has roughly 2.9.
Should we extrapolate that if some differences beyond besides those.
And then probably several hundred thousand.
Past that debt that will be something basic.
Gross.
For instance, a fifth year.
Yeah. So so remember the second quarter of last year, you all had had a significant decline in the base business. So so a significant portion or.
Some of our revenue last year was tied to Covid, where for this year, it's a bit more balance.
Also.
There was.
Most of our volume came last year from our state and local partnerships and more priced.
Significantly lower than where the majority of on.
<unk> volume comes from today. So there is a bit of a price mix component and the revenue differences as well.
Okay, Great that's very helpful.
For those questions.
Thanks Al.
Yeah.
Yeah.
This concludes our question and answer session I would now like to turn the conference back to that for a seamless frost for any closing remarks.
I wanted to thank everybody for participating we look forward to spending time with you again after our next quarter.
Ladies and gentlemen. This concludes today's conference call. Thank you for your participation and have a wonderful day you may all disconnect.
Yeah.
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Total revenue.
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