Q2 2023 OPKO Health Inc Earnings Call
Good day and welcome to the Opco Health second quarter 2023 financial results Conference call all participants will be in a listen only mode.
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After today's presentation there'll be an opportunity to ask questions. I'll say question you May Press Star then one on your Touchtone phone.
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Please note. This event is being recorded I would now like turn the conference over to Yvonne Briggs.
Thank you operator and good afternoon. This is Yvonne Briggs with L. A J. Thank you all for joining today's call to discuss Opco health financial results for the second quarter of 2023, 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 sub.
Due to risks and uncertainties that could materially affect the company's expected results.
These 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, 2022, and in subsequently filed SEC reports.
This conference call contains time sensitive information that is accurate only as of the date of the light broadcast August three 2023.
Except as required by law Opco 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 Chief Executive Officer will open the call Dr. Elias Zerhouni, Vice Chairman and President of Opco will then provide an overview of opco pharmaceutical business as well as well as bio reference health after that Adam.
Local Opco CFO will review the company's second quarter financial results and then we'll open the call to questions now I'd like to turn the call over to Dr. Frost.
Good afternoon, and thank you for joining us today.
In June we were pleased to announce what we had been expecting for more than a year.
FDA approval of <unk>.
Our long acting once weekly human growth hormone untoward to treat pediatric patients aged three and older.
Our global commercial partner Pfizer.
Has indicated it expects and drilling were to become available this month core prescribing in the U S.
This approval triggered a 90 million dollar milestone payment from Pfizer.
And leads to a profit sharing arrangement that Adam will discuss in more detail.
That decision by the FDA, that's the one gun was approvals in over 40 countries.
With commercial launches today and over 18.
Including the major markets of Japan, Germany, France, Spain, and the United Kingdom.
Pfizer expects to launch in June and another 18 or more countries. During the remainder of this year covering all priority international markets by year end.
With U S approval, we expect to see significant ramp up in sales for in Genoa as market penetration continues to expand globally.
With Pfizer's global commercial infrastructure and long standing experience in this particular market segment, we couldn't have a better partner.
Yeah.
On another front, we continue to advance as sophisticated science of our moat X unit towards clinical trials.
Nordics is novel approaches are validated by the exclusive worldwide collaboration with Merck that we announced in March.
To develop our multivalent nanoparticle Epstein Barr virus vaccine.
Our strategy was to secure a large pharmaceutical partner to develop the EBV vaccine and we have a great one and Merck.
Despite the significant prevalence of this virus and its potential to cause head and neck stomach and other cancers as well as multiple sclerosis. There are currently no FDA approved vaccines for EBV.
And for reference health, we continued to drive cost control efforts in parallel with work to enhance innovation and productivity.
We look forward to our diagnostics segment returned to profitability in the near future.
Our international operations continued to perform well with both our I Bureau, American and fine tech businesses demonstrating profitability.
We're too early is to provide further discussion and commentary on our pharmaceutical and diagnostic businesses.
Thank you Doctor Frost and good afternoon, everyone.
So Dr. Francis just mentioned, we were extremely proud to announce the approval of <unk> in the U S.
Long acting treatment reduces the burden on children with growth hormone deficiency with injection frequency going from daily administration to once weekly.
Upon the upcoming launch later this month in the U S alcohol will be entitled to a profit sharing arrangement with Pfizer on a worldwide basis, which is based on regional tiered gross profit on both in Gela and general broken.
Pfizer's daily human growth hormone.
Now turning to <unk> as mentioned by Dr. Ross, we are advancing our recently announced collaboration with Merck to develop our Epstein Barr virus multivalent nanoparticle vaccine.
This collaboration is significant in that.
It addresses an important unmet clinical need.
It also validates <unk> innovative multi targeting technologies, our vaccine targets. The four major Epstein Barr virus proteins known to allow the virus to enter human cells. This multi targeted approach.
The potential to provide complete protection against this virus, which affects up to 95% of the global adult population during their lifetime with over 200000 cases of related cancers for a year and a strong link to multiple sclerosis.
Now jointly working with Merck on IND, enabling studies.
We enter the clinic as soon as possible.
In addition to the EBV vaccine or anti viral programs focused on other indications, including the treatment and prevention of HIV and COVID-19.
We have a partnership with the NIH to develop the Tri specific candidate to both prevent and treat HIV and the NIH is providing funding for this program, which is in phase one.
In addition, we're working on next generation candidates that offer up to 10 fold improvement in potency and greater breadth of anti viral activity against the majority of global HIV strengths.
Condoms HIV medicines still have limitations, including drug toxicity due to lifelong therapy and drug resistance that can impact the efficacy of viral suppression.
Additionally, we're working on the Covid multi specific antibody program to address the emergence of resistant variants on a global basis.
We believe the virus will remain in the human population for sometime to come.
And we will require no novel therapies, especially for at risk patients, who have underlying medical conditions or suppressed immune system.
Since our technology platform is modular it allows for the rational selection of antibodies to optimize potency against current and future strains and prevent the emergence of viral resistance.
This program is partially funded by DARPA and we are in late stage preclinical testing.
Recently, we applied for further funding from BARDA to support our COVID-19, multi specific antibody program platform as well as for seasonal influenza therapy and prevention.
Now on another side of our programs our oncology program focuses on hard to treat solid tumors.
But also the treatment of leukemia and lymphoma.
As you know many cancer therapies still fail to achieve or maintain a positive response.
With a loss of tumor antigen expression as one of the main reasons are multi specific antibody candidates are designed to engage and optimize T cell function, while preventing tumor antigen escape.
These programs are in the preclinical stage with plans to enter two programs in the clinic in 2024.
Moving now to Ray Aldi are.
Treatment for secondary hyperparathyroidism in adults with stage, three or four chronic disease, chronic kidney disease and low vitamin D levels the numbers for the quarter breakdown as follows.
Total prescriptions for royalty in the second quarter of 2023 as reported by Iqs, Yeah were approximately 13100 repreve.
Representing an increase of five 8% from approximately 12385 in the previous quarter.
<unk> sales are steadily recovering from the impact of pandemic related challenges in Onboarding new patient.
Let me go now to our diagnostic segment at bio reference felt where our focus remains on improving the performance of the company. Following the major drop in Covid revenues by driving cost efficiencies.
By improving revenue cycle management.
<unk> volume growth and increasing market access with an ultimate goal of improving operating margins towards profitability in the upcoming quarters.
Through these initiatives, we've been able to further reduce our workforce by 7% in the second quarter with more than 200 positions eliminated in the laboratories, we have realized further cost reductions by better reagents and supplies pricing and utilization as well as streamline.
<unk> management structures and operation.
In regard to revenue cycle management.
We're improving the actual realizations on our build services by increasing payer coverage and access enhancing our preauthorization procedures, reducing unbilled bowls, and introducing co pay and point of care collections as well as bad debt collections.
For example, our market access team has succeeded in negotiating contracts that will result in more covered lives and improve payer reimbursement.
For example, we received the status of preferred lab network by United Health care for 2023.
The fifth consecutive year.
We reached a three year contract agreement with Humana, which includes reimbursement on the <unk> score test and negotiated a new amendment with Cigna for additional CPT code coverage. We also reached an agreement with care source, which will open up the Ohio, Georgia, Indiana, Kentucky.
North Carolina, Arkansas, and West Virginia markets among others.
We have also reorganized our commercial team based on three regions.
The northeast the southeast and the west the structure will allow us to more effectively address growth opportunities aligned with our local health care industry and local market conditions in each region.
We continue to focus growth efforts in specialty diagnostics and health systems with growing pipelines in both and begun to develop services for pharmaceutical.
Industry clients.
Apologies for example, we've seen volume growth predominantly led by our molecular genomics uncas sites and uncle <unk> advance portfolio, which have been well received that's not growing in volume and scope of services.
Women's health last quarter, we introduced <unk>, plus cytology, which is the only FDA approved triage test.
Users HBV HPV dual biomarker technology to treat women with HPV positive results with test orders steadily increasing in the second quarter.
So continue to see strong volume growth at over one plus.
Off about one plus a blood test that detects ovarian cancer risk.
In women and women diagnosed with a pelvic mass we have a planned surgery.
Our urology segment remains focused on marketing our proprietary fourth case CT test.
Which now is included in the American Urology Association clinical guidelines for urologists.
Our expanded health systems commercial team continues to build our hospital and health system business line by increasing our reach and hospital laboratory management outreach and reference work, creating meaningful and collaborative solutions that address the challenges.
Many hospitals and health systems are facing currently.
In summary, so we keep a disciplined approach to improve margins performance, we're seeing steady progress on our path back towards profitable growth.
I will now turn the call over to Adam logo to discuss our second quarter financial results out of them.
Thank you Elliot starting with our pharmaceutical segment revenue increased to $138 $4 million for the second quarter of 2023 from $123 1 million for the comparable period of 2022.
This increase reflects the $90 million milestone payment due from Pfizer related to the approval in the U S for in Genoa.
<unk>.
Second quarter of 2023 versus <unk> $85 billion in milestone payments from Pfizer for the approvals of engender in Japan, and the European Union during the 2022 quarter as well as higher gross profit share payments from Pfizer during the quarter.
Revenue from reality in our international pharmaceutical businesses increased by seven $6 million, reflecting improvements in overall prescriptions and net price as well as gains from currency exchange in Chile, and Mexico cost and expenses for our pharmaceutical segment were $74 $7 million for.
The second quarter of 2023 compared to $67 $7 million for the 2022 period.
Research and development expense for the second quarter of 2023 were $17 $5 million compared with $14 $8 million for the 2022 period.
This increase reflects activities.
From our <unk> development programs, partially offset by decreased spending for our N. Gen lead development activities, the resulting operating income for the quarter ended June 32023 was $63 6 million and $8 $2 million improvement from operating income of $55 4 million for the second.
Order of 2020 to Ameren.
Amortization expense related to intangible assets was $16 5 million and $16 7 million, respectively for the 2023 and 2022 quarters.
Moving to our diagnostics segment, we reported revenue for the second quarter of 2023 of $127 million.
Compared to $186 8 million for the 2022 period. This decline primarily reflects lower COVID-19 testing volume.
As Elliot discussed our focus.
I'll reference remains to identify profitable growth verticals and to maximize operating efficiency, we strategically invested in additional commercial resources in our higher growth specialty verticals and expect to begin yielding returns on those investments during the second half of 2023.
We continue to execute our reach expense reduction program at bio reference and as Elliot discussed. We also identified a number of near and medium term growth programs.
That we continue to expect through the balance of the year.
Operating expense for our diagnostics segment was $44 $3 million for the quarter compared to $57 5 million for the prior year.
Amortization and depreciation expense included in operating loss were $8 6 million and $10 2 million, respectively for the 23% in 2022 periods.
Turning to consolidated financial results for the second quarter, we reported operating income of $7 million compared with an operating loss of $10 7 million for the 2022 quarter net.
Net loss for the second quarter of 2023 was $19 6 million or <unk> <unk> per share. This compares to a net loss of $101 7 million or <unk> 14 per share for the 2022 quarter net loss for both periods was negatively impacted by the mark to market losses from <unk> stock price decline.
Of $19 $9 million and $71 $2 million, respectively for the 22 and 'twenty three periods.
As we look at the current quarter, we are providing financial guidance with the following assumptions.
Our pharmaceutical segment, we've assumed the U S region for the foreign Jen Lowe will be in the gross profit share commencing in September as Pfizer's U S. Launch is expected to begin in late August during the first quarter of 2023, the European region shifted to a gross profit share and going forward both.
The European region, and Japanese regions will result in gross profit share consisting of Gina Troponin N. Gen loan for the first six months of 'twenty, three Pfizer reported approximately $222 million of global <unk> sales.
We assume a stable foreign currency exchange for our U S. Pharmaceutical businesses, we have seen a 10% favorable impact on our businesses over the last 12 months.
For costs and expenses related to R&D, we expect to wind down the clinical operations are in general for the pediatric indication.
Indication as quickly as possible with final clinical site closure visits occurring now through the first half of 2024.
The decreases are expected to be offset by increased R&D activities related to our <unk> development programs that Elliot discussed.
Regarding the assumptions for our diagnostics segment, we assume COVID-19 testing volumes will remain an insignificant portion of our overall testing volumes we have.
Also assumed consistent core testing volumes with growth in our higher margin oncology and urology specialty lines as well as the site slight increase in the average per patient collection amounts due order due to our revenue cycle management initiatives.
As a result, we expect the following for the third quarter of 2023 total revenue between 165 and $180 million. This includes revenue from services between 126 $135 million.
Revenue from product sales between 32, and $36 million and other revenue between five and $10 million inclusive of the estimated Pfizer gross profit share.
We expect the Q3 23 costs and expenses to be between 240, and $250 million, including R&D expense of $21 million to $24 million and depreciation and amortization expense of approximately $26 million.
That concludes our prepared remarks. Thank you all for your attention and now operator, let's open the call for questions.
We will now begin the question and answer session to ask any question you May Press Star then one on your Touchtone phone.
We are using a speakerphone please pick up your handset before pressing the case.
Anytime your question has been addressed and you would like to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our RASK.
Our first question comes from.
Murray.
Crop <unk> Jefferies <unk> co. Please go ahead.
Hi, This is Kevin on for Maury, Congrats on the quarter and thanks for taking my questions.
First question.
On the and again Matt.
Profit share I know you mentioned that.
This would come about likely in September .
When we could get.
More details on on the agreement there and then also.
Your latest thoughts on when we could break out the <unk>.
Revenue. Thank you.
Yes.
Thanks, Kevin for the question. So so we guided the total.
Revenue is coming from the profit share lines to be between five and $10 million for the third quarter, which is pretty conservative given that the bill.
Pfizer is really just going to start launching in the U S region.
In the next couple of weeks here. So as that continues to develop we will provide some some better per views into that but I think from our overall guide. We've we've talked about the total potential opportunity as significant just or in these early days, it's difficult for us.
To be very specific on how how Pfizer is going to launch the product.
Okay, Yes.
Thanks, Adam and then just one on the diagnostics business. So.
You mentioned returning to profitability in the near future are you guiding more specifically.
In that regard in terms of maybe by the end of this year or by early next year and then also in terms of returning to profitability or you're also guiding to returning to growth as well.
Okay.
Sure.
Elyse I don't know if you want to.
Go with any comments that I can add in as well.
Sure I mean, our plans are to basically reach breakeven by the end of the year beginning of the.
Of 2024.
Our profitable growth.
In 2024.
The question you asked about.
So obviously the key to the success here is continuous growth so.
Yeah, we're not depending on just on cost reductions we're also.
Yes.
Adam mentioned, we have made investments actually in the commercial realm and focused new verticals like the pharmaceutical industry, which I know well, which is a launch potential I believe and we're working on it as well as the health systems.
Business lines.
Yes, so maybe I'll just add.
On our guide here, we get we got a $1 26 to 135 against the second quarter, which reported a $127 million. So so from that perspective, Kevin We do see there is some upside here in the near term.
Too early at this point continue to build on that into the future quarters.
Makes sense great. Thanks for answering my questions.
Our next question comes from Jeffrey Cohen Ladenburg Thalmann. Please go ahead.
Thank you all for taking our questions firstly.
Adam could you break out for service revenue to cost of service revenue and the cost of product revenue options here.
Nir chooses to momentarily.
Yeah. So the Q is out there I can I can break it down for you, Jeff if you need.
Tim Mchugh, yes, yes, yes, it's in the queue.
Okay.
And could you talk a little.
A little bit of Dol.
Overplus test.
Perhaps some of the traction or pricing or geographical presence.
Generating thus far.
<unk> plus.
It's growing quite quite a bit and.
Basically in our catchment area.
This points, where our sales forces is present in our women's health.
This is strong.
Ken will give you specific numbers, but I can certainly follow up with you on that.
Okay. That's helpful. Any commentary specific to reality I saw seven seven for the quarter or any.
Look or guidance there.
Revenues or prescriptions or growth.
So we didn't get go specific but it has continue elliott's did call out the year over year prescription growth of just below 6%. So I think we're continuing to see that that build.
Consistent with prior years, we see the net reimbursement improve throughout the year for reality. So you should we should see continued growth sequentially, but we didn't we didn't call. It out any any specific number there just a little clarification it was 6%.
Quarter on previous quarter.
Q2 over Q1 right.
Alright, and the previous year.
Okay got it that's helpful and most of it in the Q the revenue from services and products broken out that's helpful. Okay and.
Any commentary on margins should we expect with some cost reductions to see margins improve.
On the service side over the balance of this year or that's more of a 'twenty four issue.
We're working on improving the margins this year.
I mean as you know we just.
Just mentioned we've reduced.
Head count by 7%, we're looking at multiple.
Areas, where margins need to be improved we have them.
No.
Renegotiations with payers as well and then pricing review as well as contribution margins for us. So my expectation is to see you know narrow the marches.
Move the margins to narrow.
And get to breakeven hopefully at the end of the year beginning of first quarter or first quarter of 2024.
Okay, and then lastly, Adam Okay for us to use on the cash deal one way one plus the 90 expected this month I think.
Yes, that's right.
Okay perfect that tells it for us. Thank you very much for taking the questions.
Thanks, Jeff Thank you Joe.
Yeah.
Our next question comes from E. Chen from HC Wainwright. Please go ahead.
Hey, this is cheap on behalf of your churn.
And all the progress.
My first question is on model X any color on the type of cancer indications.
What you would like to target next year and the phase one.
So we have two programs. The most advanced one is for solid tumors and it's going to.
Be tested against the basket of solid tumors to try to see where we get the most response.
So.
The solid tumors that you know the prostate cancer gastric cancer pancreatic cancer.
Non small cell lung cancer. So I can tell you, which one will emerge which one's will emerge but thats. The the trust of the program.
Solid tumors and then we have a program on more liquid tumors leukemias.
Oklahoma's, which is a parallel program.
Also we will emerge in the clinic.
Hopefully as early as possible in the 'twenty 'twenty four but we think by the end of 2024, we will have two programs of two cancer programs in the clinic.
Thank you.
The other thing on <unk>.
The diagnostics business I know you mentioned.
Some of the cost cutting steps.
In your prepared remarks.
And I'm, sorry, if I missed it but could you highlight some of the other growth initiatives that you plan for that business unit.
No you can shorten the fuel but is there any anyone who wants to do so so I mean basically we're doing a full review of the business.
Mechanisms. So in addition to cost reduction we are also looking over the revenue improvements on the business.
Alright, so thats the revenue cycle management initiative and that actually is quite.
Promising because it turns out that if you look at the way we were.
Capturing revenues, we had a quite a significant loss in terms of billable due to incomplete CPT codes ICD nine ICD 10 codes and Preauthorization, which is a common strategy that players are using so we've put countermeasures to that and it's paying off in.
<unk>.
The company never really focused on point of care collections like Copay, and if you look at the number of succession as we do.
Just capturing a few dollars makes a huge difference. So that's if you will.
On right sizing the.
The spend versus collections that we make okay. The second.
Major thrust is obviously growth when you look at the growth we've grown in oncology with grown in.
In women's health and we continue to focus on these specialty services, but one that's emerging and make some announcements I hope.
Over the next few weeks as large systems.
I really are facing very difficult marches and we've for example.
Example, manage now the Westchester Medical Center.
Yeah.
LIBOR Tories and capture an increasing share of the outreach business with that.
And we are essentially increasing the funnel we increase our sales force in that category from one two salespeople before 256 today.
And we're focusing on on the regional approach because.
As you probably know the situation of hospitals and the need for laboratory management outreach services referenced is very different from region to region and so we are definitely looking at.
Growth in the specialty businesses and the health systems, and that's ongoing and we started.
New line of potential revenue, which is the pharmaceutical.
Business given the fact that we have a laboratory, which can do actually biomarker.
Our research as well as data is very valuable to pharmaceutical and biotech companies are exploring that obviously I cannot.
Quantify it at this point, but it's certainly a promising line based on my knowledge of having been a head of R&D and a major pharma company.
No that there is a huge need for that.
Having a reliable laboratory that supports clinical trials.
<unk> development as well as research.
Those are the multiple lines of activities, we're pursuing on the large fronts and I would say so far so good.
Excellent. Thank you and congrats again.
Yeah.
Our next question comes from Edward.
<unk> from Piper Sandler. Please go ahead.
Great. Thank you very much and my congratulations on getting the approval very exciting.
I know, it's been a long long time coming so that's great to see.
My question actually I, just had a real quick housekeeping one.
Adam I missed what you said I think it was about R&D, maybe 24 to towards the top end of the guidance okay.
21 to 24.
21% to 24 months out and then also just a quick accounting question I don't believe so whole economy. So you mentioned, but the $90 billion milestone won't be recognized.
P&L in any way, it's really just going to strengthen the balance sheet is that correct.
It was in the P&L in Q2, and so we have a receivable recorded for it we will get the cash or.
I didn't see that yet awesome right.
And looking forward to seeing growth from that product and also great progress from the.
From the Murdoch's work so thank you.
Thanks, Doug.
Our next question comes from Michael Pitofsky from Barrington Research. Please go ahead.
Question so.
Adam.
I may have missed this if you if you reminded people earlier, but what's the cost take out so far it at BRL to this point.
Yes.
So far this year, it's at we had set a target of about $40 million.
And we're about at the halfway point for that probably a little little bit ahead, Elyse I don't know if you have the specific number but I know as last we track that it was was just beyond the halfway point there with with more to go for the throughout the rest of the year.
That is correct.
And remember we took out.
Mm $100 million before that.
Okay Alright.
Alright so.
Given given that.
Flip through the <unk>.
I mean, it looks like you lost $44 million at the operating line in that business.
Which was actually sequentially worse than Q1.
Just feels like are nowhere close to being sort of.
On track to get to breakeven in that business by.
By year end can you sort of bridge and I'm hearing the growth programs and the continuing expense reductions, but like where does that how does that happen.
Thanks.
Well I think that you know maybe.
Maybe.
So some of the numbers in Q2.
One time expenses due to.
The reduction in people and.
You have.
Warnock to have two hubs.
One time cost accounted the decline you do that so the figure that youre mentioning is a little bit inflated.
Because of these one time.
Actions that we took to reduce costs, which are costly to themselves.
But it's a one time item. So that you really correct for that Youll see that the progress is much greater than that.
And then when you look at the Q.
Q3, Q4, and Q1 'twenty four because I can't tell you will land.
Basically have to achieve a $10 million to $12 million.
Gap closing got closing between the revenue line in the expense line and we think we can reach that.
Both from the reduction of costs that we have clear line of sight to what we need to do plus increasing capture of revenues of the existing business as we speak and the third is obviously the growth the profitable growth that we are trying to.
Not only grow but also refined and direct towards higher contribution margins.
Our business lines.
Yes.
I'll, just add and Mike if you don't mind. So so there's a couple of additional things to think about so early has talked about some of the revenue cycle management initiatives that are going on at bio reference.
And those those are of course dropped straight to the bottom line. So there there's not a significant cost takeout associated with those.
So as we made good progress on those we've initiated.
A significant number of the programs.
In the first half of the year and expect to start to realize the benefits from that as the year continues to progress on the early days as Elliot mentioned.
<unk> have shown promise.
Assuming we continue to execute there that's that's one area the volume growth that we're targeting to also bring us in line.
As needed you know as well as I do that bio reference in any lab business is a very very fixed cost in nature and you've got to bring volumes in to be absorbed those fixed costs. So the incremental.
Yeah.
Contribution for an additional dollar of revenue as it absorbs.
80, or so cents is absorbed into the fixed cost structure.
Structure, and you're only 20% variable cost so meaningful contributions from the growth initiatives that that early has walked through earlier and then finally you know the better we are.
Also talked about the nonrecurring costs that occurred during the second quarter and really in the first half of the year as we rightsize the organization, we're going to see those benefits as we continue.
On a monthly basis throughout the remainder of the year.
Could I.
Just ask you so on the sort of that one time nonrecurring stuff I mean, if if you were to give yourselves full credit for that like.
Is the 44 really something closer to 30 or 35 or something like that.
The loss at the operating line I mean, what what.
What magnitude are we talking about in terms of nonrecurring.
During the second quarter, we didn't get the benefits from the nonrecurring costs because they most of them came.
In late in the second quarter, but it's in the magnitude of about $8 million on a gross basis.
So that takes you down to 36 I guess.
Let me let me ask this question what what level of revenue do you have to be at based on what you think you'd take out in terms of costs and the benefits of revenue cycle management, what level of revenue do you have to be at the end of this year early next year.
In that business to sort of be breakeven.
What's what's the top line growth assumption that gets you there.
Yes.
It comes in.
Again, it's not just volume like so volume growth has got to come but the dollars associated with the growth is probably more important to get us to breakeven. So its going to depend on how successful we are on each of those programs.
We would sit back and say if we can achieve our guidance that we've provided the top end of our guidance that we provided in this quarter.
And continue to see that level of growth that will it will get us to breakeven as Elias mentioned late late fourth quarter early first quarter.
You have to be sort of a $600 million annual run rate.
That's right.
Okay.
Alright. Thank you so much that's helpful. I really appreciate it thanks.
Our next question comes from Yale Jen from Laidlaw <unk> Company. Please go ahead.
Good afternoon, and thanks for taking the question and I apologize I came in late so if someone has a question has been answered.
Apologize for that.
Asking that so.
My first question is in terms of.
And in.
In general in terms of the revenue.
Going forward when you guys might be able to start to break it down a break to a separate line and reporting from the P&L.
Yeah. So thanks.
Thanks for the question again, we once it becomes material we're gonna start talking about it it's in the $5 million to $10 million guide that we had for our other revenue line. So it's included in there. So you can get the scale, we think with Pfizer's launch coming in the next couple of weeks.
B B as early next quarter that we start breaking it out but at this point we haven't.
Okay, Great and maybe just one more question here in Tim.
No tax.
The collaboration with.
With Merck.
The vaccine.
Could you give us a little bit update.
In terms of where things are and.
Is there any.
Projections us when this might start the human studies and to thanks.
Thank you so with Merck, we're working very well and collaborating.
I would say in a very effective way as you know they will receive an upfront payment and Merck covers the cost of our current work, which is designed to bring the <unk> to the product to an IND.
Together.
Some unknowns that.
It relates to the choice of adjuvant.
For the vaccine that we need to test out those can be short or it can be.
Six months I don't know that.
That's the unknown, but clearly if you look at the natural evolution of such a program.
Should be in the clinic by next year.
For sure in my mind.
But this as you know.
Plus minus six months plus or minus three months, depending on how things are going but it's going well.
So that's why we were hoping for it to get it to the clinic as soon as we can.
Okay, great well I appreciate it and again congrats on the progress and look forward to speaking with you guys soon.
This concludes our question and answer session I would like to turn the conference back over to Dr. Phillip Frost for any closing remarks.
Well I'd like to thank you all for attending the conference and we look forward to.
Meeting with you again at the end of next quarter. Thank you all again.
Yeah.
Oh.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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