Q2 2023 ProPhase Labs Inc Earnings Call
Ladies and gentlemen, thank you for holding we will be beginning shortly.
[music].
Okay.
Good day and welcome to the Prophase Labs second quarter, 'twenty, 'twenty, Chief financial results and corporate update.
All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on a touchtone phone to withdraw your question. Please press Star then two.
Please note. This event is being recorded I would now like to turn the call over to Ted Carcass, CEO and chairman of Prophase Labs. Please go ahead Sir.
Thank you very much and thank you all for joining us today for our second quarter Conference call.
Look I like to talk a lot, but I also explained an awful lot.
Our press release this morning, I really don't want to read the press release I'm going to presume that you've all read it having said that before I start let me start by reading the forward looking statement.
I would like to remind you of the company's safe Harbor language. During this presentation, we will make forward looking statements, including statements regarding our strategies plans objectives and initiatives and underlying assumptions. While we believe that these forward looking statements are reasonable as and when made forward looking statements are based on expectations that involve risks and uncertainties that could cause X.
Results could differ materially.
These risks and uncertainties include but are not limited to our ability to obtain and maintain necessary regulatory approval general economic conditions consumer demand for our products and services challenges relating to enter into and growing new business line, the competitive environment and the risk factors listed from time to time in our filings with the SEC filings.
This call will present non-GAAP financial measures such as adjusted EBITDA reconciliation of these non-GAAP measures to the most comparable GAAP measures are included in the earnings release furnished to the SEC prior to this call.
And available on our website.
And with that I always like to give a couple of shout out at the beginning of the call.
Are all Red Mark does a great job on the retail investor side, we do a virtual non deal road show or presentation. We're currently doing them about once a month. So any shareholders on this call that ever wanted update about whats going on with the company I don't provide material nonpublic information I have.
To be very careful about that but I do give overviews about our company and what we're working on to give you better perspective.
And to understand how I'm thinking I am an open book.
I really am here for the shareholders on the largest shareholder in the company but.
But I don't just do this for myself I do this for all the shareholders I really want to continue to build value in the company I and our management team has had a history of success in doing so for more than a decade.
Really honestly our management team.
Incredibly successful over the last decade in building value in our company, even now you know where their stock pulling back a little bit today.
We're still up a significant multiples.
Over the last few years, while paying out a significant amount of stock dividends. So anybody that's been with US first of all over the last three or four years. The returns it's still been phenomenal anybody who's been with us over the last 10 years result, and returns have been even more phenomenal.
Interestingly, we're at a point in time right now where are my expectations and what I really believe for the future is going to be significantly greater than anything we've accomplished in the past.
We have support from not only a remark, but also we have a number of analysts that follow us and investment bankers, but we're working very closely with think equity did a phenomenal job in raising capital for a couple of years ago. They also have done a great job in showing us opportunities over the last couple of years.
Acquisitions, some of which we made probably reviewed a couple of hundred.
Acquisitions are targets and we picked the absolute best we Cherry pick and those are the assets that we're now developing that I'm going to be talking about shortly.
Wainwright also does a great job of following up on the analyst side, and then also a Joshua Levine of third screen Research and also Diamond equity research has been a phenomenal job recently of covering up. So if you want to follow our company you can also follow <unk>.
Analysts and their updates as we move forward. So that's a little background.
I really don't want to read the press release again, but I really want everybody to be on the same page. So you understand if you're going to be an investor in our company are what to expect.
As I mentioned in the press release, you know, we turned around and sold the cold EEZE brand. Many years ago from that we then pivoted into Covid testing, we knew that when we pivoted into Covid testing it was not.
Going to be a long term proposition, however, we decided to get into the business.
In late 2020, we bought a small lab, two and a half million dollars, that's probably only worth $400000, that's sort of the running joke and we built the $200 million that's outside of that and we quite frankly in the first quarter. We were in the business for the first quarter 2021 we outperformed 95% of the labs in the country. The reason I bring that up.
Is that because of anything having to do with COVID-19, but it's.
Incredibly similar to what we're working on right now would not be able to do it all.
<unk> genomics of course was founded by George Church and has two Phd students five years ago, George had a vision 20 years ago, He's been a world renowned and genomics for literally the last 20 years. He had a vision that one day every single person in the country would be tested protect every baby.
When they are born would be genetically tested to know about genetic predisposition.
And all the research that's going into your genetic predisposition, and I'm going to get into that a little bit more well whats eerily similar and the reason I bring up the COVID-19 testing because we're no longer a COVID-19 testing company. The reason I bring it up is because we got into the Covid testing business.
After not knowing anything about the lab business, but we saw an opportunity.
And yet we outperformed 95% of the labs, the first quarter. The very first three months that we were in the business and over the first year I don't remember, what we generated but over those first two years, we generate over $200 million in revenues.
So what's interesting is we're now in the exact same place with Nebula genomics.
We just don't have this.
State of the Art laboratory. So of course, we have a state of the art.
A high complexity molecular laboratory that not only does COVID-19 tests. It does all upper respiratory we just built out a fantastic clinical lab and now we have this literally world class lab for doing genetic testing and we provide whole genome sequencing at a lower cost than anybody in the country.
So just imagine we're in the same place now with Nebula genomics that we were with Covid testing, two and a half years.
So the difference is everybody thought that COVID-19 was going to last for six months or a year. It ended up laughing for two years now by the way there's another round of COVID-19 coming around but people are taking it seriously they're not testing like they work and I'm not focusing the company on it if we get some COVID-19 testing great, but that's not spoken to the company, but my point is.
Now, we're getting into something where we're literally in the first inning with genetic testing.
And we're the leading lab already now instead of getting into a business, where we had no experience. We have three years of experience in the lab business, where you got to understand when we first started that business.
Hired a bunch of people with great resumes that were not great employees, but they help build the lab initially and then.
I work in weeding out the weaker employees and hiring better employees, we have a.
Team here that I would put up against any lab team around the country.
And we just had a a inspection.
Don't know that I'm really allowed to talk much about it but it went fabulously well and I can't tell you a compliment we got from our inspectors.
Regarding our lapping and so now this what I think is a world class lab team.
It's focusing on building a world class genomics lab.
There were.
We're essentially a leader in the space. So we're a leader in the space and selling whole genome sequencing direct to consumers.
And maybe more importantly, and that's really been sort of the focus.
We're also a leader in providing the sequencing to businesses and so we just built a lab, we literally just finishing the validation that we're literally just starting to do testing in our lab.
And the types of calls and inquiries. We're getting you know, it's it's really interesting my son, Jason Who's the President Prophage diagnostics. He started the lab business with me.
And we decided together when we were exploring it back in 2020, and we were traveling the country and looking at opportunities and we literally were just talking in the last two days were like Oh My God. This is deja blue.
The sense that we're getting from the interest levels.
Companies that want to do business with us is eerily similar.
To the sense that we got about the Covid business the differences the genomic business where in the first thing. This is a business that's going to be a huge growth industry for years, if not decades. The car all the medical research is going in this direction towards personalized precision medicine.
And again for those of you don't know and most of you probably do at this point have you been on my other calls.
Personalized precision medicine, it's all about studying your genetic makeup and how that plays a role in diseases that you're predisposed to the risks are there.
The the risks you're a what we call polygenic risk scores, which are the reports that we provide to you. When you get tested tells you about your gene mutations tells you about diseases, you're at high risk.
And then if you know you're at high risk of a dangerous disease.
Hopefully, you'll do things preventative to prevent you from getting a disease that all starts with knowing your genetic makeup maybe more importantly, though if you get a disease, how do you treat it.
Turns out drugs work differently.
And different people.
Pending on your genetic makeup the researches literally just started in that field and in order to do this research you need data that data comes in the form of whole genome sequencing test and that's what we do best.
So what's interesting is not only do we see opportunities in the United States. We also see.
Attunity is in other countries. So we just have to decide how much we want to focus all the other countries versus how much we want to just focus on our business in the United States. So we have a direct to consumer business.
But what could be really explosive in the direct to consumer business. Obviously go out and we have you know we're growing over 100% year over year and honestly, where we're just getting started in the direct to consumer business that was growing 100% year over year and as prices come down that only helps us even more because as prices come down.
We're making our money and the consumer business on selling subscriptions to our library, where we provide the colleagues at work and we provide updates twice a week on all of the clinical research going on around the world.
Some of which is related to your pretty you know your the disease that your risk of your gating mutation, it's really interesting stuff and our subscribers love it and the profit margins are very very high for the subscription so that that's a great business model that in and of itself, but the b to B model.
The volume.
That we see the potential volume that we see.
Is enormous and so we built out.
The state of the art lab, but what what's interesting I am spoiled with spoiled by when we were doing COVID-19 testing because the amount of tests you can do on one machine.
And Covid testing is quite large, whereas with whole genome sequencing and had significantly less so for us to get the kinds of volumes.
To do the kinds of revenues that we want to generate.
Means buy more equipment and building out a potentially a larger lab. The only reason we would do that is because.
The potential demand that we're seeing is off with significant so right now for the lab that we have in garden city I see that most of that.
Capacity is going to be used up by our current customers and our D to C business that is growing but if we wanted to do a substantial b to b business, we're going to want to continue to expand which is a good thing because we can make an enormous amount of money.
And we won't have success just in the short term like Covid testing will have success in the long term so I'm happy to talk more about nebula genomics.
In the Q&A, if you want to ask about it that's a little bit of background I gave a lot more thinking in the press release I also just wanted to touch people have asked me in recent quarters about our accounts receivable.
Just wanted to clarify that so there's no confusion, we're not the least bit concerned about our accounts receivable. So when somebody else you know year end, we had 37 approximately $37 million of accounts receivable as at the end of June we had 38 well over a 38 million in accounts receivable. So everyone's like Oh, My God, what's wrong with your accounts receivable well you don't under.
It's about 37 million.
And accounts receivable at year end, we already collected a $19 million of that.
It's not a substantial amount that's left so you know what we're talking about from 'twenty 'twenty. Two we're talking about you know about $18 million that that's on a $200 million roughly.
Roughly $200 million Covid business, we have 18 billion left the clock.
And so you understand why don't we collect it first of all our accounts receivable, it's with the highest quality payers as with insurance company. So we're not really worried about collecting the issue was with collecting the patient data. So understand we did it I don't know what the exact number is if we did 2 million Covid test over two years.
That means that's 2 million times, we had to collect especially when we had to collect patient data and unlike a patient that goes into a doctor's office that fits for 20 minutes with the receptionist and he got the driver's license to get the insurance card information and if everything doesn't check out you don't even get to see the doctor until everything is like that we couldnt do that.
With Covid testing when we were collecting specimens where are our specimen collection partners. We're basically setting up tents on streets in New York City that was a big part of our business and you just had people randomly walking up you also had from Hearst, though at the time.
Her so once the government funded and anybody that didn't have insurance hurt someone just reimburse that all ended.
Last year and when that ended you had people still wanted to be tested so sometimes they wouldn't get the correct information. They wouldnt have their insurance information with them, we would pull test them and now we're collecting on all of that just takes time, but you have to understand we have to one by one go through every single one of those claims.
So even on you know roughly $15 million.
You know what.
We're talking about tens of thousands of tests and we have to go through each one individually. So we hired a company who are experts.
There's a couple of months ago, they've made enormous progress in collections and they had about 25 people in another country working on this going through literally every single claim. So I just wanted to say that accounts receivable is not an issue obviously.
We're doing business and we were doing some coffee business in the first quarter that created new accounts receivable and replace the accounts receivable that we collected on last year. So not an issue, we're making a lot of progress with your accounts receivable and I'm I'm not really worried about it and why we did a write off.
Last year, a small write up I think five or $6 million a ton of $200 million business, So where we're pretty stuck there separately before I get to questions. Obviously, you talked a lot without even covering a lot formalized.
The potential with formalized our manufacturing facility is enormous what's interesting is when I first saw the colby's Brad.
I didn't even care I don't know if it if they wanted to acquire our manufacturing facility I wouldn't put it put up a big fight that is now becoming an enormously valuable business I mentioned on a previous call that one or two of the largest licensed brands in the world wants to do business with us.
Capacity is tight all over the place and the most important thing for a lot of things brand when it comes to selling if you're selling into a walgreens Walmart Cvs and obviously, we have a lot of experience they're critically important.
But you don't have empty shelf space when the buyer Walgreens sits down with you and goes over the plan.
They are responsible for every square inch of shelf space and their department if its shelf is empty.
That space is that it's not generating a profit they look really really bad but what happens is with licensed brands that as with any consumer product.
If you don't deliver the product on time.
The retailers get really upset and they cut back your shelf space.
And so we have major brands, who need the reliability and we have the best reputation in the industry. When it comes along laws into manufacturing and so we have large brands, who want to do business with us.
That would be very profitable tours to our manufacturing facility and so we are now working on building out that capacity.
One thing we're doing is purchasing we already ordered another license line that's being manufactured but in addition to that there's other pieces of equipment that we can buy to increase our capacity, which we're doing now.
And it's a wrapper and other types of machinery and quite frankly, we never.
Really upgraded to new equipment and never really built it out before it wasn't a big.
Focus of the company before but now the potential is really enormous we can go from a roughly breakeven.
Break even type of business to a business with literally we put in.
Or press release, you know that could be earning $10 million is that just on the new business plus the existing business.
We're in the process of raising prices and also making our facility more efficient so.
Oh the <unk>.
Tuning to get formalized is enormous over the next 12 months.
And so anybody worried about is building value in the company first of all it that'd be a lot to me that that's a lay up you know and we have this attitude with Covid. If you build it they will come in they came well if you build it and the genomics business I I can already see they're coming and what's interesting is a lot of the companies.
You have first of all you have consumer product companies that are selling genetic testing, where I'm not only talking about a whole genome sequencing I'm also talking about the type of testing that accessory companies, providing their only studying that very very small percentage of your genome compared to whole genome sequencing, but even those companies potentially could do.
<unk> testing in our lab, none of them want to be in the lab testing business.
And what's interesting, particularly with our academic institutions doing research some of them have small lab. They don't want them to best inexpensive lab and have expensive equipment to do whole genome sequencing they would rather outsource it.
Because they're only doing testing on whatever research, they're doing they're not doing nobody's doing enough testing individually to support building out the type of lab that we're building.
And so that's why the opportunity is there for a company like ours, we now have a phenomenal.
Our reputation in the industry.
In the lab business as I said, the inspections, and New York, New Yorkers, one of the most stringent difficult from a regulatory perspective based on the entire country and we are.
Literally one of the top labs and the state of New York from a regulatory point of view.
And I'll leave it at that and we'll talk more about the inspection, but it went incredibly well and.
Really pleased with our lab and so now we have this great reputation. We now have the best equipment, we are working with literally the leading global leaders.
In the equipment that is used you know they manufacture the equipment and they manufacture the consumables that are needed in order for us to process.
The whole genome sequencing tests, and we have relationships with literally every major company in the world.
George Church was the part of it and he made a lot of those introductions a lot of it we inherited when we acquired nebula genomics. They were that'd be all this when we acquired Nebula I don't know too I know, it's probably two two and a half years ago.
They were already doing business with some of the largest and we've now developed those relationships for.
So I'm really excited about.
About these two.
City areas.
Indian revenues now.
And the revenue growth I believe is going to be dramatic.
Over the next 612 18 months and the earnings associated with it next year, we're going to be significant.
And so we're using this year to invest.
To build out the equipment to build out the labs.
Do you know purchase more license manufactured equipment purchase more genetic testing equipment hiring lab tests.
We're hiring very sophisticated lab techs to.
To build this business and so you got to understand yes of course, we're going to lose money for a couple of quarters. We're hiring we built out the state of the art lab, we have some of the best lab techs in the World now working at our company and we weren't doing any genetic testing in our lab. It wasn't validated yet so obviously, they're going to be lots of short term that that's what developing that's what it means to be a development.
Each company, but what's nice about us is the amount of money, we're losing pales in comparison to the value of our company our networking company the value of the assets, we have and the potential for growth.
So those are two businesses that I mentioned esophageal cancer.
I could spend the whole call just talking about esophageal cancer I'm not going to I'm happy to in the Q&A everything is going really well there we're working with an independent professional statistics company called Stat King that did a full analysis of all the testing we've.
So far.
And the idea is not to do more not to run.
One the clinical study any any further than we have to and how you determine the number of specimens we need and the clinical study is based on the statistical analysis, but we are an independent company.
Right now calculating how many assessments, we need to process in order to apply for CPT codes.
And in order for our physicians.
And you know the barriers.
Cancer organizations around the country around the world to accept us for for commercialization.
And so we believe that with the number of assessments that have been coming in recently and there. We're studying now we should be we're in really good shape. Later this year and so I'm just looking forward to completing the current studies, which have been done exactly the same.
As the studies that were done on the first us humans and so we are highly optimistic that we're going to get the same results and then we're gonna be able to run with it and again I I think the stoppage will capture tests by yourself is multibillion dollar, but that's all.
Happy to go into the numbers about anybody wants to I don't want to do it in my presentation, but in the Q&A I'm.
I'm happy to cover what anybody wants to travel so that's.
That gives me background I want to stop at 11, 29, I spoke to a little over 20 minutes just to give you a little bit of background and update on our company I'm happy to.
To move this over to the Q&A.
And.
I'll hand, it back over to our conference call company used to start the Q&A.
And my actually in my.
My computer just froze.
Yeah.
Okay.
Now if you want to start the Q&A I'd appreciate it sure sure. Thank you. We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone, if you're using a speakerphone. Please pick up your handset before pressing dickies.
If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Our first question comes from Adam Waldo with Lismore partners. Please go ahead.
Yes, good day, thanks, very much for taking our questions.
You know you have a lot of very attractive shots on goal here on what you're working as we look out over the next year or two.
Pretty decent probability that several of them are going to score.
But in the next several quarters there isn't a lot of visibility I think for investors into the cash trajectory looks like the trajectory of the company.
You're sort of at a cash burn run rate of around 14 15 million annualized based on the first half results.
You have cash and marketable securities on the balance sheet of about $9 million you could back to your accounts receivable are there other things you could do in terms of if you will bridge financing if you need it can you lay out for people, how youre thinking about bridge financing opportunities it needs, but more importantly can you lay out what you see the cash are.
And like Chris liquidity progression looking like over the next three to four quarters.
Yeah. That's a great question I don't know I don't have the first quarter numbers in front of me, but when I look at our cash burn I like to focus more on our adjusted EBITDA than anything else. Our adjusted EBITDA was negative I think $2 2 million in the second quarter and it was much better than that in the first.
So I'm not sure where you get your numbers from if we burn cash is to buy equipment. If we buy equipment, we certainly have the ability to finance.
That equipment, so cash doesn't become a major obstacle for us if you're if you're asking me am I thinking about doing a raise for prophase labs. The answers now at these prices.
I.
I don't know, what's appropriate to say or not say, but I think nebula genomics is is it could be worth right now more than the entire market cap of our company by itself.
And especially if you are if.
You include our net working capital then you know it just those two things that we have nothing but nebula and our net working capital I would tell you that our stock's probably undervalued when when you include our formalized manufacturing facility.
You know look at the type of numbers I really think we could generate.
$10 million and pre tax profits just from the new business, we're getting so even if we say to breakeven, but the truth of matters, we're increasing our gross margins were increasing our pricing, we're getting more efficient where we're I don't want to go too much into it but there are some short things sure short term things we brought in an efficiency expert theres some short thing for them.
So we can do to even increase the profitability right now in our card business, but with the business that we're adding and within negotiations that.
That have taken place.
You know I've I've been told that a manufacturing facility that private equity loves manufacturing facilities and will pay 10 or 15 times EBITDA.
So we potentially and I'm not saying that formula is gonna be worth 100, $150 million, but in a year, but it.
It could be worth $75 million in a year.
And then Meanwhile, you know more importantly, nebula genomics that business is exploding and all the things we're doing so if we wanted to do something creative it wouldn't be raising capital for.
Through Prophase labs as I mentioned on the call already the accounts receivable isn't an issue cash flow is flowing in for Matt.
Also since our Covid testing slowed it actually improves.
Our cash flow and our accounts receivable going forward because as the accounts receivable flows.
You see the issue as I explained earlier in the call. We had significant accounts receivable you rather than it looked like our accounts receivable actually grew a little bit six months later it looked like we didn't make any progress we made a lot of progress we collected on more than 50% of our accounts receivable, but we had new accounts receivable that was generated particularly in the first quarter.
From the new Covid testing business that we're doing so now we're in a situation and understand we're paying a lot of expenses upfront when we do the Covid testing and then we're getting paid on the back end when the insurance companies reimburse us and of course for the specimen.
That are associated with a faulty patient data it takes a lot longer to collect and so those are those all those expenses go out upfront. We get paid later so now we're in a situation, where we're doing significantly less COVID-19 testing.
We have accounts receivable come in where we're starting to collect that now for the second half of the year. While at the same time, we don't have the expenses going out a new COVID-19 testing because we you know we downsize that business significantly so our cash flow is actually pretty good.
And we have plenty of opportunities first of all hypothetically.
I want to.
So I Wanna Finance formalized we have this amazing.
Building Amazing business operates but he besides besides this as operations are just the building itself and its on 12 acres across from a Walmart we could we could take out a mortgage on that very very quickly. We can finance our accounts receivable. So the last thing I'm going to do.
Or that I wanted to do is to do a dilutive round of financing prophase labs at the same time, we have subsidiaries that I can't really talk about this but you know we might have a subsidiary that as I mentioned by itself might be worth a market cap of the company. So just make up and you got to understand my background is on Wall Street.
So in the background on Wall Street, and with these great investment bankers that were working with there are all sorts of creative ways.
We can finance this company without doing a dilutive round.
Of our financing with a secondary for prophase labs, and I don't want to go into it more than you know I don't know, we'll see where this goes and I really shouldn't talk about it more but.
But I can just tell you I have plenty of opportunities, but I want to bring out the underlying value in our company and at some point at the right time and the right market conditions. It's it's quite possible that I could do that and we'll just have to wait and see.
I don't want to say more than that but I'm not interested in getting in trouble with the SEC.
But I just wanted to get it all that I've plenty of options that don't include anything to do with dilutive around the finance is that the way we manage the property.
The way I I manage the company again I'm the largest shareholder in the company.
Personal friends of mine are also large shareholders and I am I believe and watching their backs even more than watching my own and the one thing I understand is raise capital when the stock market is hot and there's lots of capital around and stock prices are high.
Hello, you buy back stock and you pay dividends and so I have a history of doing exactly what I. Just described I. There's no reason why I want to do anything to all upside to change my style from what it's been for the last dozen years, which had been.
Very very successful so it's only really the Warren Buffett.
To some point.
I really think long term in terms of just building long term value for the company I hope that answers. Your question I want a bunch of candidates, but I think I brought it all together.
I think that softwood and you'd asked earlier and your answer on the source of the cash flow commentary. That's just your first half.
Free cash flow from your press release today, and so you you got to know your free cash flow of about 7 million first half of the year back of the envelope simple math here and why is it 14 million, yes, so I'm trying to get a similar bridge for the next three or four quarters I think what I've heard you say and again clarify if you think it's appropriate as you didn't get appropriate but thank god.
Heard you say is look we have $39 million a day or that we could securitize or factor, we have the ability to mortgage the.
Mortgage on the.
The loss in Chicago, and Atlanta, factoring business pharma laws, we have the ability to do various and sundry things in the capital markets that might unlock value in our.
Our five made doesn't want one or more of our five main business lines and what we see obviously the formalized business ramping quite significantly next year, plus the genetic testing business and so that business should be solidly free cash flow positive.
Into 2020 'twenty four is that a fair summary.
Yes that was I'm really impressed that am I I don't know what you do for a living but you might want to come work for us if you're looking for a job because that was really well done yeah. That's an excellent summary, thank you okay. Thank you.
Alright, and do you have any other questions or should we move on.
Yeah.
But nothing let's go towards next question. Please.
Alright. The next question comes from Fred Mcdonald, a private Investor. Please go ahead.
Chad you paid this value of nebula is greater than our market cap.
But if the market isn't recognizing that would you consider doing an IPO in Netherlands.
Is there some other ways that you could get it recognize the true value of nobody will ever be recognized.
So what's interesting it's a great question I alluded to it on the.
From the last callers question.
Not allowed to talk about things like Ipos, but what I can tell you and again I said this before it so it really similar it's it's almost scary what happened two and a half years ago. When we raised the block of money, we think that green led by think equity.
We built out this tremendous lab, we built tremendous capacity.
And no we didn't see enormous business.
And so it really is a day's AVO, where we're in the exact same situation now almost exactly three years later.
But it's where the business nebula genomics, where the.
The upside is.
As you know dramatically greater than Covid, and it's an upside that's going to last.
For not only for years, but for decades.
This is the future personalized precision medicine. So as I said my background is on Wall Street, So I am really.
Telling me I'm terrible at everything I do the one thing I can tell you is I understand wall Street, and I understand the value of Nebula and.
I understand the best ways to bring out that value as needed. So to me. The real issue is I wanted to build we already have a state of the art whole genome sequencing facility.
But now I want to build capacity I want to be the leading laboratory in the country, if not the world for whole genome sequencing at broad genetic testing.
And not only from the point of view of having the best equipment, which we have we have the best equipment in the world right now.
We have equipment in this country that nobody else in the country I'll do the first one.
To get the latest leading state of the art whole genome sequencing equipment, but now I want to build the capacity so that the bigger deals.
Where are the lab of choice for the bigger deals.
And I believe there's an opportunity right now to do it right now.
That opportunity may not be there in three years, but it's there right now because we're firsthand because George church.
Had.
The vision five years ago to found this company with his two ph D students, who by the way it worked for us and they're great guys by the way come on that as you can see there intercompany profiles, great guys really happy they came and joined US and we're building this great company and to be honest with you we have a whole team that's doing it.
The job of building building nebula so.
I'm, sorry, I can't directly answer your question and I'm not I'm, not saying, we're going to do something were not going to do something but also the previous caller asked about cash flow.
Well I mean, certainly if I wanted to I could raise raised capital what's.
What's the value of Netherlands.
And you know there's multiple different ways that I can do that if we wanted to do that and we'll just have to see we will explore things overtime. So my point in time.
Lots of options without having to do a dilutive round of financing if appropriate and if I did some sort of a financing as I said I could.
Finance formalized with the mortgage or I can do something with nebula.
And I don't want to go into more detail now, but the answer is yes, we have lots of options to explore the beauty is when you build a company that has significant underlying value than we do with multiple subsidiaries. It gives you options for how to finance going forward. So to me the real question is.
Do I want to do a financing.
In order to scale up.
Nabila because the opportunities are so large and that we just have to balance what I don't want to do is a dilutive round of financing at prophase labs.
Alright, so and we'll just have to see but at the same way, we built out a COVID-19 testing lab and outperform 95% of labs in the country I expect to do the same thing with whole genome sequencing, except I expect too.
My goal is to outperform 100% of the labs in the country.
And that's our goal and I think I've also mentioned that we have significant opportunities not only in the United States, but abroad, but what's interesting over the last couple of weeks that I've been talking about our opportunities abroad for a while what's interesting over the last couple of weeks.
As the interest level is so high.
For Nebula genomics for a lab.
For B to B business, and we're literally just starting we're not even where you know we're barely even in the business yet and the interest level is high from some of the largest companies testing companies in the world and so it's really interesting well, we'll see where this goes but I can tell you if we build it they will come.
I really believe that that's applicable to nebula genomics and I really believe that's here right now and that opportunity is here right now and I'm really looking forward to taking advantage of that opportunity.
Hope that answered your question.
Thank you Ted.
Alright, great.
But it's not be onto the next question. Please.
Next question comes from Dennis keyboards men with Barrick Productions. Please go ahead.
Thank you for taking my call I have about three or four questions. If you don't mind I'm trying to wrap my head around Q1 versus Q2 and Q1, you did about $19 million in here you did about 13 million.
I would assume that the consumer products nebula and the pharma was increased from Q1 to Q2 and I see the diagnostic testing in Q1 was 120000 with an average price of about $121. In Q2. It went up 226000 and about 5% increase so I'm trying to understand how.
We have a 30% drop in revenue we had increases across at least unit volume in diagnostic testing unless the price went down protest.
I apologize I would have to get back to you on an answer to that question.
Our testing is was definitely down in Q2 versus Q1, it'll be down in Q3 versus Q2, it's not the future of the company. It's not my focus and your numbers were also doing a lot of antigen testing, which is different from laboratory PCR testing antigen.
The testing is done.
At the point of service when you go out to the 10th.
The numbers I'd have to go back and look at the numbers. We are our COVID-19 revenues are definitely going down every quarter now having said that the fourth quarter. They may pick up substantially I hear that theres more COVID-19 around the questionnaires.
Are the positivity rates are going up I believe and we believe that's because people who actually have colbert are getting tested but nobody else's, whereas before everybody who's getting what a few people you heard about somebody getting tested.
Or having Covid you immediately went out and got tested too. So for every person that actually had COVID-19.
<unk> had 15 other people that when he got tested now people are getting COVID-19 again, but the people around them art. So the testing is a lot less the opportunities a lot less of it it's really not the focus of the company I apologize I'll get back to you offline to get more into the numbers, but there's no question, our COVID-19 revenues are going down but.
The market never gave any value to our COVID-19 revenues anyway, as I said, it actually improves our accounts receivable, if we're doing less COVID-19 business.
Our nebula genomics business and our formalized business are.
Our growing.
Sure certainly year over a year they're growing.
Quarters seasonally by my second quarter is typically because of.
The seasonally slowest quarter of the year for all of our businesses.
And they're gonna be growing, but I'm less concerned with the quarter to quarter. Because there are various things we're doing in the various businesses that affect quarter to quarter, but the year over year growth is tremendous in both and that that's going to continue.
I hope that answered your question, if you need to offline I can get back to you on the I. Appreciate you getting back to me on that and I was going to bring up the fact that the positivity rates have tripled in the last month and I have I'm hearing that's because everybody's traveling overseas now and even though it hasn't hit the mainstream media a lot of the other articles.
I've been reading are saying that there was a tremendous concern that we're going to have another virus Ah another upswing.
This is the worst of positivity rates, we've seen in over 18 months. So right. Okay. I wonder if you've seen any uptick at all yeah. Yeah. No. So so you you just so indirectly pointed to the fact that the mainstream media isn't even picking up.
Right not picking up on it because people don't care and the positivity rates without an explanation doesn't mean anything in it and as I explained the positivity rates.
Our high because only people that actually have COVID-19 or being tested. So therefore, the positivity rates don't mean anything it's what would matter is the total number of people testing positive now versus previously so it was about picking yes. It's up ticking, yes is it coming from abroad, Yes was there new big Covid spread.
In China.
Over the last few months, yes, you know there was so there's definitely going to be some positive upticks here. It will lead to some business, but I'm not focused on the coffee business I don't even want to focus anymore on this call and because it's a waste of time, it's not where we're focused that is not what we're doing.
So let me turn the other question Yeah, Let me jump you had.
Last week, you you made a great announcement, a main factor and the relationship with service in there I just wanted to read it says with this extensive data set now in hand probe plays will proceed to the next level. So I'm just curious what level was lying baccarat and what.
Levels are going to.
Yeah. So the best way I can look I'm not a scientist, but the best way I can explain this is that.
It's always a case of balancing between how much money you want to spend how many clinical studies you want to do how much time, you want to take before you go into humans.
You can go into humans quickly.
Or you can go into humans.
Years from now and.
My point is with a compound like linebacker it has.
Several gift.
Different opportunities for commercialization to make a meaningfully a meaningful difference in the world of cancer and treating cancer.
And so the question is how many cell lines do we want to test how many different types of tests that we want to do we originally thought of this test is a co therapy, because it's worked so well with multibillion dollar drugs like doxorubicin and others and we found that it worked significantly better doxorubicin work significantly better with line back.
Then without and we were like Wow. This would be a great co therapy, but then we found in certain cell lives and there's so many different types of cancer. So what do you want to do do you want to test.
Do you want to test them preclinical studies you wanted tests linebacker with every single type of cancer. So you have to narrow it down to which cancers do you want to focus on both in terms of commercial opportunity, but also in terms of which one is going to be most effective and that's that's why you do clinical studies to begin with our preclinical studies I should say so we're doing preclinical studies were now working with.
And AI leader.
To help perfect.
The path to commercialization to figure out exactly which cell lines, we want to focus on.
And humans and Wix directions, we want to go in and so that's the stage now so our goal is to be in humans next year and once we go into humans next year, you start with phase one.
Human clinical study.
Once you complete that.
I am optimistic that linebacker we could end up doing a licensing deal that would be extremely valuable for it so.
I've mentioned on previous calls you know when you acquire assets. When you first start to develop them you can do all the due diligence and the world is it's very difficult or it's not the same when you actually acquired the asset you hire the CRO as a clinical research organization you do the research yourself and you see the actual results yourself and I can just tell you we have been.
Pleasantly surprised every step of the way with linebackers so far I don't like to focus on it on these calls because it's the future of the stock market isn't going to give us any value for linebacker or anything we're doing long term of cancer.
And so all I can tell you is we have a very promising compound.
If it's successful it will dwarf the value of our company down the road, we could potentially do a licensing deal for the value of our company 12 months from now that would be a nice surprise I'm not guaranteeing I'm not betting on it but we're not spending a lot of money either we're using AI to perfect.
The path to commercialization.
I think that as I mentioned, we're talking about $23 million over the next you know 12 12 months to get us to a point, where I believe we could be in licensing negotiations after spending another $3 million hope that answered that question. We do have a bunch more calls if you will have a quick one and then one quick one quiver.
Kind of are excited to see that on the market. What is your worst case scenario, we will see it on the store shelves.
I'm, sorry, I couldn't hear it quiver.
Yeah, no yeah pronounced eklavya excuse me I'm sorry.
There's a difference between store shelves and commercializing it online where we're doing studies the first set of studies.
The preliminary results will be good enough.
First the finalized claims that we've put on packaging to sell.
Do consumers online and then we have a second round or it's really the same clinical studies, but additional.
As we get through the complete clinical study, we're actually doing a prophylactic study in a therapeutic study.
And I'm really looking forward to the results that'll be done over the winter and then when those results will be able to put very powerful claims on the packaging as far as putting it into the stores.
We're up to the mercy of the stores were not ready to introduce it to the stories that because I wanted to finalize claims on the packaging of package sitting on a store shelf will not sell if it doesn't have good claims on it.
I know that from the cold These days all right.
And I'm, an expert on that and just take my word for it because I turned around the cold EEZE brand myself I was very involved in that.
So that could be or we got to get the claims right. So we're doing that now in the coming months then we'll sell it you know we're talking about fourth quarter, introducing it online and as far as the stores.
Talking about next year and I can't tell you the timing of part of that is going to be based on how strong. The claims are how excited the retailers get in and the timing.
And when they're doing their plan O grams is theres, a number of variables out of our control, but any potential for this is huge and I. Just wanted to know there's long term potential of the equity or because.
You know immune defense products really good immune defense products.
A great business in the dietary supplement category, if you come out with a great immune defense product like heck with your I think it could be very valuable and historically that was our business and so we have a whole infrastructure for making that a very successful product.
But again the first step is.
Finish the preliminary result results that we can get some claims on the packaging and start selling that to consumers online and then you know the bigger push will be in stores interestingly, we actually have some other countries that are potentially interested in distributing that as well, but I don't want to get too much into that on this call alright, having that.
Thank you that's it thank you.
You're quite welcome but now the next.
Caller please.
Okay. Our next call question comes from E E Chen with H C. Wainwright. Please go ahead.
Okay. Thank you for taking my questions I'm, sorry of course my first.
My first question is so.
So for the second quarter, but in the second quarter revenue is there any.
Revenue actually is coming from my neighborhood of genomics.
Well when you say significant.
So, let's see over 1 million over 1 million customer level economics, Oh, Yeah of course, Oh, Yeah, Yeah, where we're number one we're in right now the problem is and I, probably said this on the last quarter or two it gets complicated and we sorted. This out we have two sources of revenue when we sell a whole genome sequencing test.
There is selling the test itself for which we do the sequencing.
But then also there's the sale of a subscription to our library.
So of course, when we sell a test.
We get that money upfront and we recognize that as revenue immediately when we sell a subscription to our library.
The F. B C is really tough where even though we're getting the cash upfront and accountants are very tough on us they want us to.
Recognize that revenue over the course of the subscriptions over the three year subscription or if it's a lifetime subscription they don't want they want us to recognize that revenue over three years, even though we get it upfront. So if we sell.
A subscription today and we collect $200 they want us to recognize that $200 over three years, even though we collected about $200 today and there. So what we've done is we've been we've spent months now with our attorneys working out the language.
In terms of what we offer to the consumer so that it's recognized as they set up the.
As opposed to an ongoing subscription we think we have perfected that language as we protect that language, we will be able to recognize the revenues in the quarter in which they are generated as opposed to having to spread it out. So there are some timing issues there right now, but our revenues are significant.
So I don't want to be quoted with numbers, but it was off the top of my head ballpark, I guess, where I'm a shareholder conference call my off the top of my head.
At like a 15 million dollar plus one right at the <unk> right now, but that's probably a non-GAAP number but that number is growing and it all depends on how quickly we ramp up our garden City lab.
But as soon as we ramp up the garden City lab, our profitability for selling these tests goes up significantly we will also be able to drop our pricing even further for the whole genome sequencing, which will drive even more volume and weather.
The higher volumes the bigger the volume the more subscriptions, we sell them subscriptions or where the margins are so.
It's actually good for us if we dropped price because it drives volume, which in turn draw.
Drives more subscriptions more revenue and more profits so and we're that's where we're literally in the infancy of growing this business right now.
And again for the others out there that are listening there are genomics companies out there with no revenues with 50 and $100 million valuations that are years behind us in development.
And so we're already a a revenue generating company, but the run rate of those revenues I believe besides growing dramatically year over year, they're growing every day.
The numbers, we got just in the last couple of weeks from some new ads that we ran.
The volumes were significant some of the largest volumes we've ever we see it in fact I think the largest volumes we've ever received on a daily basis. So there's no question. This business is growing by leaps and bounds and we haven't even started.
There's significant way with a b to B business and that's all coming.
I hope that is actually at that that's related to my second question. So as you ramp up the volume of sequencing services going forward will be.
Will your main target customer be consumers or businesses or both.
So you know there is there sort of an internal debate going on and it's a it's a great question.
Because if you ask George Church.
Don't tell you in and we're working very closely with George Church.
Heartburn and Russ Walkman at Fairford and.
George's vision has always been for every single person.
In the country and in the planet on the planet to be tested and that's what in the UAE and Abu Dhabi, that's what they're doing with the already genome program. They're testing 1 million residents. That's 1 million residents out of 9 million residents in the UAE.
So think about it if we did the same percentages here, what we're talking about 30 35 million people testing.
We're a multibillion dollar company if if we committed to the same type of program here, but the point is we're literally just testing the serve the surface and then the question is how much of that is direct to consumer we're concerned I still think only 1% of consumers even know what personalized precision medicine.
People's Utah, I didn't I didn't know what whole genome sequencing was two years ago.
Before we acquired <unk> and I think most of the country doesn't even know what it is so the question is how quickly.
They learn.
<unk>, the United States and around the world learn about whole genome sequencing and learn how important it is and learn.
How important the differences between whole genome sequencing and what the ancestry companies do where they test less than 1% of your genome, which is great brand first three information, but it pales in comparison, if you want health related information and so it's only a matter of time I think the consumer business is literally it's in its infancy. Its where is the internet was 20 years ago, but then.
On the business side.
And with academic institutions and other types of businesses. They can bring enormous business to us right now and so this really is what I was talking about earlier on this conference call is now that we built this lab, we're starting to get inquiries that are that are scary large.
And I have the utmost confidence if we build a larger capacity lab, we will fill it with an enormous amount of business. So you know you can focus on whatever business. We are doing now I think I'd put in the I put in the press release, what our capacity is in our current lab nebulous.
It's about $40 million, Oh, I'm going to build a lab.
We have the capacity to do five or 10 times that and I believe if we do I believe we'll fill it.
Where we're where we're talking about an opportunity with <unk> to be a multibillion dollar company and we're in the right place right time were already in the business. We're already growing quickly we already have all the relationships. We have everything we have in the entire infrastructure the entire relationships to build an incredibly successful genomics business.
And so you can focus on our current revenues, but again you know I mentioned, there may be ways that we could bring out value nebula and I think it will be substantial and that would just be the starting point.
Yes.
My next question is could you comment could you provide a rough timeline as to with respect to the B smart esophageal cancer test.
In terms of when it could be commercialized.
Sure. Okay. So there's a difference between commercializing without CPT codes is commercializing with the CPT codes. There is a major conference in the first quarter of next year, we have a expert consultants who is confident that we will get the CPT codes.
At that at that conference. So first quarter next year, we're looking for CPT codes, we can commercialize without it and so basically.
Our lab here and again, we have a world class lab.
<unk> working here.
And headed by Alex Leroy and Alice said as soon as we do these next 300 specimens 200 of which were doing right now 100 supposed to come in in the next couple of weeks so.
Within the next month or two when we complete those 500 festivals that should be enough data to then do a validation for what's called research use only and this would not be reimbursed by insurance company. This would be a cash based test.
<unk>.
I'm not really focused on it as a caspase test right now, but once we get the CPT codes. The key is to get the key opinion leaders and the cancer institutions behind you and then that brings into physicians wanting to order the test.
So there's a whole ramp up we can do with this could build up into an incredibly valuable tests very quickly.
This is really a 2024 project, whereas the 'twenty 'twenty four projects that could be very big and I'll also tell you. There's a possibility that there are large very large companies out there who might love to have our sausage, you'll cancer tests become a part of their portfolio as opposed to us in building out the infrastructure ourselves.
So the opportunities here are enormous next year once we get the CPT codes actually it's not even so much the CPT code once we complete the current studies.
And Stat King does your independent analysis to show that we have studied enough specimens that Oh, and it's all based on confidence levels.
95% confidence level of sensitivity and specificity are the following numbers and the bottom line is so far our number two.
Fantastic.
Much better than most of the other cancer tests on the market and so I'm very confident that we're gonna get commercialized and ultimately it gets the CPT codes and once we do.
Outlined previously.
But that's a multibillion dollar market out there and then phase two is to develop these tests, where it doesn't have to be performed on people that got adoptees, then it becomes an even larger.
Exponentially larger business because ultimately you could go into a doctor's office with a brush technology.
Rush down your throat it picks up sells it picks up the proteins that we need to test in order to tell you, whether you're at high risk or low risk of esophageal cancer, whether you have esophageal cancer right now.
And so that test you know I've got that then it becomes ridiculous everybody go into a G. I before you even get into Duffy just everybody go into Gi that has guard could say hey, what's going on in the position to say Hey, let's do this quick test to see if you're if you have esophageal cancer right now or if you're at high risk or low risk and based on that we can determine next.
What do you need and so forth.
And our our test is more yeah. Okay I'm sorry go ahead in your next question Yeah.
Yeah. My last question is.
I Wonder if you can comment more be the baseline level of diagnostic revenue if kobe testing is completely call.
Oh, so we're not we are not yet doing clinical lab testing and so just very very quickly.
We've developed and this again was led by Jason Who's the president of our diagnostics business and he built a multi hundred million dollar Covid business. He has and we have <unk>.
Significant relationships in the industry.
We are dying to exploit those relationships to build out our clinical lab.
The gating issue or factor is getting in network with insurance with Covid testing you didn't have to be a network, especially during the public health emergency. So now its a completely different business turns out it's somewhat the insurance I'm sorry. The lab business is somewhat of a monopoly, it's really incredible I've never seen such anti competitive practices.
It's really disappointing and I don't want to pick fights with anyone.
But if you're not in network with some of the major.
Insurance providers, then the physicians don't want to send you the assessment because if they send you the assessment.
Then the patient is going to have to pay out of pocket and then the patient complaints to the physicians. So it's all linked between the physicians want to see that the lab is a network and Meanwhile, the insurance companies are like if you already know it.
If you Werent, a big customer of ours, we don't want to let your network and so you have insurance companies that for the exact same test two labs will perform the relapses will perform the exact same test.
From the exact same pace at one level get $300. So that test the second lab will get $100 for the third lab won't get reimbursed at all.
They'll give you exactly what it was.
Really important to be a network. So we have some opportunities right now to get our network by acquiring <unk> and I'm looking for the right small lab, but we have some opportunities right now I don't want to get too much into it but I am up I'm optimistic that we will get in the.
Network with a small acquisition and they're not too distant future then as soon as we do we will build out our clinical lab business in a significant way, but for now I would say the main focus of our revenues is going to be our nebula genomics business that formula.
Yeah.
Got it thank you very much.
Yes sure.
And you know what why don't I just throw out there you didn't really ask the question Nebula genomics.
Again, if the capacity of our lab with $40 million I'm, telling you that we're thinking about building out a significantly larger lab. It gives you the kind of idea.
Of what the revenue run rate should be for Nebula genomics for next year just from a rollout.
And I think that our demand is going to be significantly greater than whats in our lab. We also have the ability to outsource assessments, which is what we've been doing that so we built up a lab anyway. So without even building. Another lab. We're building more capacity, we have the potential to be at a run rate of more than $40 million.
And revenues for <unk> next year, and then of course once we build out more capacity those numbers could only go up from there. So that's something that would be on the formalized side.
I think I've mentioned previously that.
We want to build our capacity to 25 or $35 million and I think that we would have no problem filling most of that capacity. When we do so so there's equipment that we're bringing in right now short term to increase the capacity in a whole new La Z boy definitely we might want to bring them to more lives with one there's room for it and so building a capacity of 25 35 million.
Next year.
It seems like should be straightforward and and and quite frankly, it might be more than that next year and again, our pretax profits on the new business that we're talking about bringing in could generate 10 million of profit by itself next year. So I'm really looking for nebula and formalized the revenues to be really quite substantial.
Next year and the earnings associated with both to be quite successful and I'm sorry, It's really just the next six months you know.
Figuring out the ramp up and it really has more to do with ramping up the capacity ramping up the business is coming in to nebula, and how quickly we ramp up our formalized in terms of the capacity and increasing prices and so forth.
Thank you so much.
On the call.
Alright, and let's try and get to the last questions as quickly as possible.
I thought this was going to be a shorter call.
Alright.
Alright. The next question comes from Lee elaborate please go ahead.
Alright, Thanks, the last couple of calls.
You were excited about what was happening over the UAE you did not mention anything today can you give us some color.
Sure.
Yeah, so here's what's interesting about UAE so.
Couple of things I have to way.
That's actually great question, Yeah, there's a a lot potentially going on in UAE I'm trying to be careful to not talk about things until they're sort of set in stone. So we have.
Some major companies that are very interested in that village genomics and potentially interested in joint venture opportunities for us to actually build a nebula genomics laboratory in their country.
Most countries don't want to send their specimens outside the country. It's one of the reasons why we built a lab in New York, even though we had access to relatively inexpensive whole genome sequencing.
Broad.
Now of course, we have we can work for even lower pricing doing in our lab, because where we're getting I believe some of the best places in the world for the consumables. So we have opportunities and then it's a question of how.
Do we want to how then do we want to spread ourselves.
The opportunity in our own lab is so huge I really want to focus on that more than abroad. The other aspect of this is joint venturing or esophageal cancer test.
And we.
We already have a clinical research organization is excited and ready to go there the Mayo clinic and Cleveland clinic actually in the UAE that wants to work with US we have assessments lined up.
But I'll only do that if there's a joint venture partner upfront otherwise I could do a study over there and then all of these companies over there will jump on and want to commercialize it but I think we'll make a lot more money if we commercialized in the United States first and then have them come scrambling for us, but other than that.
Yes, there is lots of opportunities over there I just don't want it to get too far ahead of myself. There is so much opportunity with what we're doing right in the United States and I can touch it tasted feel it and that's what we're building but in parallel we are working with investment bankers.
In the UAE and in both the UAE and Saudi Arabia Theres ongoing discussions.
And I would just like to leave it at that for now I don't I always want to under promise and over deliver.
And so there's definitely opportunities we're definitely following up on them, but the other thing I just noticed.
And this is true of all small cap companies. They all move slowly and so in the UAE the biggest companies they move even slower so theyre all interested they all want to do deals, but I don't have time.
There's an enormous opportunity right now with nebula genomics today.
And that's why literally we had one of the world class genomics manufacturers in our laboratory.
Literally a few business days ago, and we were discussing hey, we got to build out some 10 times as such it's just too much demand out there. There's just too many large players out there. The one that brings business. So why do I have to go build a lab another even at a joint venture even if.
Even though they have a $1 billion company abroad.
They will pay for the lab do build it will pay for it will well joint venture and the profit I'm interested in doing that but.
I just thought maybe it could be $1 billion company pretty quickly right here in the United States. So I just have to weigh opportunities and how attractive they are today versus down the road.
I know that was sort of a long winded answer to your question, Yes, I'm. So excited about the UAE, but I have other opportunities at the same time that I can touch tasting field today.
Okay. Thanks.
Alright, you're quite welcome and I think we have one more question.
Yes, we have a follow up from Adam.
More partners.
For the follow up here I Should've asked it on the front end, but during the quarter you made a.
An unsolicited all cash offer for a business unit of N. A b b into video pharmaceutical Biopharma.
Can you say anything publicly about where that stands as another dead mother at this point and.
Or could that still come back around and in a general sense are you still looking at other opportunities with your resource base or are you really focused on the five you have and bridging the liquidity you have to really get too.
Strong revenue and cash flow generation from those in 2024. Thanks.
I really like.
Your question was a or B I really like the I really like the latter that's really what I'm doing that I want to focus on our assets and to some extent that dovetails into the last caller, who just asked about the UAE, we have lots of opportunities already in the UAE I don't want to spread myself too thin I don't want to spread our company to pen so I wont really great.
Opportunities or I don't want to focus on them because they have great opportunities just what we if we do nothing but just focus.
Forget about linebacker okay forget about equity here alright, if we just focus on nebulous genomics formalized.
And esophageal cancer.
We can be a blockbuster company over the next one two years, we could be Unicorn and then a couple of years alright, and so that's my focus.
And it said that there are opportunities so with the company you're talking about I really don't want to talk about that company, except that they happen to have an asset.
That is underutilized that we could commercialize we happened to have these phenomenal relationships in the UAE, we could commercialize it today and it happens to be an asset that fits in perfectly.
The Mena region and in that region. So it just happens to be a perfect fit its still a perfect fit.
I don't want to say more about it but the one thing I will say in general in small cap companies in general most of the management.
Reform and I'm, not saying anything about this company, but in general I looked at hundreds of acquisitions over the last couple of years. They settle back two or three they were based on how great. The assets were in the opportunity was.
It was also partially based on whether or not we can work with the management teams. So the question is can we work with this management team and.
I can't I don't know why a management team wouldnt want to exploit the assets that they have.
Unless there's ulterior motives of the shareholders don't know about so that's all I can say about that but the bottom line is they have assets that I think that we could exploit to be worth an awful lot of money very quickly, but if we don't acquire the assets. We don't acquire them. So my open to it yet, but I, particularly liked about it is it fits really well my scientific.
<unk>.
At prophase could be able to handle this I wouldn't have to hire other people and the relationships we have.
Are already developed and I think we can rollout very quickly and that's why I looked at that opportunity in general I'm not looking for acquisition unless it.
It builds upon.
And accelerates the growth of the subsidiaries we already have so for example, if I could find a small lab because it is in network for insurance. So that we can accelerate the development of our clinical lab will do that because we have this fantastic clinical lab, that's ready to go but that's a perfect example.
Right no that makes sense. So again for all intents and purposes should we assume N. B is a dead letter or I mean, given that the company could change that.
Cash burn.
They're.
They are financing options looked to be increasingly limited.
Could that potentially morph into more advantageous deal down the road, we'll just have to wait and see.
Got you.
You said it perfectly I couldnt have said it better myself well what did that look I don't I don't I certainly don't control the company I don't know what they are thinking and we'll just have to play it by here I don't I don't know if you have it if that's what they are or if you have an interest there I don't know if you're doing that you don't have to comment on that the bottom line.
There's an opportunity and that's the only reason why prophase labs, gautam valves and made the offer letter.
In the first place and so.
Well no that's right, where we're not yeah, we're not involved in the stock but it just you know obviously came across your press releases and right I looked at the financials.
There's companies our cash run way, it's not very long.
You know I don't know, where we're at what's doing right.
Yeah, well look we we acquired the esophageal cancer tests under similar circumstances the company that owns it.
Couldn't finance it we were in a bear market and they couldn't finance company.
And they were in Oh under a lot of pressure, but they were great management team to work with in fact, the gentleman who was the acting CEO at the time that we acquired the stoppage of cancer test that's lacking.
It's working for us.
As a senior consultant he's very involved with the company and with the developer right now that that deal worked out great, but a part of it was because the management was amenable to working with us and the asset is fantastic I mean, since we acquired esophageal cancer.
I'm so excited about the development.
It's a lifetime opportunity quite frankly.
And of course, there's nothing in our market cap for it but it's a lifetime opportunity and its all systems go. So I'm just excited about that for the future and it got people. Some people don't like it when I make this a reference because it's night and day, but exact sciences you know.
I've been talking about them since there were 10 of $11 billion company out of another $15 billion company. They have a their primary business is cologuard.
Colin it's.
Test for colon cancer, we have a test for esophageal catch it right. There's requires you to make a bowel movement hours right. Now are on people that are already getting the dustbins anyway. So they don't have to do anything extra and ultimately it may be a test where you just put a breathtaking.
And we believe that our sensitivity and specificity <unk>.
May be greater.
Then cologuard and so I'm not looking for a company to be esophageal cancer. It would be a $15 billion company, even a $1 billion company alright, what about 100 million revenues that would still triple the value of our company. So.
The opportunity here is enormous and anyway, I think I pretty much answered your question I'm pretty cool weather.
But at times as analog Cologuard analogs pretty interesting one that thanks for the answer to my question on any P. B, though.
You're quite welcome and have a great day I really appreciate everybody joining the call today, Vice Navy buy snotty, I'm, sorry, I hand, it back over to you, obviously I'm really excited about the future of the company.
Thank you all for joining us today and I'm looking forward to a lot of progress in the next 369 and 12 months.
I think that ends our call.
Alright. Thank you. This concludes our Q&A session and the call as well.
You may now disconnect. Thank you for participating today.
Okay.