Q1 2025 OPKO Health Inc Earnings Call
Operator: Good afternoon and welcome to the OPKO Health First Quarter 2025 Financial Results Conference Call.
Good afternoon, and welcome to the Umpqua has plus culture 2025 financial results Conference call.
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After todays presentation, there will be an opportunity to ask questions.
Speaker Change: Well that's a good question your Memphis Star then one on your desk phone.
To withdraw your question. Please press Star then two.
Operator: Please note, this event has been recorded.
Speaker Change: Please note this event is being recorded.
Yvonne Briggs: I would now like to turn the conference over to Yvonne Briggs, please go ahead. Thank you, Operator. Good afternoon. This is Yvonne Briggs with Alliance Advisors IR. Thank you all for joining today's call to discuss OPKO Health's financial results for the first quarter of 2025.
Speaker Change: I would now like to turn the conference over to Yvonne Briggs. Please go ahead.
Speaker Change: Thank you operator. Good afternoon. This is a bomb greg's with alliance advisors I R. Thank you all for joining today's call to discuss the Opco health financial results for the first quarter of 2025.
Yvonne Briggs: I'd like to remind you that any statements made during this call by management other than statements of historical fact will be considered forelooking and as such will be subject to risks and uncertainties that could materially affect the company's expected results. Those four looking statements include, but 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, 2024, and subsequently filed SEC reports. Furthermore, this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast on April 30, 2025.
Speaker Change: I'd like to remind you that any statements made during this call by management other than statements of historical fact will be considered forward looking and as such will be subject to risks and uncertainties that could materially affect the company's expected results.
Speaker Change: 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, 2024, and subsequently filed SEC reports.
Speaker Change: Furthermore, This conference call contains time sensitive information that is accurate only as of the date of the live broadcast on April 30th 2025 ish.
Yvonne Briggs: Except as required by law, OPKO undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call.
Speaker Change: Except as required by law <unk> undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances. After the date of this call.
Yvonne Briggs: Before we begin, let me review the format for today's call.
Speaker Change: 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 will then provide an overview of bio reference health as well as up goes pharmaceutical business.
Phillip Frost: Dr. Phillip Frost, Chairman and Chief Executive Officer, will open the call.
Elias Zerhouni: Dr. Elias Zerhouni, Vice Chairman and President, will then provide an overview of BioReference Health as well as OPKO's pharmaceutical business.
Adam Logal: After that, Adam Logal, OPKO's CFO, will review the company's first quarter financial results and discuss OPKO's financial outlook, and then we'll open up the call to questions.
Speaker Change: After that Adam local Opco CFO will review the Companys first quarter financial results and discuss the op Cos financial outlook and then we'll open up the cost of questions now I'd like to turn the call over to Dr. Frost.
Phillip Frost: Now I'd like to turn the call over to Dr. Frost. Good afternoon, and thank you for joining us today. We continue to advance our strategic initiatives to drive value for OPKO Health. In March, we announced the sale of BioReference's Health oncology and related clinical testing business to LabCorp. BioReference will continue to offer urology diagnostic services nationwide as well as maintain its core clinical testing operations in New York and New Jersey, which collectively represented approximately $320 million in revenue for 2024. This transaction is our second with LabCorp, and it unlocks additional value in our diagnostic segment and enhances BioReference's path to profitability.
Speaker Change: Good afternoon, and thank you for joining us today.
Speaker Change: We continue to advance our strategic initiatives to drive value corrupt courthouse.
Speaker Change: In March we announced the sale of bio references health.
Speaker Change: Oncology related clinical testing business to Labcorp.
Speaker Change: I referenced will continue to offer urology diagnostic services nationwide as well as maintain its core clinical testing operations in New York and New Jersey.
Speaker Change: Which collectively.
Speaker Change: Representing approximately $320 million in revenue for 2024.
Speaker Change: This trend of drugs transaction is there a second with Labcorp and then unlocks additional value in our diagnostics segment.
Speaker Change: And enhances my references path to profitability.
Phillip Frost: Our dual GLP-1, GLP-GIGON, and OPKO 88006, administered subcutaneously, has demonstrated encouraging outcomes in animal models of obesity and mash. The Positive Improvements of Metabolic Parameters hepatic pathology, and non-alcoholic fatty liver disease activity score, including fibrosis stage. support our decision to develop OPK88006 as a once-weekly subcutaneous injectable treatment of MASH.
Speaker Change: Hard to draw a good one glucagon.
Speaker Change: 088006 administered subcutaneously.
Speaker Change: Illustrated encouraging outcomes in animal models of obesity and marsh.
The positive improvements of metabolic parameters.
Speaker Change: The product pathology, and non alcoholic fatty liver disease activity score, including fibrosis stage.
Speaker Change: To support our decision to develop our PK data O six as a once weekly subcutaneous injectable treatment of Marsh.
Phillip Frost: In March, we entered into a collaborative agreement with Enterobio to advance the development of an oral tablet form of OPKO 88006. Using Antero's proprietary NTEP technology, oral bioavailability studies in several animal models suggest that therapeutic levels can be achieved for human.
Speaker Change: In March we entered into a collaborative agreement with Antero bio.
Speaker Change: To advance the development of an oral tablet form of Wabco eight eight or six.
Speaker Change: Using and terrorists proprietary N type technology oral bioavailability studies in several animal models suggest the therapeutic levels can be achieved for human use.
Speaker Change: [noise] motor has two programs in phase one clinical trials.
Phillip Frost: MODEX has two programs in Phase I clinical trials.
Phillip Frost: our Epstein-Barr virus vaccine candidate in collaboration with Merck, and MDX-2001, a tetraspecific antibody for the treatment of solid tumor cancers. We look forward to keeping you updated on the progress of these trials.
Speaker Change: Our upstream Barbara strikes in candidate in collaboration with Merck.
Speaker Change: An M D X 2001, tetra specific antibody for the treatment of solid tumor cancers.
We look forward to keeping you updated on the progress of these trials.
Phillip Frost: our Latin American business, and Arigen Pharma, our Irish contract pharmaceutical development and manufacturing unit. continue to show revenue and profit growth. As we continue to advance our strategy for each business segment, we're confident in our ability to drive value for OPKO shareholders.
Speaker Change: Our Latin American business, and arrogant farmer, our Irish contract pharmaceutical development and manufacturing unit.
Speaker Change: Continuing to show revenue and profit growth.
Speaker Change: As we continue to advance our strategy for each business segment, we're confident in our ability to drive value for Aimco shareholders.
Phillip Frost: In addition to the BioReference asset sale, the board approved a $100 million increase to our Common Stock Repurchase Program, bringing the total to $200 million. We believe OPKO shares continue to be significantly undervalued and our strong cash position provides the ability to return capital to shareholders while adequately funding our pharmaceutical programs. In addition, we entered into a note exchange agreement to bolster our capital structure.
Speaker Change: In addition to the bio reference asset sale.
Speaker Change: The board approved a 100 million dollar increase to our common stock repurchase program.
Speaker Change: Bringing the total to.
Speaker Change: So $200 million.
Speaker Change: We believe opco shares continue to be significantly undervalued.
Speaker Change: Strong cash position provides the ability to return capital to shareholders, while adequately funding our pharmaceutical programs.
Speaker Change: In addition, we entered into a note exchange agreement to bolster our capital structure item will provide details on the agreement and related benefits in a moment.
Phillip Frost: Adam will provide details on the agreement and related benefits in a moment.
Elias Zerhouni: Now, I'll turn the call over to Elias. Well, thank you, Phil. And thank you all for joining today. Let me start with the diagnostic segment where our restructuring efforts are continuing.
Speaker Change: Now I'll turn the call over to failure.
Speaker Change: Well, thank you Phil and thank you all for joining us today, and let me start with the diagnostics segment, where our restructuring efforts are continuing.
Elias Zerhouni: First, as mentioned by Phil, we signed a definitive agreement with LabCorp to sell the oncology and related clinical testing assets of bio-reference The transaction includes the sale of bioreferences, laboratory testing businesses focused on oncology and oncology-related clinical testing services for up to $225 million, including $192.5 million payable as closing and up to $32.5 million in an earn-out based on performance. Although our oncology business has grown over the years, its scale was not sufficiently large to support its costs. Hence, our decision to divest from this line of business, which will improve profitability of the remaining business of bioref.
Speaker Change: First as mentioned by shell, we signed the definitive agreement with Labcorp to sell the oncology and related clinical testing assets of bio reference accounts.
Speaker Change: Transaction includes the sale of bio reference laboratory testing businesses focused on oncology.
Speaker Change: And oncology related clinical testing services for up to $225 million, including $192 5 million payable at closing and up to $32 5 million in earn out based on performance.
Speaker Change: Although our oncology business has grown over the years at scale was not sufficiently large to support its costs, hence our decision to divest from this line of business, which will improve profitability of the remaining business at bio reference.
Elias Zerhouni: Excuse me. BioReference will continue to offer urology diagnostic services, including our proprietary four case score tests for positive cancer assessment nationwide, and our corrections clinical services nationwide. as well as maintain its core clinical testing operations in New York and New Jersey, which represents approximately $320 million in revenues for 2024. And the transaction is anticipated to close in the second half of 2025. Overall, business volume at BioReference, excluding oncology, grew modestly, Q125 versus Q124, while our 4K score test reported another impressive quarter with 14.5% growth year over year. BioReference continues to make progress in driving efficiencies and aligning operations with current volumes.
Speaker Change: Excuse me.
Speaker Change: By referenced will continue to offer urology diagnostic services, including our proprietary for case forecast for prostate cancer assessment nationwide and our corrections clinical services nationwide as well as maintain its core clinical testing operations in New York, and New Jersey, which.
Speaker Change: Representing approximately 320 million in revenues for 2024, and the transaction is anticipated to close in the second half of 2025.
Speaker Change: Overall business volume at bio reference excluding oncology grew modestly Q1, 25 versus Q1 24, while our forecasts core tests reported another impressive quarter with 14, 5% growth year over year.
Speaker Change: Bio reference continues to make progress in driving efficiencies and aligning operations with current volumes in Q1 2025, we made great strides in continuing both the reduction of employee costs and footprint consolidation specifically during this quarter the first quarter.
Elias Zerhouni: In Q1 2025, we made great strides in continuing both the reduction of employee costs and footprint consolidation. Specifically, during this quarter, the first quarter, BioReference eliminated an additional 136 positions, which represents about a 7% workforce reduction. Total cost savings from actions initiated during Q1 are estimated at approximately $19 million on an annualized run rate, $14 million for employee costs, and $5 million in footprint consolidation. Our current headcount now stands at 1,962, which is down from a high of 3,099 in Q1 2024.
Speaker Change: By reference eliminated an additional 136 positions, which represents about a 7% workforce a workforce reduction.
Speaker Change: Total cost savings from actions initiated during Q1 are estimated at approximately $19 million on an annual run.
Speaker Change: Run rate $14 million for employee employee costs and $5 million and footprint consolidation.
Speaker Change: Our current head count now stands at 1900 62.
Speaker Change: Which is down from a high of 3099 in Q1 2024.
Elias Zerhouni: And once the oncology transaction is closed in Q3-Q4, our headcount will stand at about $1,600,000 with revenue of about $320 million. We continue to re-engineer operations in our main laboratory with automation and other approaches for greater efficiency and service levels.
Speaker Change: And once the oncology transaction is closed in Q3 Q4 are head count will stand at about 1600 with revenue of about $320 million.
Speaker Change: We continue to reengineer operations in our main laboratory with automation and other approaches for greater efficiency and service levels. Our stated objective as we have mentioned before remains to reach profitability within this year.
Elias Zerhouni: Our stated objective, as we have mentioned before, remains to reach profitability within this year. On the commercial front, BioReference strategically expanded its patient access service center locations during the first quarter in the New Jersey, New York area, adding infrastructure and key geography in the New York, New Jersey market. And this will not only add revenue to the organization, but will also improve the patient and client experience in the region. In addition, Bioreference continued its work to enter new clinical markets by enhancing its service levels and test offerings.
Speaker Change: On the commercial front bio reference it.
Speaker Change: <unk> expanded its patient access service center locations during the first quarter in the New Jersey, and New York area, adding infrastructure in key geographies in the New York, New Jersey market and this will not only add revenue to the organization, but will also improve as a patient and client experience in the region.
Speaker Change: <unk> bio reference continued its work.
Speaker Change: Entering new clinical markets by enhancing service levels and test offerings, including for example, respiratory pathogens and recently FDA approved self collection options for sexual health.
Elias Zerhouni: including, for example, respiratory pathogens and recently FDA-approved self-collection options for sexual Now, let me go to the therapeutic segment.
Speaker Change: Let me go through the therapeutic segments.
Elias Zerhouni: MODX continues its advances in clinical development. As you heard from Phil, enrollment and dosing are well underway by our partner Merck in the Phase 1 Epstein-Barr virus vaccine trial. This investigational vaccine based on MODX's ferritin nanoparticle vaccine platform is being evaluated for safety and tolerability in up to 200 healthy adults. and commencement of this study triggered the milestone payment to MODEX in Q4 2020. In addition, MODX continues to advance its immuno-oncology and immunology portfolio, with four potential clinical candidates progressing in the pipeline. The MDX-2001, which is a C-MET, TROP2, CD3, CD28, tetraspecific antibody, has advanced in phase 1 clinical trials to its fourth dose level.
Speaker Change: <unk> continues its advances in clinical development.
Speaker Change: As you heard from Phil enrollment and dosing are well underway by our partner Merck in the phase one Epstein Barr virus vaccine trials.
Speaker Change: This investigational vaccine based on load acts as ferritin nanoparticle vaccine platform is being evaluated for safety and Tolerability in up to 200 healthy healthy adults.
Speaker Change: The commencement of this study.
The milestone payment to <unk> in Q4 2024.
Speaker Change: In addition, <unk> continues to advance its immuno oncology and immunology portfolio with four potential clinical candidates progressing in the pipeline.
Speaker Change: <unk> 2001, which is a C met structure.
Speaker Change: Let me see 28 Tetra specific antibody is advancing phase one clinical trials towards fourth dose level.
Elias Zerhouni: with additional. Continuing Phase 1 and additional Phase 1b studies in selected solid tumors expected in early 2020. The MDX-2003 product, CD19, CD20, CD3, CD28, tetraspecific antibody for lymphoma and leukemia, and the MDX-2004, which is an immune rejuvenator for multiple oncology and immunology indications, are both expected to begin human trials in late 2025, early 2026. The development of multispecific antibodies for immune-impaired patients at risk for COVID and influenza A and B continues to progress with support from BARDA, which increased its previous commitment of $59 million by another $51 million in Q4 2024 for a total of $110 million to advance these programs and the related multispecific antibodies platform.
Speaker Change: With additional.
Speaker Change: Continuing phase one in additional phase one studies and selected solid tumors expected in early 2026.
Speaker Change: The mdx to treat products CD 19, C 20, <unk> 28, Tetra specific antibody for lymphoma, and leukemia, and the Mdx 2004, which is an immune rejuvenated from multiple oncology and immunology indications are both expected to begin.
Speaker Change: Human trials in late 2025 early 2026.
Speaker Change: The development of multi specific antibodies for immune impaired patients at risk for Covid and influence our a and B continues to progress with support from BARDA.
Speaker Change: Which increased its previous commitment of $59 million by another 51 million in Q4 2024 for a total of $410 million to advance these programs and the related multi specific antibodies platform.
Elias Zerhouni: There's a remaining $95 million commitment dependent upon reaching some milestones, which is still committed by BARDA. I'd like to add here that to date, we have not received any indication that BARDA will defund these grants and these programs as we stand here today. and we're hopeful that they will not because COVID antibodies are different than COVID vaccines and COVID antibodies are needed for the immune-impaired population. As Phil mentioned, we have advanced into the pre-IND stage with our injectable proprietary GLP-1 Glucagon Long-Acting Oxyntomodulin Analog OPK880007. even very promising preclinical data. For example, the study in male Gendio MASH mice demonstrated improved metabolic and biochemical parameters in hepatic pathology with improved non-alcoholic fatty liver disease activity score, called NAS, by over 2 points.
Speaker Change: There is a remaining $95 million commitment dependent upon reaching certain milestones, we should still committed by BARDA I'd like to add here that so to date, we have not received any indication that BARDA will do.
Speaker Change: Deform these brands these programs.
Speaker Change: As we as we stand here today.
Speaker Change: And we're hopeful that it will go up because COVID-19 antibodies are different than COVID-19 vaccines and COVID-19 antibodies are needed for the union impaired population.
Speaker Change: As Phil mentioned, we have advanced into the pre IMD stage with our injectable proprietary GL, one glucagon long acting ocean modular analogue O P. K a D 006.
Speaker Change: He has been very promising preclinical data.
Speaker Change: For example, the study in the mail Ganzi homage mice demonstrated improved metabolic and biochemical parameters and hepatic pathology with improved non alcoholic fatty liver disease activity score called mass by over two points supported by quantitative liver histology.
Elias Zerhouni: supported by quantitative liver histology for steatosis, inflammation, and fibrosis, showing improvement. We also entered into a collaboration agreement with Entera Bio to advance an oral tablet of the OPK88006. GLP-1 glucagon agonists into the clinic to treat obesity and metabolic disorders using Entera's NTAV technology. Under the terms of the agreement, OPKO and Interra will hold 60% and 40% ownership interests, respectively, in the orally administered product and be responsible for 60% and 40%, respectively, of the program's development costs. In connection with the execution of the agreement, OPKO purchased approximately 3.7 million ordinary shares of Mantera. for a purchase price equal to $2.
Speaker Change: For Steatosis inflammation and fibrosis filling improvements.
Speaker Change: We also entered into a collaboration agreement with Antero buyer to advance an oral tablet the <unk> 80 8006.
Speaker Change: <unk>, one glucagon agonist into the clinic to treat obesity and metabolic disorders using in Tara's Intouch technology.
Speaker Change: Under the terms of the agreement <unk> will hold 60% and 40% ownership interest respectively in the orally administered product and be responsible for 60% and 40% respectively of the programs development costs.
Speaker Change: In connection with the execution of the agreement Umpqua purchased approximately $3 7 million ordinary shares and Tara.
Speaker Change: For a purchase price equal to.
Speaker Change: Ooh.
Elias Zerhouni: $2.17 per share for about $8 million. Anterra agreed to utilize the proceeds from this share. to fund its 40% share of the program's development costs through the completion of phase one. Our Royalty team continues to produce new analyses and peer-reviewed publications suggesting that Royalty in CKD patients. secondary hyperparathyroidism may significantly delay the need for dialysis relative to other vitamin D products.
Speaker Change: $2 17 per share for about $8 million and Tara agreed to utilize the proceeds from this share purchase to fund its 40% share of the programs development costs through the completion of phase one.
Speaker Change: Oh reality team continued to produce new analyses and peer reviewed publications, suggesting that our ILD and CK knee patients with secondary hyperparathyroidism may significantly delay the need for dialysis relative to other vitamin D products potentially increasing.
Elias Zerhouni: potentially increasing its utilization in this group of In summary, we believe Bioreference is now in a position of strength with a clear focus on its core testing capabilities, streamlined operations, and expectations of profitability later this year. In addition, we're pleased with the progress of our pharmaceutical segment in advancing our therapeutic and vaccine candidates through the clinic.
Speaker Change: Its utilization and there's a group of patients.
Speaker Change: In summary, we believe by reference as long as a position of strength with a clear focus on its core testing capabilities streamline operations and expectation of profitability. Later. This year. In addition, we're pleased with the progress of our pharmaceutical segment.
Speaker Change: Advancing our therapeutic and vaccine candidates through the clinic, let me now turn it over to Adam Noble for our financial reporting for their information Adam.
Adam Logal: Let me now turn it over to Adam Logal for our financial report and further information. Thank you, Elias. Starting with operating results from our diagnostic segment, revenues of $102.8 million to 2021-2025, including $25.1 million from the assets being sold to LabCorp, compared with $126.9 million for the 2024 period. This decrease was primarily the result of the first LabCorp transaction that closed in September 2024. During the first quarter of 2025, costs and expenses totaled $126.8 million, including $32.4 million related to the assets being sold to LabCorp. This compares with $161.3 million for the comparable period of 2025.
Adam Noble: Thank you Elliot starting with operating results from our diagnostics segment revenue was $102 $8 million.
Adam Noble: <unk>, including $25 $1 million from the assets being sold to lab.
Adam Noble: Compared with $126 $9 million for the 2024 periods.
Adam Noble: This decrease was primarily the result of the first Labcorp transaction that closed in September 2024.
Adam Noble: During the first quarter of 2025 cost and expenses totaled $126 $8 million, including $32 $4 million related to the assets being sold to Labcorp. This compares with $161 $3 million for the comparable period of 2024.
Adam Logal: Q1 2025 also includes approximately $7.2 million in non-recurring costs and expenses for severance and facility closure. All incurred as expected as we realign our business to ensure sustainable growth and profitability. As Elias mentioned, the actions taken to date will result in annualized cost savings of more than $19 million. which we will benefit from starting in May. During the first quarter of 2025, operating loss was $23.9 million, compared with an operating loss of $34.4 million for the 2024 quarter. Depreciation and amortization expenses for the diagnostic segment were $5.7 million and $7.9 million for the 2025 and 2024 periods respectively.
Adam Noble: Q1, 2025 also includes approximately $7 $2 million and nonrecurring costs and expenses for severance and facility closures all incurred as expected as we realign our business to ensure sustainable growth and profitability.
Elliot: As Elliot mentioned the actions taken to date will result in annualized cost savings of more than $19 million.
Elliot: Which we will benefit from starting in May.
Elliot: During the first quarter of 2025 operating loss was $23 $9 million compared with an operating loss of $34 $4 million for the 2024 quarter.
Elliot: Depreciation and amortization expenses for the diagnostics segment were $5 7 million and $7 $9 million for the 2025 and 2024 periods respectively.
Adam Logal: Moving to our pharmaceutical segment. Revenue was $47.1 million for the first quarter of 2025 compared with $46.8 million for the 2024 period. Revenue from products, including our international pharmaceutical businesses, was $34.8 million, compared with $38.1 million for the comparable 2024 period.
Elliot: Moving to our pharmaceutical segment.
Elliot: Revenue was $47 $1 million for the first quarter of 2025, compared with $46 $8 million for the 2024 period.
Elliot: Revenue from products, including our international pharmaceutical businesses with $34 $8 million compared with $38 $1 million for the comparable 2024 period.
Adam Logal: In response to the challenging foreign currency environment that has impacted revenue, the profitability of this business continues to meet our expectations through disciplined operating expense constraints. Product revenue includes revenue of reality of $6.3 million, which was slightly lower than 2024's $6.9 million.
In response to the challenging foreign currency environment that has impacted revenue the profitability of this business continues to meet our expectations through disciplined operating expense constrained.
Elliot: Product revenue includes revenue reality of $6 $3 million, which was slightly lower than 2024 is $6 $9 million the inflation.
Adam Logal: The Inflation Reduction Act has resulted in challenging environment for RALDI, however we have realized an increase in the operating margins for RALDI as a result of the improved net pricing through lower government rebates, partially offsetting the volume decrease. Revenue from the transfer of IP was $12.3 million for the first quarter of 2025, compared to $8.7 million for the same quarter of 2024. Our gross profit share from Pfizer was $4.5 million during the 2025 quarter, versus $5.6 million for the 2024 quarter. We continue to follow the publicly available prescription data reported by third-party services and remain encouraged by the growth.
Elliot: A reduction act has resulted in challenging environment for reality. However, we have realized an increase in the operating margins for reality as a result of the improved net pricing through lower government rebates.
Elliot: Surely offsetting the volume decrease.
Elliot: Revenue from the transfer of IP was $12 $3 million for the first quarter of 2025 compared to $8 $7 million at the same quarter of 2024 are.
Elliot: Our gross profit share from Pfizer was $4 $5 million during the 2025 quarter versus $5 6 million for the 2024 periods.
Elliot: We continue to follow the publicly available prescription data reported by third party services and remain encouraged by the growth rates. However, we are working with Pfizer to better understand some of the underlying dynamics that have negatively impacted the first quarter profit share payments.
Adam Logal: However, we are working with Pfizer to better understand some of the underlying dynamics that have negatively impacted the first quarter profit share payment. The first quarter of 2025 also includes $7 million in R&D funding compared to $2.2 million for the 2024 period, reflecting increased activities under our program supported by BARDA. Costed expenses for our pharmaceutical segment were $81.9 million for the first quarter of 2025, compared with $74.5 million for the 2024 period. Research and development expenses were $30.2 million compared to $21.2 million a year ago. R&D expense increased as a result of our MODEX development activities, including the Phase I clinical trial for our first oncology program, as well as our BARDA-supported program.
Elliot: The first quarter of 2025 also includes $7 million in R&D funding compared to $2 $2 million for the 2024 period, reflecting increased activities under our program supported by BARDA.
Cost of expenses for our pharmaceutical segment were $81 9 million for the first quarter of 2025, compared with $74 $5 million for the 2024 period.
Elliot: Research and development expenses were $32 million compared to $21 $2 million a year ago.
Elliot: R&D expense increased as a result of our <unk> development activities, including the phase one clinical trial of our first oncology program as well as our BARDA supported programs, the resulting operating loss for the quarter ended March 31, 2025 was $34 $8 million compared with an operating loss of $27 $7 million.
Adam Logal: The resulting operating loss for the quarter ended March 31st, 2025, with $34.8 billion compared with an operating loss of $27.7 million for the 2024 quarter. Appreciation and Amortization Expense for the 2025 quarter decreased slightly to $17.8 million from $18 million for the 2024 quarter.
Elliot: For the 2024 quarter.
Elliot: Depreciation and amortization amortization expense for the 2025 quarter decreased slightly to $17 $8 million from $18 million for the 2024 quarter.
Adam Logal: Turning to our consolidated financial results, net loss for the first quarter of 2025 was $67.6 million, or $0.10 per share, compared with a net loss of $81.8 million, or $0.12 per share for the 2020 board period.
Elliot: Turning to our consolidated financial results net loss for the first quarter of 2025 was $67 $6 million 10 per share compared with a net loss of $81 $8 million or <unk> 12 per share for the 2024 period.
Adam Logal: Turning to our balance sheet, we continue to work on our capital structure and allocate capital as we laid out during our last call. We ended Q1 2025 with approximately $450 million in cash, cash equivalents and restricted cash. And as we noted, we fully exited our position in GeneDx during the first quarter, adding approximately $51 million to our cash balance. We closed on our convertible debt exchange on April 1st, 2025, which used approximately $65 million in cash, and we issued approximately 121 million shares of common stock and eliminated $159.2 million of the company's outstanding convertible notes, including accrued and unpaid...
Elliot: Turning to our balance sheet, we continue to work on our capital structure and allocate capital as we laid out during our last call. We ended Q1 2025 with approximately $450 million in cash cash equivalents and restricted cash and as we noted we fully exited our position in <unk> during the first quarter, adding approximately.
Elliot: $51 million to our cash balance.
Elliot: We closed on our convertible debt exchange on April one 2025, which used approximately $65 million in cash and we issued approximately 121 million shares of common stock and eliminated $159 $2 million of the company's outstanding convertible notes, including accrued and unpaid interest.
Adam Logal: We intend to continue to reduce our remaining convertible debt and through our recently expanded share repurchase authorization, we plan to continue to reduce the number of shares outstanding in the most capital efficient way possible. Under our share repurchase authorization, we have approximately $159 million remaining, which at yesterday's closing price represents more than 113 million shares, or more than 14% of our currently outstanding shares.
Elliot: We intend to continue to reduce our remaining convertible debt and through our recently expanded share repurchase authorization. We plan to continue to reduce the number of shares outstanding in the most capital efficient way possible.
Elliot: Under our share repurchase authorization, we have approximately $159 million, meaning which at yesterday's closing price represents more than 113 million shares or more than 14% of our currently outstanding shares.
Adam Logal: As Elias mentioned, we anticipate closing our second transaction with LabCorp later this year, and we'll receive $192.5 million in closing, and up to $225 million in total.
Elliot: As Elliot mentioned, we anticipate closing our second transaction with Labcorp later, this year and will receive a $192 $5 million at closing and up to $225 million in total.
Adam Logal: As we look ahead, the following assumptions influence our financial guidance. For a pharmaceutical segment, we expect Pfizer to continue to grow sales of Ingenla and the overall HGH franchise. We assume a stable foreign currency exchange rate for our ex-U.S. pharmaceutical businesses, which has recently been challenged with large swings in certain territories. Our teams have been navigating those challenges through disciplined expense control and expect that going forward. R&D expenses will reflect higher activities related to our MODEX programs, including CMC efforts related to our first oncology trial, as well as furthering our GLP-1 glucagon development program. A portion of the increased MODEX activities will continue to be funded through our BARDA agreement.
Elliot: As we look ahead the following assumptions influenced our financial guidance for our pharmaceutical segment, we expect Pfizer to continue to grow sales of in Genoa, and the overall HVA transact charges.
Elliot: We assume a stable ferrency foreign currency exchange rate for our X U S pharmaceutical businesses, which has recently been challenged with a large swings in certain territories.
Elliot: Our teams have been diligently navigating those challenges through disciplined expense control and expect that going forward.
Elliot: R&D expenses will reflect higher activities related to our moat X programs, including CMC efforts related to our first oncology trial as well as furthering our G O P. One glucagon development program.
Elliot: A portion of the increased <unk> X activities will continue to be funded.
Elliot: Arda agreements.
Adam Logal: For our Diagnostics segment, we are executing our multi-year, multi-phase program to reach and improve profitability. The program continues to be focused on operational efficiencies and the reduction of fixed infrastructure costs. We expect to incur an additional $5 million in non-recurring costs during the second quarter, which primarily reflect severance pay. We have established an additional cost reduction initiative targeting a further $10 million of annualized cost savings on top of the $20 million we discussed in our last call.
Elliot: For our diagnostics segment, we are executing our multi year multi phase program to reach and improve profitability.
Elliot: Program continues to be focused on operational efficiencies and the reduction of fixed infrastructure costs.
Elliot: We expect to incur an additional $5 million and nonrecurring costs during the second quarter, which primarily reflects severance costs. We have established an additional cost reduction initiatives targeting a further $10 million of annualized cost savings on top of the $20 million, we discussed in our last call.
Elliot: Paul.
Adam Logal: As a result of our recently announced transaction with LabCorp, once closed, the remaining bioreference will be cash flow positive and profitable as measured before non-recurring and non-cash items. In addition, we expect to realize a gain on the LabCorp transaction of approximately $100 million, which will be reflected as a reduction to operating expenses and an increase in operating income. Due to the uncertainty of the timing of closing, we are including revenue, costs, and expenses for the full year and will adjust the total revenue, costs, and expenses once the closing date is served. As a result, we expect the following for the full year 2025, total revenues between $675 and $685 million, revenue from services between $405 and $425 million, including the revenue from the assets being sold to LabCorp of $95 to $105 million.
Elliot: As a result of our recently announced transaction with Labcorp. Once closed the remaining bio reference will be cash flow positive and profitable as measured before nonrecurring and noncash items. In addition, we expect to realize a gain on the labcorp transaction of approximately $100 billion, which will be.
Elliot: <unk> reflected as reduction to operating expenses and an increase in operating income.
Elliot: Due to the uncertainty of the timing of closing, we are including revenue costs and expenses for the full year and will adjust the total revenue costs and expenses once the closing date of certain.
Elliot: As a result, we expect the following for the full year 2025 total revenues between 675 and $685 million revenue from services between 405 and $425 million, including the revenue from the assets being sold to labcorp of $95 million to $105 million.
Adam Logal: Revenue from products between $165 and $175 million. and other revenue between $75 and $85 million, inclusive of the revenue from our Pfizer gross profit share, which is estimated to be between $30 and $40 million, from $35 to $45 million, and BARDA revenue of $38 to $44 million, which was previously guided from $40 to $48 million. We expect costs and expenses to be between $825 and $875 million, excluding the non-recurring expenses related to the restructuring activities for bioreference. which are currently estimated to be between $10 to $14 million for the full year, and inclusive of costs and expenses related to the assets being sold to LabCorp of $125 to $135 million.
Elliot: Revenue from products between 165 and $175 million.
Elliot: And other revenue between 75 and $85 million inclusive of the revenue from that or Pfizer gross profit share, which is estimated to be between 30% and $40 million from $35 million to $45 million in BARDA revenue of 38% to $44 million, which was previously guided from.
Elliot: $40 million to $48 million, we expect costs and expenses to be between 825 and $875 million, excluding the nonrecurring expenses related to the restructuring activities for bio reference.
Elliot: Which are currently estimated to be between 10 and $14 million for the full year and inclusive of costs and expenses related to the assets being sold to Labcorp.
Elliot: $125 million to $135 million.
Adam Logal: R&D expense is expected to be between $120 and $130 million, down from $120 to $140 million. which depends on the rate of enrollment of our clinical trial and the timing for certain activities for our MODX programs, including CMC, with $37 to $43 million being offset from funding by BARDA. Depreciation and amortization expense is expected to be approximately $90 million.
Elliot: R&D expense is expected to be between $120 million to $130 million.
Elliot: Down from $120 million to $140 million.
Elliot: Which depends on the rate of enrollment of our clinical trial and the timing for certain activities for our <unk> X programs, including CMC, with 37% and $43 million being offset from funding by BARDA.
Elliot: Depreciation and amortization expense is expected to be approximately $90 million.
Adam Logal: while we don't typically provide non-operating income and expense guidance. As a result of our convertible debt exchange, we are providing guidance as we anticipate a non-recurring other expense item related to that exchange of approximately $90 million during the second quarter of 2025, which is comprised of interest expense from debt discount, debt issuance fees, and inducement expense.
Elliot: While we don't predict typically provide nonoperating income and expense guidance as a result of our convertible debt exchange, we are providing guidance as we anticipated nonrecurring other expense item related to that exchange of approximately $90 million. During the second quarter of 2025, which is comprised of interest expense from.
Debt discount and debt issuance fees and inducing inducement expense.
Adam Logal: That concludes our prepared remarks, and thank you all for your attention.
Elliot: That concludes our prepared remarks, and thank you all for your attention now operator, let's open the call for questions.
Operator: Now, operator, let's open the call for questions. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your questions, please press star then 2.
Elliot: We will now begin the question and answer session.
Speaker Change: Quick question you May Press Star then one on your desk phone.
Speaker Change: If youre using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: To withdraw your question. Please press Star then two.
Operator: At this time, we will pause momentarily to assemble our roster.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Maurice Raycroft: The first question comes from Maurice Raycroft with Jeffreys, please go ahead. Hi, this is James. I'm from Moray. Thanks. Just to start off, what are some possible explanations for the negative dynamics for Ingenla? Is it more likely competition, access issues, or something commercial related to Pfizer? Yeah, so we've seen, you know, the growth rates of the prescriptions to continue along both for Ingenla and Genotropin. So we think it's more likely to do with some of the commercial environments. We don't have color further from Pfizer just yet on the dynamic there. But we expect this to be a first quarter only event, which is why we've only slightly reduced the guys.
Speaker Change: The first question comes from Maury Raycroft with Jefferies. Please go ahead.
Speaker Change: Hi, This is James on for Maury. Thanks for taking my questions just to start off what are some possible explanation. So the negative dynamics for Amgen law is it more likely competition access issues or something commercial related to Pfizer.
Speaker Change: Yeah. So we've seen the growth rates of the prescriptions to continue along both for in general in G&A drop and so we think it's more likely to do with some of the commercial environments. We don't have color further from Pfizer just yet.
Speaker Change: On the dynamic there but.
Speaker Change: We expect this to be a first quarter only event, which is why we've only slightly reduce the guide.
Maurice Raycroft: Got it.
Maurice Raycroft: And could, just to add on to that, could you also please comment on why you think Pfizer withdrew their EU application for the adult sending?
Speaker Change: Got it.
Speaker Change: And just to add on to that could you also please comment on why you think Pfizer withdrew their EU application for the adult setting when was the last time you met with Pfizer regarding plans to expand the franchise and what are those plans for expansion into additional settings.
Elias Zerhouni: When was the last time you met with Pfizer regarding plans to expand the franchise and what are those plans? So I'll try to expand on this, and then Elias or others could jump in as well. So Pfizer has been working on a strategy to expand the label for Ingenla for some time. We do know that they're expecting to kick off some trials for the additional pediatric indications. Within Europe, the dynamics are slightly different, and I think Pfizer chose to be more focused on the pediatric indication given the size of the overall market for the pediatric indications in comparison to the adult and wanted to focus their efforts there.
Speaker Change: Yes, so I'll try to expand on this in L. A S or others could jump in as well. So Pfizer has been working on a strategy to expand the label.
Speaker Change: Forage for in general for some time, we do know that they're expecting to.
Speaker Change: Kickoff some trials for the additional pediatric indications.
Speaker Change: Within Europe, the dynamics are slightly different and I think the Pfizer chose to be more focused on the pediatric indication given the size of the overall market.
Speaker Change: For the pediatric indications in comparison to the adult in and wanted to focus their efforts there.
Speaker Change: Okay.
Maurice Raycroft: Got it.
Maurice Raycroft: Thanks for taking our questions. I'll hop back in the queue. Thank you.
Speaker Change: Got it.
Speaker Change: Thanks for taking our questions I'll hop back in the queue.
Speaker Change: Yeah.
Speaker Change: Thank you.
Yi Chen: The next question comes from Yi Chen with HC Rainwright, please go ahead. Thank you for taking my question. Could you please provide a rough timeline about the development program of the GLP-1 glucagon tablet? When can we expect to see some clinical results? Also, what could be the 1,000...
Speaker Change: The next question comes from <unk>, Chen with H C. Wainwright. Please go ahead.
Speaker Change: Thank you for taking my question could you. Please.
Speaker Change: And the rough timeline about.
Speaker Change: Development program.
Speaker Change: Q1 glucagon tablets.
Speaker Change: When when can we expect to see some clinical themselves and also welcome.
Speaker Change: Those in sequence.
Speaker Change: Okay.
Elias Zerhouni: Thanks Yi. So the timeline for the development program, we expect to have an IND file later this year or by the end of this year or early next year with with the trial to commence thereafter and could get results from a phase one trial by the end of 26. As it relates to dosing, it's expected to be a once weekly dosing.
Speaker Change: Okay.
Speaker Change: Thanks, So the timeline for the development program, we expect to have an IND filed later this year or by the end of this year or early next year with the with the trial to commence their thereafter and could get results.
Speaker Change: From a phase one trial by the end of 'twenty six.
Speaker Change: As it relates to dosing it is expected to be a once once weekly dosing.
Elias Zerhouni: Sorry, I was on mute. I couldn't answer before Adam took it and give you a perfect. So, apart from being an oral tablet candidate and once-a-week dosing, is there any other differentiating factor for this candidate compared to semiglutide? Yeah, so let me let me take that one. First of all, for the oral formulation, it's a once a day. For the sub cue, it's once a All right, now GLP-1 and Glucagon are a pair of... I'm going to ask a few about oxytomodulin, it's an analog of oxytomodulin, and it's really, really interesting because it does, glucagon acts on the liver, on the metabolism of the And so it's really focused on whether or not this compound can be of use in MASH, and all of our preclinical work indicates that it is.
Speaker Change: Sorry, I was on mute I couldn't answer before Adam together and give you a perfect answer.
Speaker Change: So.
Speaker Change: Far from being an all rule 70, Kennedy once a week dosing or any other differentiating factor.
Speaker Change: Kennedy.
Speaker Change: Semi glucide arts and Samsung.
Speaker Change: Yes, So let me let me take that one first of all for the oral formulation, it's a once a day.
Speaker Change: For the sub Q, it's once a week right.
Speaker Change: No <unk>, one and glucagon or a pair of.
Speaker Change: So.
Speaker Change: I'm going to ask that you also options of module.
Speaker Change: For modeling, it's a it's an analogue of hooks into modulus and it's really really interesting because it does vehicles on axon deliver on the metal bulletin those liver and so it's really focused on whether or not this this compound can be abusing match and all of our preclinical work.
Speaker Change: Indicates that it is if you're looking at the niche, which we think <unk> glucagon will be superior.
Elias Zerhouni: So if you're looking at the niche, which we think GLP-1 glucagon will be superior, is really the MASH fatty liver disease group. So that's really where we're going, and that's what we're going to try to develop over the next year.
Speaker Change: Is the is really the mesh fatty liver disease a group.
Speaker Change: So that's really where we're going and that's what we're all going to trial.
Speaker Change: We will develop over the next year.
Elias Zerhouni: Okay. Thank you. Another way to say that we're not going into all markets that relate to GLP-1 glucagon. We're focusing our entry indication is going to be in the liver diseases that are affected by fatty liver disease, patients who are affected by fatty liver disease, and then we'll expand from that depending on the results we see in Phase 1 and Phase 1B. Thank you.
Speaker Change: Okay. Thank you.
Speaker Change: Another way to say that we're not going into all markets that relate to GL. One glucagon were focusing our entry indication is going to be in the liver.
Speaker Change: Diseases that are affected by following a liver disease patients who are affected by the disease and then we'll expand from there depending on the results we see in phase one and phase one b.
Jeffrey Cohen: Thank you. The next question comes from Jeffrey Cohen.
Jeffrey Cohen: The next question comes from Jeffrey Cohen with Leidenberg Talman. Please go ahead. Good afternoon. Thanks for taking our questions. Adam, can you comment to Proforma now? Can you give us a sense of if anything's left on the convertible notes, as well as the secured notes and number of shares, Proforma? Sure. So let me just make sure I heard you right. So on the number of shares on a pro-forma basis, it went from, at March 31st, it was about 671 million shares. As part of the convertible note exchange, we increased that by 121 million. So you get to just about 790 million shares, a little bit more than 790 million shares outstanding on a pro-forma basis.
Speaker Change: Ladenburg Thalmann. Please go ahead.
Jeffrey Cohen: Oh good afternoon. Thanks for taking our questions can you comment so pro forma now can you give us a sense.
Speaker Change: Yeah.
Speaker Change: On the convertible notes as well as the are the secured notes.
Speaker Change: Number of shares pro forma.
Speaker Change: Sure. So let me just make sure I heard you right. So on the number of shares on.
Speaker Change: On a pro forma basis. It went from <unk> at March 31, It was about 671 million shares.
Speaker Change: Part of the convertible note exchange, we increased that by $121 million, so you'd get to just about 790 million shares.
Speaker Change: A little bit more than 790 million shares outstanding at on a pro forma basis on what's left on the convertible notes, we have approximately $129 million remaining principal that's outstanding.
Adam Logal: On what's left on the convertible notes, we have approximately $129 million remaining of principal that's outstanding on an ongoing basis. Okay, got it. That's super helpful. I appreciate it.
Speaker Change: On a ongoing basis.
Speaker Change: Okay got it that's super helpful. I appreciate it.
Jeffrey Cohen: Can you give us a sense of the diagnostic business and bio-referencing right here? online some numbers for the year. So we should think of that as a 300 ish million dollar baseline business. for the second half of this year as far as thinking of it on an annual basis. Yeah, on a manualized basis, the kind of remaining business, you know, sits between $310 and $320 million. on and anyways. Okay, got it, and um...
Speaker Change: Give us a sense of the deal.
Speaker Change: Diagnostic business from a referral center.
Speaker Change: All lines some numbers for the year or so we should think about as a 300 ish million dollar based long business.
Speaker Change: For the the.
Speaker Change: The second half of this year as far as thinking of it.
Speaker Change: Yes.
Speaker Change: Annualized basis, the kind of remaining business sits between 310 and $320 million that's already.
Speaker Change: On an annualized basis.
Speaker Change: Okay got it and.
Jeffrey Cohen: Timing on the queue will be today or tomorrow? Tomorrow evening. Okay, and I got all the metrics so I think that those are for us. Thanks for taking the question. Thank you.
Speaker Change: Timing on the Q will be today or tomorrow.
Speaker Change: Tomorrow evening.
Speaker Change: Okay and.
Speaker Change: I got all the metrics so.
Speaker Change: I think that those are for us thanks for taking the questions. Thanks, Joe.
Speaker Change: Okay.
Speaker Change: Thank you. The next question comes from Eric Joseph with JP Morgan. Please go ahead.
Eric Joseph: The next question comes from Eric Joseph with JP Morgan. Please go ahead.
Eric Joseph: Hi, this is Billy. I'm for Eric. Thanks for taking our questions. Um, quick one on the EBV trial, if that's okay, first. Um, with the 200 patients, 200 healthy volunteers looking to be read out, are there any sort of efficacy or biomarker, um... Take notes, you might look for in that readout that might derisk the asset from an efficacy perspective. So, the 200 patients are divided in different cohorts because we're also using adjuvants. Merck is using adjuvant testing, different adjuvants for the vaccine, and that's what is going to be measured. We will get an idea of the immunogenicity of the vaccine with biomarkers.
Kelly: Hi, This is Kelly answer Eric Thanks for taking our questions quickly.
Speaker Change: Quick one on the EBV trial, that's it thanks guys.
Speaker Change: And with a 200 page 200 healthy volunteers stuck in kidney read out are there any sort of efficacy or biomarker.
Speaker Change: Jake knows you might look for in that readout.
Speaker Change: Rescue asset from an efficacy perspective.
Speaker Change: So the 200 patients on divided in different cohorts, because we're also using adjuvant network more confusing adjuvant testing different adjuvant for for the vaccine and that's what is going to be measure we will get an idea of the evening immunogenicity of the vaccine.
Speaker Change: With Biomarkers, that's not the intent of phase one is most of the Tolerability and safety.
Elias Zerhouni: It's not the intent of phase one. It's mostly tolerability and safety. So, by the end of that trial, we'll have a good idea of the potential efficacy to indirect measure. Thanks.
Speaker Change: So by the end of that trial will have a good idea.
Speaker Change: The potential efficacy and direct measures.
Elias Zerhouni: And then just a quick one, if you might, just squeeze in on the TCE candidate, 2001. Is there any update on timelines as to when that safety readout might come out? And then kind of how many dosing cohorts you might expect for that first safety readout? So, the first phase was six levels. We're in the fourth. We've accomplished the fourth. We're going to the fifth and sixth. Hopefully, we'll have that initial six levels, which are really important because at the end of the sixth, we get to what we think is the beginning of the efficacy range, even though we're observing, you know, whether or not we have results within these levels that we have now.
Speaker Change: Thanks, and then just a quick question, Mike just squeeze it in on the TCE, Canada 2001.
Is there any update on timelines as to when that safety readout might come out and then kind of how many dosing cohorts you might expect Florida safety readout.
Speaker Change: So the first phase six levels, where the fourth we've accomplished in the fourth will go into the fifth and sixth hopefully we'll have that our initial six levels, which are really important because at the end of the six we get to what we think is the beginning of the efficacy range, even though we are observing.
Speaker Change: You know whether or not we have results within these are levels that we have now and as I said before we should be able to complete that phase before the end of this year and then enter the efficacy part of the trial.
Elias Zerhouni: And as I said before, we should be able to complete that phase before the end of this year and then enter the efficacy part of the trial. Probably was still a basket trial, a few different cancers, solid cancers that where we have seen some signals and then eventually a cone down in phase 1B to one, possibly two cancers that are the most prominent. So that's the way the trial is designed.
Speaker Change: Probably with still a basket trial a few.
Speaker Change: Different cancers solid cancers that where we have seen some signals and then eventually calmed down and changed <unk> to one possibly two.
Speaker Change: Answers that are the most promising.
Speaker Change: The way the trial is designed.
Elias Zerhouni: Thanks, I have a question.
Speaker Change: Thanks for your question.
Speaker Change: Yeah.
Edward Tenthoff: Thank you. The next question comes from Edward Tenthoff with Piper Sandler. Please go ahead. Great. Thank you very much. I just want to confirm and make sure I'm getting this.
Speaker Change: Thank you.
Speaker Change: The next question comes from Edward <unk> with Piper Sandler. Please go ahead.
Speaker Change: Great. Thank you very much.
Edward: I just wanted to confirm and make sure I'm getting this right.
Edward Tenthoff: But what are next steps for the subcube obesity program, mass program? And then what is sort of the differential development plan for oral? How do you anticipate differentiating them? And what do you think the timing is for the study? Thank you. For both of them, we're working diligently to enter phase one. So, we're in the pre-IND phase for both of them, CMC phase for both of them, and they've been manufactured. We will have our GMP material ready. We're completing and interacting with the FDA about the design of these trials. Initially, it would pretty much be, you know, safety, as you know, with phase one trials, measuring side effects, measuring dose range, and so on.
Edward: What are the next steps for the sub Q.
Edward: Obesity program match program and then what is sort of a differential development plan.
Edward: For oral how how do you anticipate differentiating.
Edward: What do you think the timing is for that thank.
Edward: Thank you.
Edward: But both of them were working.
Edward: Working diligently to enter phase one so we are in the pre IND phase for both of them.
Edward: CMC phase from both of them and they've been manufactured where we will have at JMP.
Edward: Material ready well completing and interacting with the FDA about the design of these trials initially will pretty much be.
Edward: Safety.
Edward: As you know with phase one trials measuring side effects measuring those.
Edward: <unk> and so on so it's a prep work if you will.
Elias Zerhouni: So, it's prep work, if you will, in view of a more... more advanced development in phase 2a and 2b, but what we're talking about here is phase 1a and 2b. To answer that question that you're just asking, what is the right you know, PKPD and pharmacological behavior that we need to measure before we go further in phase two.
Edward: In law in view of say more.
Edward: More advanced development and phase two and to do that.
Edward: What we're talking about here is phase one Andy to answer that question that you just asking what is the right.
Edward: T K T D.
Edward: Pharmacological behavior that we need to measure it before we go further in phase two.
Edward: Okay.
Edward: Okay. Thank you.
Elias Zerhouni: The next question comes from Yael Chen with Laidlaw and Company. Please go ahead. Good afternoon, and thanks for taking the call. have two here. The first one is that you mentioned a little bit earlier in terms of power situation at this point. Could you elaborate a little bit more in terms of whether you see something more negative or positive at this point? And then I have a follow-up. Could you repeat the question? I'm not sure I got it. The government tariff situation, whether that has any effect. Yeah. Thank you.
Speaker Change: The next question comes from Yale Jen with Laidlaw and company. Please go ahead.
Yale Jen: Good afternoon, and thanks for taking the question.
Yale Jen: I have two here the first one is that.
Yale Jen: You mentioned earlier on in terms of power.
Yale Jen: At this point could you elaborate a little bit more in terms of what.
Yale Jen: Or do you see something more next April are positive at this point.
Yale Jen: And then I have a follow up question.
Yale Jen: Could you repeat the question Im not sure I got it.
Yale Jen: Did you have.
Yale Jen: Did the government situation.
Yale Jen: Yes.
Yale Jen: Yeah. Thank you.
Adam Logal: I'll let Adam answer for operations overseas and then I'll answer for R&D. Sure. Thanks, Elias. So for CARE-FTL, you know, we're obviously monitoring it. We're looking throughout our supply chain mostly for bioreference. You know, we do buy most of our products here from the U.S. Some of it is manufactured internationally. So we're looking at all the different alternatives to minimize any impact. But as we sit here today, we think it's a manageable risk, but we'll continue to monitor it. As it relates to our pharmaceutical products, we do import both Ryalde and we know Pfizer sells Ingenla and Genotropin, and they're manufactured in Ireland.
Speaker Change: Adam answer for operations overseas and not answer for R&D.
Yale Jen: Sure so.
Yale Jen: Sure. Thanks alia, so so for tariffs yeah, we're obviously monitoring it we're looking throughout our supply chain for mostly for bio reference.
Yale Jen: We do buy most of our products here from the U S. Some of it is manufactured internationally. So we're looking at all the different alternatives to minimize any impact, but as we sit here today, we think it's manageable.
Yale Jen: But we'll continue to monitor it as it relates to our pharmaceutical products we do.
Yale Jen: Import both reality and we know Pfizer ourselves.
Yale Jen: In general are in Jena, troponin and their manufacturing in Ireland. So continue to monitor those obviously the U S market.
Adam Logal: So continue to monitor those. Obviously, the U.S. market or the cost of goods is a minor component of the total cost structure, so we wouldn't expect it to have a significant impact. And obviously, HGH, the HGH franchise is a global franchise, so it only impacts the U.S.
Yale Jen: The cost of goods, it's a minor component of the total cost structure. So we wouldn't expect it to have a significant impact.
Yale Jen: And obviously, our hgh the Hh franchise as a global franchise. So it only impacts the U S market.
Elias Zerhouni: And for R&D, we primarily depend on European and also Chinese CROs and CDMOs. That has been essentially a minor amount of services that we need to obtain outside of the U.S. And as far as we can tell, we don't see a significant impact on R&D operations from tariffs. Okay, great. Thanks.
Yale Jen: And for R&D, we primarily depend on European and also.
Yale Jen: Chinese opera Cro's.
Yale Jen: <unk> and <unk>.
Yale Jen: That has been essentially in a minor amount of.
Yale Jen: I'll start with services that we need to obtain outside of the U S.
Yale Jen: And as far as we can tell we don't see it.
Yale Jen: And as you can impact on R&D operations in Paris.
Yale Jen: Okay, great. Thanks, and then maybe the follow up in terms of the.
Elias Zerhouni: And maybe the follow-up in terms of the... misdeveloped Do you anticipate it? So the target for the earlier stage of NASH or much more the later stage in the fibrosis. in the text. Right. That's a great question. So, we're still thinking through it, obviously. We are inclined to really use the product where it's most needed, and that is F3 or F3 NASH or F4, early F4 NASH, pre-cerotic NASH at the beginning. We do not believe there's as much of a need for F2 and F3, early F3, because of the alternatives that you have on the market.
Yale Jen: Great.
Yale Jen: Product.
Yale Jen: MS Development Alright.
Yale Jen: Do you anticipate it.
Yale Jen: So apologize for the already earlier stage Nash or much more at the later stage and fibrosis part of it in the text.
Yale Jen: Ryan that's a great question. So we're still thinking through it obviously we are.
Yale Jen: Incline to really use the product, where it's most needed and that is F three or <unk> Nash or F for early for Nash three cirrhotic Nash.
Yale Jen: At the beginning.
Yale Jen: Do not believe there is as much of a need for F. Two and that's to me earlier three because of the alternatives that you have on the market right now.
Elias Zerhouni: So that's where we are focusing our efforts, but we haven't yet decided. Okay, great. Thanks a lot. I appreciate the response. Thank you.
Yale Jen: So that's where we are focusing our efforts, but we havent yet decided about.
Yale Jen: Okay, great. Thanks, Scott I appreciate it.
Yale Jen: Ross.
Yale Jen: Thank you.
Michael Petusky: The next question comes from Michael Petusky with Barrington Research. Please go ahead. Adam, could you repeat, I'm sorry, it got a little garbled on my end, the revised guidance for BARDA revenue? Yeah, it's 38 to 44, which is down from 40 to 40. All right.
Speaker Change: The next question comes from Michael It does keep with Barrington Research. Please go ahead.
Michael It: Hey, Good evening, Hey, Adam could you repeat I'm sorry, it got a little garbled on my end the the Guy the revised guidance for the BARDA revenue.
Speaker Change: Yes.
Speaker Change: 38 to.
Speaker Change: <unk> 44, which was down from 40 to 48.
Speaker Change: Okay, Alright, and then on <unk> in general and just the the idea that Hey, we think this is a a.
Adam Logal: And then on Angela and just the idea that, hey, we think this is a one-quarter issue, I mean, is that based on sort of, you know, the script data or is it based on any kind of conversations with Pfizer, at least preliminary conversation with Pfizer sort of suggesting that? Can you just sort of dig into that a little bit for me? Sure. So, we talked to Pfizer at least once a quarter just to get general updates. They haven't indicated that there were anything in our first-quarter conversation. We haven't spoken with them since we've received these results.
Speaker Change: A one quarter issue I mean is that based on.
Speaker Change: Sort of.
Script data or or is it based on any kind of conversations with buys or at least preliminary conversations with pfizer sort of suggesting that or can you just yes for sure.
Speaker Change: That a little bit for me.
Speaker Change: Sure.
Speaker Change: We talked to Pfizer ER at least once a quarter just didn't get general updates. They have in indicated that there were anything in our in our first quarter conversation, we haven't spoken with them. Since we've received these results, but we do look at the script data in the script data continues to indicate a growing franchise, so and no significant changes.
Adam Logal: But we do look at the script data, and the script data continues to indicate a growing franchise, and no significant changes. So, we're not certain if it was anything on a gross to net basis that impacted it or on the manufacturing side, if there were any charges that came through there that impacted the gross profit share. I'll note that last year, the first quarter was the low quarter of the year, and, you know, we would expect, as I guided, that this was a non-recurring issue for us, and it'll rebound to historical.
Speaker Change: So we're not sure if it was anything on a gross to net basis that impacted it or on the.
Speaker Change: The.
Speaker Change: On the manufacturing side, if there were any any charges that came through there that impacted the gross profit share I'll note that last last year in the first quarter was the low quarter of the year end.
Speaker Change: We would expect as I guided that this was a nonrecurring ish.
Speaker Change: The issue for us and it'll it'll rebound to historical norms.
Speaker Change: Okay.
Adam Logal: All right, and then just on the diagnostics. If, I understand that the oncology will be sold, but if that asset had not been sold, would you have been able to get to sort of cash flow, you know, break even this year? Yeah, so part of our plans, Mike, we had a couple of different ones. One was to work to find a way to monetize it through a transaction like we entered into with LabCorp. The other was to continue to exit certain lines of testing and certain clients that have high demands for service that our scale just wouldn't allow us to reach.
Speaker Change: And then just on the.
Speaker Change: Our diagnostics business.
Speaker Change: And I understand that the oncology will be sold but if that business if that asset.
Speaker Change: Had not sold would you would you have been able to get to sort of cash flow.
Speaker Change: Breakeven this year or not.
Speaker Change: Yeah. So we part of our plans, Mike where we had a couple of different ones. One was to work to find a way to.
Speaker Change: Monetize it through a transaction like we entered into with five sorry with Labcorp. The other was to continue to.
Speaker Change: Exit certain lines of testing and in certain clients that have high demands for service that our scale just wouldn't allow us to reach so we had fully expected to get there and certainly could.
Adam Logal: So, you know, we had fully expected to get there and certainly could. Okay. All right. Very good. Thanks, guys.
Speaker Change: Okay, all right very good thanks, guys.
Operator: Thank you.
Speaker Change: Thank you.
Phillip Frost: This concludes our question and answer session.
Speaker Change: This concludes our question and answer session.
Phillip Frost: I would like to turn the conference back over to Dr. Phillip Frost, Chairman and Chief Executive Officer for any closing remarks. I want to thank you all for your participation, for your good questions, and we look forward to talking to you again at the end of the next quarter. Thank you very much.
Speaker Change: I would like to turn the conference back over to Doug <unk>, Chairman and Chief Executive Officer for any closing remarks.
Speaker Change: I wanted to thank you all for your participation.
Speaker Change: Good questions and we look forward to talking to you again at the end of the next quarter.
Wolfgang: Thank you Wolfgang.
Operator: The conference has now concluded. Thank you for attending today's presentation.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Operator: You may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].