OPK - NASDAQ

Good afternoon, and welcome to the OPKO Health Third Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would like to now turn the conference over to Yvonne Briggs. Please go ahead.

Thank you, operator, and 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 third quarter of 2025. 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, are subject to risks and uncertainties that could materially affect the company's results. Those forward-looking statements include, without limitation, the various risks described in the company's SEC filings, including the annual report on Form 10-K for the year ended December 31, 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, today, October 29, 2025. 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. Regarding the format of today's call, Dr. Phillip Frost, Chairman and Chief Executive Officer, will provide opening remarks. Dr. Elias

Good evening and thank you for joining us today. During the third quarter, OPKO Health continued to execute well against our strategic priorities. We completed the sale of BioReference Health's oncology division and related testing services. This transaction is a significant milestone designed to streamline our lab business and ensure profitable growth. The sale provided $192.5 million at the closing and $32.5 million in the performance-based earn-out. BioReference is now focused on our core clinical testing operations in the New York, New Jersey region and driving adoption of our 4Kscore test nationwide. We're devoting a portion of the sale proceeds to our stock repurchase program, reinforcing our commitment to increasing shareholder value. So far, during 2025, we repurchased $25.1 million worth of stock. As of September 30, we had $126 million remaining under this program. On the pharmaceutical side, we are advancing our pipeline of innovative therapeutics with 4 candidates now in the clinic and several more in the pre-IND stage. We're pleased to have significant partnerships to provide nondilutive funding to support the development process for several of these programs. This morning, we announced a research collaboration and license agreement with Regeneron, a leader and innovator in antibody-based therapies. This program will leverage ModeX's MSTAR platform with Regeneron's proprietary binders to discover and develop multispecific antibodies that allow us to explore several indications of mutual interest. Currently, ModeX has 3 programs in Phase I clinical trials. Our most recent candidate, MDX2004, a multispecific immune rejuvenator, entered the clinic last month. Our most advanced immuno-oncology medicine, MDX2001 is a T cell engager enhancer directed at 2 tumor antigens, CMet and Trop2 found on a variety of solid tumors. An abstract on this program was presented at the recent ESMO meeting in Berlin, Germany. It has advanced to its fifth cycle of escalation, which is approximately tenfold higher than the initial starting dose with acceptable safety and tolerability. Based on the outcome of these studies, we anticipate further Phase Ib expansion cohorts for next year. Our EBV vaccine being developed in partnership with Merck has advanced for immunogenicity, safety and tolerability evaluation in Phase I human trials. Enrollment in this ongoing trial is progressing well, and the data will inform the Phase II trial design. Our next immuno-oncology candidate, MDX2003, a tetraspecific T cell engager expander that targets B-cell leukemia and lymphoma. We expect this compound to enter the clinic early next year after appropriate regulatory review. Finally, MDX2301 is our bispecific tetravalent antibody designed to prevent and treat COVID infections. Funded by BARDA, we expect Phase I safety and immunogenicity studies to begin early next year. The ModeX multispecific COVID antibody neutralizes all known strains of the virus, including the most recent variants. It is designed to confer broad protection against evolving outbreaks, particularly for subjects with underlying immune impairment such as cancer patients, diabetics and the elderly, thus having great medical value potentially and global health impact. Our collaboration with BARDA continues to advance the development of broadly protective multispecific antibodies for both COVID and influenza viruses. We're progressing our development of OPK-88006 for the treatment of MASH and obesity for both subcutaneous and oral administration. We have partnered with Entera Bio for the development of the oral formulation. The subcutaneous program is expected to enter the clinic in early 2026 with the oral formulation to follow later that year. Our international operations, including OPKO Health Iberoamerica and EirGen Pharma continue to provide steady sales growth and meaningful cash flow to assist in funding our R&D efforts. Overall, we remain highly committed to maximizing shareholder value. Through strategic actions such as the sale of select BioReference assets, the execution of our share repurchase program, the advancement of the ModeX portfolio of products in clinical trials and a new ModeX R&D alliance, we are focusing our operations to provide growth opportunities while returning capital to investors. We are confident in our strategic direction, our team and our ability to deliver on our milestones. With that overview, I'll turn the call over to Elias. Elias?

Thank you, Phil, and good afternoon, everyone. As Phil mentioned, in mid-September, we closed the sale of BioReference Health oncology assets to Labcorp. BioReference now operates as a streamlined clinical laboratory focused on its core testing services in the New York, New Jersey region and correctional facilities nationwide. In addition, its 4Kscore test franchise for prostate cancer risk assessment is poised for growth with the recent FDA label expansion, allowing use of the test without the requirement of a digital rectal exam, which opens a significant new market of primary care physicians who currently perform over 90% of PSA screening tests that rarely performed digital rectal exams. Excluding the assets sold to LabCorp, BioReference testing volume increased by approximately 5.3% in the third quarter compared with the year ago period. Our approach is to increase profitability by focusing on and expanding existing customer segments, optimizing our test menu to increase our operating margins and implementing additional operational efficiencies where possible. We're also strengthening our market position by forging novel relationships with additional ACOs, IPAs, FQHCs, regional health system and specialty health care companies. In addition, we have begun pursuing new revenue streams to bolster growth such as direct-to-consumer lab testing companies, employer-based testing and early phase clinical trials. The 4Kscore test volume increased more than 20% in the third quarter versus the comparable year ago period. As for our sustained efforts to drive operational efficiency, the BioReference employee headcount now stands just over 1,500 people, and this represents a 25% reduction from January. As a result of improved margins realized by these expense reduction efforts and strategic divestitures, BioReference is now well positioned for sustained growth and profitability going forward. Now, turning to our Therapeutics segment. We were delighted to enter into a license and collaboration agreement with Regeneron. Under this collaboration, we will apply our MSTAR platform with Regeneron's proprietary binders to develop medicines capable of targeting multiple biological pathways in a single molecule that will include disease indications of mutual interest to Regeneron and ModeX Therapeutics. Now, Regeneron will be responsible for funding the entire development process and all commercialization efforts. As part of the agreement, we will receive milestone payments for research expenses, development, clinical, regulatory and commercial achievements for each program, which taken together could total over $1 billion if multiple programs successfully advance. In addition, we'll be entitled to receive tiered royalties up to the low double digits on global net sales. We're particularly excited to be working with Regeneron given its leadership and experience in antibody therapeutics. I myself and some of the ModeX teams have already worked with Regeneron's R&D group in the past, and we look forward to reconnecting and expanding the scope of our collective efforts. Now, moving to the most advanced clinical study. Our collaboration with Merck on the Phase I Epstein-Barr Virus vaccine trial is progressing according to plan and preliminary safety, tolerability and immunogenicity data are becoming available. Over the coming months, this data will guide Merck's decision on the design and execution of Phase II studies. We have several programs in our immuno-oncology and immunology portfolio that are advancing in development. Our lead product is MDX2001, a first-in-class tetraspecific T cell engager as described by Phil, with 2 cancer targets, CMet and Trop2 and 2 T cell engagers, CD3 and CD28. It has progressed to its fifth dose level, which is 10x the starting dose in a Phase I clinical trial. We are noting acceptable safety data at this level. After enrollment of the highest possible dose cohort, we will focus on assessing signals of efficacy in select tumors in an expansion cohort. We're also pleased to present a poster on our progress with MDX2001 at ESMO 2025. MDX2004 now is a new first-in-class multispecific immune rejuvenator that has the potential to treat a variety of oncology and immunology indications. MDX2004 stimulates T cells to proliferate through 3 signaling pathways to achieve optimal activation and proliferation. Of note, it is a first-in-class multispecific antibody directed to CD3/CD28 and 4-1BB that stimulates T stem cells to undergo self-renewal and give rise to mature T cells, and that is the reason for its designation as an immune rejuvenator. We announced this week that Phase I studies on this new medicine have begun. The first patient has been administered drug at the starting dose in Australia. And this trial marks clearly another significant milestone for our technology platform. And next week, we'll make a presentation on MDX2004 at the Society for Immunotherapy of Cancer Conference or SITC. MDX2003, a tetraspecific CD3/CD28 T cell engager for lymphoma and leukemia targeting both CD19 and CD20 is in the pre-IND stage, and we expect this program to enter the clinic early next year. We continue to work with BARDA on our COVID and influenza programs. The main focus of these programs is to advance multispecific antibody protein candidates that provide broad and potent coverage against all known circulating strains in Phase I clinical trials. Our work to develop the COVID multispecific antibody is focused on the unmet need in patients with underlying immune impairment, as Phil mentioned, such as patients with cancer, diabetes or the elderly, who respond poorly to vaccination and are highly susceptible to severe complications or death from COVID infection, and we anticipate commencing Phase I studies early next year. In addition, we are advancing our pre-IND influenza program against both flu A and flu B to achieve universal protection and we'll seek additional funding to accelerate its clinical development. Through the close of the third quarter, we have received $22 million in non-dilutive funding from BARDA for these 2 programs. We are also continuing our development efforts with respect to OPK-88006, which is a novel long-acting GLP-1 glucagon receptor dual agonist to treat MASH and obesity. We're developing a subcutaneous formulation and in collaboration with Entera Bio, we're also developing an oral formulation. At the ENDO conference in July, we presented favorable pharmacologic and pharmacokinetic in vivo animal data, demonstrating excellent bioavailability for the oral tablet formulation. We're in the pre-IND stage with both of these programs and anticipate entering the clinic next year. We're also working with Entera Bio on an oral GLP-2 tablet for short bowel syndrome. Recent positive pharmacokinetic data from preclinical animal models indicate an extended half-life and robust oral bioavailability, which results -- these results were presented in September at ESPEN or the European Society for Clinical Nutrition and Metabolism Congress. This program has the potential to transform the treatment paradigm for patients with short bowel syndrome who currently rely on daily injections. Our international pharmaceutical operations continue to provide operating cash flows and despite foreign currency pressures have executed their growth plans in local currencies. Rayaldee has offset the volume declines resulting from the Inflation Reduction Act through the realization of a higher net realized price and achieved year-over-year revenue growth. So in conclusion, we're really pleased with OPKO's strategic direction with BioReference poised for profitability and growth as well as the advancement of our pharmaceutical programs and partnerships into clinical trials. So now, let me turn the call over to Adam to discuss our financial results. Adam?

Thank you, Elias. We ended the third quarter with over $428 million in cash, cash equivalents and restricted cash, more than sufficient to fund our ongoing operations and development plans. Capital allocation remains on track within our plans. Our strong cash position allowed us to repurchase 11.1 million shares during the third quarter of 2025. And for the full year, we have repurchased nearly 25 million shares for approximately $33.5 million. We have $126 million remaining authorized under our buyback program and expect to continue to make additional common stock repurchases throughout the end of the year. We have deployed nearly $100 million so far this year in convertible note repurchases and conversions and common stock repurchases and over $215 million since the start of 2024, demonstrating our commitment to strengthening our balance sheet and returning capital to our shareholders. Let us turn to our financial performance, starting with our Diagnostics business. Revenue for Q3 2025 was $95.2 million, including $19.5 million from the oncology assets recently sold to Labcorp. This compares to $121.3 million in Q3 2024, with the decline primarily due to revenue attributable to the Labcorp transactions that closed in September 2024 and 2025. Revenue in our continuing business has delivered strong growth, highlighted by an increase in 4Kscore volumes and resulting revenues of nearly 20%. Total costs and expenses were $115.2 million, down from $184.2 million last year. This includes $25.2 million related to the oncology assets that we sold and approximately $4.2 million in expected nonrecurring costs for severance during the 2025 quarter. Costs and expenses were partially offset by the gains recorded related to our transactions with Labcorp with $101.6 million in gains recorded in 2025 and $121.5 million recorded in the 2024 quarter. As a result, our diagnostic operating income improved to $81.6 million compared to $58.5 million in the third quarter of 2024. Depreciation and amortization expense came in at $4.7 million, down from $6.1 million in 2024. Importantly, the actions we've taken throughout the year are expected to deliver over $25 million in annualized cost savings, and we remain on track to achieve breakeven operating results in Q4 2025 and are well positioned as we head into 2026 for sustained and growing profitability. Turning to our Pharmaceutical business. Revenue was $56.4 million, up 8% or $4.1 million from 2024's $52.4 million. Product revenue was $37.7 million, down slightly from 2024's $39.1 million, reflecting lower sales in Chile as well as foreign currency headwinds within our Latin American businesses. These sales were partially offset by increased revenue from Rayaldee. Rayaldee contributed $7.5 million during Q3 2025, a 29% increase from 2024's $5.8 million, primarily reflecting lower government rebates during the 2025 period, which more than offset an approximately 20% decline in volumes. IP transfer revenue rose to $18.7 million, up from $13.2 million, which includes our Pfizer profit share payments of $8.8 million, reflecting a 25% increase from 2024's $7 million. We remain optimistic about the efforts Pfizer has made and we expect them to make throughout the remainder of 2025 and into 2026 on the effectiveness of their global commercialization program. In addition, BARDA funding increased to $8.2 million from $5.5 million, reflecting expanded activity for our infectious disease antibody programs. Costs and expenses were $80.6 million, down from $84.6 million, driven by cost containment activities throughout our Iberoamerica and Rayaldee commercial organizations, partially offset by increased R&D investment. R&D for 2025 totaled $29.6 million, up slightly from $28.2 million for the 2024 quarter, primarily due to our ModeX development activities. As a result, our pharmaceutical operating loss was $24.2 million, a 25% improvement compared to last year's operating loss of $32.2 million. Depreciation and amortization expense was $18 million in both periods. For our consolidated financial results, consolidated operating income of $48.1 million improved from 2024's $14.2 million as a result of the improved results at BioReference. Both periods benefit from gains from the disposition of assets, resulting in net income in Q3 2025 of $21.6 million or $0.03 per basic and diluted share compared to $24.9 million or $0.04 per basic share and $0.03 per diluted share in Q3 2024. You will recall the 2024 period benefited from gains on certain underlying investments. Looking forward, we're continuing to execute our multi-phase plan to drive profitability within our Diagnostics segment by reducing the fixed infrastructure cost and improving operating efficiency. Following the oncology transaction closing in September, the remaining BioReference business has a clear path to cash flow positive and profitable growth, excluding any nonrecurring or noncash items. We are resetting the Q4 outlook for 2025 to reflect the disposition of the oncology business. As a result, we expect total revenue to be between $135 million to $140 million, with revenue from services of $70 million to $75 million, revenue from products of $40 million to $45 million and other revenue of $25 million to $30 million, including our Pfizer profit share of $10 million to $12 million and revenue from BARDA of $7 million to $9 million. Total costs and expenses are expected to be between $175 million and $180 million, excluding any nonrecurring or restructuring costs. Research and development expense is expected to be between $30 million and $35 million, offset partially by the BARDA revenue. And depreciation and amortization expense is expected to be approximately $24 million. As we look forward to 2026, we're providing some high-level guidance, which will more fully detail early in 2026. We expect BioReference to be profitable and to grow revenue in the low single-digit percentages. We expect to see our in-line pharmaceutical businesses, including Rayaldee to grow in the mid-single-digit percentages and to improve its operating income by approximately low -- by low double-digit percentages. We expect NGENLA profit share payments to increase to approximately $32 million to $35 million. Finally, we plan to invest up to $100 million in our R&D programs, net of any partnering reimbursement as we expect to have up to 6 Phase I programs enrolling patients during 2026. This concludes our prepared remarks. Operator, let's open the call for some questions.

[Operator Instructions] Our first question comes from Maury Raycroft of Jefferies.

Congrats on the progress. I had one for MDX2001. Wondering if you could say how many patients you've dosed at the fifth dose level? And will you proceed to dose level 6 with the program? And is there anything more you can share on the safety profile and potentially whether you're seeing any efficacy signals at this point as well?

Well, we've -- I'll let Gary answer that question. Gary, would you like to give those details?

Sure.

Gary Nabel is on the line.

Gary Nabel, I'm the CEO of ModeX. We're in our fifth patient at the fifth dose level. And again, when the suitable observation period has been complete, then we'd go on to the next. In terms of signals, I think at this point, it would be probably not wise to comment on efficacy because any responses that you see with this small number of patients are anecdotal. And I think that really the time to take a look at efficacy would be, as Elias and Phil were mentioned, when we go to the expansion cohorts in Phase Ib. We're just as interested as you are and can't wait to get those results, but I'm afraid we just have to follow the process, and we'll certainly share any news as soon as it becomes available.

Just to be clear, Maury, Gary is mentioning 5 patients at the current dose level, but the total number of patients is higher, obviously, that we've exposed. And obviously, we're interested in continuing, which based on all the data we have.

Got it. Yes. It’s okay.

Total numbers are close to 30 or so, but yes, 5 in this cohort, as Elias mentioned.

Okay. And you will go to dose level 6 as well?

We would expect.

Okay. Okay. That's helpful. And I had a quick question on the 4Kscore. For that label expansion and the 20% growth that you mentioned, is the growth directly related to the expansion? And how should we think about the importance of this product as a contributor going forward?

Yes, that's a good question, Maury. No, it's not. The growth is really based on the former label. The label was really changed this quarter. And obviously, what it does is it really expands the market to the primary care doctors. In the past, the urologists would have to order the test because they had to determine whether they need to do biopsy or MRI. Now, because you don't require the digital rectal exam anymore, which we've proven with the data that we have accumulated, Dr. [ Jane Hsiao ] was telling the FDA that it didn't add anything much to the accuracy of the test. And so that was a point that the PCPs, the primary care doctors kept asking us, we would like to have the test perform after we do our PSAs. And that is the expansion market that we're talking about. But we're just at the beginning of doing that. And as you know, the 4Kscore franchise is a national one. So it takes time to get going with that. But it's doing well on its own with the old label, and we hope it will grow significantly with the new label.

Yes, Maury, just to put a little bit of an explanation point on that. Through June, I think we were up either 12% or 14%. And we saw the acceleration picking up before that label change came through. So we are certainly excited about that. And obviously, we are working with payers to ensure we align volume potential with the payer policies as it relates to the DRE.

Got it. Okay. That's helpful. And is this something you could provide more granularity on going forward just with helping us better track the progress there.

Yes, for sure.

Our next question comes from Yi Chen of H.C. Wainwright.

My first question is, could you give us some more color on the Regeneron collaboration, whether the program is exclusively focused on oncology or it could be some candidates in other therapeutic sectors? And also, can you comment on how many total programs are currently ongoing?

Let me start and then I'll give it over to you. So there's nothing exclusive on the field, oncology or immunology. We've really agreed to work on 4 programs, which may have more than one product, obviously, but 4 specific programs for specific indications, which cover metabolism, oncology as well as immunology. And with that, I'll turn it over to Gary to give you more specifications on how exactly the collaboration is going to work forward.

Yes. Thanks, Elias. As Elias mentioned, one of the reasons we're excited about this collaboration is that it will allow us to work in areas that we haven't worked on in the past, and they would include the areas of metabolism and more activity in the area of immunology as well as some selected oncology opportunities. As you know, Regeneron has a very deep library of human antibodies that are monoclonals. We have the capacity to put those together into the formats that allow us to make multispecifics. So together, we can do things that neither of us can do alone. And that's always the mark of a good collaboration. As Elias pointed out and as in our press release, there are 4 targets to start with, but the agreement is written in a way where that can be expanded should we find something of interest. So a lot of work to do to explore the initial candidates, but we're very excited to work with them because of their deep expertise in the antibody area and their success in bringing products to patients in the past.

Got it. And could you tell us whether the milestone payments include both preclinical as well as clinical milestones? And also, could you give us a rough estimate as to the time frame to -- for the first milestone? Is this something we can reasonably expect to occur in 2026?

The answer is yes and yes. So we have preclinical milestones and then post Phase I milestones if Regeneron takes it over. Regeneron will reimburse us for all the preclinical studies and costs, and then there will be milestones for progression within that all the way to Phase I. And then after that, they take it and there will be the typical milestones, development, approval and commercial following that.

Our next question comes from Kevin DeGeeter of Ladenburg Thalmann.

Maybe 2 for me. The first one is on MDX2001. Can you walk us through your current thinking on how you're thinking looking at patient selection for the Phase Ib expansion cohorts? Are there specific tumor types that makes sense based on how you think about the profile of this molecule?

Yes. Well, based on what we've done so far, we obviously read out the safety and tolerability in different types of tumors and then we narrow it down. But I'll let Gary be more specific on that. Gary?

Yes. I would say there are criteria that we apply in the first part of Phase I, where you're just trying to explore and confirm safety, we're pretty agnostic to the tumor types. Once we've maximized the dose and we're seeing -- and once we see biologic activity in our patients, what we then do is we look at the tumor types where we see the highest levels of CMet and Trop2 and also the tumor types that are -- have shown, I'd say, the property of being more immunogenic that they are more likely to respond to immune therapies. We will ultimately explore the harder targets as well, but we'd like to establish efficacy where we have a better chance of succeeding first. High on our list are tumors like lung cancer, like non-small cell lung cancer is very high on our list. And then depending on availability of patients, tumors like renal cell carcinoma and perhaps some of the PD-1 failures in melanoma. But after that, any tumor type, and there are 13 different tumor types that express CMet and Trop2, we essentially will go down that list. And at some point, we may do what we call an expanded basket trial as well where we look for signals of regression. But the first expansion cohorts will be based on levels of expression and expected response to immune therapy in humans.

That's very helpful. And then as my follow-up question. Adam, with regard to the guidance of getting the diagnostic service business to profitability, how do you -- what's sort of the baked-in assumption with regard to the sustainable gross margin of the -- your remaining diagnostic services assets?

Yes. So gross margins, we expect Q4 to be in the mid-20s. And then with the main reason being in the mid-20s and that the high 20s is just the challenges around the holiday season in December. In the first half of next year, we would expect that number to get into the high 20s to low 30s.

Our next question comes from Ted Tenthoff of Piper Sandler.

Congrats on all the progress, including the new Regeneron deal. It really feels to me like ModeX just as the gift that keeps giving. Is there other updates that maybe could be happening on the partner front in infectious diseases beyond obviously, the great EBV deal with Merck?

I'll let Gary respond. Gary, can you respond?

Yes. Well, needless to say, we do -- as you point out, we do have other infectious disease targets that we're working on is besides COVID. We're very encouraged by the early data with flu, with the caveat being that, that's all preclinical at this point. But with BARDA, we're hoping to move those products into Phase I as well. We also have a program for HIV and have discussions with the various major players, the pharmas involved in HIV, particularly now looking at opportunities to either improve treatments or eventually to try to affect cure in some patients with some of our immune therapies. And then the last thing I should point out is that our new molecule, MDX2004 that just started in the clinic this week as an immune rejuvenator has potential for treating a variety of different viral infections and nonviral infections, a rejuvenator of the immune system. So after we establish the safety, which is the goal of the first studies, we'll be exploring that as well. So we continue to update partners or potential partners on our progress. And at the appropriate time, we'd be delighted to work together with the relevant experts in the field.

That's really helpful. And I'm so glad you brought up MDX2004. What are other indications where it might make sense to develop this unique multi-specific?

Well, there are a number. One that comes to mind is hepatitis B. We know, for example, that hepatitis B, a certain percentage of cases will clear with time if the immune response is strong enough. And so again, after safety is addressed, that would be one area that we would want to explore further, and there are a variety of ways to do that. Even for chronic diseases, even where there's chronic infection, for example, in diabetics, where the immune system is really not functioning correctly, there's some potential value to providing a boost to the immune system to protect against everyday pathogens and perhaps even to enhance vaccine elicited responses. HIV -- chronic HIV is another example. So we do think for MDX2004, in addition to the immuno-oncology applications, that's an aspect that we would be very interested in doing further studies.

And sorry to keep asking, but each of your answers prompts another question. Could you envision a day where you combine MDX2004 with some multispecific cancer assets?

Yes, it's a great question. And the answer is yes. We could imagine using combinations of that sort. And it doesn't need to be limited to just the ModeX immunotherapies. You could imagine doing combinations with PD-1s, with CAR T cells. So there is a range of potential, obviously, early days. We need to get some experimental data for it, but there are a number of indications that I think would be worthy of further consideration.

Our next question comes from Yale Jen of Laidlaw & Co.

Just a few here. The first one is in terms of the EBV virus vaccine data, first Phase I data, do you anticipate to report that data in near term? Or you think that Merck may not report that data just to go ahead for the Phase II?

Yes, yes, you should, you should because you're on the coordinating committee.

Yes. Thanks, Elias, and thank you for the question. We're in very close contact with Merck. Merck is obviously responsible for executing the trials, but we work together closely and look at the data and discuss what is the best way forward. The decision about when and where to report will, of course, be Merck's. It is something we've discussed, and I think they understand that there is an obligation to present data that's part of the NIH guidelines on doing clinical studies in humans. So I think that -- and as you know, Merck is very science and data-driven. So I would expect that at the right time, which I think is when the data is complete and we can understand what it means, I would be surprised if they didn't report it. And I -- how that relates to the start of Phase II, I can't say at this point. My guess is that it would be somewhere within a time frame where they've made their decision and would be progressing the study. But they're very science-driven and I think, responsible in their clinical development.

And maybe a follow-up on that is that would either Merck or you guys will at least inform the public that the program we are heading to or starting Phase II study?

When the decision is made for sure, yes. I think that will be shared. And for those Phase II studies, as you can imagine, for EBV, you have a select population that you're going to be studying. You have -- you're looking for subjects who are EBV negative, and that's actually a minority of our population. And you're also looking for patients who are highly susceptible to the effects of infection and particularly to infectious mono. So I think that you would almost have to make the trial known to those people. I think many of them will be early college aged students who will be at risk of acquiring infectious mono when they start school and they're exposed to EBV through their classmates. So I think very much so it would be something that would be out in the public domain once it starts.

Okay. Great. That's very helpful. Maybe the last question here is that you guys mentioned that you have a program which is targeting CD19 and CD20 together. Now the question is that at least in many tumors -- cancers that the CD19 and CD20 seems very much overlap in terms of their time of expression in the cells progresses. So what was the rationale in terms of design this product with highly sort of overlapping expression period. Just curious about that.

Yes. I'll just try -- go ahead, Gary. Go ahead.

No, go ahead, Elias.

I just wanted to -- no, I just want to correct something. It's not always overlapping. Actually, we know that in cases of lymphoma and leukemia, sometimes what you see the CD19 disappears and then there is a clonal expansion of CD20. Or if you do CD20 only, you can see CD20 going down and then a clonal expansion of CD19. That's the idea of having 2 targets because then you prevent or delay the appearance of resistant variants. Correct me if I'm wrong, Gary, but I thought that was clear that we're not addressing tumors that have both CD19 and CD20. Obviously, some will have that. But the population that resist therapy often has the emergence of a clonal CD20 or a clonal CD19 that then recurs that makes the disease recurrent. Gary, go ahead, if I missed anything.

Yes. No, no, I think you said it. I think another way to state it is that when many lymphomas arise, you're correct that there is both CD19 and CD20 on those lymphomas. But what we're seeing increasingly is that after treatment and in some cases, with glofitamab as a T cell engager or with CAR T cells, which often will target CD19, sometimes CD20. Once you start selecting against those tumors, you then promote the outgrowth of variants that now are downregulating the first antigen, in many cases, CD19, and they become resistant to the therapy. So the idea would be that at the start, this dual targeted antibody would allow us to treat the escape mutants from those other therapies. Now should it prove to be effective, and we think there's a good chance it could, if it works, then it could allow you to move up in the treatment line that you would actually use that earlier so that you wouldn't give the tumors a chance to develop -- to down modulate and to escape. So this is a way of -- in the long run, we hope of preventing tumor escape and to provide better upfront coverage. There's already some data in the CAR T cell world that some of the dual-targeted CAR T cells say, against CD19 and CD20 do better than CD19 alone. Our approach now does this with an engager-like molecule, which is a lot easier to administer to patients. And so we think it's worth advancing this for more -- so it would be available for more patients.

Let me add one point that may escape a lot of folks. Our [ quadri-specific ] does not need to engage both CD19 and CD20 to be active. If it engages CD19 alone, it will be effective. If it engages CD20 alone, it will be effective. It doesn't have to be simultaneous. And that's really an important concept because what you see early on, you have a dominant clone, dominant CD19, 90% of the cells are CD19 positive. And then you may have a much lower proportion of CD20s. It doesn't matter because our antibody will attack the CD19, they will regress and then the CD20 will emerge. And then at that point, you attack the CD20 or if they're both equivalently present, then both of them may be engaged and attacked at the same time. You see what I'm saying. We don't depend on having both the CD19 and the CD20 engaged for the therapy to be effective. I think that's an important basic concept.

Okay. Great. That's a very clear explanation. I really appreciate that.

By the way, it's the same for MDX2001. You don't have to engage both CMet and Trop2 to make it happen, but it does help in controlling the heterogeneity of the disease, depending on how many CMet or Trop2 receptors you have. The same is true for CD19 and CD20.

Our next question comes from Michael Petusky of Barrington Research.

Adam, I just want to clarify something real quick. The $4.2 million in severance, that's in addition to the $25.2 million of expenses -- costs and expenses associated with the assets that are being sold. Is that correct?

That's right.

All right. Great. And then I guess one of the earlier callers sort of alluded to increased granularity. I'm going to actually give it a shot and ask for it now. Would you guys be willing to share sort of year-to-date revs through 9 months of 4Kscore or third quarter revenue associated with the test?

So we haven't separately disclosed it yet, Mike, but we certainly are -- we'll take it back and we'll start to provide more clarity there.

Okay. Could I ask in terms of the -- and I really super appreciate the '26 high-level guide. In terms of the low single-digit growth that you guys expect in the lab business, what are you assuming around volume growth and pricing? I mean, I don't know, is pricing sort of a neutral, a bad guy? Can you just sort of talk about what you expect in terms of volume growth and pricing for '26?

Yes. Thanks for the question on that one. So we would expect volume growth to be in the low single-digit numbers. We're assuming stable pricing. I think as we see more success with some of the conversations around 4Kscore, we see potential upside for overall reimbursement, which would drive up total ASPs. But beyond that change, ASPs would be pretty consistent with what we've seen this year.

Okay. And then just last one and sticking with the ‘26 high-level guide. The Pfizer profit share guide that you gave, to me, feels a little lighter than I would have guessed. Can you just talk about what's going on there in terms of conversion to weekly and just any other sort of data points you can share around that relationship and that effort to get that business going?

Yes. So the overall market, I think, is converting slower than what we thought and I think what many in the industry thought. There's not many daily patients today that are converting as quickly as what we expected to see in the original models. So that phenomenon is going to continue. I think even though there's 3 players out there with us and 2 competitors, we think the market is -- should start to pick up steam, but it just -- it hasn't. We think Pfizer has been done well from a global perspective. We think based on the data we look at from Symphony and IMS, we think that data shows that Pfizer has about 1/3 of the overall long-acting market. So they're competing globally quite well. They've got a bunch of efforts to increase share in each one of the territories they've got the product in, and we think they're going to be successful. We've talked a little bit about the expansion trials that will increase the number of indications that it will have access to, and we know they're pursuing those and hope to get approval for those in a few years' time. We've taken a 10% to 15% increase over current year forecast for the profit share. Certainly, we'd love to see it come in better than that, but I think that's consistent with what we saw this quarter, in the last couple of quarters where we think we'll be at, at this time. Hopefully, that helps.

Great. It really does. Let me just sneak one last one in. Just around -- and this should be a quick answer, I think. 4Kscore, I think you said the test volumes were up 20% in the quarter. Would revenue be up approximately 20%? Or would that be lagging that 20% figure?

It's similar, both the same.

This concludes our question-and-answer session. I would now like to turn the conference back over to Dr. Frost for any closing remarks.

Well, I want to thank everyone for your participation and good questions, and we look forward to continuing the conversation 3 months from now. Thank you.