Opko Health, Inc. Q2 FY2021 Earnings Call

Good afternoon, everyone, and welcome to the OPKO Health Second Quarter 2021 Financial Results Conference Call. I would now like to hand the floor over to your host, Ms. Yvonne Briggs with LHA. Please proceed.

Thank you, operator, and good afternoon. This is Yvonne Briggs with LHA. Thank you all for joining today's call to discuss OPKO Health's financial results for the second quarter of 2021. I'd like to remind you that any statements made during this call by management other than statements of historical fact will be considered forward-looking and as such, will be subject to risks and uncertainties that could materially affect the Company's expected results. Those forward-looking statements include, without limitation, the various risks described in the company's SEC filings, including the Annual Report on Form 10-K for the year-ended December 31, 2020 and in subsequently filed SEC reports. Importantly, this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, today, July 29, 2021. 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. Before we begin, let me review the format for today's call. Dr. Phillip Frost, Chairman and Chief Executive Officer, will open the call; and Steve Rubin, OPKO's Executive Vice President, will provide a business update and pipeline review. And then Dr. Jon Cohen will discuss BioReference Laboratories. After that, Adam Logal, OPKO's CFO, will review the company's first quarter financial results, and then we'll open up the call for questions. Now I'd like to turn the call over to Dr. Frost.

Good afternoon and thank you for joining the call today. We're here to discuss our second quarter results, which were right on plan with the financial guidance Adam provided during our last quarterly call. I'll start with BioReference Laboratories. During Q2, BRL generated solid results, even as overall demand for COVID-19 testing declined. BRL continues to meet the testing needs of many significant customers who are now focused on large-scale screening in support of the transition from diagnosis to surveillance. Due to BRL's ability to provide accurate test results efficiently, it remains the test provider of choice for large public school systems, as well as all the major sports leagues who are continuing to test this year and possibly into 2022. Furthermore, testing in the travel industry is likely to continue into next year and we are pleased to announce our agreement with Royal Caribbean Group. This, so far as we know, is the first COVID-19 testing program for the cruise industry. Due to increased awareness of the high quality of its efficient service, BRL's core business along with its specialty testing in oncology, urology, women's health and genetics, all continue to rebound toward pre-pandemic levels. It's gratifying to see BRL convert many new COVID-19 relationships into ongoing customers for its core diagnostics offering. I'll let Jon speak to the great strides we're making with Scarlet Health and our on-demand diagnostic service to expand digital health access to the patients. We are enthusiastic about this initiative as we continue to position diagnostic services as a key component in the continuum of care to improve patient outcomes. As for our pharmaceutical business, we look forward to SymmetriX's upcoming PDUFA date in October, followed by determinations from the European and Japanese Regulatory Authorities next year. As I mentioned recently, during our Annual Meeting, we've undertaken several initiatives to restore growth to our RAYALDEE franchise, including rebalancing our sales regions, more focused physician training and targeting, and updating our message to highlight the benefits of initiating treatment earlier in the disease cycle. We are pleased that we recently announced our agreement with Nicoya Therapeutics to develop and commercialize RAYALDEE in Mainland China, Hong Kong, Macau, and Taiwan. Infection rates for COVID-19 have recently increased throughout the country, and enrollment levels for our RAYALDEE trial in COVID-19 outpatients have picked up. The primary efficacy endpoints for the trial include raising and maintaining serum total 25-hydroxy vitamin D levels within the targeted range of 50 to 100 nanograms per ml, and time to resolution of key COVID-19 symptoms. Numerous independent studies have reported an inverse correlation between vitamin D status and COVID-19 risk and severity. RAYALDEE can represent a great option for patients to quickly and safely raise vitamin D to sufficient levels, especially in cases of CKD and obesity. Finally, I'd like to mention that as part of our strategy to outlicense certain early-stage pharmaceutical assets, we executed an agreement with CAMP4 for the development and commercialization of our antagonist technology. We continue to pursue other licensing opportunities like this one in order to monetize and leverage our early-stage assets. I'll now turn the call over to Steven Rubin, who will provide further commentary on our pharmaceutical business.

Thank you, Phil. And good afternoon, everyone. Thank you all for joining us today. As Phil mentioned, we are quite pleased with our second quarter financial results. BioReference Laboratories' core business is trending back to pre-pandemic volumes while still leveraging its COVID-19 testing capabilities with certain large customers. Somatrogon is our once-weekly long-acting recombinant human growth hormone for the treatment of pediatric patients with growth hormone deficiency or GHD. As you know, Pfizer, our global commercial partner for Somatrogon, submitted the initial biologics license application to the FDA, which was accepted and assigned a PDUFA action date in October 2021. In addition, Pfizer expects decisions from both the European Commission and Japanese regulators next year. Under our agreement with Pfizer, OPKO is eligible to receive up to $275 million on the achievement of certain regulatory and pricing milestones. These milestones range from $20 million to $90 million each and are catalyzed by regulatory approval in the U.S., and regulatory and pricing determinations in other major markets. In addition, upon launch, we are entitled to regional tiered gross profit sharing on sales for both Somatrogon and Pfizer's daily GHD drug Genotropin. With respect to RAYALDEE, the numbers for the quarter break down as follows. Total prescriptions for RAYALDEE in Q2 2021, as reported by IQVIA, were approximately 11,700, representing a decrease of approximately 36% compared with Q2 of 2020 and a decrease of approximately 5% compared with Q1 of 2021. RAYALDEE sales continue to be impacted by challenges in onboarding new patients, although this trend is starting to reverse. New patient starts decreased by 5.2% in Q2 versus Q1. Since the product was launched, nearly 26,700 patients have had RAYALDEE prescribed by approximately 3,800 physicians. More than 150 physicians, or nearly 4% of the total number of prescribers, were new RAYALDEE prescribers in Q2. As Phil mentioned, we continue to implement strategies to restore growth for RAYALDEE, including training our sales force in virtual selling techniques, enhancing our digital marketing efforts channeled through social media platforms, and redeploying sales personnel to geographies with lower COVID-19 infection rates. To expand RAYALDEE's market opportunity last month, we announced an executed agreement with Nicoya Therapeutics for the development and commercialization of RAYALDEE in Greater China. The agreement covers RAYALDEE in Mainland China, Hong Kong, Macau, and Taiwan for the treatment of secondary hyperparathyroidism in patients with Stage 3 or 4 CKD. We were excited to partner with Nicoya given their expertise and network in this significant market where more than 19 million people have Stage 3 or 4 CKD. Nicoya will be responsible for all regulatory approvals and commercial activities. In addition to upfront and milestone payments of $10 million in the first 12 months, OPKO is eligible to receive up to $115 million upon the achievement of certain development, regulatory, and sales-based milestones. Nicoya will also pay OPKO tiered, double-digit royalties on product sales. Our ongoing Phase 2 trial with RAYALDEE as a treatment for COVID-19 outpatients is now 86% enrolled; only 23 more patients need to be enrolled in order to reach the target of approximately 160. Enrollment has been slow during the past few months due to a lull in the pandemic and an increase in vaccinations, but it is showing recent signs of picking up as the Delta variant spreads in areas where we have active study sites. The primary efficacy endpoints include raising and maintaining serum total 25-hydroxy vitamin D within the range of 50 to 100 nanograms per ml and time to resolution of COVID-19 symptoms, as self-reported each day by subjects using a questionnaire designed and validated to evaluate in clinical trials the presence, severity, and duration of symptoms associated with viral infections. Top-line data from this randomized double-blind, placebo-controlled trial are still expected later this year. Moving to our other programs, about two weeks ago, we were pleased to announce our partnership with CAMP4 for the development, manufacturing, and commercialization of therapeutics utilizing our AntagoNAT technology, which is an oligonucleotide platform developed under OPKO CURNA. CAMP4 has prioritized OPKO's lead AntagoNAT compound to progress into clinical trials for the treatment of Dravet syndrome. Under the terms of the agreement, OPKO received an upfront cash payment along with a 5% equity interest in CAMP4. We are also eligible to receive up to $93.5 million in additional shares upon the achievement of certain development and sales milestones, and CAMP4 will pay OPKO double-digit royalties on product sales. As part of our strategic initiatives, we will continue to seek other licensing opportunities to monetize our early-stage assets. We are constantly evaluating our assets in order to maximize our return on investment. Last month, we announced the sale of OPKO's sterile fill-and-finish manufacturing facility in Ireland to Horizon Therapeutics for $65 million in cash. This facility was no longer a core asset of our ongoing operations, and the sale provided an opportunity to strengthen our balance sheet as well as improve efficiencies. Now let me turn the call over to Jon Cohen to discuss our BRL business.

Thanks, Steve. And good afternoon, everyone. BioReference's core clinical business continues to make progress toward returning to normalized pre-pandemic levels as more patients are visiting their physicians in person and sales teams are allowed back into the offices. In fact, many of our clinical counts have already returned to pre-pandemic levels. BioReference's core testing volume at the end of the second quarter was up 55% versus the prior year period. Specifically, our women's health specialty testing business has been coming back nicely over the last couple of months, with the clinical women's health business seeing increased volume by 25% and revenue increasing by 35% when comparing Q2 2021 versus Q2 2020. Our oncology business also continues to make significant progress with substantial growth compared to 2019. Solid tumor testing is up 140% over 2019, hematological malignancies liquid tumors is up 105% over 2019, cancer genomics is up 107% over 2019, and myeloid is up 209% since 2019. We continue to make investments in all these areas, particularly in our myeloid offerings with some new testing options. Our partnership initiatives, including large medical groups, FQHCs, ACOs, and health systems continue to experience month-over-month increases in patient visits. We have added several new ACOs and signed lab service agreements with several new hospitals this quarter. In addition, our business development efforts in partnering with large physician groups to manage their physician office labs are paying off with increased volumes. Our payer relations teams have increased our access across the country, and during the second quarter, we received our renewal for the United Healthcare preferred lab network for an additional three years. In addition, BioReference and GeneDx will now provide us with a high mark of Delaware covering 236,000 lives, formerly exclusive to LabCorp. At the beginning of the year, we formally launched Scarlet Health, the on-demand diagnostic service to expand digital health access. Scarlet brings our diagnostic services to patients' preferred locations, which may be their home or their office for an on-demand safe and convenient diagnostic experience. Currently, we are in 73 markets with Scarlet. We are continuing to invest significantly in Scarlet by adding new markets, with the goal to reach 60% of the U.S. population in the next several months and 80% by early next year. We are seeing significant demand for Scarlet's services across a multitude of commercial verticals. Now, let me turn my attention to COVID testing. Although COVID-19 cases have come off their highs with the administration of the vaccine nationwide, we continue to see significant interest in surveillance testing in our sports programs, school programs, and travel industry partners. We believe that many of these entities will continue their COVID-19 screening programs through the end of this year, and in certain cases, into 2022. In addition, we have seen an increase in volumes over the last two weeks as a result of the Delta variant spreading across the country. To date, we have performed over 17 million COVID-19 molecular tests. In the second quarter, we performed 2.9 million COVID tests. We are averaging about 20,000 tests a day in July and are closely monitoring developments and demand shifts. In late March, we kicked-off a company-wide lab operations specimen acquisition, logistics procurement, customer service, cost reduction initiatives to right-size our cost structure to match the declining COVID testing volumes and to drive efficiency gains in our core clinical lines of business. We are finding many savings opportunities, especially in overall labor and reagent inventory management originally associated with COVID expansion. In this quarter, we renewed our contractual relationships with the National Football League and Major League Soccer for next season, and Major League Baseball testing for this season. We also announced the first national program for COVID testing for the cruise industry, testing crew and guests for the Royal Caribbean cruise line. As I have mentioned on previous calls, our point-of-care testing capabilities have played an increasingly significant role in COVID offerings as we're experiencing a shift towards demand for screening capabilities on-site. We now have over 240 point-of-care sites in operation around the country and have conducted over 240,000 point-of-care tests in Q2. In terms of our COVID-19 school testing program to support a return to in-person classroom instruction, we are currently working with multiple school districts, including two of the three largest school systems in the country including New York City and Chicago. These agreements cover testing services for more than 1,500 schools to perform tests on public school students, principals, and teachers. To date, we have tested over 650,000 students. We continue to see strong interest in school-based testing programs. I'd like to briefly discuss the SARS-CoV-2 Delta variant rapidly spreading across the country. The term variant refers to genetic variations in the SARS-CoV-2, which has been emerging and circulating around the world throughout the COVID-19 pandemic. Viruses will constantly change through mutation, and new variants of the virus are expected to occur. Over time, new variants will emerge and others will disappear. These variants may act differently and require different treatments. Most notably, the B.1.1.7 Alpha, B.1.351 Beta, B.1.617.2 Delta, and the P.1 Gamma variants seem to spread more easily and quickly than other variants, leading to more cases of COVID-19 in unvaccinated individuals. An increase in the number of cases will put strain on healthcare resources, lead to more hospitalizations as we're now seeing across the country, and potentially more deaths. These variants are considered variants of concern by the CDC, variants for which there is evidence of an increase in transmissibility and potentially more severe disease. The Delta variant is estimated to account for up to 80% of new COVID testing as of July 19. While BioReference’s COVID-19 testing platforms do not specifically report the detection of any specific variant, our platforms are not affected by the varying spike protein variants, including Delta. For example, if an individual is infected with a Delta variant, the individual will receive a positive COVID-19 result. The result will not specify any type of variant. Our genetic testing volume at GeneDx grew over 84% in the second quarter compared to the prior year period, driven by our industry-leading exome test offerings. There is substantial interest in our genome service across our existing client base, driven by a rapid genome offering. In late June of this year, BioReference announced the appointment of Katherine Stueland as President and Chief Executive Officer of GeneDx, our global genomic subsidiary. Katherine joined GeneDx from Invitae Corporation, where she served most recently as the Chief Commercial Officer. We are delighted to have her lead the GeneDx organization. And now let me turn it over to our CFO, Adam.

Thank you, Jon. For the fifth straight quarter, we've reported consolidated income from operations. Across both of our segments, our operating companies continue to execute on their plans. Our diagnostic segment reported revenue from services of $397 million compared to $250 million for the 2020 period. This increase reflects the continued demand for COVID testing, as well as the recovery of our routine clinical and genetic testing volumes. As Jon mentioned, our clinical test volumes continue to be below historical levels, but are significantly higher than 2020. While our genetic testing volumes are higher than 2020 and 2019 levels. The diagnostic segment reported operating income of $30 million compared to operating income of $41 million during 2020. Recall that the 2020 period benefited from two significant items. The first was nearly $11 million from the successful Medicare appeal for the 4Kscore, and second was the $6 million we received under the CARES Act. Total costs and expenses were $367.2 million compared to $216.2 million of cost and expense for 2020. The increase primarily reflects the increased testing volumes. In addition, we have continued to invest in our commercial activities, as Jon outlined, related to our base business, including our efforts within Scarlet, resulting in increased selling, general, and administrative expenses. Moving to our pharmaceutical segment, we reported revenues of $45.2 million for the second quarter of 2021 compared to $44 million for the 2020 period. Product revenue increased by $6.3 million to $35.7 million, driven by strong performance from our Latin American operations. International revenue increases were partially offset by a decrease in sales of RAYALDEE. RAYALDEE continues to be negatively impacted by physician office restrictions, with physician offices restricting product sales representatives from making sales calls, as well as a decrease in Medicare patients utilizing RAYALDEE. In Q2 2021, revenue from the transfer of intellectual property was $9.5 million compared to $14.7 million for the 2020 period. The 2021 period includes $5 million of revenue from our recently announced partnership with Nicoya for RAYALDEE in the Chinese market. The overall decrease is the result of the completion of our somatrogon Phase 3 clinical trial and the associated amortization of the upfront payment we received from Pfizer. The loss from operations from our pharmaceutical segment was $13.7 million for the second quarter of 2021 compared to $6 million for the 2020 period. Overall research and development expense for the second quarter of 2021 was $14.8 million compared to $14.1 million in 2020. On a consolidated basis, the second quarter of 2021 had an operating profit of $5.6 million, compared to $27.2 million for the 2020 period. During the second quarter of 2021, we exchanged $55.4 million of our 4.5% convertible notes for common shares resulting in a non-cash and non-recurring other expense of $11 million. As a reminder, the 2020 period benefited from the 4Kscore Medicare appeal of $11 million, $6 million in CARES Act funding, as well as mark-to-market activity of several of our strategic investments, which had shares appreciate during the quarter resulting in $18.2 million of other income. Considering these items, we reported a net loss in the second quarter of 2021 of $16.2 million or $0.03 per share compared to net income of $33.7 million or $0.05 per share for the 2020 period. Our cash balance as of June 30, 2021 was $65.8 million. The combination of our cash on hand, our unutilized line of credit with JP Morgan, and the proceeds from our sale of one of our facilities provide us with a strong balance sheet and adequate capital resources. As we look into the second half of 2021, our focus has shifted to growing our base business and maximizing the margins we earn on our COVID testing while controlling our operating costs. Given the uncertainty of the testing demands for COVID, including the most recent growth in demand as a result of the Delta variant, we are limiting our forward-looking guidance to the third quarter and have built the following assumptions into our forecast. We anticipate performing between 1 million and 1.5 million COVID PCR point-of-care and antibody tests during the quarter. As Jon mentioned, we have capacity well in excess of these levels should demand for testing increase. Our range of guidance reflects testing demand from our physician office clients, tests for schools, sports, entertainment, and employer channels. Should testing from the general public through our partnerships with state and local governments and pharmacy chains increase, we could exceed our volume expectations. We assume our base business for routine clinical testing will remain at current levels, which is overall behind 2019 levels. We anticipate RAYALDEE sales to remain behind 2020 until our sales force is fully able to return to their promotional activities, and we grow our non-Medicare patient utilization. Including those assumptions, we expect revenue for the third quarter of 2021 to be between $270 million and $300 million, including revenue from services of $230 million to $270 million, revenue from product sales of $30 million to $35 million, and other revenue of $3 million to $5 million. We expect costs and expenses of $300 million to $335 million resulting in an overall operating loss between $5 million and operating income of $5 million at various points between the revenue and expense assumptions. Forecasted operating income includes a gain of approximately $30 million resulting from the disposition of our facility. Operating profit also includes approximately $20 million of non-cash depreciation and amortization expense, as well as an expected investment in research and development of $18 million to $22 million. With that, I'll open up the call for questions. Operator?

Your first question comes from the line of Maurice Raycroft from Jefferies. Your line is open.

Hi, everyone. Thanks for taking my questions. First question is on just the commentary on the base business. You've provided a little bit more granularity in the past on where you're at compared to pre-COVID levels. So I'm just wondering if you can do that at this point, and talk a little bit more about the trajectory going forward for the base business. And also if you can comment more on that genetic testing to which it sounds like that's doing well. What are your growth expectations for the genetic testing?

Jon, do you want to take it or you allow me to?

You could start; I'll jump back in.

Sure. We were down on the base business against 2019 somewhere around in the low teens. I think it was 13% or 14% overall. I think our expectation is the base business is going to slowly return. As we look at it for the overall BioReference base. GeneDx, to your point, we had a pretty strong quarter up significantly against last year, but also up significantly against 2019 levels. And that remains our expectations that'll continue to grow and accelerate as we go throughout the year.

I want to emphasize that our strategic approach in 2019, just before the onset of COVID, involved making targeted investments in women's health and oncology, as well as continuing our 4Kscore initiative in urology and expanding our genetic business. These investments are now yielding positive results. Additionally, our strategic ventures included investing in a vertical to engage with health systems, hospital businesses, ACOs, and FQHCs, which are also proving successful. As physician practices transition towards making decisions driven by CEOs and COOs of larger medical groups, we expect to see continued shifts that align with our strategic positioning.

Got it. Okay, that's helpful. I also wanted to ask about somatrogon. When you receive approval later this year in the United States, will you provide more details on the gross profit share and possibly give guidance on what to expect for somatrogon after that?

Yes, so we'll definitely provide some better clarity. I think it obviously has to do with the timing of the approvals and the launches. So until we have those, we're not going to add anything on top of it right now, Maurice, but once we have an approval, we'll provide some better clarity on our expectations.

Got it. Okay, thank you. And I'll hop back in the queue.

Your next question comes from the line of HC Wainwright. Your line is open.

Hi, this is Matt from HC Wainwright. Thanks for taking my questions. The first kind of centers around the Delta variant. I was wondering, to your knowledge, if there are only COVID tests on the market that can differentiate the variant if your customers are asking for it and whether you think it's meaningful at this point to provide this differentiation?

So we do get asked occasionally by customers; we cooperate obviously with every State Department of Health. We send them positive COVID-19 PCR samples if they ask for it for specific genomic sequencing. Frequently, that's for epidemiological purposes, which is what we obviously participate with them to do. Right now, I'm sure the vaccine has had a significant positive effect on the Delta variants and all the others. As I mentioned, the testing has not changed. So although there is a request, it's mostly as a result of really the State Departments of Health wanting to know the spread of the virus. As I said, right now, over 80% of the tests that are positive are the other Delta variants. But it doesn't impact therapy. So it doesn't impact what patients will do as a result of it.

Okay, understood. And then with regard to the multiplex test for COVID-19 and flu, are you planning to commodify the surveillance data that you capture?

The question is about the availability of COVID and flu testing, including point-of-care rapid testing. Currently, there has been almost no demand for it as no one has requested it yet. However, I expect that could change in the fall when people start to show symptoms. They may either get both tests or just a flu test, which will indicate the presence of COVID as well. Right now, it's completely unpredictable how the flu season will play out, but the testing is available.

Okay, makes sense. And just finally, regarding the CAMP4 deal and regarding Dravet syndrome, is your intention to shift away from neurology indications or developing compounds with the AntagoNAT platform? Are you planning to reprise these streams once again, once you gain kind of proof of principle?

CAMP4 currently holds the AntagoNAT platform. Our license agreement allows us to either propose additional compounds or collaborate with another partner. Initially, CAMP4 leads with the Dravet compound, followed by others, and we have obligations regarding the development and commercialization of other drugs within this agreement.

Okay, thank you. Appreciate you.

Your next question comes from the line of Jeff. Your line is open.

All right, folks, how are you? Thanks for taking the questions. Firstly, could you talk about the product revenue from Q2 itself a little stronger than estimated; was there anything in particular to call out there?

Our Latin American businesses, just, they won a few tenders during the quarter that will allow them to increase their overall businesses. We do expect it to be a strong business for us and growth business for us going forward. But that was the main driver there, Jeff.

Okay. You mentioned cash in Q2 was $65.8 million, and you also talked about next quarter showing a gain of $30 million. Did the cash get reflected in the second quarter, or will it be shown in the third quarter?

It'll be in the third quarter. So we don't have that cash yet.

Okay, perfect. I got it. And one more, if I may. Any insight into the composition of PCR versus antibody, Dr. Cohen, and maybe talk a little bit about that and how you expect the composition to be reflected going forward?

Yes, there is some demand for antibody testing, although it has not aligned with early predictions. We have taken a conservative approach in estimating its potential impact. According to CDC and administration reports, the outlook on antibody testing has generally been negative concerning immunological status. Unfortunately, there is limited data to determine whether high or low antibody levels correlate with true immunity. For instance, a low antibody level does not necessarily imply a lack of strong T-Cell memory, which is actually more significant. As a result, there is a current increase in orders for antibody tests. This trend may shift with the Delta variant, as people might want to confirm their antibody status or check if they need another vaccine dose. There are many questions regarding whether antibody levels can guide those decisions. However, the reality is that the future of antibody testing remains uncertain in the coming months.

Got it. That's super helpful. And lastly for me, Adam, anything specific to call out on the below-the-line item on investment loss in income tax provision of note for the quarter?

For income taxes, it's again taxes principally that we're paying and incurring in our international businesses, and as those continuing to do well and be taxpayers. On the other income and expenses, it really relates 100% to our convertible note exchange, so it's just the fair value of the underlying shares taking out the $55 million in debt.

Okay. And the investment loss of 11.3 for the quarter?

That's the other income expense line. That's the $11 million or so.

Your next question comes from the line of Edward Tenthoff from Piper Sandler. Your line is open.

Great. Thank you very much, guys. And thanks for taking the question. A couple housekeeping ones if I may. The $55 million in debt, was that converted into a number of shares? And where do you expect to recognize the EirGen gain in the P&L?

The debt was exchanged for common shares, resulting in a recorded loss. The gain from EirGen will be included in the operating income line item and will offset the operating expense.

Okay, great. And how many shares of it?

I don't have that information readily available.

No worry. No worry Adam. Thanks so much. I'll talk to…

Your next and your last question comes from the line of I Eh Jen from Laidlaw & Company. Your line is open.

Thanks for taking the questions. I've got two here. The first one is in terms of the pharmaceutical business and you guys have done a lot of our licensing type of activities. Are you guys also contemplating any ill-licensing going forward?

So yes, we're always certainly open to opportunity if it's there. I mean, I guess we're not looking for any early-stage project at this point. But certainly, if there's something that's synergistic, for example, something that would supplement the RAYALDEE side or something that we already have a sales force that would be advantageous to us. But this currently, we're not looking for any additional development self-projects. We have a fair amount of early stage already, as you know.

Yes, I understand. I have one more question regarding BioReference's income. Last year, you reported approximately $215 million, while this year's quarter is around $397 million. Last year, profit before tax was about $2.2 million, and this quarter, it’s roughly $2.9 million. Should we consider any differences beyond the 200,000 tests conducted as a straightforward indicator of business growth year-over-year?

Yes, so remember, the second quarter of last year I Eh had a significant decline in the base business. So a significant portion of our revenue last year was tied to COVID, where this year, it's a bit more balanced. Also, there was in most of our volume came last year from our state and local partnerships significantly lower than where the majority of our volume comes from today. So there is a bit of a price mix component in the revenue differences as well.

Okay, great, that's very helpful, and thanks for answering those questions.

Sure. Thank you.

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

All right, thank everybody for participating. We look forward to spending time with you again for our next quarter.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and have a wonderful day. You may all disconnect.