Advancing Clinical Trials and Financial Strategies: A Company Update

The ongoing clinical trial aims to evaluate the safety and immunogenicity of ascending doses of MDX-2001 while establishing a biologically active dose in humans. So far, the trial is progressing well, with safety and tolerability data expected to be available in the latter half of this year. Early efficacy data is anticipated to emerge in late 2025 or early 2026.

Innovative Immunotherapy Programs

This research program employs a next-generation enhanced T-cell engager designed to activate dual signaling through CD3 and CD28. The tetraspecific antibody effectively engages T-cells by binding to CD3 to promote activation, while also promoting their expansion and survival through CD28 recognition. The other two antibody arms target tumor antigens TROP2 and c-MET, validated targets associated with various solid tumors. Additionally, the company has two other ongoing immunology programs: MDX-2003, a tetraspecific antibody targeting hematologic tumors and autoimmune diseases, which is currently in the pre-IND stage and expected to enter clinical trials later this year or early next year.

Development of Immune Modulators

Moreover, the team is also developing MDX-2004, an immune modulator designed to rejuvenate and strengthen the immune system in patients who are immunocompromised or aged. This approach stimulates the proliferation of T-stem cells to enhance immune function. Like MDX-2003, this program is in the pre-IND stage, with plans for IND finalization and possible Phase 1 entry in the fourth quarter of this year.

Focus on Antiviral Programs

On another front, the company has received $51 million in additional funding from BARDA, which includes a $35 million supplement to expedite the development of a COVID multispecific antibody and $16 million dedicated to evolving broadly neutralizing influenza multispecific antibodies via the proprietary MSTAR antibody platform. Overall, BARDA has committed $110 million in non-dilutive funding, with the potential for this amount to reach $205 million upon fulfilling specified options and milestones. This financing will expedite COVID and flu programs, innovate manufacturing methods, and address other biodefense challenges while developing gene-based delivery systems for future pandemic responses.

The lead anti-COVID multispecific antibody, MDX-2301, is on track for IND submission and Phase 1 trials, also slated for the fourth quarter of this year. The organization remains engaged in business development, actively exploring external collaborations to bolster pipeline advancement efficiently and effectively.

Commercial Product Performance

In terms of commercialized products, NGENLA continues to perform well under Pfizer’s global commercialization efforts. Pfizer is focused on transitioning existing patients from daily administration to the once-weekly drug while integrating new pediatric patients into treatment regimens. The company also has plans to advance additional pediatric and adult indications that could unlock up to $100 million in milestones. Within its long-acting biologics portfolio, several other candidates are under development, including a GLP-2 for short bowel syndrome, and a dual agonist GLP-1 glucagon, a derivative of oxyntomodulin.

GLP-1 agonists have gained traction in treating diabetic and obese patients, with some clinical-stage dual GLP-1 glucagon agonists demonstrating efficacy against non-alcoholic fatty liver disease by improving liver fibrosis scores. The collaboration with Entera Bio continues as well, focusing on creating an oral formulation of this molecule through their N-Tab technology, with promising in vivo experimental results.

BioReference Health Restructuring

In a strategic move, the company has successfully sold the BioReference Health lab testing business, which focuses on clinical diagnostics and women’s health, while retaining operations in New York and New Jersey as well as oncology and corrections services nationwide. This sale forms part of broader restructuring efforts aimed at enhancing financial and operational performance, which includes reducing overall expenses and workforce size from 3,300 to 2,000 employees.

Efforts have also involved closing underperforming facilities and streamlining company operations. These restructuring initiatives are expected to bolster performance in specialty testing, particularly in oncology and urology, as well as comprehensive clinical diagnostic services in key states. Notably, on a comparable basis—excluding the assets sold to Labcorp—testing volume increased by 1% in Q4 2024 compared to Q4 2023.

Growth in Oncology and Urology Segments

Our National Oncology Testing segment achieved strong performance this quarter, securing nine new hospital reference contracts, including a large academic medical center in New York, while realizing a 5% increase in net revenues year-over-year. Moreover, we have expanded our oncology testing offerings, emphasizing cancer genomics and hereditary cancer assessments. In our Urology segment, the 4Kscore has demonstrated solid performance, with a 16% increase in test volume and revenue compared to 2023.

Additionally, our pharmaceutical divisions in Latin America and Europe reported a 9% growth amid favorable EBITDA trends, despite challenges posed by currency fluctuations from a strong dollar. Rayaldee sales have remained consistent, supported by new findings indicating that its use for patients with secondary hyperparathyroidism may postpone dialysis requirements.

Looking Ahead

In conclusion, we are optimistic about the performance of our Biopharmaceutical and Diagnostic segments and remain confident in their prospects for generating positive results this year. Now, I’ll hand the discussion over to Adam for a review of our financial performance. Adam?

Adam E. Logal — Senior Vice President, Chief Financial Officer

Thank you, Elias. The fourth quarter of 2024 marks significant strides in enhancing shareholder value. Under the leadership of the BioReference team, we have focused on cost reduction and improving operating efficiency, paving a clear path to profitability, excluding non-cash and nonrecurring charges, and targeting positive cash flow in 2025. While our restructuring work at BioReference continues, refining our geographic focus and prioritizing high-value testing has led to improved operating results despite previous nonrecurring expenses.

Our Global Health segment has achieved growth in revenue and operating income, while we continue to advance our R&D pipeline. During the fourth quarter, we also took steps to realize asset value by exiting one of our liquid investments and reallocating capital toward buying back common stock and convertible notes. Now, let’s review our operating results, beginning with the Diagnostics segment.

Company Reports Q4 2024 Financial Performance and Outlook

Revenue for Q4 2024 reached $103.1 million, a decrease from $124.2 million in the same quarter of 2023. This decline was primarily attributed to the Labcorp transaction that closed in September. During Q4 2024, total costs and expenses amounted to $124.8 million, down from $166.4 million in Q4 2023. The 2024 figure included approximately $4.5 million in nonrecurring expenses for severance and facility closures. These costs were anticipated as part of our business realignment aimed at promoting sustainable growth and profitability. The operating loss for this quarter was $21.7 million, an improvement from the operating loss of $42.3 million reported in the previous year.

Diagnostics and Pharmaceuticals Segment Performance

In the Diagnostics segment, depreciation and amortization expenses were $6 million for Q4 2024, compared to $8.1 million for Q4 2023. Meanwhile, the Pharmaceuticals segment saw revenue of $80.5 million in Q4 2024, up from $57.7 million in the comparable 2023 period. However, product revenue, which includes sales from our international Pharmaceuticals businesses, was $37.4 million compared to $43 million in Q4 2023.

Despite facing challenges from adverse foreign currency fluctuations, the profitability of our business continues to exceed expectations. Notably, product revenue from Rayaldee was stable, generating $9.1 million this year compared to $9.3 million in 2023. Meanwhile, revenue from the transfer of intellectual property (IP) surged to $43.1 million in Q4 2024, significantly higher than $14.7 million in Q4 2023. This increase included a $12.5 million milestone payment for the initiation of our EBV clinical trial, along with $10.2 million from commercial milestones related to our EirGen business.

Gross profit from our collaboration with Pfizer was $9.5 million in Q4 2024, a decline from $12.2 million in 2023, which had included a catch-up payment referencing the Q3 ’23 launch of NGENLA in the U.S. Additionally, Q4 2024 included $11 million in R&D funding from our BARDA agreement compared to only $1.2 million for the prior year. The Pharmaceuticals segment’s costs and expenses for Q4 2024 stood at $82.6 million, an increase from $73.8 million in 2023, driven primarily by R&D expenses of $29.8 million, up from $18.7 million year-over-year.

Increased R&D spending reflects ongoing development activities for ModeX, including the Phase 1 oncology clinical trial and BARDA support. Consequently, the operating loss for the quarter ending December 31, 2024, was $2.1 million, improving from an operating loss of $16.1 million in 2023. Furthermore, depreciation and amortization expenses for this quarter slightly rose to $18.1 million from $17.9 million a year ago.

Consolidated Financial Results and Future Guidance

For Q4 2024, net income was $14 million, equating to $0.01 per diluted share, compared to a net loss of $66.5 million or $0.09 per share in the same period of 2023. This positive shift was influenced by a realized gain of $54.1 million from the sale of GeneDx as well as non-cash other income of $21.4 million, contrasting sharply with a non-cash other expense of $3.2 million a year ago due to the change in fair value of GeneDx shares. We concluded 2024 with approximately $495 million in cash, cash equivalents, liquid investments, and restricted cash, planning to allocate up to $100 million for common stock repurchases as part of our announced buyback program, along with potential convertible note purchases.

Our strategy for the buyback program is adjustable based on market conditions. We also expect to utilize around $100 million of cash for operating expenses, including anticipated R&D investments discussed by Elias. After factoring in roughly $15 million in capital expenditures, we project to finish 2025 with at least $300 million in cash and cash equivalents before considering any non-dilutive financing or third-party partnerships. Looking ahead, our focus remains on executing the essential objectives Elias outlined, with the following assumptions shaping our financial guidance.

In the Pharmaceuticals segment, we anticipate continued growth in NGENLA sales and better gross margins due to scaled-up manufacturing processes. We expect stable foreign currency rates for our non-U.S. pharmaceutical operations. R&D expenses will rise as we expand our ModeX programs—including CMC work and ongoing oncology clinical trials—some of which will receive funding through our BARDA agreements. In our Diagnostics segment, we maintain a multi-year program aimed at enhancing profitability through operational efficiencies and reducing fixed costs. We predict an additional $4 million to $8 million in nonrecurring costs in Q1, primarily pertaining to facility closures.

We have set a gross margin target of over 27% to ensure profitability and expect positive cash flow for the entirety of 2025. We plan to implement an additional cost reduction initiative aimed at achieving $20 million in annual savings throughout 2025. In the first half of next year, we intend to rationalize our testing offerings and client mix to enhance BioReference’s focus, ensuring it becomes a profitable and expanding business. For the full year 2025, we forecast total revenues between $675 million and $700 million, with service revenues projected at $405 million to $425 million, product revenues between $165 million and $175 million, and other revenues ranging from $80 million to $95 million. This includes estimated Pfizer gross profit share of $35 million to $45 million and BARDA revenue between $40 million and $48 million. Overall costs and expenses are projected to fall between $825 million and $875 million, excluding nonrecurring expenses related to the BioReference restructuring. We anticipate R&D expenses between $120 million and $140 million based on enrollment rates for clinical trials and the timing of specific CMC activities in our ModeX programs, with $40 million to $48 million offset from BARDA funding. Depreciation and amortization for the year is expected to be around $90 million.

This concludes our prepared remarks. Thank you for your attention, and now operator, let’s open the call for questions.

Questions & Answers:

Operator

We will now begin the question-and-answer session. [Operator instructions] The first question comes from Maury Raycroft from Jefferies. Please go ahead.

Maury Raycroft — Analyst

Hi. Thanks for taking my questions. I’ll start with BioReference. Can you provide a timeline for when you expect to reach profitability, and how do you plan to balance spending while expanding your oncology testing menu?

Phillip Frost — Chairman and Chief Executive Officer

Adam, would you like to address that?

Adam E. Logal — Senior Vice President, Chief Financial Officer

Sure. So, Maury, we have…

Fourth Quarter Results Highlight Strong Improvement and Future Prospects

In the fourth quarter, the company reported meaningful improvements in its financial performance. The EBITDA loss for the third quarter was approximately $20 million, but in Q4, this loss was reduced by more than half. This positive trend sets a favorable guide path into the first quarter, with expectations of reaching breakeven and achieving profitability subsequently. Although the first quarter may include some restructuring charges from initiatives initiated last year, the overall outlook is optimistic.

Regarding operational expenditures, significant investments in the test menu are not anticipated. The team is efficiently rolling out new modalities, as discussed by Elias, without a pressing need for increased spending.

Maury Raycroft — Analyst

Understood. Thank you. I want to inquire about the $12.5 million milestone related to EBV and Merck. Can you clarify what the potential Phase 2 milestone might look like if Merck proceeds with the program? Additionally, will Merck issue a press release with data updates, and what timeline should we expect for this?

Phillip Frost — Chairman and Chief Executive Officer

I can address that. The study, which involves 200 patients, should yield results quickly, possibly by the second quarter. After that, the analysis will occur, and the decision regarding advancement to Phase 2 would likely come in the third quarter. This decision would trigger a significant milestone.

While I can’t provide a specific figure, we would need to confirm with Merck or Adam. An official announcement is expected once the portfolio progresses to Phase 2.

Adam E. Logal — Senior Vice President, Chief Financial Officer

We are unable to disclose specific milestones under our agreement until they are earned.

Maury Raycroft — Analyst

Thank you for clarifying that. I’ll pass the mic to the next question.

Operator

The next question comes from Jeffrey Cohen of Ladenburg Thalmann. Please go ahead.

Jeffrey Cohen — Analyst

Thank you for taking my questions. Could you elaborate on Dr. Frost’s earlier comments regarding the dual agonist with Entera Bio? What specifics can you share about what’s being studied, including administration type—oral or injectable, weekly or daily? Is targeting Type 1 diabetes part of the plan?

Elias Zerhouni — Vice Chairman and President

I’ll begin with that. The dual agonist includes both an injectable and oral form through our partner, with the injectable administered weekly and the oral taken daily. These parameters are significant from a clinical perspective. This analog of oxyntomodulin is designed to benefit specific populations, such as those with diabetes and obesity, as well as individuals with fatty liver disease.

We are still in the pre-IND phase, but I can say the preliminary results are quite promising. Dr. Frost, do you have anything to add?

Phillip Frost — Chairman and Chief Executive Officer

No, I believe you’ve covered it well.

Jeffrey Cohen — Analyst

That’s helpful; thank you. Now, can you discuss the launch of Rayaldee in China with Nicoya? What size of the commercial team are they planning, and what can we expect from the launch through 2025?

Phillip Frost — Chairman and Chief Executive Officer

I don’t have the specifics on Nicoya’s commercial team size, but we anticipate that the initial launch will be relatively small as they begin operations in select territories in China. However, following formal NDA approval, a broader launch phase is expected throughout the year. Our agreement with them is structured around milestones and royalties, which we will detail as appropriate.

Jeffrey Cohen — Analyst

Understood, thanks. Lastly, you mentioned the $26.9 million from BARDA and the potential for a total of $110 million. What is the projected timeline for these funds?

Phillip Frost — Chairman and Chief Executive Officer

I can provide some clarity on that. We expect to receive between $40 million and $48 million in 2025. Historically, we received $59 million for COVID-related development, in addition to $35 million. This COVID program, totaling $84 million, is active and expected to run for about two years, depending on our recruitment pace.

This year, we aim to bring the first molecule into the clinic by the third or fourth quarter, which is crucial for demonstrating safety in patients. Significant milestones are anticipated this year. Moreover, if we prove our innovative manufacturing capabilities to BARDA’s satisfaction, extending the program would be a possibility.

Furthermore, we’re also advancing flu-related projects with an initial $16 million contract. Meeting milestones for both Flu A, Flu B, and pandemic flu could lead to additional funding. The overall budget for our BARDA program stands at approximately $205 million, with $110 million already committed and the remaining $95 million contingent upon future milestones.

Jeffrey Cohen — Analyst

Perfect, thank you for the clarification.

Phillip Frost — Chairman and Chief Executive Officer

We are looking into the next two years.

Company Shares Insights on Financial Guidance and Clinical Trial Progress

Jeffrey Cohen — Analyst

Got it. Thanks for the clarification. Thank you for taking our questions.

Operator

The next question comes from Edward Tenthoff from Piper Sandler. Please go ahead.

Edward Tenthoff — Analyst

Great. Thanks. And if I may, just a quick housekeeping question. Adam, can you please repeat the product sales guidance you mentioned? And then I have a follow-up question.

Adam E. Logal — Senior Vice President, Chief Financial Officer

Sure. The product sales were $165 million to $175 million.

Edward Tenthoff — Analyst

$165 million and $175 million. Great. Thank you. And then when it comes to ModeX data this year with respect to the Cancer program, what should we be expecting in terms of data this year? And what’s the latest with respect to the hematologic cancer program? Thank you.

Elias Zerhouni — Vice Chairman and President

In terms of the ModeX data, it relates to MDX-2001, a multispecific antibody targeting TROP2 and c-MET, aimed at solid tumors. This product is already in clinical trials, currently undergoing dose escalation to evaluate safety and tolerability. We expect preliminary results around the fourth quarter of this year.

To assess efficacy signals, reaching safe therapeutic doses is crucial, which may yield information later this year but more likely in the first half of 2026. Regarding the CD19 and CD20 programs, we are in pre-IND development, finalizing Chemistry, Manufacturing, and Controls (CMC) before filing with the FDA toward year-end. Hence, no results will be available for those until next year.

Edward Tenthoff — Analyst

Have you disclosed what the targets are for the hematologic?

Elias Zerhouni — Vice Chairman and President

CD19 and CD20, yes, it is a dual target.

Edward Tenthoff — Analyst

Are you considering that for autoimmune diseases as well?

Elias Zerhouni — Vice Chairman and President

Good question. Yes, we are.

Edward Tenthoff — Analyst

Thanks, guys.

Operator

The next question comes from Yale Jen from Laidlaw and Company. Please go ahead.

Yale Jen — Analyst

Thank you. I have a macro question regarding recent governmental changes. Are there concerns about the future of vaccine prospects and funding?

Elias Zerhouni — Vice Chairman and President

This is a valid question. So far, we haven’t received any indications from our partner that would impede the progress of our significant EBV vaccine, which offers extensive benefits, including preventing mononucleosis and possibly mitigating certain cancers and multiple sclerosis. Thus, we remain optimistic about advancing clinical trials.

While there may be political controversies surrounding vaccine funding in Washington, we are firmly positioned in the antibody sector and are closely engaged with our contracting officers. Currently, there appears to be sustained interest in funding development for programs like ours that address epidemic preparedness.

To summarize, we have no immediate concerns regarding support for our initiatives, but the political landscape is uncertain.

Yale Jen — Analyst

That sounds reassuring. Thank you, and best of luck.

Elias Zerhouni — Vice Chairman and President

Thank you.

Operator

The next question comes from Yi Chen from H.C. Wainwright. Please go ahead.

Unknown speaker — H.C. Wainwright — Analyst

This is Eduardo on for Yi. I have a question regarding the potential impact of the administration on BARDA-sponsored programs. Is current funding sufficient for your planned trials in 2025, specifically the $40 million to $48 million?

Phillip Frost — Chairman and Chief Executive Officer

The funding already committed, along with an additional $35 million, can support full development through Phase 1 and into early Phase 2. Depending on progress, we may also develop a secondary candidate, but not beyond Phase 1. The funding plan from BARDA intends for us to complete development through these phases, at which point they may decide to continue support depending on our results. I am confident that the $110 million secured is stable and committed to a key inflection point in our development.

Unknown speaker — H.C. Wainwright — Analyst

Any update on the HIV monoclonal? Has the focus shifted towards EBV, COVID, and flu due to current incentives?

Phillip Frost — Chairman and Chief Executive Officer

I’ll have Gary Nabel address that, as he is leading the efforts.

Gary Nabel — Co-Founder, President and Chief Executive Officer, ModeX Therapeutics

Thank you, Elias, and I appreciate the question. In short, we have made solid progress on the HIV monoclonal. Our first-generation HIV multispecific antibody has advanced into clinical trials, showing good tolerance, low immunogenicity, and a favorable half-life.

ModeX Therapeutics Discusses Optimized Antibody Development in Recent Call

ModeX Therapeutics has announced advancements in their second-generation molecule, which is now ten times more potent than its predecessor. Utilizing their proprietary MSTAR format, the company is nearing the identification of a lead candidate to move forward with, while engaging with various partners for collaboration on further development.

The ongoing scientific program has benefited from lessons learned during the BARDA initiatives, particularly in areas like Chemistry, Manufacturing, and Controls (CMC), yield optimization, and scalability. Leadership remains optimistic about the new molecule’s potential.

Clinical Trials and Biomarker Selection for MDX-2001

During the call, analysts sought clarity on the company’s solid tumor trial involving MDX-2001, a tetravalent antibody. The discussion revealed that the trial operates as a basket study with multiple indications being investigated.

One critical aspect of recruitment is the selection for elevated expression of c-MET and TROP2 biomarkers. Analysts inquired about the percentage of patients that meet this criterion across different indications. Phillip Frost, Chairman and CEO, responded that both biomarkers are broadly distributed across various tumors, showing significant expression levels.

He elaborated that the tumors selected for the trial exhibit high levels of c-MET and TROP2 expression, indicating it is not a limiting factor in patient recruitment. The focus will be on common solid tumors such as lung, gastric, and breast cancers. Frost indicated that more specific data could be provided if requested.

Expression Cutoff and Recruitment Strategy

Co-Founder Gary Nabel added context to the expression levels used in defining patient eligibility. He noted that a 45% cutoff for surface expression had been considered, which would capture a substantial number of tumors with both biomarkers. However, he mentioned that this threshold might be overly conservative. Nabel stated that even tumors with as low as 10% expression could respond effectively, suggesting a broader approach to recruitment. The current strategy is to include all patients for initial efficacy analysis, later determining an optimal expression threshold based on trial data.

Addressing a follow-up question, Nabel confirmed the commitment to measuring expression levels without excluding patients based on biomarker presence at this stage. The focus remains on evaluating the efficacy data from the trials.

Closing Remarks and Future Expectations

As the session concluded, Frost expressed gratitude for the participation and insightful questions from attendees. The anticipation for the next meeting remains high as the team continues to advance their programs.

Operator

This concludes our question-and-answer session. Thank you for attending today’s call.

Duration: 0 minutes

Call Participants:

• Yvonne Briggs — Investor Relations
• Phillip Frost — Chairman and Chief Executive Officer
• Elias Zerhouni — Vice Chairman and President
• Adam E. Logal — Senior Vice President, Chief Financial Officer
• Maury Raycroft — Analyst
• Gary Nabel — Co-Founder, President and Chief Executive Officer, ModeX Therapeutics
• Unknown Speaker — H.C. Wainwright — Analyst
• Jeffrey Cohen — Analyst
• Edward Tenthoff — Analyst
• Yale Jen — Analyst

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