OPKO Health - Q4 2025

Transcript

Operator (participant)

Hello and welcome to the OPKO Health Fourth Quarter 2025 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask your question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Yvonne Briggs. Please go ahead.

Yvonne Briggs (Director of Investor Relations)

Thank you, operator. Good afternoon. This is Yvonne Briggs with Alliance Advisors IR. Thank you all for joining today's call to discuss OPKO Health Financial Results for the Fourth 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, 2025, that was just filed earlier today. This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast on February 26, 2026.

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 Zerhouni, Vice Chairman and President, will then provide an overview of BioReference Health as well as OPKO's therapeutic segment. After that, Adam Logal, OPKO's CFO, will review the company's fourth quarter financial results and discuss OPKO's financial outlook. We'll open the call to questions. Now I'd like to turn the call over to Dr. Frost.

Phillip Frost (Chairman and CEO)

Good afternoon, thank you for joining us today. OPKO exited 2025 with tremendous momentum as we executed on the priorities we laid out earlier in the year. These included positioning our diagnostics business for a return to profitability, advancing our ModeX pipeline, leveraging non-dilutive funds from strategic partnerships to offset our R&D budget, and strengthening our balance sheet. We're looking forward to the year ahead as we have multiple value-creating catalysts for 2026 and beyond. At BioReference, 2025 was transformative, with the closing of a second asset sale. In September, we completed the sale of our oncology division and related testing services. This allowed us to focus on BioReference on its core clinical laboratory business in the New York and New Jersey region, as well as correctional health and our 4Kscore Test nationally.

This divestiture streamlined our infrastructure and reduced fixed costs while freeing capital to support our broader strategic objectives. BioReference is now positioned to meet our goal of sustained profitable growth in 2026. We believe that our more focused footprint, combined with the accelerating adoption of 4Kscore, give us a clear path to modest revenue growth and improving margins this year. On the therapeutic side, ModeX continues to be a central component of our long-term strategy. We now have multiple clinical stage programs and EBV vaccine that's partnered with Merck, a proprietary multispecific immuno-oncology and immunology candidates, including those intended for immune rejuvenation and for the immune-impaired. In 2025, we also began an important collaboration with Regeneron that aligns our deep antibody discovery capabilities with our unique multispecific platform to pursue targets in metabolism, oncology, and immunology.

The value of this collaboration potentially exceeds $1 billion in milestones alone. Regeneron is responsible for reimbursing ModeX for its work in creating antibody candidates, utilizing ModeX's proprietary platform and for funding all development and commercial efforts for candidates it selects for further development. From a financial perspective, we entered 2026 with a strong cash position that was bolstered by asset sales, BARDA funding, partnership payments, and positive operating contributions from our international pharmaceutical business. This has allowed us to invest meaningfully in our R&D portfolio while returning capital to shareholders through share repurchases. Last year, we bought back over $90 million in common shares and convertible notes. We look forward to the year ahead as we advance the ModeX pipeline with multiple clinical and partnership catalysts and continued focus on operating efficiencies as BioReference returns to profitability.

With that overview, I'll return the call over to Elias.

Elias Zerhouni (Vice Chairman and President)

Well, thank you, Phil, and good afternoon, everyone. I'll start with ModeX. ModeX is now firmly established as a clinical-stage platform company spanning vaccines, oncology, and immunology. We have three programs in the clinic already and two more entering the clinic over the next few months. Our EBV vaccine is partnered with Merck, includes our two antigens in combination with Merck's adjuvants. Merck enrolled over 200 subjects in a phase I trial that is evaluating safety, tolerability, and immunogenicity, enabling further development by Merck. Our lead immuno-oncology candidate, MDX-2001, is a tetraspecific T-cell engager directed at two tumor antigens, c-Met and TROP-2, and 2 T-cell activators, CD3 and CD28. This candidate continues to progress through phase I dose escalation in solid tumors.

To date, we have dosed more than 25 patients across multiple tumor types and have reached dose levels that are approximately 10-fold higher than the starting dose with acceptable safety. We're now refining the final dose and regimen to be used in phase I-B expansion cohorts, focusing on specific tumor types. MDX-2004 is our first-in-class multispecific immune rejuvenator for advanced cancers. This trispecific molecule simultaneously engages CD3, CD28, and 4-1BB to stimulate T-cell activation, proliferation, and persistence, with the goal of restoring the immune system. By restoring and maintaining T-cell activity, this immune rejuvenator may address a broad range of cancers by potentially reversing immune dysfunction associated with chemotherapy, chronic illness, infections, and aging. MDX-2004 entered phase I late last year in Australia and subsequently in Israel.

With MDX-2003, we are now developing a tetraspecific antibody that binds CD19 and CD20 on cancerous B cells and CD3 and CD28 on T cells. This is in line with emerging data showing the benefit of targeting both CD19 and CD20 in difficult-to-treat B-cell lymphomas and leukemias. MDX-2003 is designed to maintain efficacy even if one B-cell marker is lost or greatly reduced, which is a common way for tumors to escape CD19-only treatments, and to build in CD28 co-stimulation so that T cells can stay active and able to kill cancer cells longer. We presented a poster at the ASH annual meeting in December, which described our preclinical findings. We have received regulatory IND approval in Australia and will begin first-in-human trials in a few weeks for cancer.

I should note that this tetraspecific antibody also has potential to treat diseases associated with autoimmunity, an indication we're separately considering for entry into the clinic. A highlight of the fourth quarter, as Phil said, was the announcement of an agreement with Regeneron, which brings together their extensive library of clinically validated monoclonal antibody finders with our multispecific engineering platform to pursue four initial programs across metabolism, oncology, and immunology, with potential to expand beyond the initial targets. Under this collaboration, Regeneron will fully fund preclinical and clinical development and commercialization for selected assets. OPKO is eligible for research, development, regulatory, and commercial milestones that could exceed $1 billion, and as well as up to low to double-digit royalties on global sales.

Our joint teams are actively working towards nominating lead candidates with the goal of achieving the first milestone of these programs as these programs move into formal development. Turning to infectious diseases in the immune-impaired, our BARDA-supported programs for multispecific COVID-19 and influenza antibodies continue to move forward. We recently received IND clearance from the FDA for MDX-2301, our COVID multispecific antibody, which is aimed at high-risk immunocompromised populations, and this program is to enter the clinic in the first half of 2026. Our influenza program against both flu A and flu B is in the pre-IND stage. We're currently evaluating the lead clinical candidates in challenge models to prioritize them for further clinical testing with potential incremental funding from BARDA.

In 2025, we received $28.5 million in non-dilutive funding from BARDA for these two programs and a total of $54 million since inception. BARDA will assume the cost of the clinical trials. Over the past two years, we've also been building an in vivo CAR-T platform that we believe represents the next generation of cellular immunotherapies. Unlike traditional CAR-T approaches, our platform uses multi-specific antibodies to greatly expand potential applications by targeting our proprietary lipid nanoparticles to any desired cell type and enabling the creation of multi-specific chimeric antigen receptors, showing excellent B-cell depletion and safety in non-human primate experiments.

We view this flexible, differentiated, and unencumbered technology as a unique asset within our portfolio, generating significant interest from potential partners as we enter the late stages of the pre-IND process, hoping to enter the clinic either late this year or the beginning of 2027. During the fourth quarter, we continued to advance OPKO-88006, an analog of natural dual GLP-1 glucagon oxyntomodulin towards the first in human phases. We are in the late stages of the pre-IND work to study healthy and presumed metabolic dysfunction associated with steatohepatitis, for short NASH participant, as both a weekly injectable product and in partnership with Entera Bio, a once-daily oral formulation, which has been selected based on encouraging oral bioavailability in non-human primates.

In addition, under the collaboration with Entera, we recently announced a program to develop a first-in-class oral long-acting PTH tablet for patients with hypoparathyroidism. This program combines OPKO's proprietary long-acting PTH variants with Entera's proprietary N-Tab technology. OPKO and Entera will each hold a 50% ownership interest in this program and will each be responsible for half of the program's development costs. Given the favorable PK/PD data announced last December, we're accelerating the development timeline of this product and expect to file an IND application with the FDA mid this year. Now, our international pharmaceutical operations continue to be a source of steady cash flow and operating income. In 2025, global pharmaceutical product sales grew by 17% versus the prior year quarter. I'll let Adam go through the numbers in more detail.

Our partnering strategy continues to provide meaningful cash flow, and we're pleased that our partner, Lilly, has brought mazdutide to the Chinese market, and we received our first royalty payment in the fourth quarter. Finally, turning to our diagnostic business. In mid-September, we completed the sale of BioReference's oncology assets to Labcorp, transforming BioReference into a streamlined, regionally focused clinical laboratory with a national specialty testing franchise anchored by 4Kscore. We now operate with a more efficient footprint, supported by correctional health nationally, in also an expanding menu of higher-margin services. In 2025, the post-transaction remaining operations represented approximately $300 million in revenue.

Fourth quarter testing volume in the BioReference business, excluding the divested oncology assets, grew slightly, and we continued to realize the benefits of our cost reduction initiatives, including a workforce reduction of roughly 29% from the previous year to approximately 1,400 FTEs and all other targeted operational efficiencies. These efforts have significantly improved our margins and support our expectation that BioReference will deliver positive operating income and cash flow in 2026. Of note, our 4Kscore test remains a key growth driver. Fourth quarter volume increased more than 6% year-over-year, and we expect the updated label, which does not require a digital rectal examination anymore, to support continuing momentum and entry in the primary care market.

In third quarter last year, FDA approved this labeling change to dissociate the elevated PSA from suspicious nodules for the use of the 4Kscore. The intended use population are men ages greater than 45, with age-stratified elevated PSA, or men without elevated PSA, but a suspicious nodule. Most of the PSA screening are performed by primary care physicians. The age stratified, elevated PSA and the precision of the 4Kscore test results would facilitate physician's decision to further assess the probability of clinically significant prostate cancer before a biopsy or MR imaging decision. We view 4Kscore as a valuable, differentiated franchise that can generate meaningful revenue and profit as we expand payer coverage and educate both urologists and primary care provider on its clinical utility.

Collectively, our diagnostic transformation, our clinical progress, and across the company and high-quality partnerships have positioned us as a more focused, therapeutically driven company with multiple near and midterm inflection points. With that, I'll turn the call over to Adam to review our financial results and outlook. Adam?

Adam Logal (SVP and CFO)

Thank you, Elias. Capital allocation remains our top priority as we ended the quarter with $369 million in cash and cash equivalents and restricted cash, which is more than sufficient to fund our ongoing operations and development plans, while we also return capital to our shareholders. Our strong cash position allowed us to repurchase 9.8 million shares during the fourth quarter of 2025, and for the full year, we repurchased 34.6 million shares for approximately $47 million. We have approximately $113 million remaining under our buyback authorization and expect to accelerate our repurchases over the short term. We deployed over $109 million in convertible note and common stock repurchases during 2025, and almost $230 million since the start of 2024.

Demonstrating our commitment to strengthening our balance sheet and returning that capital to our shareholders. Let's turn to the financial performance, starting with our diagnostics business. Q4 was our first full quarter since closing our second transaction with Labcorp. We are encouraged by the progress the team has made. Revenue in Q4 2025 was $71.1 million, including $7 million from our 4Kscore test, which grew in revenue by a little more than 16% compared to 2024's $6 million. Revenue in Q4 2024 was $103.1 million, with the year-over-year decline, primarily due to revenue attributable to the Labcorp transaction that closed in September.

Revenue from our retained business declined principally due to test mix changes, as we shifted some of our unprofitable but higher-priced esoteric testing to our strategic partners, which was partially offset by slight volume increases. Total costs and expenses were $89.4 million, down from $124.8 million last year, reflecting the September 2025 Labcorp transaction, as well as the continued efforts to rationalize our cost structure to align with our focused geographic footprint and testing offerings. Including in operating expenses were $5.8 million of non-recurring expenses related to reducing our headcount, asset write-offs as we transition into our new operating footprint.

Our diagnostics operating loss was $18.3 million, compared to $21.7 million in Q4 2024, and depreciation and amortization came in at $4.1 million, down from $6 million in 2024. Revenue from our pharmaceutical segment was $77.4 million in Q4 2024, excuse me, 2025, compared to $80.5 million in the prior year. Revenue from product sales increased to $43.7 million, up from $37.4 million, reflecting foreign exchange tailwinds in the 2025 quarter, as well as higher sales volumes in our international operations. As we continue to focus on the profitability of Rayaldee, the growth to net improvements that we have realized in 2025 have resulted in meaningful positive cash flow from operations while maintaining our overall revenue levels.

Rayaldee contributed $8.8 million during Q4 2025, compared to 2024's $9.1 million, reflecting lower government rebates during the 2025 period, partially offset by an approximately 17% decline in volumes. Our Pfizer gross profit share was $12.5 million, reflecting a 30% increase to 2024's $9.6 million. The fourth quarter of 2025 reflects the highest gross profit share recorded to date, and reflects Pfizer's progress on the global commercialization of NGENLA. During Q4 2025, we recorded $7.2 million of revenue from our new collaboration with Regeneron, while the 2024 period included $12.5 million of milestone payments from Merck for our EBV clinical collaboration.

BARDA funding was $6.9 million compared to 2024's $11 million, reflecting activity levels for our infectious disease antibody programs that BARDA supports. The 2024 period included higher level of CMC activities, while the 2025 period reflected activities in preparation for our upcoming phase I clinical trial for MDX-202301. The 4th quarter of 2025 included $4.3 million paid by Eli Lilly for royalties on mazdutide, which is being commercialized by Innovent in China. This reflects royalties on sales from July to December 2025. IP and other revenue was $33.7 million compared to 2024's $43.1 million. Costs and expenses for our pharmaceutical business were $88 million, up from $82.6 million, reflecting our investments in our R&D programs.

R&D for Q4 2025 totaled $32.4 million, up from $29.8 million in the 2024 quarter, due to our increasing ModeX development activities. As a result, our pharmaceutical operating loss was $10.7 million, compared to last year's operating loss of $2.1 million. Depreciation and amortization was $18.3 million, which was consistent with 2024's $18.1 million. Our consolidated financial results include total revenues for Q4 2025 of $148.5 million, compared to $183.6 million in the fourth quarter of 2024. Our consolidated operating loss for Q4 2025 of $38.3 million, compared to $33.1 million for the 2024 period.

The 2024 period benefited from the Merck milestone payment, which was approximately $5 million more than 2025's Regeneron milestone payment. Our net loss for Q4 2025 was $31.3 million, or $0.04 per share, compared to net income of $14 million, or $0.01 per diluted share in Q4 2024, which included the benefit from gains of certain of our underlying investments. Looking forward to our outlook for the first quarter of 2026, we expect total revenue to be between $125 million and $140 million, with revenue from services of $71 million-$75 million. This range reflects several of the weather impacts that have already occurred in January and February in the Northeast, which have already impacted our volumes by $3 million-$5 million.

We expect pharmaceutical product revenue of between $38 million and $45 million. We expect IP and other revenue to be between $15 million-$20 million, including Pfizer's gross profit share of $5 million-$6 million. The first quarter reflects the reset of the global revenue base. In prior years, has been negatively impacted by gross to net adjustments in inventory revaluations that Pfizer records. Total costs and expenses are expected to come in between $170 million-$180 million, excluding any one-time restructuring costs. With our expanding investments in R&D to come in between $30 million-$32 million, partially offset by $7 million-$9 million in collaboration funding and depreciation in amortization expense of approximately $24 million.

Moving to the outlook for the full year, we expect total revenue of $530 million-$560 million, with revenue from services contributing $300 million-$312 million, pharmaceutical product revenue of $160 million-$170 million. Other revenue from our partnering and collaboration agreements of $70 million-$80 million, including Pfizer gross profit share of $34 million-$37 million. Total costs and expenses are expected to be in the range of $725 million-$750 million. Our full year investment in R&D is expected to be between $125 million and $135 million, offset by $22 million-$26 million in BARDA funding and reimbursement through Regeneron under our collaboration agreements.

Finally, depreciation and amortization expense is expected to be approximately $100 million in 2026. As I mentioned earlier, we have approximately $113 million authorized to repurchase shares of our common stock. We expect to continue to accelerate our repurchase program over the next several days and weeks, continuing to focus on our investments into our R&D programs, with capital being allocated to our repurchase program. That concludes our prepared remarks. Operator, let's open the call to questions.

Operator (participant)

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing any keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Maury Raycroft of Jefferies. Please go ahead.

Speaker 10

Hi, it's James on for Maury. Congrats on the progress in the quarter, and thanks for taking our questions. Just start with MDX-2001. Can you discuss the timing of a potential data disclosure and how you're setting expectation for the proportion of patients from the 25 that you've dosed so far? How many of those could be evaluable for efficacy? Also, can you confirm whether you still plan to advance the sixth dose level, or whether you're seeing sufficient activity at the 5th dose level to begin backfilling certain dose cohorts? Should we be thinking about this?

Elias Zerhouni (Vice Chairman and President)

Yes.

Speaker 10

Data disclosure as first half or second half event? Thanks.

Elias Zerhouni (Vice Chairman and President)

Right. In terms of the dose, I think we are at the dose that we were proceed. We are adjusting the regimen. How many microgram per week or every two weeks? We're adjusting that right now. We will not go to a much higher dose level based on the information we have. We have dosed 25 patients. We do see signs of efficacy. It's too early, obviously, to report, you know, formally, but we will announce the results of phase I-A trial in a upcoming conference and phase I-B for the tumors that show the most promising signs of efficacy. And that will probably be, you know, advancing so that we will have results that we can share by the end of 2026.

Speaker 10

Thanks. Just another quick one on NGENLA profit shares. Increased to $12.5 million this quarter, consistent with the upper trajectory and weekly prescription trends that we've been seeing. Can you provide more color on the key drivers of the profit share increase, and what are the assumptions underpinning the guidance for profit share of $34 million-$37 million in 2026? Thanks.

Adam Logal (SVP and CFO)

James, thanks. we've seen good continued growth globally for Pfizer. Really, what drove the fourth quarter increase was certain regions have moved up in the overall tiering structure. in one of the regions, they actually hit the third tier, the overall gross profit % sharing has been moving up in those regions. We've also seen Pfizer continue to take market share, again, on a global basis and increasing it in markets where they've historically been behind. we're pretty pleased with where they've been able to head in the fourth quarter. Came in ahead of where we had expected, based on the growth rates that they've been able to deliver.

You know, we see, you know, the 34 to 37 as being achievable at current growth rates and certainly could accelerate should they have some more wins on a global basis.

Speaker 10

Thanks so much for taking my question. I'll back it.

Operator (participant)

Our next question comes from Brian Cheng of JP Morgan. Please go ahead.

Brian Cheng (Executive Director and Senior Biotech Analyst)

Question this afternoon. Maybe just first on the BioReference side of the business. Can you give a bit more color in the growth that you're seeing, especially in the 4K diagnostic test segment? Is the 6% growth that, you know, you saw here, driven by particularly momentum in the primary care setting? How should we think about just the stability of this growth trajectory, especially in the 4K diagnostic test? Then I have a follow-up. Thank you.

Adam Logal (SVP and CFO)

Brian, we have not made any meaningful effort yet into the primary care setting. We're still, while we have the FDA label change, we're still working with payers to ensure coverage. The volume increases have all been coming from the work within the urology field. We'll expect to continue to push that growth upwards and think it can accelerate as we make progress with payers. The overall revenue growth came from improved revenue cycle management and selling into the right payer mix. We've continued to see overall benefits of the 4K and expect that to grow at a, you know, a high single-digit, low double-digit pace into 2026.

That could accelerate as we make progress within the primary care setting as payers come along.

Brian Cheng (Executive Director and Senior Biotech Analyst)

Got it. Just on the Merck partnership, for the Epstein-Barr virus vaccine, you know, we noticed that there are additional studies being performed. What are those specific studies that will move this program to move into the phase II phase? Any sense of the timing when those studies will be completed?

Elias Zerhouni (Vice Chairman and President)

I'll defer to Gary Nabel, who is the the leader of the the collaboration with Merck. Gary, can you respond?

Gary Nabel (CIO)

I'd be happy to give you some more color on that. The studies that are ongoing at the moment are designed to give us a little bit more information on the EBV naive patients. The initial phase one took all comers. Since the rates of seropositivity are so high in the U.S. and throughout the world, the vaccine ultimately is intended for patients who've never been exposed to the virus, we'd like to see a little bit more data on that seronegative population, because they'll be the subject ofphase II. The other activity that's ongoing is to see if we can reduce the age of inclusion in the trial. In the current phase one, it was age 18 and older.

While we're getting material ready for phase II and beyond, we can now take this opportunity to reduce the age of entry down to 12 years of age. It's really kind of positioning ourselves for more success and more the most relevant formulation to succeed in the prevention studies when they begin.

Brian Cheng (Executive Director and Senior Biotech Analyst)

Thank you.

Elias Zerhouni (Vice Chairman and President)

Do you want to talk about the timing also, Gary?

Gary Nabel (CIO)

Yeah. In terms of the timing, I expect by the end of the year, we would have most of the data that we need to make the decisions. I think we're looking at a timeframe forphase II that would start next year, not in this current year.

Brian Cheng (Executive Director and Senior Biotech Analyst)

Got it. Well, thanks for the follow-up. Thank you.

Operator (participant)

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

Yale Jen (Senior Biotech Analyst)

Good afternoon, and thanks for taking the questions. I'm just going to follow up on the EBV in terms of the first data readout with the study already completed. Do you anticipate Merck to provide that? The second sort of follow-up on this question, really, this part, is really that has Merck make a final, definitely go, no-go decision, and the current study is simply just to supplement or extend that versus the no-go decision has not yet, you know, officially made? I have a follow-up.

Phillip Frost (Chairman and CEO)

Yeah, you know, I'd say the short answer to your question is that it is a decision for Merck to make and to announce. I don't want to get too far ahead of the curve. What I will say is that the data we've seen thus far is encouraging, and I think that, you know, we, at the moment, really want to just make sure that everything is in place so that when we start thephase II, thephase II goes seamlessly and beyond. That we can go straight fromphase II to phase three to the launch, using the same-

batches and the same preparations of the vaccine. I, what I can tell you is that we are encouraged, but the final decisions really should be coming from Merck, and I don't wanna get ahead of ourselves in that regard.

Yale Jen (Senior Biotech Analyst)

Understood. Understood. Appreciate that. Maybe just another question here really. In terms of the collaboration with Entera Bio, we noticed that there's also a GLP-1 glucagon combos assets. You guys seem to have not yet talked much about it. Could you reveal some information on that one and the current status of that one as well? Thanks.

Elias Zerhouni (Vice Chairman and President)

The GLP-1 glucagon is what we call oxyntomodulin in our report, and that's the name that is used for that. It's pretty much at the very latest stages of IND submission. I think in terms of the overall formulation with Entera, we're pursuing that, given the results we had in December, which are very, very promising. In terms of the injectable, we're getting ready to enter a phase I once we get the IND cleared.

Yale Jen (Senior Biotech Analyst)

Okay, great. That's very helpful, and, congrats on all the progress, in the ModeX side.

Operator (participant)

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

Edward Tenthoff (Managing Director and Senior Research Analyst)

Great. Thank you very much. Really impressed with so much going on at the company these days and the improvements in the balance sheet too, to pay for all of this research. I wanted to ask a little bit about the in vivo CAR-T, and it really is an interesting opportunity for the ModeX technology. Can you elaborate a little bit more in terms of how you're delivering the construct so that you can express-

Elias Zerhouni (Vice Chairman and President)

Mm-hmm.

Edward Tenthoff (Managing Director and Senior Research Analyst)

the CARs on either T-cells or other specific cells? Thanks.

Elias Zerhouni (Vice Chairman and President)

What we've developed here is a really unique approach to in vivo CAR-T, characterized by a few factors. Number one, we've found a way to conjugate covalently the targeting antibodies that are on the surface of the lipid nanoparticle. We're using lipid nanoparticles, which can have a cargo of either mRNA or DNA, and our ability to target with multispecifics allows us to be able to target T cells, B cells, NK cells. It's a very versatile platform, which is very interesting. We have advanced the program in terms of the CMC and as well as the non-human primate experiments that are really necessary to achieve, you know, IND progression.

The characteristics of this CAR, in vivo CAR-T, really are quite fascinating because the possibilities are enormous, because the CAR-T receptor itself, the chimeric receptor itself, can be actually multispecific as well. As you know, currently, they're all monospecifics, but we've been able to achieve both monospecific CAR-Ts as well as multispecific CAR-T developments. We believe, and others do, and we've had a lot of interest, incoming interest on this platform, that this asset is really something that is, in my view, a large component of the value of ModeX at this time.

Edward Tenthoff (Managing Director and Senior Research Analyst)

Yeah, very, very interesting. I appreciate that color. If I may ask just one additional question also on MDX-2004, the immune rejuvenator. I'm thinking about this almost as like an immunostimulatory agent. How do you envision developing it? Because it could have very broad utility. Thanks.

Elias Zerhouni (Vice Chairman and President)

You're referring to MDX-2004? Is that what you're talking about?

Edward Tenthoff (Managing Director and Senior Research Analyst)

Yes, sir.

Elias Zerhouni (Vice Chairman and President)

I couldn't hear you. Yeah. MDX-2004 is, I mean, pretty much a rejuvenator of the immune system. As you know, many patients have exhausted immune systems when they fight cancer and they receive multiple treatments, chemotherapy and other immune oncology drugs. What we found is that the need is to really reinforce the immune system in these situations. As you know, PD-1 is a checkpoint inhibitor. What it does, it removes the brake on the immune cells, the T cells in particular. That doesn't guarantee that the T cell is going to be effective, because you remove the brake, but the car may not advance, right? What MDX-2004 does, it is an accelerator.

It really provides energy, gas, if you will, to rejuvenate the T cells and the stem cells and the memory cells so that the immune system can rev up and continue its fight against cancer cells. In terms of development, we're going into both patients who've been, or cancer patients who have been treated in multiple lines and testing whether or not a rejuvenation of the immune system will really reignite the positive anti-cancer effectiveness of the immune system, right? In addition, we're doing it in patients who are PD-1 naive and patients who've had PD-1s in the past, but where the effects of the PD-1 has, you know, basically faded. That's the first step.

We have a two-arm trials with PD-1 naives and PD-1 previously exposed, and then we're really testing whether or not it's a tolerable molecule that can be administered without too much safety issues, and observe whether or not it can prolong or rejuvenate the response, the immune system response. So far, we have eight patients, and things are going well.

Phillip Frost (Chairman and CEO)

That's great. That's really helpful. Appreciate all the color.

Elias Zerhouni (Vice Chairman and President)

Thank you. Thank you.

Operator (participant)

Our next question comes from Yi Chen of H.C. Wainwright & Co. Please go ahead.

Speaker 9

Hi, this is Eduardo on for Yi. I was just hoping if I could get you guys to repeat the specific clinical milestones for 2001 and 2004 in 2026, just to have some clarity there.

Elias Zerhouni (Vice Chairman and President)

2001 is pretty straightforward. It's completion of the dose regimen and entry phase I-B. all right? That's really what it is. For 2004, we're doing the escalation, the phase I escalation. We passed the first step, and we're going into the second, and there are multiple steps that are planned, which phase I-A, which we hope to complete by within this year and determine what the optimal dose is for this therapy. I'll point out the fact that this therapy may be effective in more indications than just tumors, simply because you have many patients who are immunosuppressed for reasons other than harboring a phase I-B for 2001 and phase I-A for 2004.

Speaker 9

Got it. That's really helpful. Then shifting over to the BioReference, margin expansion and the expense bridge. I think the guidance said $725 million-$750 million in total expense, which seems a little high following the divestiture. just wanted if you could add some more color there in terms of the OpEx.

Elias Zerhouni (Vice Chairman and President)

Yeah

Speaker 9

The new BioReference divesture.

Elias Zerhouni (Vice Chairman and President)

Adam can cover that. Adam, can you cover?

Adam Logal (SVP and CFO)

Yeah. Yeah, sure. We would expect, Eduardo, the overall expense base to continue to decline at BioReference, as we've continued to work the overall operating efficiency upwards and starting to work the margin profile up. The really where the expense expansion's coming from is within the R&D efforts. It's gonna be dependent on some of the successes that we've been talking about in other programs and what the timing of where they start. That's where the expense expansion is. Everything else from the operating company side, we should see stable or reductions.

Speaker 9

Got it. Thanks so much for the clarity. Congrats on the year.

Operator (participant)

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

Phillip Frost (Chairman and CEO)

Thank you all for participating and for your good questions. We look forward to meeting with you again after the first quarter to discuss those results. Thank you again, and have a good evening.

Operator (participant)

This concludes today's conference call. You may disconnect your lines. Thank you for participating. Have a pleasant day.