OPKO Health, Inc. (OPK) Q2 2016 Earnings Report, Transcript and Summary

Welcome to the OPKO Health conference call. At this time, all participants are in a listen-only mode. Following management’s prepared remarks, we’ll hold a Q&A session. [Operator Instructions] As a reminder, this conference is being recorded August 8, 2016. I would like to turn the call over to Anne Marie Fields. Please go ahead, ma’am.

Thank you, Victoria. Good afternoon. This is Anne Marie Fields with LHA. Thank you all for joining today's call. Before we begin, I'd like to remind you that any statements made during this call other than statements of historical fact will be considered a forward-looking and as such will be subject to risks and uncertainties which could materially affect the company's expected results, including, without limitation, the various risks described in the company's annual report on Form 10-K for the year ended December 31, 2015 and its subsequent filings with the SEC. Before we begin, let me review the format for today's call. Dr. Phillip Frost, Chairman and Chief Executive Officer of OPKO, will provide brief opening remarks, followed by Steven Rubin, OPKO’s Executive Vice President, who will provide an update on the company's various businesses and clinical programs, followed by Adam Logal, Chief Financial Officer, who will provide an overview of the company's financial performance during the second quarter of 2016. We will then open the call for questions, after which Dr. Frost will conclude the call with his closing remarks. Now, I'd like to turn the call over to Dr. Phillip Frost. Dr. Frost?

Thank you. Today's report represents the continuation of a growth story through acquisitions. product development and improved operation. At about a year ago, we completed the acquisition of our Bio-Reference Laboratories in a stock transaction that resulted in a 14% equity dilution, but added approximately $1 billion in revenue and $100 million in operating income. The results have been improving through revenue expansion and better operating efficiency. But there’s also a strong strategic value to the deal. A 400-person seasoned sales force, some of which could immediately help expand our 4Kscore test sales and later to help sell our Claros point-of-care diagnostics products. Needless to say, we are well satisfied with Bio-Reference and with the great team running it. RAYALDEE has been approved after a little hiccup that seemed big to others. Now, we're assembling a marketing and sales leadership team that is second to none and we’ll start selling the product in the fourth quarter. A great validation of the importance of this product comes from the deal we struck with a joint venture between Vifor International, a multinational Swiss company specializing in renal diseases and Fresenius, a major operator of dialysis centers. The large upfront payments, milestones and eventual royalties from this deal will add to the success of RAYALDEE in the US, where we will commercialize the product ourselves. Rolapitant, now known as VARUBI, has been approved and is being sold by our licensee TESARO, with sales of the orally-administered form increasing nicely. The IV form, with a PDUFA date in January 2017, will be more important commercially and is expected to capture significant market share. On another front, we hope to close on the acquisition of Transition Therapeutics shortly, which had advanced projects to develop medicines with major market potential. We will offer greater detail about these products after the closing. You will hear more about all this from Steve, but I will point out that the value of our assets keeps growing. In fact, we’re beginning to exploit assets that we have owned, but not had the resources to develop. For example, we have previously mentioned another NK-1 inhibitor separate from rolapitant which we also got from Schering prior to their sale to Merck as a possible drug to treat itching, a common and important problem. We plan to shortly file an IND for this product and begin Phase II clinical trials. There are others. Steve Rubin will now provide more detail on our activities.

Thanks, Phil. And thank you all for joining us this afternoon. Throughout the second quarter, we made excellent progress across a number of areas that position us for continued commercial and clinical success. The quarter featured a number of important milestones, such as FDA approval of RAYALDEE, an international co-development agreement with Vifor Fresenius Medical Care Renal Pharmaceuticals for RAYALDEE, an agreement to acquire Transition Therapeutics, growing revenues from our diagnostic business, and continued execution on our ongoing clinical trials. During today's call, I'll provide an overview of our progress in therapeutics, diagnostics, biologics and certain partnered programs before turning the call over to Adam for a detailed discussion of our financial performance. Let me begin with an update on RAYALDEE. We were delighted to announce on June 21 receipt of FDA approval for RAYALDEE. The approved indication is treatment of secondary hyperparathyroidism in adults with stage three or four chronic kidney disease and Vitamin D insufficiency. The FDA defined Vitamin D insufficiency as serum total 25-hydroxyvitamin D levels less than 30 ng/mL. RAYALDEE is the first product to receive FDA approval for this indication. RAYALDEE fills a void in the available treatment options for the approximately 9 million American adults with SHPT, stage 3 or 4 chronic kidney disease and vitamin D insufficiency, a potential market estimate to exceed $12 billion annually. The current standard of care is high dose vitamin D supplementation, which is an approach that is neither FDA approved nor demonstrated to be safe and effective in this population. Survey data indicates that 75% of RAYALDEE’s target market is treated with high-dose vitamin D supplementation. A recently published review of published randomized clinical trials concluded that supplementation with nutritional vitamin D is completely ineffective against SHPT. SHPT is a progressive disease that becomes increasingly debilitating and difficult to treat, thereby necessitating timely and effective treatment. Without effective treatment, SHPT leads to increased healthcare costs and patient morbidity and mortality. The FDA based its approval of RAYALDEE on the results from two 26-week placebo-controlled, double-blind Phase III trials, which demonstrated that RAYALDEE can reliably and sufficiently raise serum total 25-hydroxyvitamin D in patients with stage 3 or 4 chronic kidney disease to control elevated parathyroid hormone levels without clinically meaningful effect on serum calcium or phosphorus, two key drivers of vascular calcification. Vascular calcification is the primary cause of morbidity and mortality in CKD. We continue with our pre-commercial plans for RAYALDEE and remain on track for launch in the fourth quarter of this year, probably in November. We’ve been making key additions to our renal division and have already recruited top-level talent for our sales, marketing, market access and medical science liaison teams to support the upcoming launch. At the time of launch, we expect to have approximately 10 internal and 35 regionally-based sales representative. And over time, perhaps six months later, we plan to continue building our own team to a mature size of around 70 to 80 reps. Market access, of course, is important to the product’s commercial success. And in this regard, we're working on our pricing strategy, favorable listings in key compendia and formularies, and patient assistance programs. This is a process that will take some months to complete, but we feel we will be in a strong position right out of the gate to provide good access to RAYALDEE for CKD patients. In addition to the considerable US market opportunity, the global market opportunity for RAYALDEE is substantial and we are working closely with our partner, Vifor Fresenius, to bring RAYALDEE to Europe and other international markets as well as develop RAYALDEE for end-stage or stage 5 renal disease. We are very excited about RAYALDEE both in the US and overseas and look forward to updating you on our continued progress. Moving on to our diagnostics segment, we see continued revenue growth underscoring the rationale for acquisition of Bio-Reference Laboratories last year. Currently, the bulk of our revenue comes from traditional reference lab testing, but, over time, we expect increasingly significant contributions from GeneDx, our higher-margin genetic testing business, and from the 4Kscore test and Claros 1 point-of-care test. Let’s turn now to our progress of 4Kscore, our blood test that provides men with a personalized risk score for having aggressive prostate cancer. 4Kscore test is included in the latest recommendations from the US National Comprehensive Cancer Network guidelines for prostate cancer early detection and in the European Association of Urology prostate cancer guidelines panel for 2016. In both cases, the 4Kscore as a blood test with greater specificity over the PSA test is indicated for use prior to a first prostate biopsy or after negative biopsy to assist patients and physicians in further defining the probability of high-grade cancer. Looking to our progress with reimbursement for the 4Kscore, last November, the American Medical Association granted a CPT 1 code for 4Kscore which will be published later this month and will be effective on January 1, 2017. We already secured a number of favorable coverage decisions. We received an initial draft positive coverage determination from Novitas Solutions. Novitas is the Medicare administrative contractor or MAC that provides administrative services for Medicare coverage of the 4Kscore. This positive draft determination by Novitas was tentatively retired due to a potential conflict with a contemporaneous initial draft negative coverage determination from another MAC, Palmetto. Notably, we have not submitted complete dossiers to either of these MACs prior to these determinations, but rather they made their determinations on their own. We have since submitted a rebuttal to Palmetto’s draft determination and are submitting complete data packages to both MACs. These data packages will contain, among other things, background information, physician experience and extensive clinical validation, including data published in the peer-reviewed reviews in urology, demonstrating that the 4Kscore test led to 65% fewer prostate biopsies being performed among participating patients. We believe there is more than enough scientific and clinical data to justify a local positive coverage determination by any MAC. We expect action next month from Palmetto on our rebuttal to their draft negative determination and we hope Novitas will post a draft positive coverage determination in October. As we previously reported, the 4Kscore is currently being marketed by approximately 205 Bio-Reference Lab sales reps to both urologists and primary care physicians. We have continued to see double-digit volume growth every month that we expanded our sales force from the original ten people and we remain encouraged by the ramp-up on physician use of the test. More than 5,000 physicians have used the 4Kscore test in routine practice and we performed over 5,300 4Kscore tests in the month of June alone. We have also made significant progress with GeneDx. Patient volume in GeneDx continues to grow substantially over prior-year volumes. Regarding Claros 1 point-of-care system, we continue to make progress with plans to commercialize this novel diagnostic system to provide rapid high-performance blood test result at the point-of-care. Using a single drop of the blood, Claros 1 can run multiple tests in the physician's office or hospital nurses station negating the need to use a centralized reference laboratory for these tests. We continue to make progress in our efforts to advance Claros 1 through the regulatory pathway towards commercialization in the US. Following the completion of the clinical trials later this year or early next year, we expect to file with FDA PMA for PSA and a 510(k) for testosterone diagnostic utilizing the Claros 1 system. Upon the FDA clearance, we expect to fully leverage BRL’s marketing, sales and distribution resources to launch the Claros and its associated diagnostic tests in the US. We believe there are many more applications for the Claros technology, including infectious disease, nephrology, cardiology, women’s health and companion diagnostics. Let me turn to our biologics division where we are advancing the development of improved long-acting proteins and peptides and for which we have a number of exciting and promising products in ongoing clinical studies. Our most advanced product candidate is our long-acting human growth hormone product, hGH-CTP, which is partnered worldwide with Pfizer. A global Phase III clinical study of this product in adults is nearing completion. Enrollment in this trial was completed last year and we expect the last patient visit on August 19, with a topline data readout expected around year-end. These data will support forthcoming regulatory submissions, requesting marketing approvals in the EU and the US. We plan to initiate our global pivotal Phase III study in pre-pubertal growth hormone deficient children later this year. This upcoming study will evaluate a weekly single dose of hGH-CTP versus daily injections of currently marketed growth hormone. Let me now update you on our Long-Acting Factor VIIa-CTP for the treatment of bleeding episodes in hemophilia A or B patient with inhibitors to factor VIII or factor IX. During the first quarter, we initiated Phase IIa dose escalation study to determine safety of intravenously administered Factor VIIa-CTP and explore efficacy endpoints. We intend to enroll 24 patients in the US and we expect to have interim data by year-end. We intend to initiate a new study evaluating subcutaneous administration by year-end as well. Current treatment options with factor VII require multiple infusions to treat bleeding episodes because of its short half-life. Also, frequent infusions are impractical for preventative prophylactic therapy, especially in children. This is currently a $1.7 billion market opportunity and the market is growing 7% annually. More importantly, only 25% of the patients are currently being treated. Turning now to MOD-6031, our long-acting, subcutaneous oxyntomodulin. We continue to enroll patients in a Phase I single-dose escalation study evaluating safety, pharmacokinetics in healthy, overweight or obese volunteers. We intend to enroll 48 subjects in Israel and the trial is expected to be completed by year-end. MOD-6031 is a once-weekly oxyntomodulin with a proprietary delivery system designed to slowly release the natural oxyntomodulin and to allow the molecule to effectively penetrate the blood-brain barrier. MOD-6031 has excellent potential to interact with the central nervous system as well as peripheral receptors, which should mimic the effects of natural oxyntomodulin on satiety and weight loss. In animal studies, MOD-6031 showed significant inhibition of food intake and reduction in body weight, enhanced glycemic control, glucose-dependent insulin secretion, fat reduction and improved lipid profile. Talk a little bit about the Transition Therapeutics acquisition. At the end of the second quarter, we announced the acquisition of Transition Therapeutics for approximately 6.4 million shares of OPKO common stock. This transaction provides us with two late-stage assets. First is TT401, a long acting dual GLP-1/glucagon agonist that showed success in a recently completed 420-patient Phase II study in type 2 diabetes patients. TT401 demonstrated significantly superior weight loss compared to currently-approved extended-release exenatide and placebo after 12 and 24 weeks of treatment. TT401 further showed reduction in hemoglobin A1c, which is a marker of sugar metabolism, similar to exenatide at weeks 12 and 24. The second asset is TT701, an orally-administered selective androgen receptor modulator or SARM for the treatment of conditions characterized by androgen deficiency. TT701 produced significant decreases in fat mass and increases in lean body mass without significantly changing PSA levels in a Phase II study in 350 male subjects. TT701 appears to be well suited to provide therapeutic anabolic benefits to specific patient populations, while potentially avoiding or even reducing prostate hypertrophy. TT701 is expected to be an important need in patients who can benefit from its anabolic effects without the risk associated with testosterone products. The Transition Therapeutics acquisition is expected to close in early September. Following on the close of the deal, we look forward to sharing with you more details of our clinical development plans for TT401 and TT701. So in closing, the achievements we made during the first half of 2016 position us well to reach a number of value-creating milestones throughout the balance of this year. We look forward to the launch of RAYALDEE in the US as a treatment for secondary hyperparathyroidism in adults with stage 3 or 4 CKD and vitamin D insufficiency. We expect to grow revenue and improve margins from our diagnostic business. We plan to enhance the commercialization of 4Kscore by securing positive local coverage determinations and continuing to advance reimbursement efforts with private payers. We also plan to advance the development programs for Claros and begin clinical trials late this year. We look forward to making progress with the multiple clinical programs underway, including reporting topline data from our Phase III adult trial of hGH-CTP, our long-acting human growth hormone, initiating our global Phase III pediatric study of hGH-CTP, reporting interim data from our Phase IIa study of our long-acting Factor VIIa-CTP and initiating a clinical study using subcutaneous administration and reporting topline data from our Phase I study of MOD-6031 in overweight or obese volunteers. With that overview of our business, let me turn the call over to Adam for a discussion of our financial performance.

Thank you, Steve. And good afternoon, everyone. The progress Steve outlined has resulted in a number of important improvements to our financial results. During the second quarter of 2016, we strengthened our balance sheet through the reduction of our line of credit by over $38 million, resulting in the outstanding balance on our facility to approximately $34 million, down from $72 million at December 31, 2015. The reduction in our credit facility is the result of the cash flow generated by Bio-Reference. In addition, we received an upfront payment of $50 million from the Vifor Fresenius as part of our RAYALDEE license agreement, which resulted in our ending cash, cash equivalents and marketable securities of $171 million. In addition, during the second quarter of 2016, we received approval for a method change with Internal Revenue Service which will result in our receiving approximately $38 million of cash as a tax refund late in 2016, as well as an additional $10 million of net operating loss carry-forward to be used to offset future taxable income in the United States. Turning to the results of operations, during the quarter ended June 30, 2016, revenue increased by over $310 million to $357 million from $42 million for the comparable period of 2015. This increase is the result of revenue generated by our diagnostics business and the $50 million upfront payment from the Vifor Fresenius license agreement. On a sequential basis, revenue from our diagnostics business increased to $266 million from $252 million for the first quarter of 2016 as a result of continued growth in patient count as well as slight improvements in our overall collection rates. We continue to invest in our research and development programs and had just over $31 million of R&D expense during the quarter compared to $29 million of the 2015 period. Income from operations were $28 million and net income for the quarter was $15.6 million, which is principally the result of the license arrangement for RAYALDEE. For the comparable period of 2015, we had an operating loss of $25 million and a net loss of $82 million. I’d like to turn the call back to Phil.

Thank you. We will entertain questions if there are any.

[Operator Instructions] Our first question is from Dana Flanders with JPMorgan.

Hi. Thank you for the questions. Just the first one on RAYALDEE, can you just discuss in more details some of the prelaunch activity underway between now and Q4, just what exactly you have going on at the company? And in terms of the launch trajectory, how should we think about the initial uptake over the course of – the end of 2017 and 2018 just as we think about the sales force and managed care and just, I guess, what should we keep in mind as we think about how quickly you can get this out and how receptive the physician base will be?

Charlie Bishop is on the phone standing by. Charlie, if you’re available, please respond.

Thanks, Phil. Dana, thanks for the question. We have quite a lot of activities, as you might imagine, in getting ready to launch RAYALDEE probably in November, as Steve pointed out. As we mentioned, we restarted our hiring process for the sales force. We’ve put in place five regional business managers. We are in the process of concluding hiring a total of 45 reps by the middle of September. We’re hiring an MSL team as well with the completion date for that as of October 1. We have brought on-board a significant market access and marketing team, which will be interfacing with the payers. Activities that we’re undertaking to prepare for launch are submitting our applications to the various compendia to get consistent and favorable listings for RAYALDEE. We're requesting licenses from all of the states. Until we get licenses, we will be selling under a title direct model with our third-party logistics provider. Our third-party logistics provider is already in place. We’re doing research on our product messaging and our pricing. We are developing our unbranded and branded campaigns and we're also working on patient assistance programs and putting in place a hub. So you can imagine that we’re fairly busy, but we will be ready by the time of launch. With regard to forecast, OPKO is not providing guidance at this time as to what we're anticipating for sales, but we will provide guidance on an ongoing basis after we launch.

Okay, that's really helpful. And just on the pricing side of things, can you just update us on what you're thinking there? I know you can’t give us a specific price point, but maybe just some of the factors that you're weighing given that there are cheaper, but maybe less effective alternatives on the market?

I’ll be happy to, Dana. First, we will not be loading price into the compendia until about two weeks before we launch. This is so that we can continue to get our listings with the compendia in place. Our pricing research is underway right now. We have not settled on what the price will be for RAYALDEE on a monthly basis. But we have provided some working numbers in the past that give you some idea as to how to estimate the size of this opportunity and I'd refer you back to our previous comments regarding the range in which we think the price will land.

Okay, great. And maybe just one final one from me. On Lagova and the pediatric Phase III study, I know you said that it would start later this year, but are there any gating factors to getting that study underway? And just assuming all goes well with that and your timelines, can you just remind us when you would plan to launch that indication? Thank you.

So there are no particular gating factors other than setting up the centers. We were waiting until we had drug supply in the pen device, as we mentioned before, the actual device that Pfizer would use to commercialize in the same formulation. So it’s, at this point, just logistics to set up the centers. We do expect the trial to start later this year. It is a 12-month trial followed by 12 months of safety. So counting forward, it’s finishing it up – it’s three years, I guess, until launch.

I will mention that it’s a worldwide trial and preparation for registering the product not only in United States and the usual markets, but in what has been one of the more important markets, Japan. So we've been doing a lot of work meeting with the top investigators in places like Japan to get them on-board.

Thanks. That’s all for me.

Your next question comes from line of the Yale Jen with Laidlaw & Company.

Thanks a lot for taking the questions. I know you guys will not comment too much on the detail of the study for Transition acquired product, 401 and 701. But on the top level, to look at it, how these two assets potentially fit into your entire drug development profile and what type of anticipation at this point you may have?

Well, as we said, there are two principal products that have attracted our interest. One is an oxyntomodulin product and, as many of you know, we have had a long interest in that subject, having our own product under development. This is a product that has been studied in more than 400 patients in a Phase II trial. We’ve got very good data about its efficacy and safety and it's in a wonderful position to be developed as we go along to be a major product in the treatment of overweight and type 2 diabetes. And we have our own product there as well which we’re moving forward with, and so it will be very important to compare the two products to see how they might differentiate from each other. But it’s nice to have a more advanced product as well as our early stage product. The other product, the SARM or selective androgen receptor modulator, is one of a family of compounds that have been studied by others. But this one, again, has been a 400-men, in a very interesting trial previously. So we have a lot of information about its safety and the various effects that it can have. And it's clear that it’s a drug that without affecting the prostate in negative way or without raising the PSA can increase muscle mass while at the same time decreasing body fat. So it’s a very, very interesting drug and there are several possible indications that we’re evaluating now for our clinical trials and it can have at least two or three separate indications, each one of which is very important and major. And it could be used conceivably not only in men, but also in women. Does that answer your question?

Yes. That has been very helpful. And we look forward to see more details when you close the deal. And one, just another follow-up question, which is to follow-up the earlier one which is in the pre-launch activity for the RAYALDEE. I think one of the key aspects is to getting into different formularies and different tiers. Given this drug is already approved, a month ago, two months ago, do you guys have any comment in terms of that negotiation at this point? And would you guys provide more details now or later when you get sort of into the formulation and how that will impact on your pricing going forward? And thanks a lot.

Hi. This is Charlie. As I mentioned in answering the question that Dana posed, we have filed applications to nine US compendia, seeking consistent and favorable listings. We will not know the outcome of our applications for favorable listings until we load price. And as I mentioned, we won't load the price for the product until about two weeks before we launch. We will get an earlier read on our application to USP because there’s a public comment period. And on or before October 1, USP will list the provisional classification of RAYALDEE for public comment. So we'll see at that point how USP has viewed our application and where they intend to list this. There will be, of course, an opportunity to change a provisional listing by USP if we think it's inappropriate. But that's the only one we’re going to have significant visibility until we load price. Did that answer your question?

Yes. That has been helpful, I think we like the granularity of this details here. So thanks a lot. I appreciate and congrats on the good quarter.

Going back to the SARM that we’re getting from Transition Therapeutics acquisition, I would point out that out interest there was in helping to develop a franchise in urology. As you know, the 4Kscore test for serious prostate cancer is expected to be a major product for the urology market. The PSA and the testosterone Claros test will also be very important in urology. So the SARM can represent, from a therapeutic point of view, a major product in that urology franchise and it would be safe to assume that we will be looking for other opportunities in that area as well.

Sounds great. And that's definitely more helpful because I think that start to make more sense in the way of specialty areas that you guys will be interested in and explore. Thanks a lot.

I think it's important to think in terms of a model that we’re developing and that is to develop certain products for us to market ourselves and others to out-license, so that as we have done with the growth hormone, licensing it out to Pfizer, we may consider as time goes on the same type of opportunity with the oxyntomodulin that we’re getting from the Transition Therapeutics. But that’s premature now, it’s early. That’s for the future.

Okay, great.

Your next question comes from the line of Kevin DeGeeter with Ladenburg.

Hi. Good afternoon, guys. Thanks for taking my questions. With regard to Factor VII as we look forward to seeing some of the Phase I readout in the next six months, can you just comment on how you anticipate or how we should think about that product potentially differentiating itself from some of the other long-acting Factor VIIs in development? And just any thoughts you have as to how gene therapy down the line may or may not factor into this market?

The biggest differentiation, Kevin, is going to its ability to administer it subcu. So there are long-acting – people worked on long-actings in factors in hemophilia A and B. On the inhibitor side, the pipeline is really consistent with some of the new technologies, the micro antibody and kind of the gene therapies which are further down the line, relatively early in trial. So ours is actually – it’s no doubt that Factor VII works, it’s just not the right way to treat a patient with short-acting infusion. So I’m not aware of anybody else where we are that would have a subcutaneous long-acting version of actual Factor VII at this point.

Okay, great. That’s helpful. And then with regard to 4K and the prostate cancer market opportunity in general, there's been a number of small investigator studies and some amount of attention in the lay press as well with regard to increase in men presenting with more advanced prostate cancer. And hypothesis being that that they may be related to a decrease number of PSA tests being performed. Are you seeing any change in the general market dynamics with clinicians in terms of how they just use PSA testing and then how 4K may enable certain clinician to – who may have concerns about overuse of PSA testing, but clearly want to retain some of the full benefits and the role 4K may play in that decision-making?

I think the way we’re thinking about it is that there’s pendulum effect. Initially, there was great enthusiasm for screening with the PSA – and there’s no question about it that the use as a screening test has led to an improvement in the overall therapy of prostate cancer in the sense that it’s reduced the mortality rate in men. On the other hand, this recent advisory indicating that it was being overuse has perhaps pushed the pendulum too far in the other direction and now we’re at a point where, as you indicate, more men are presenting with metastatic disease than ever before, particularly in the African-American populations. And so, I think it's time for a fresh look at the whole question and we’re hoping that the urology community will take the lead in making it clear that there is a great role for PSA testing. And as more of it gets done, naturally, because there will be more positive or elevated PSAs, that will lead to more 4Kscore tests being done. But this is an educational process that will take time and we’re hoping that others such as the urology community and the support groups will pick up the mantle and carry the ball.

Okay, great. That's very helpful. And then maybe one last one from me as well. And that's just a clarification on Lagova and the pediatric study design. I think if I heard you correctly, you're planning a global study with basically one program including Japan, is that correct? So I think that might be a small change, perhaps a favorable change from some of the earlier discussion where we were thinking about perhaps a separate study in Japan.

It is a separate study in Japan. So we have a global for Europe and the US using the same dosage. There will be an…

Asia also, excluding Japan.

That’s right. That’s Dr. Hsiao here. And so, Asia will also be included in a global study excluding Japan. Japan will be a separate study.

Great. No, that's very helpful. That's it for me. Thank you.

Your last question comes from the line of Mike Petusky with Barrington Research.

Good afternoon. I guess first one for Dr. Frost. Just kind of a broad question, but having had the Bio-Reference Lab asset kind of in-house here for about a year now, can you just talk about this first year, what's worked, what hasn't worked, what are the opportunities that you see over the next, say, 12 to 24 months that should be front-burner for you guys as you kind of look at that asset and ways to leverage it? Thanks.

For one thing, the company has been consistent in increasing its revenues over a period of time and that trend is continuing. There have been several important additions to management that have led the effort to improve operating efficiency. So that's reflecting itself in better margins. So whereas we started with an operating profit of approximately $100 million when we acquired the asset, it’s going at a much better rate now and we think that that direction will continue, so that by the time we have this discussion next year, we think that you will see much better numbers coming from Bio-Reference.

Okay. All right, great. Would you guys be willing to share – you, obviously, gave the number of tests that were – 4Kscore tests that were done in June. Would you guys be willing to share what the year-ago June figure was?

I can't remember, but it was a tiny fraction of what it is today.

We wouldn’t mind sharing. We can follow up with you later on that.

Okay. That's all I’ve got. Thanks.

And we do have time for one more question. That question comes from Brandon Couillard with Jefferies.

Hello, good afternoon. This is Sachin in for Brandon. Would you guys quantify how many of the 5,000 4Kscore tests were paid and reimbursed and what was the mix between urologists versus primary care?

This is Adam. We’re not providing the exact revenue numbers, but certainly a substantial portion are now being paid for at varying rates of reimbursement. As far as the split between primary care and urologist, it's about 60/40 split today for urologists versus primary care.

Got it. And would you quantify the number – the amount of Bio-Reference Lab revenues in the period and how much of that growing year-over-year?

So the Bio-Reference Lab revenue for the quarter was about $266 million. So it’s tough to do a year-over-year comparison. But sequentially it was $252 million in the first quarter of this year.

Got it, thanks.

There are no further questions at this time. Dr. Frost, I will turn the call back over to you for closing remarks.

Thank you all for participating and we look forward to talking to you again next year, if not sooner.