OPKO Health Inc (OPK) 2016 Q2 法說會逐字稿

Welcome to the OPKO Health conference call. (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 filing 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 operations. At about a year ago we completed the acquisition of 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 was 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 to sell Claros point-of-care diagnosis 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 are assembling a marketing and sales leadership team that is second to none and will 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 multi-national 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 successive reality in the US where we will commercialize the product ourselves.

Rolapitant, now known as VARUBI, has been approved and is being sold by a 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 will add advanced projects to develop medicines with major market potential. We will offer greater detail about these products after the closing. You'll hear more about all this from Steve but I'll 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 2 clinical trials. There are others; Steve Rubin will now provide more detail on our activities.

Thanks Phil and thank you 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 of 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 3 or 4 chronic kidney disease and vitamin D insufficiency. The FDA defined vitamin D insufficiency as serum total 25-hydroxyvitamin D levels, less than 30 nanograms per mil. RAYALDEE is the first product to receive FDA approval for this indication.

RAYALDEE fills a void in the available treatment options for the approximately nine million American adults with SHPT, stage 3 or 4 chronic kidney disease and vitamin D insufficiency, a potential market estimated 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 cost and patient morbidity and mortality.

The FDA based its approval of RAYALDEE on the results from two 26 week placebo-controlled double-blind phase 3 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 effects 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 a 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 team to support the upcoming launch.

At the time of launch we expect to have approximately 10 internal and 35 regionally-based sales representatives, 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 are 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 posted continued revenue growth underscoring the rationale for our 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 the Claros 1 point-of-care test.

Let's turn now to our progress with 4Kscore, our blood test that provides men with a personalized risk score for having aggressive prostate cancer. The 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 a 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 graded 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 medical -- 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 had not submitted complete dossiers to either of these MACs prior to these determinations, but rather they made their own determinations on their own.

We have since submitted a rebuttal to Pametto's draft determination; we 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's more than enough scientifc 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've previously reported, the 4Kscore is currently being marketed by approximately 200 Bio-Reference Lab sales reps to both urologists and primary care physicians. We have continued to see double-digit volume growth every month after we expanded our sales force from the original 10 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've also made significant progress with GeneDX. Patient volume in GeneDx continues to grow substantially over prior-year volumes.

Regarding our 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 results at the point of care. Using a single droplet of 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 clinical trials later this year, or early next year, we expect to file with the FDA a PMA for PSA and a 510K for a testosterone diagnostic utilizing the Claros point system. Upon FDA clearance we expect to fully leverage BRL's marketing, sales and distribution resources to launch the Claros system 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 now 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 we just partnered worldwide with Pfizer.

A global phase 3 clinical study of this product in adults is nearing completion. Enrollment in this trail was completed last year and we expect the last patient visit on August 19, with a top line 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 3 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 patients, with inhibitors to Factor VIII or Factor IX. During the first quarter we initiated a phase 2a dose escalation study to determine safety of intravenously administered Factor VIIa CTP and to explore efficacy endpoints. We intend to enroll 24 patients in the US; we expect to have interim data by year-end. We intend to initiate a new study valuing 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 a 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 1 single-dose escalation study valuing safety and 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, as well as peripheral receptors, and it 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 and 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 2 study in type II 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 a 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 administrated selective androgen receptor modulator, or SARM, for the treatment of conditions characterized with androgen deficiency. TT701 produced significant decreases in fat mass and increases in lean body mass without significantly changing PSA levels in a phase 2 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 meet 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 will 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 our multiple clinical programs underway including reporting top line data from our phase 3 adult trail of hGH-CTP, our long acting human growth hormone; initiating our global phase 3 pediatric study of hGH-CTP; reporting interim data from our phase 2a study of our long acting Factor VIIa CTP and initiating a clinical study using subcutaneous administration; and reporting top line data from our phase 1 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 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 equivalent and marketable securities of $171 million.

In addition, during the second quarter of 2016 we received approval for a method change with the Internal Revenue Service which will result in our receiving approximately $38 million of cash as a tax-free fund late in 2016, as well as an additional $10 million of net operating loss carry forwards 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 was a 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 continued 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) Dana Flanders, JPMorgan.

Hi, thank you for the questions. Just the first one on RAYALDEE, can you just discuss in more details some of the pre-launch 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 rates 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 activity as you might imagine in getting ready to launch RAYALDEE, probably in November as Steve pointed out. As we mentioned, we started our hiring process for the sales force, we've put in place five regional business managers; we're in the process of concluding hiring a total of 45 reps by the middle of September. We are hiring an MSL team as well, with the completion date for that as of October 1. And we have brought on board 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 are doing research on product messaging and on pricing, we're 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 are 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 are weighing given that there are cheaper but maybe less effective alternatives on the market?

I'd 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 end.

Okay, great and maybe just one final one for me. On Lagova and the pediatric phase 3 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 we would -- 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, in preparation for registering the product not only in the United States and the usual markets but in a -- 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.

Yale Jen, 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, for one in the 701. But on the top level to look at it, how these two assets potentially could fit into your entire sort of drug development profile, and how would you -- 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 2 trial and we have 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 II diabetes. And we have our own product there as well, and -- which we are 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, a SARM, or a selective androgen receptor modulator, is one of a family of compounds that have been studied by others, but this one again has been in 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 a 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. We look forward to see more details when you close the deal. 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're getting sort of into the formulation and how that will impact on your pricing going forward? And thanks a lot.

Hi, Yale, 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 had viewed our application and where they intend to list us. 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 into 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 it and congrats on the good quarter.

Going back to the SARM that we're getting from the Transition Therapeutics acquisition, I will just point out that our interest here 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.

(Technical difficulty) PSA and 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'll be looking for other opportunities in that area as well.

Sounds great and that's definitely more helpful because I think that started 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 gone 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 very early, that's for the future. Other questions?

Okay, great. Thanks.

Kevin DeGeeter, Ladenburg.

Hi, good afternoon, thanks for taking my questions. With regard to Factor VII as we look forward to seeing some the phase 1 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?

So the biggest differentiation is going to be its ability to administer subQ. So there are long acting -- people worked on long actives in [factors] in hemophilia A and B. In the inhibitor side the pipeline really consists of some of the new technologies that [micro antibody] and gene therapies, which are further down the line (technical difficulty) early trial.

So we think ours has -- ours is actually -- there's no doubt that Factor VII works, it's just not -- it's just not right way to treat a patient with short acting infusions. So there's not -- 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 have been a number of small investigator studies and some amount of attention in the lay press as well with regard to an increase in men presenting with more advanced prostate cancer and the hypothesis being that that they may be related to a decrease in the 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 clinicians 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?

You know, I think it we are thinking about it is that there's a pendulum effect. Initially there was great enthusiasm for screening with the PSA and, there's no question about it, 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 over-used has perhaps pushed the pendulum too far in the other direction, and now we're at the 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, we're hoping that the urology community will take the lead in making it clear that there's 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 as it 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 for 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? I think that might be a small change, perhaps a favorable change from some of the earlier discussion where we were thinking that 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 they will be in --.

Asia also, excluding Japan.

That's Dr. Hsiao you're hearing. So, Asia will also be included in the global study excluding Japan. Japan will be a separate study.

Great that's very helpful. That's it for me. Thank you.

Mike Petusky, Barrington Research.

Good afternoon. I guess the 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.

Well 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'll see much better numbers coming from Bio-Reference.

Okay, 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 it, we can follow up with you later on that.

Okay. That's all I've got, thanks.

Brandon Couillard, Jefferies.

Hello, good afternoon. This is Sachin on for Brandon. Would you guys quantify how many of the 5,000 4Kscore tests were paid and reimbursed and will it be mixed between urologists versus primary care?

Yes, so this is Adam, the exact -- 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 urologists, it's about 60/40 split today for urologists versus primary care.

Got it, and would you quantify the amount of Bio-Reference Lab revenues in the period and how much is that growing year over year?

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'll 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, maybe the next quarterly report.

Ladies and gentlemen, that concludes your conference call for today. We thank you for your participation and ask that you please disconnect your lines.