ProPhase Labs, Inc. Q1 FY2024 earnings call

• Ted Karkus highlights ProPhase's history of turnaround, having taken the company from $0.65 per share in 2012 to around $5.0, with significant total returns to shareholders and special dividends paid.
• Transitioned between development stage and revenue-generating stages. Turned around Cold-EEZE brand, sold it for $50M, and similar with IT Biomedical.
• Pharmaloz is in the process of exploring strategic alternatives, with capacity expansion and talks with large brands for potential liquidity events.
• Nebula Genomics has a new go-to-market strategy involving social media and podcast experts, focusing on its bioinformatics, reporting system, and database.
• BE-Smart test has multibillion potential, focusing on protein shifts for esophageal cancer, with low cost of development currently.
• Equivir and Legendz XL mentioned as other initiatives, with Equivir set to roll out online first.

Pharmaloz: Last year, revenue was approximately $9.3 million and was losing money. With price increases and 2 new orders, annualized run rate of revenues is expected to be around $16 million with substantial profits of ~$3.5 million. It is exploring strategic alternatives and has a second manufacturing line with additional automation coming in. Nebula Genomics: Founded by George Church, it has a world-class lab in New York. The real value lies in its bioinformatics platform, reporting system, and database. It has a new go-to-market strategy with social media and podcast experts, but currently not generating significant revenue. BE-Smart Esophageal Cancer test: Has multibillion potential, focuses on recognizing protein shifts related to esophageal cancer. Not costing much at this point, doing statistical analysis for commercialization. Equivir: Dietary supplement with potential, rolling out online first, has infrastructure in place for distribution. Legendz XL: Already in stores, generates ~$2.5 - $3M in revenue annually and ~$0.5M in profit annually.

• Pharmaloz expected to see significant revenue and profit growth in the second half of the year, with annualized run rate to ~$16M and profits ~$3.5M.
• Nebula Genomics expected to take off in 6 - 12 months, but currently in development stage with ongoing go-to-market strategy development.
• No immediate plans for equity financing, focusing on liquidity events for Pharmaloz as the primary near-term focus.

• Regulatory approval risks for new products and initiatives.
• General economic conditions affecting consumer demand for products and services.
• Challenges in entering and growing new business lines like Nebula Genomics and BE-Smart test.
• Competitive environment impacting market share and revenue.
• Risks related to the development stage of assets, where there's no guarantee of success in commercialization.

Q: We're interested in the growth plans of Nebula Genomics A: Nebula has a new go-to-market strategy, focusing on bioinformatics, reporting system, and database. Working with social media and podcast experts. B2B side has potential with telemedicine platforms and international deals in progress. Direct-to-consumer side also in development, but will take time Q: Why did you enter into a standstill agreement with ThinkEquity on April 18 without explanation A: It's about not considering equity financings at present. Focused on potential liquidity events for Pharmaloz. No interest in equity offers currently unless strategic Q: Do you think ProPhase will have to raise money in the second or third quarter this year A: As of now, the answer is no. Focused on other liquidity events for Pharmaloz Q: Why not do an IPO for Nebula or Pharmaloz or both and raise all the growth capital you need for expansion and also create a market value for these assets that the Street is totally overlooking A: Requires separate audited financials for subsidiaries, which takes time. Market conditions matter; don't want to do IPO at wrong time and give away too much equity. Best for long-term shareholders Q: Regarding Pharmaloz, are we in the early stage of negotiating a sale or a lease or at late stage A: Press release states Pharmaloz is exploring strategic alternatives, not at early stages of exploration Q: When can we expect meaningful revenue from Nebula? Keep hearing about all the potential yet to see anything being sold A: Nebula has potential but no overnight success. Transitioning go-to-market strategy, multiple paths to success, but will take a couple of quarters. Losing money now but lab kept for potential large liquidity events Q: With the Equivir study coming to completion, can you share with us what claims you expect to put on the package A: Claims are a work in progress. Study was great with over 300 patients, results impressive, but premature to talk about specific claims; will work with attorneys Q: Since we're almost halfway through the second quarter, what growth in revenue do you expect in Q2 as compared to Q1 A: Can't comment on Q2 specifics. Pharmaloz seasonally weakest now, but third quarter expected to see improvement with Pharmaloz ramping up Q: In the earnings release, share count jumped from 18 million last year to 90 million this year. I missed the 72 million share insurance, please explain A: Not going to get into specifics of share count changes; shares change insignificantly over time Q: In the earnings release, share count jumped from 18 million last year to 90 million this year. I missed the 72 million share insurance, please explain A: Not going to get into specifics of share count changes; shares change insignificantly over time Q: Regarding BE-Smart, have we filed for the insurance code? How expensive will our advertising campaign educating the doctors A: Working on CPT codes, with consultants, window to submit soon. Advertising campaign details premature, working on multiple strategies for commercialization Q: Speaking of partnering, what are the odds of partnering with someone on BE-Smart or doing it in-house A: Premature to decide. Open to exploring all possibilities, but risk/reward and long-term shareholder best interest considered; decisions to be made later in the year