I’ll turn it back over to Noella for the Q&A. Don’t be shy, feel free to ask a question. I love to be an open book and talk about our company.
A – Noella Alexander-Young: Thank you, Ted, for the presentation. So now we’ll begin the Q&A. The first question is, we’re interested in the growth plans of Nebula Genomics.
Ted Karkus: I’m sorry, you said, we’re interested in.
Noella Alexander-Young: Yes.
Ted Karkus: I’m interested too. Is that a question.
Ted Karkus: It’s not a statement, but I’m missing —
Ted Karkus: Okay. That’s an interesting way to kick off the Q&A. Listen, I’m interested in the growth plans Nebula as well we are evolving and developing the best go to market strategy, there are a couple of core assets to Nebula that have enormous potential among them are our reporting — our bioinformatics reporting system, which is one of the best in the world. Another is our database, which is one of the biggest, most diverse in the world. It’s equivalent of 150 million ancestry test. We can leverage that potentially in enormous ways. I didn’t even talk about — I’m sorry, because it was in the slide. Our most recent AI initiative, which is actually a very big deal. And our AI initiative, we built a world-class AI platform that’s going to leverage this database and it’s also going to leverage the knowledge that we’ve learned — the IP proprietary discoveries that we’ve learned with our esophageal cancer test and our initial focus are ADCs, anti-drug conjugates, that source the cancer cells directly and kill the cancer cells, leaving the healthy cells alone.
This is the next stage of medical research. It’s a very big deal what we’re working on. It’s relatively in its early stage, but I understand that our database was six years in the making in 130 countries worth of testing patients from 130 countries, six years in the making of developing the esophageal cancer test and the proprietary knowledge we have. So again, it’s one of these overnight successes, but some very big things could happen from the AI leveraging our Nebula. Separately, in terms of the go-to market strategy, there are several different strategies, understand from the B2B perspective. When we built out the lab and attracted businesses that don’t want to send their specimens abroad, but a lot of these business are new businesses.
They haven’t done whole genome sequencing before. So for instance, I talk about this telemedicine platform. They’re moving slowly. It’s frustrating. But it’s very real and the potential is very large. But this is an organization that hasn’t done whole genome sequencing before. So they want to do it the right way. Planning and details and big deals like that take several quarters, not several weeks, but several quarters to develop. So we’re in the stage of developing many businesses like this, both here and abroad, we announced one deal abroad. Again, that’s just the beginning. We have one of our lead sales guys in another part of the world right now, meeting with big players who are very interested in what Nebula is doing. So there’s a lot going on the B2B side.
It’s going to take time. On the direct-to-consumer side, I already mentioned we are working with world-class social media experts, very involved in the podcasting world. And I can just tell you, and this Jason Kark has overseen. It’s a young man’s world for dealing with podcasts and social media and all that stuff. I don’t even want to be involved. I’m happy from a distance to oversee and make sure strategically, we do this the right way. I think it’s going to be very, very big. But it’s going to take time. It’s going to take a couple of quarters before you start to see the results of that. Thank you, Noella. What’s the next question, please?
Noella Alexander-Young: Next is, why did you enter into a standstill agreement with ThinkEquity on April 18 without explanation?
Ted Karkus: So I don’t get into investment banking decisions. By its very nature, when you’re working with an investment bank, it’s usually proprietary and sometimes material non-public information, but it’s kind of interesting the responses that I got to that. And what I can tell you very specifically, it says that we specifically are not going to issue equity for the next couple of — and everybody said, oh, this means you’re going to issue equity. Actually, it’s just the opposite. We’re not going to issue equity. So we’re always working on various strategies. Again, we have a relationship with ThinkEquity going back almost four years. They’ve helped us build tremendous value in our company. And again, I’m the largest shareholder in the company.
Everything I do is for the best interest of our long-term shareholders. It doesn’t mean I won’t ever do in a round of equity financing. If it’s called for and it’s the best strategy for the company, it doesn’t mean I won’t take other actions. I had a shareholder reach out to me and say, hey Ted, how can you not buying back stock? How can you not paying more dividend? Well, if we had a large block of cost that we didn’t need right now. I probably wouldn’t be buying back stock, but that’s just not a possibility right now. There’s no reality to that thing. To be a shareholder, of course, you always want to be buying back stock and paying stock dividends. I do it when strategically it makes sense. Right now, it doesn’t strategically make sense.
So by the same token work with ThinkEquity we’re always working on various strategies and various planning and I’ll leave it at that. But at the present time, I even put it in the press release. We have no interest at the present time of any sort of equity financings. In fact to the contrary, I just mentioned, there are three — I mentioned in the press release, there’s three potential liquidity events that could occur in the next couple of quarters. That’s what I’m popular. Now none of those happened, then I’d have to reconsider. But as of right now, I’m not even considering anything like equity offers. Thank you.
Noella Alexander-Young: Thank you for clarifying. Your next question is, do you think ProPhase will have to raise money in the second or third quarter this year?
Ted Karkus: I just answered that question. I don’t need to repeat myself. As of right now, the answer is no.
Noella Alexander-Young: Thank you, Ted. Next, why not do an IPO for Nebula or Pharmaloz or both, and raise all the growth capital you need for expansion and also create end market value for these assets that the Street is totally overlooking?
Ted Karkus: That’s a great question. It’s something that I considered for quite a long period of time. One issue is that the books and records of both subsidiaries have to have completely separate audited financials to spin them off. That takes time to completely set them out. They are wholly-owned subsidiaries. But right now, it’s a little complicated. You need independent. You need orders to do an independent review of all the finances and sign off on separate financials for each company. So in effect they have their own fully audited statements. And then the timing has to be right with the market. For microcap, we’ve been in a bear market for three years. For the larger companies, they had a great year last year. All indications where this — that money would start to flow into the microcap, it actually started to in the first quarter, things look great, and then all of a sudden inflation rose it’s head.
Fed talks about — we thought we were going to start cutting interest rates now, we’re not. And that put a damper on things. We had a significant sell up in April in the microcap. And in fact there were a lot of IPOs that were canceled. So yes, I think it’s a great idea at the right time, but I’m not going to do an IPO for either one of those subsidiaries at the wrong time and the wrong market conditions, because instead of getting a large valuation and raising money at a high valuation, we do an IPO at a low valuation. The money you raised are giving away a big chunk of the company. And again I think about what’s best for the shareholders long-term. So, I would love to do an IPO of either subsidiary under the right market conditions. By the same token with Pharmaloz, there’s also the possibility that we just sell.
And we don’t have to do the IPO. So we’ll see. Again, these are decisions. These are strategic decisions and discussions that I’m having on virtually a daily basis. I live breath and think about our company 24/7, and these are some of the things that I think about, literally all the time. Thank you for that question. It’s a great question. I’m sorry I don’t have a better answer. But honestly, a part of it is market conditions and a part of it is strategically what’s best for the company and how to optimize value for the company and its shareholders on a long-term basis, not to get a pop in the stock short-term.
Noella Alexander-Young: Thank you, Ted. Next and you’re asked, can you provide additional information on the valuation seeing in sales licensing transactions for CDMO?
Ted Karkus: I don’t understand the question. I don’t know what’s subsidiary. I apologize. I don’t understand the context. If the person asked a question wants to send a question and clarifying. I’m happy to take the question if he want to put them back in the queue. Can we go to the next question please?
Noella Alexander-Young: Certainly. Next question is regarding Pharmaloz, are we in the early stage of negotiation — negotiating a sale or at late stage?
Ted Karkus: It’s a great question. I have to be very careful and sensitive. You never know who’s watching these presentations. I don’t want to say or do anything inappropriate. So I’m not sure how to answer the question except to tell you there isn’t anything put in our press releases to hype the stock or pump people up. Everything I say in our press release is real. That’s what I truly believe. And so if I put a statement, which is one of our headlines of our earnings release that Pharmaloz is exploring strategic alternatives. We’re not at the beginning stages of exploring strategic alternatives if that’s the headline of our press release. I think that answers your question. If it didn’t then replay this piece, because I’m pretty sure I answered the question. Go on Noella, next please.
Noella Alexander-Young: Next, when can we expect meaningful revenue from Nebula? Keep hearing about all the potential yet to see anything being sold?
