Ted Karkus: Yeah So I addressed that in the presentation. We have completely transitioned our go-to-market strategy, including hiring some great people, a new management team, some great people as I said were podcasts and social media experts. We are putting together a plan. The assets are there at Nebula. We’ve developed them, all right? As I said, the database, the reporting system, we’ve continually fine-tuned, the reporting system building out the lab. We have all the right pieces. But as I said, there’s no such thing as an overnight success. And I’m pretty sure I addressed — I know I addressed in my presentation a short while ago. It’s going to take a couple of quarters. And we’re going to lose money at Nebula for a couple of quarters.
The money being lost in the company right now is a combination of the overhead of the company and the cost of running the lab. If I didn’t think that the potential was enormous and that the lab was a part of that, I would just shut down the lab. I can do that tomorrow. But I believe we have liquidity events that are going to dwarf the cost of keeping the lab. So I’d rather keep the lab for you and see how that plays out. But as far as generating the revenues, we have multiple avenues or pass to success. We’re working on all of them. But it will take time. And I feel like I’d say I’m sorry, it’s going to take an actual two or three quarters. But as I said, I build the value of the company long-term for shareholders not short-term. And in the meantime people should be really excited about what we’re doing with Pharmaloz today, which then gives us the flexibility without wiping out to shareholders with big dilutive round of financing it gives us the flexibility to develop these other assets and Nebula being one of them.
Noella Alexander-Young: Excellent. Thank you, Ted. Next question with the Equivir study coming to completion, can you share with us what claims you expect to put on the package?
Ted Karkus: Those are actually a work-in-progress. I’d rather not misstate that. I mean, I can just imagine a class action attorney, six or nine months from now we commercialize the product. And they say, oh, Ted said on a conference call nine months ago that it could do such and such. So I have to be very careful. It’s premature to talk about the claims. What I can tell you is our study, it was a really great study that was done over a long period of time with more than 300 patients, which is an enormous study for a dietary supplement. And we tested it all through the entire cough/cold season, the entire viral season and we tested it and compared people who got COVID, cough cold, flu with people that didn’t people that were that took our product versus took a placebo, and the results so far have been fantastic.
Now it doesn’t mean we can make a COVID claim. It doesn’t mean we can make an RSV claim. It doesn’t mean we can make a flu claim, but the results are palpable. If you have 150 people over here and 150 people over here, and randomly they’re in one group versus the other. And the group that took our product got significantly less sick and the group that didn’t take a product took placebo got significantly more sick with all of these viruses, flus, COVIDs and so forth, the results are pretty impressive. What we can say is claims on the packaging, we’re going to work that out with the attorneys. We want to complete the study first, then work with the attorneys, get the right claims to the packaging, create the packaging and then we’re up to the races.
And so to get to the market quickly, we will go online first with our product. It will take longer to get into the stores, but we will demonstrate the success of the product online. And then ultimately, we anticipate distribution of the stores thereafter.
Noella Alexander-Young: Excellent. Thank you, Ted, for that response. Next is, since we’re almost halfway through the second quarter, what growth in revenue do you expect in Q2 as compared to Q1?
Ted Karkus: So I can’t comment on Q2 today. I haven’t even looked at Q2 numbers consider Nebula, esophageal cancer test, Equivir are all development stage. As I mentioned, Nebula really isn’t going to ramp up maybe fourth — maybe third quarter — hopefully, maybe fourth quarter, I can’t tell you all guessing. Pharmaloz is really going to start to ramp up third quarter. So second quarter, I’m not putting — I never put out projections and I have to be careful what I say on this conference call right now. But based on what I just said, I wouldn’t expect much in our second quarter. I will tell you that our adjusted EBITDA, our cash flow improved dramatically in the first quarter versus fourth quarter of last year. But the next significant jump also understand Pharmaloz, we’re in our seasonally weakest period right now.
But then come third quarter, it starts getting — that starts heating up. We — I believe that for our first line of manufacturing, Pharmaloz will — we built the capacity on the first line, I believe we’ll be running at full capacity. I believe we already have the demand for full capacity for the third quarter. And then it just quickly a question of how quickly we open up the second line and bring in customers for the second line. And again, we’re in strategic discussions right now. And so it’s a little complicated, not sure how the second line plays out or when it plays out. But the numbers of Pharmaloz are improving that, certainly, from the fourth quarter last year. I mean, they’re going to improve, but the real improvement of Pharmaloz is going to occur in the second half of the year.
I hope that answers your question.
Noella Alexander-Young: Thank you, Ted. We’re coming up on your last two questions. The first one is, in the earnings release, share count jumped from 18 million last year to 90 million this year. I missed the 72 million share. Please explain?
Ted Karkus: I’m not going to get into specifics of share count changes. I appreciate the question. Shares change in significantly over time. I’ll let just leave it at that.
Noella Alexander-Young: Thank you, Ted. We actually have another question that came in. So I’ll do the first one. Ted, I have two questions regarding BE-Smart. Have we filed for the insurance code? How expensive will our advertising campaign educating the doctors?
Ted Karkus: Yes. So the CPT codes, we’re working on that right now. We’re working with consultants. We’re making sure we get all the information in at the right time correctly. The application of the CPT codes is coming through. And there’s only a window, one month out of every three months. So there’s another window in, I want to say in about six weeks. And our goal — I think it’s — don’t quote me on that. But sometime soon, there’s a window to submit, and then it’s just a question of how quickly we get a response. But at the same time that we’re working on the CPT codes, we are also working with several different groups towards a game plan for commercialization. So we’re not waiting for the CPT codes. We have other things in progress.
We’ve even talked to — we talked to a very large company in the past about potentially partnering. But again, all that is premature. But there’s a lot that goes into this, and there’s a lot behind the scenes, but we’re working on several strategies at the same time, one of which are the CPT codes. At the end of the day, you need the CPT codes to go to next steps, but we’re planning for getting the CPT codes, and we’re already planning for the next steps after the CPT codes. But the gating issue right now are the CPT codes.
Noella Alexander-Young: Thank you, Ted. And this will be your last question. Speaking of partnering [indiscernible] what are the odds of partnering with someone on BE-Smart or doing it in-house?
Ted Karkus: That’s interesting. I think I already addressed that. The odds — I can’t give odds. We’re open to exploring all possibilities. I simply look at risk/reward and what’s best for the shareholders long-term. I mean if esophageal cancer test — if that test I really believe it has multibillion-dollar potential. It’s just hard when you’re sitting here — you haven’t even commercialized it yet to say, yes, we’re going to generate $2 billion in year three. I have no idea what we’re going to do with this test. I would hate to sell it short and partner with somebody and kind of block the money upfront. I don’t what that block of money would like. So it could very meaningful to the shareholders short-term but it could leave 90% of the value of BE-Smart on the table for somebody else just because we weren’t patient for a year or two.
So I really have to see how this plays out? It has to do with dynamics are and have see to what the acceptance is of the insurance company? What the acceptance is? What the reception is of the GIs that would actually order the test. All those dynamics and so we actually start to sell the test, try to sell the test, commercialize the test – although those – you don’t know how people – how companies are going to respond until we’re actually out there and actually commercializing it. So I think it’s really premature to make a decision on that. If I told you I knew which way it was going to go that to me wouldn’t be prudent. I wouldn’t be doing a great job as our CEO and guiding the company. So these are decisions to be made later in the year.
Noella Alexander-Young: Excellent. Thank you very much Ted for your responses. That concludes the Q&A session. But before we go I will turn back before to Ted for final remarks.
Ted Karkus: Thank you, Noella. Thank you all for joining. Again we do these virtual non-deal roadshows with Renmark once a month. So feel free next month to sign and even if it’s not an earnings call to sign up with Renmark. And look I say it in the press release and I mean it when I say the best is yet to come, I truly believe the best is yet to come. We’re in an interesting turning point in our company. I can’t tell you which month the stock is going to be at its bottom which month it’s going to go up. But I can tell you in terms of the value of the company right now we’re at an interesting juncture given the most recent developments at Pharmaloz. And from the recent developments of Pharmaloz as those progress that could lead into very significant developments with our esophageal cancer test with Nebula with our AI initiative with the rollout of Equivir and so on and so forth.
So I appreciate all of you joining me today and sitting with me for an hour. And for those who are shareholders of course always appreciate your support. We’re on the same side we’re on the same team. And the one thing I can tell you I am working my best off to make sure we have a world-class management team that we’re working on world-class subsidiaries and that we’re doing everything to the best of our ability to really kill it for all of you. Thank you. Have a great day. Thanks again, Noella.
