ProPhase Labs, Inc. (NASDAQ:PRPH) Q2 2023 Earnings Conference Call August 10, 2023 11:00 AM ET
Company Participants
Ted Karkus – Chairman and CEO
Conference Call Participants
Adam Waldo – Lismore Partners
Dennis Waldman – Barrett Productions
Yi Chen – H.C. Wainwright
Operator
Good day, and welcome to the ProPhase Labs Second Quarter 2023 Financial Results and Corporate Update. All participants’ will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.
I would now like to turn the call over to Ted Karkus, CEO and Chairman of ProPhase Labs. Please go ahead, sir.
Ted Karkus
Thank you very much, and thank you all for joining us today for our second quarter conference call. Look, I’d like to talk a lot, but I also explained an awful lot in our press release this morning. I really don’t want to read the press release. I’m going to presume that you’ve all read it.
Having said that before, let me start by reading the forward-looking statement. I would like to remind you of the company’s safe harbor language. During this presentation, we will make forward-looking statements, including statements regarding our strategies, plans, objectives and initiatives and underlying assumptions.
While we believe that these forward-looking statements are reasonable as and when made. Forward-looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include, but are not limited to, our ability to obtain and maintain necessary regulatory approval, general economic conditions, consumer demand for our products and services challenges relating to entering into and growing new business lines, the competitive environment and the risk factors listed from time-to-time in our filings with the SEC filings.
This call will present non-GAAP financial measures such as adjusted EBITDA. Reconciliation of these non-GAAP measures to the most comparable GAAP measures are included in the earnings release furnished to the SEC prior to this call, and available on our website.
And with that, I always like to give a couple of shout outs at the beginning of the call. First of all, Renmark does a great job on the retail investor side. We do a virtual non-deal road show or presentation. We’re currently doing them about once a month. So any shareholders on this call that ever want an update about what’s going on with the company. I don’t provide material nonpublic information. I have to be very careful about that.
But I do give overviews about our company, what we’re working on to give you better perspective and to understand how I’m thinking. I am an open book. I really am here for the shareholders, I’m the largest shareholder in the company. But I don’t just do this for myself. I do this for all the shareholders. I really want to continue to build value in the company. I and our management team have had a history of success in doing so for more than a decade.
Really, honestly, our management team has been incredibly successful over the last decade in building value in our company. Even now where the stock going back a little bit today, we’re still up significant multiples over the last few years, while paying out a significant amount of stock dividends. So anybody that’s been with us, first of all, over the last three or four years, the returns have still been phenomenal. Anybody who’s been with us over the last 10-years, resulted and returns have been even more phenomenal.
Interestingly, we’re at a point in time right now where my expectations and what I really believe for the future is going to be significantly greater than anything we’ve accomplished in the past. We have support from not only Renmark, but also we have a number of analysts that follow us and investment bankers that we’re working very closely with. ThinkEquity did a phenomenal job in raising capital for us a couple of years ago. They also have done a great job in showing us opportunities over the last couple of years, acquisitions, some of which we made. We probably reviewed a couple of hundred acquisitions targets, and we picked the absolute best we cherry pick. And those are the assets that we’re now developing that I’m going to be talking about shortly.
H.C. Wainwright also does a great job of following us on the analyst side and then also Joshua, Livina, Search Screen Research and also Diamond Equity Research has been a phenomenal job recently of covering them. So if you want to follow our company, you can also follow the analysts and their updates as we move forward. So that’s a little background. I really don’t want to read the press release again, but I really want everybody to be on the same page. So you understand if you’re going to be an investor in our company, what to expect?
As I mentioned in the press release, we turned around and sold the Cold-EEZE brand many years ago. From that we then pivoted into COVID testing. We knew that when we pivoted into COVID testing, it was not going to be a long-term proposition. However, we decided to get into the business in late 2020. We bought a small lab for $2.5 million. It’s probably only worth $400,000. That’s sort of the running joke. And we built a $200 million business out of that.
And we, quite frankly in the first quarter, we were in the business in the first quarter of 2021, we outperformed 95% of the labs in the country. The reason I bring that up is not because of anything having to do with COVID, but it’s incredibly similar to what we’re working on right now with Nebula Genomics. Nebula Genomics of course, was founded by George Church and his two PhD students five years ago. George had a vision 20 years ago. He’s been a world renowned in genomics for literally the last 20-years. He had a vision that one day, every single person of the country would be tested, potentially every baby when they’re born would be genetically tested to know about genetic predispositions and all the research is going into your genetic predispositions.
And I’m going to get into that a little bit more. But what’s eerily similar and the reason I bring up the COVID testing, because we’re no longer a COVID testing company. The reason to bring it up is because we got into the COVID testing business after not knowing anything about the lab business, but we saw an opportunity and yet we outperformed 95% of the labs in the first quarter, the very first three months that we were in the business. And over that first year, I don’t remember what we generated. But over the first two years, we generated over $200 million in revenues.
So what’s interesting is we’re now in the exact same place with Nebula Genomics. We just built out this state-of-the-art laboratory. So of course, we have a state-of-the-art high-complexity molecular laboratory that not only does COVID testing respiratory. We just built out a fantastic clinical lab. And now we have this literally world-class lab for doing genetic testing, and we provide whole genome sequencing at a lower cost than anybody in the country.
So just imagine, we’re in the same place now with Nebula Genomics that we were with COVID testing 2.5 years ago. The difference is everybody thought that COVID was going to last for six months or a year, it ended up lasting for two years. Now by the way, there is another round of COVID coming around, but people aren’t taking it seriously, they’re not testing like they were. And I’m not focusing on the company on it. If we get some COVID testing, great, the best not the focus on the company. But my point is now we’re getting into something we’re literally in the first inning with genetic testing, and we’re the leading lab already.
Now instead of getting into a business where we had no experience, we have three years of experience in the lab business, where as you got to understand, when we first started that business, I hired a bunch of people with great resumes that were not great employees, but they help build the lab initially. And then I worked on weeding out the weaker employees and hiring better employees. We have a team here that I would put up against any lab team in the country.
And we just had an inspection. And I don’t know that I’m really allowed to talk much about it, but it went fabulously well. And I can’t tell you the compliments we got from our inspectors regarding our lab team. And so now this what I think is a world-class lab team is focusing on building a world-class genomics lab, where we’re essentially a leader in the space. So we’re a leader in the space of selling whole genome sequencing direct to consumers. And maybe more importantly, and that’s really been sort of the focus, we’re now also a leader in providing the sequencing to businesses.
And so we just built a lab. We’re literally just finishing the validations now. We’re literally just starting to do testing in our lab. And the types of quality of inquiries we’re getting, it’s really interesting. My son Jason, who’s the President of ProPhase Diagnostics he started the lab business with me. And we decided together when we were exploring it back in 2020, and we were traveling the country and looking at opportunities. And we literally were just talking in the last two days and were like, “Oh my God, this is deja vu, the sense that we’re getting from the interest levels of companies that want to do business with us is eerily similar to the sense that we got about the COVID business.
The difference is the genomics business. We’re in the first thing, this is a business that’s going to be a huge growth industry for years, if not decades, to come. All the medical research is going in this direction towards personalized precision medicine. And again, for those of you who don’t know, and most of you probably do at this point if you’ve been on my other calls, personalized physician medicine. It’s all about studying your genetic makeup and how that plays a role in diseases that you’re predisposed to the risk what we call polygenic risk scores which are the reports that we provide to you when you get tested, tells you about your gene mutations, tells you about diseases, you’re at high risk of.
And then if you know, you’re at high risk of a dangerous disease, hopefully, you’ll do things preventative to prevent you from getting that disease. That all starts with knowing your genetic makeup. Maybe more importantly, though, if you get a disease, how do you treat it? Turns out, drugs work differently on different people, depending on your genetic makeup, the research is literally just starting in this field. And in order to do this research, you need data. That data comes in the form of whole genome sequencing test. And that’s what we do best.
So what’s interesting is not only do we see opportunities in the United States. We are also seeing opportunities in other countries. So we just have to decide how much we want to focus on the other countries versus how much we want to just focus on our business in the United States. So we have a direct-to-consumer business. But what could be really explosive in the direct-to-consumer business is obviously growing. We’re growing over 100% year-over-year. And honestly, we’re just getting started in the direct-to-consumer business, and we’re growing 100% year-over-year.
And as prices come down, that only helps us even more, because as prices come down, we’re making our money in the consumer business on selling subscription store library, where we provide the polygenic risk scores and we provide updates twice a week on all of the clinical research going on around the world, some of which is related to the disease that you’re risk of, your gene mutation. It’s really interesting stuff, and our subscribers love it and the profit margins are very, very high for the subscription.
So that’s a great business model in and of itself. But the B2B model, the volume that we see, the potential volume that we see is enormous. And so we built out the state-of-the-art lab. But what’s interesting, I am spoiled and were spoiled by when we were doing COVID testing because the amount of tests you can do on one machine in COVID testing is quite large, whereas with whole genome sequencing its significantly less. So for us to get the kind of volumes to do the kinds of revenues that we want to generate means buying more equipment and building out potentially a larger lab.
The only reason we would do that is because the potential demand that we’re seeing is awfully significant. So right now, for the lab that we have in Garden City, I see that most of that capacity is going to be used up by our current customers and our D2C business that is growing. But if we want to do a substantial B2B business, we’re going to want to continue to expand, which is a good thing because we can make an enormous amount of money, and we won’t have success just in the short term, like COVID testing will have success in the long term.
So I’m happy to talk more about Nebula Genomics in the Q&A, if you want to ask about it. That’s a little bit of background. I gave a lot more, I think, in the press release. I also just want to touch people have asked me in recent quarters about our accounts receivable. So I just want to clarify that. So there’s no confusion. We are not the least bit concerned about our accounts receivable. So when somebody asked year-end, we had approximately $37 million of accounts receivable. As of the end of June, we had $38 million, we’ll leverage $38 million in accounts receivable.
So everyone was like, “Oh my god, what’s wrong with your accounts receivable. What you don’t understand is of that $37 million in accounts receivable at year-end, we already collected a $19 million of that. So it’s not a substantial amount that’s left. So we’re talking about from 2022, we’re talking about $18 million. That’s roughly $200 million COVID business. We have $18 million left to collect. And so you understand why don’t we collect it.
First of all, accounts receivable, it’s with the highest quality payers with insurance companies. So we’re not really worried about collecting the issue was with collecting the patient data. So understand, we did it and I don’t know what the exact number is, if we did 2 million COVID test over two years, that means that’s 2 million times, we had to collect the specimen, we had to collect patient data. And unlike a patient that goes into a doctor’s office that sits for 20 minutes with the receptionist and you get the driver’s license and you get the insurance card information. And if everything doesn’t check out, you don’t even get to see the doctor till everything checks out. We couldn’t do that with COVID testing when we were collecting specimens.
Our specimen collection partners were basically setting up tents on streets in New York City. That was a big part of our business. And he just had people randomly walking up. You also had from HRSA at the time. HRSA was the government funded and anybody who didn’t have insurance, HRSA would just reimburse. That all ended last year. And when that ended, you had people that still want to be tested. So sometimes they wouldn’t give their correct information. They wouldn’t have their insurance information with them, we would still test them. And now we’re collecting on all that it just takes time.
But you got to have to understand we have to one by one, go through every single one of those claims. So even on roughly $15 million we’re talking about tens of thousands of tests, and we have to go through each one individually. So we hired a company who are experts. I mentioned this a couple of months ago, they’ve made enormous progress in collections, and they had about 25 people in another country working on this going through literally every single claim.
So I just wanted to say that our accounts receivable is not an issue. Obviously, as we’re doing business, and we were doing some COVID business in the first quarter that created new accounts receivable and replaced the accounts receivable that we collected on last year. So not an issue. We’re making a lot of progress in the accounts receivable. And I’m not really worried about it. While we did a write-off at the end of last year, a small write-off. I think its $5 million or $6 million it’s not a $200 million business. So we’re pretty set there. Separately, before I get to questions, obviously, I talked a lot without even covering a lot Pharmaloz.
The potential of Pharmaloz Manufacturing facility is enormous. What’s interesting is when I first sold the Cold-EEZE brand, I didn’t even care. I don’t know, if they wanted to acquire a manufacturing facility, I wouldn’t have put up a big fight. That is now becoming an enormously valuable business. I mentioned on a previous call that one or two of the largest lozenge brands in the world want to do business with us. Capacity is tight all over the place and the most important thing for a lozenge brand when it comes to selling, if you’re selling into a Walgreens, Walmart, CVS, and obviously, we have a lot of experience here critically important that you don’t have empty shelf space.
When the buyer at Walgreens sits down with you and goes over the plan, they are responsible for every square inch of shelf space in their department. If a shelf is empty, if that space is empty, it’s not generating a profit. They look really, really bad. So what happens is with lozenge brand as with any consumer product, if you don’t deliver the product on time, the retailers get really upset and they cut back your shelf space. And so we have major brands who need the reliability, and we have the best reputation in the industry when it comes to lozenge manufacturing. And so we have large brands who want to do business with us that would be very profitable to our manufacturing facility.
And so we are now working on building out that capacity. One thing we’re doing is purchasing. We already ordered another lozenge line that’s being manufactured. But in addition to that, there’s other pieces of equipment that we can buy to increase our capacity, which we’re doing now, and it’s a wrapper and it’s other types of machinery.
And quite frankly, we never really upgraded to new equipment and never really built it out before. It wasn’t a big focus of the company before. But now the potential is really enormous. We can go from a roughly breakeven type of business to a business that literally we put in our press release that could be earning $10 million.
That’s just on the new business plus the existing business, we are in the process of raising prices and also making our facility more efficient. So the opportunity at Pharmaloz is enormous over the next 12 months. And so anybody worried about us building value in the company. First of all, Nebula to me, that’s a layup. And we had this attitude with COVID, if you build it, they will come, and they came. Well, if you build it in the genomics business, I can already see they’re coming.
And what’s interesting is a lot of the companies you have, first of all, you have consumer product companies that are selling genetic testing. I’m not only talking about whole genome sequencing. I’m also talking about the type of testing that accessory companies provide. They’re only studying a very, very small percentage of your genome compared to all genome sequencing. But even those companies potentially could do testing at our lab, none of them want to be in the lab testing business.
And what’s interesting, particularly with academic institutions doing research, some of them have small labs, they don’t want to invest in an expensive lab and have expensive equipment to do whole genome sequencing, they would rather outsource it. Because they’re only doing testing on whatever research they’re doing. Nobody is doing enough testing individually to support building out the type of lab that we’re building. And so that’s why the opportunity is there for a company like ours.
We now have a phenomenal reputation in the industry in the lab business. As I said, the inspectors in New York is one of the most stringent difficult from a regulatory perspective based in the entire country. And we are literally one of the top labs in the state of New York from a regulatory point of view.
And I’ll leave it at that. I want to talk more about the inspection, but it went incredibly well, and I’m really pleased with our lab. And so now we have this great reputation. We now have the best equipment. We’re working with literally the leading global leaders in the equipment that is used. They manufacture the equipment and they manufacture the consumables that are needed in order for us to process the whole genome sequencing test. And we have relationships with literally every major company in the world.
George Church was a part of it. He made a lot of those introductions. A lot of it we inherited when we acquired Nebula Genomics they were notable when we acquired Nebula, I don’t know it was probably two, 2.5 years ago. They were already doing business with some of the largest and we’ve now developed those relationships part.
So I’m really excited about these two subsidiaries in revenues now and the revenue growth, I believe, is going to be dramatic over the next six, 12, 18 months. And the earnings associated with it next year are going to be significant. And so we’re using this year to invest, to build out the equipment, to build out the labs, to purchase more lozenge manufacturing equipment, purchase more genetic testing equipment, hiring lab techs. I mean we’re hiring very sophisticated lab techs to build this business.
And so you got to understand, yes, of course, we’re going to lose money for a couple of quarters. We’re hiring, we built out the state-of-the-art lab. We have some of the best lab techs in the world now working at our company. And we weren’t doing any genetic testing in our labs, because it wasn’t validated yet. So obviously, they’re going to be loss in short-term. That’s what it means to be a development stage company. But what’s nice about us is the amount of money we’re losing, tails in comparison to the value of our company, our networking company, the value of the assets we have and the potential for growth.
So those are two businesses that I mentioned. Esophageal cancer, I could spend the whole call just talking about esophageal cancer. I’m not going to. I’m happy to in the Q&A. Everything is going really well there. We’re working with an independent professional statistics company called STATKING that did a full analysis of all the testing we’ve done so far. And the idea is not to do more, not to run the clinical study any further than we have to.
And how you determine the number of specimens we need in the clinical studies is based on the statistical analysis. So we have an independent company right now calculating how many specimens we need to process in order to apply for CPT codes and in order for physicians and the various cancer organizations around the country around the world to accept us for commercialization.
And so we believe that with the number of specimens that have been coming in recently, and that we’re studying now, we should be in really good shape later this year. And so I’m just looking forward to completing the current studies, which will be done exactly the same as the studies that were done on the first specimens. And so we are highly optimistic that we’re going to get the same results, and then we’re going to be able to run with it.
And again, I think esophageal cancer test by itself has multibillion-dollar potential. Happy to go into the numbers if anybody wants to. I don’t want to do it in my presentation, but in the Q&A, I’m happy to cover what anybody wants to cover.
So that gives me background. I want to stop. It’s 11:20, and I probably spoke to a little over 20 minutes just to give you a little bit of background and update on our company. Happy to move this over to the Q&A. And I’ll hand it back over to our conference call company to start the Q&A. And actually my computer just froze. Okay, Vaisnavi, if you want to start the Q&A, I’d appreciate it.
Question-and-Answer Session
Operator
Sure, sure. Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Adam Waldo with Lismore Partners. Please go ahead.
Adam Waldo
Yes, good day too. Thanks very much for taking our questions. You have a lot of very attractive shots on goal here on which you’re working as we look out over the next year or two and pretty decent probability that several of them were going to score. But in the next several quarters, there isn’t a lot of visibility, I think, for investors into the cash trajectory, liquidity trajectory of the company.
Right, you’re sort of at a cash burn run rate of around $14 million, $15 million annualized based on the first-half results. You have cash and marketable securities on the balance sheet of about $9 million. You could factor your accounts receivable, there are other things you could do in terms of if you will bridge financing if you need it. Can you lay out for people how you’re thinking about bridge financing opportunities at least, but more importantly, can you lay out what you see the cash progression liquidity progression looking like over the next three to four quarters?
Ted Karkus
That’s a great question. I don’t know – I don’t have the first quarter numbers in front of me. But when I look at our cash burn, I’d like to focus more on our adjusted EBITDA than anything else. Our adjusted EBITDA was negative, I think $2.2 million in the second quarter, and it was much better than in the first quarter. So I’m not sure where you get your numbers from. If we burn cash it’s to buy equipment, if we buy equipment we certainly have the ability to finance that equipment. So cash doesn’t become a major obstacle for us. If you’re asking me, am I thinking about doing a raise for ProPhase Labs?
The answer is no. At these prices, I don’t know what’s appropriate to say or not to say. But I think Nebula Genomics is — it could be worth right now more than the entire market cap of our company by itself. And especially, if you include our net working capital, then it’s just those two things and we had nothing, but Nebula and our net working capital. I’d tell you that our stock is probably undervalued. When you include our Pharmaloz Manufacturing facility, look at the type of numbers. I really think we could generate $10 million in pretax profits just from the new business we’re going to.
So even if we say at breakeven, but the proof of the matter is we’re increasing our gross margins, we’re increasing our pricing. We are getting more efficient. I don’t want to go too much into it, but there are some short-term things we brought in efficiency expert. There’s some short-term firm things that we can do to increase the profitability right now in our current business. But with the business that we’re adding and with the negotiations that have taken place I’ve been told that a manufacturing facility that private equity loves manufacturing facilities and will pay 10 times or 15 times EBITDA.
So we potentially, and I’m not saying that pharma is going to be worth $100 million, $150 million in a year, but it could be worth $75 million in a year. And then meanwhile, more importantly, Nebula Genomics that business is exploding and all the things we’re doing. So if we want to do something creative, it wouldn’t be raising capital through ProPhase Labs. As I mentioned on the call already, the accounts receivable isn’t an issue. Cash flow is flowing in from that.
Also, since our COVID testing slowed, it actually improves our cash flow and our accounts receivable going forward, because as the accounts receivable flows you see the issue as I explained earlier in the call, we had significant accounts receivable year-end and it looked like our accounts receivable actually grew a little bit six months later. It looked like we didn’t make any progress. We made a lot of progress. We collected on more than 50% of our accounts receivable but we had new accounts receivable that was generated, particularly in the first quarter from the new COVID testing business that we’re doing.
So now we’re in a situation and understand we’re paying a lot of expenses upfront when we do the COVID testing, and then we’re getting paid on the back end when the insurance companies reimburse us. And of course, for the specimens that are associated with hoppy patient data takes a lot longer to collect. And so on those all those expenses go out upfront, we get paid later. So now we’re in a situation where we’re doing significantly less COVID testing. We have accounts receivable coming in, where we’re starting to collect that now for the second half of the year, while at the same time, we don’t have the expenses going out new COVID testing because we’ve downsized that business significantly.
So our cash flow is actually pretty good, and we have plenty of opportunities. First of all, hypothetically, I want to finance Pharmaloz. We have this building amazing business operation. But even besides the business operation, just the building itself, and it’s on 12 acres across from Walmart. We could take out a mortgage on that very, very quickly. We can finance our accounts receivable. So the last thing I’m going to do or that I want to do is to do a dilutive rent of financing at ProPhase Labs.
At the same time, we have subsidiaries, and I can’t really talk about this, but we just might have a subsidiary that as I mentioned, by itself, might be worth the market cap of the company. So just think of, and you got to understand my background is on Wall Street. So with the background on Wall Street and with these great investment bankers that we’re working with, there are all sorts of creative ways we can finance this company without doing the dilutive round of financing with a secondary for ProPhase Labs.
And I don’t want to go into it more, and I don’t know we’ll see where this goes, and I really shouldn’t talk about it more. But I can just tell you, I have plenty of opportunities if I want to bring out the underlying value in our company. And at some point, at the right time in the right market conditions, it’s quite possible that I would do that. And we’ll just have to wait and see. I don’t want to say more than that. I’m not interested in getting trouble with the SEC.
But I just wanted to know that I have plenty of options that don’t include anything to do with dilutive around of finances. That’s the way I manage the company. The way I manage the company, again, I’m the largest shareholder in the company. Personal friends of mine are also large shareholders. And I believe in watching their back even more than watching my own. And the one thing I understand is raise capital when the stock market is hot and there’s lots of capital around and stock prices are high. When stock prices are low, you buy back stock and you pay dividends.
And so I have a history of doing exactly what I just described. There’s no reason why I want to do anything to all of a sudden change my style from what it’s been for the last dozen years, which have been very, very successful. So it’s really it’s a word of Buffet style to some point. I really think long term in terms of just building long-term value for the company.
I hope that answers your question. I went a bunch of tangents, but I think I brought it all together.
Adam Waldo
No, I think that’s helpful. And you’d asked earlier in your answer the source of the cash flow commentary. That’s just your first half free cash flow from your press release today annually. So you had saved free cash flow of about $7 million in the first-half of the year back in the envelope simple math, you analyzed its $14 million-ish. So I was trying to get a sense of bridge for the next three or four quarters. I think what I’ve heard you say, and again, clarify if you think as you think appropriate.
But I think what I’ve heard you say is, look, we have $39 million of AR that we could securitize or factor. We have the ability to mortgage on the lozenge manufacturing business Pharmaloz. We have the ability to do various and sundry things in the capital markets that might unlock value in our five main business or more of our 5 million business lines. And we see, obviously, the Pharmaloz business ramping quite significantly next year plus the genetic testing business. And so the business should be solidly free cash flow positive in 2024. Is that a fair summary?
Ted Karkus
Yes. I was really impressed, Adam. I don’t know what you do for a living, but you might want to come work for us if you’re looking for a job because that was really well done. Yes, that’s an excellent summary. Thank you.
Adam Waldo
Okay, thank you.
Ted Karkus
Alright, do you have any other questions? Or should we move on? Vaishnavi, lets go to our next question, please.
Operator
Alright. The next question comes from Fred McDonald, a Private Investor. Please go ahead.
Unidentified Analyst
Ted, you say the value of Nebula is greater than our market cap. But the market isn’t recognizing that. Would you consider doing an IPO, a Nebula or is there some other ways that you could get it the true value of Nebula be recognized?
Ted Karkus
Yes. So what’s interesting, it’s a great question. I alluded to it from the last quarter’s question. I’m not allowed to talk about things like IPOs. But what I can tell you, and again, I said this before, it’s so eerily similar. It’s almost scary. What happened 2.5 years ago, where we raised the block of money with ThinkEquity, led by ThinkEquity. We built out this tremendous lab. We built tremendous capacity and then we did this enormous business. And so it really is a deja vu where we’re in the exact same situation now almost exactly three years later.
But it’s with the business Nebula Genomics where the upside is dramatically greater than COVID and it’s an upside that’s going to last potentially for not only for years, but for decades. I mean this is the future of personalized precision medicine. So as I said, my background is on Wall Street. So I’m really — tell me I’m terrible at everything I do. The one thing I can tell you is I understand Wall Street, and I understand the value of Nebula and I understand the best ways to bring out that value as needed.
So to me, the real issue is I want to build, we already have a state-of-the-art whole genome sequencing facility. But now I want to build capacity. I want to be the leading laboratory in the country, if not in the world for whole genome sequencing and for all genetic testing. And not only from the point of view of having the best equipment, which we have. We have the best equipment in the world right now. We have equipment in this country that nobody else in the country as we’re the first one to get the latest leading state-of-the-art whole genome sequencing equipment. But now I want to build the capacity so that the bigger deals, we are at the lab of choice for the bigger deals.
And I believe there’s an opportunity right now to do it right now. That opportunity may not be there in three years, but it’s there right now because we’re first in, because George Church had the vision five years ago to found this company with his two PhD students who, by the way, work for us, and they’re great guys, by the way. Kamal and Dennis, you can see they’re in our company profiles. Great guys, really happy they came and joined us. And we’re building this great company. And to be honest with you, we have a whole team that’s doing a phenomenal job of building Nebula.
So I’m sorry I can’t directly answer your question, and I’m not saying we’re going to do something. We’re not going to do something, but also the previous caller asked about cash flow. Well, I mean, certainly, if I wanted to, I could raise capital well up the value of Nebula. And there’s multiple different ways that I can do that if we want to do that. And we’ll just have to see. We’ll explore things over time. So my point is I have lots of options without having to do a dilutive around of financing for ProPhase. And if I did some sort of financing as I said, I can finance Pharmaloz with a mortgage or I can do something with Nebula.
And I don’t want to go into more detail now, but the answer is yes. We have lots of options to explore. So the beauty is when you build a company that has significant underlying value when we do with multiple subsidiaries, it gives you options for how to finance going forward. So to me, the real question is, do I want to do a financing in order to scale up Nebula, because the opportunities are so large and that we just have to balance. What I don’t want to do is a dilutive round of financing at ProPhase labs, alright. And we’ll just have to see.
But the same way we built out a COVID testing lab and outperformed 95% of the labs in the country. I expect to do the same thing with whole genome sequencing except I expect my goal was to outperform 100% of the labs in the country. And that’s our goal. And I think I’ve also mentioned that we have significant opportunities, not only in the United States, but abroad.
But what’s interesting over the last couple of weeks, and I’ve been talking about our opportunities abroad for a while. What’s interesting over the last couple of weeks as the interest level is so high for Nebula Genomics for a lab for B2B business, and we’re literally just starting. We’re barely even in the business yet. And the interest level is high from some of the largest testing companies in the world.
And so it’s really interesting. We’ll see where this goes. But I can tell you, if we build it, they will come. I really believe that, that’s applicable to Nebula Genomics. And I believe that’s here right now and that opportunity is here right now. And I’m really looking forward to taking advantage of that opportunity. I hope that answers your question.
Unidentified Analyst
Thank you, Ted.
Ted Karkus
Alright, great. Vaishnavi [Indiscernible] next question, please.
Operator
Our next question comes from Dennis Waldman with Barrett Productions. Please go ahead.
Dennis Waldman
Hi, Ted. Thank you for taking my call. I have about three or four questions, if you don’t mind. I’m trying to wrap my head around Q1 versus Q2. In Q1, you did about $19 million, and here, you did about $13 million. I would assume that the consumer products of the Nebula and the Pharmaloz increased from Q1 to Q2. And I see that diagnostic testing in Q1 was $120,000 with an average price of about $121. In Q2, it went up to 126,000, about 5% increase. So I’m trying to understand how we have a 30% drop in revenue where we had increases across at least unit volume in diagnostic testing unless the price went down per test.
Ted Karkus
I apologize. I would have to get back to you on an answer to that question. Our testing was definitely down in Q2 versus Q1. It will be down in Q3 versus Q2. It’s not the future of the company. It’s not my focus. And your numbers, we are also doing a lot of antigen testing, which is different from laboratory PCR testing. Antigen testing is done at the point of service when you go up to the tent, the numbers. I would have to go back and look at the numbers. Our COVID revenues are definitely going down every quarter.
Now having said that, the fourth quarter, they may pick up substantially. I hear that there’s more COVID around. The question is, are the positivity rates are going up? I believe, and we believe that’s because people who actually have COVID are getting tested, but nobody else is where before everybody was getting. When a few people, you heard about somebody getting tested or having COVID, you immediately went down and get tested too. So for every person that actually had COVID, you probably had 15 other people that went got tested.
Now people are getting COVID again, but the people around them aren’t. So the testing is a lot less. The opportunity is a lot less. It’s really not the focus for the company. I apologize, I’ll get back to you off-line to get more into the numbers, but there’s no question our COVID revenues are going down. But the market never gave any value to our COVID revenues anyway.
As I said, it actually improves our accounts receivable if we’re doing less COVID business and our Nebula Genomics business and our Pharmaloz business are growing certainly year-over-year. They’re growing second quarter is seasonally. By the way, second quarter is typically the seasonally slowest quarter of the year for all of our businesses, and they’re going to be growing.
But I’m less concerned with the quarter-to-quarter because there are various things we’re doing in the various businesses that affect the quarter-to-quarter. But the year-over-year growth is tremendous in both and that’s going to continue. I hope that answers your question. If you need to offline, I can get back to you.
Dennis Waldman
Yes, I appreciate you getting back to me on that. And I was going to bring up the fact that the positivity rates have tripled in the last 1.5 months. I’m hearing that because everybody is traveling overseas now. And even though it hasn’t hit the mainstream media, a lot of the other articles I’ve been reading are saying that there is a tremendous concern that we’re going to have another virus, another upswing. This is the worst positivity rates we’ve seen in over 18 months. So I was wondering if you’re seeing any uptick at all?
Ted Karkus
No. So you just so indirectly pointed to the fact that the mainstream media isn’t even picking up on it. We’re not picking up on it because people don’t care. And the positivity rates without an explanation doesn’t mean anything. And as I explained, the positivity rates are high because only people that actually have COVID are being tested. So therefore, the positivity rates don’t mean anything. What would matter is the total number of people testing positive now versus previously. So is it upticking?
Yes, it’s upticking. Yes, is it coming from abroad? Yes, was there a new big COVID spread in China over the last few months? Yes, there was. So there’s definitely going to be some positive uptick here. It will lead to some business, but I’m not focused on the COVID business. I don’t even want to focus any more on this call on the COVID business. It’s a waste of time. It’s not where we’re focused on. It’s not what we’re doing. Do you have another question?
Dennis Waldman
Last week, you made a great announcement at Linebacker and the relationship with Certus. In there, I just want to read it says with this extensive data set down in hand, ProPhase will proceed to the next level. So I’m just curious what level was Linebacker at and what level is it going to?
Ted Karkus
Yes. And look, I’m not a scientist, but the best way I can explain this is that it’s always a case of balancing between how much money you want to spend, how many clinical studies you want to do, how much time you want to take before you go into humans. You can go into humans quickly or you can go into humans 10-years from now. And my point is with a compound like Linebacker, it has several different opportunities for commercialization to make a meaningful difference in the world of cancer in treating cancer. And so the question is how many cell lines do we want to test, how many different types of tests do we want to do?
We originally thought of this test as a co-therapy because it worked so well with multibillion-dollar drugs like doxorubicin and others, and we found that it worked significantly better. Doxorubicin work significantly better with Linebacker than without. And we know like, wow, this will be a great co-therapy. But then we found in certain cell lines and there are so many different types of cancer. So what do you want to do? Do you want to test in preclinical studies? Do you want to test Linebacker with every single type of cancer? So you have to narrow it down to which cancers do you want to focus on, both in terms of commercial opportunity, but also in terms of which one it’s going to be most effective.
And that’s why you do clinical studies to begin with, preclinical studies, I should say. So we’re doing preclinical studies. We’re now working with an AI leader to help perfect the path to commercialization to figure out exactly which cell lines we want to focus on in humans and which directions we want to go. And so that’s the stage now. So our goal is to be in humans next year. And once we go into humans next year, you start with Phase I human clinical study. And once you complete that, I am optimistic that Linebacker, we could end up doing a licensing deal that would be extremely valuable for it.
So as I’ve mentioned on previous calls, when you acquire assets and you first start to develop them, you can do all the due diligence in the world. It’s very difficult or it’s not the same when you actually acquire the asset. You hire the CROs, the clinical research organization, you do the research yourself and you see the actual results yourself. And I can just tell you, we have been pleasantly surprised every step of the way with Linebacker and so forth. I don’t like to focus on it on these calls because it’s the future, the stock market isn’t going to give us any value for Linebacker or anything we’re doing long term with cancer.
And so all I can tell you is we have a very promising compound. If it’s successful, it will dwarf the value of our company down the road, we can potentially do a licensing deal for the value of our company 12-months from now. That would be a nice surprise. I’m not guaranteeing. I’m not betting on it, but we’re not spending a lot of money either we’re using AI to perfect the path to commercialization. And again, as I mentioned, we’re talking about spending $3 million over the next 12-months to get us to a point where I believe we could be in licensing negotiations after spending another $3 million. I hope that answered that question. I do have a bunch more calls. You have a quick one.
Dennis Waldman
I have a quick one. Equivir kind of excited to see that on the market. What is your worst-case scenario where we’ll see it under the store shelves?
Ted Karkus
I’m sorry, Equivir?
Dennis Waldman
Equivir, yes.
Ted Karkus
Yes, pronounced Equivir. There’s a difference between store shelves and commercializing it online. We’re doing studies, the first set of studies. The preliminary results will be good enough for us to finalize claims that we put on packaging to sell to consumers online. And then we have a second round or it’s really the same clinical studies, but additional as we get through the complete clinical study, we’re actually doing a prophylactic study and a therapeutic study. And I’m really looking forward to the results that will be done over the winter. And then with those results, we’ll be able to put very powerful claims on the packaging.
As far as putting it into the stores, that’s we’re up to the mercy of the stores. We’re not ready to introduce it to the stores yet because I wanted to finalize claims on the packaging. A package sitting on a store self will not sell if it doesn’t have good claims on it. I know that from the Cold-EEZE days, all right? I’m an expert in that and just take my word for it because I turned around the Cold-EEZE brand myself, I was very involved in that. And so with Equivir we got to get the claims right. So we’re doing that now in the coming months, then we’ll sell it. We’re talking about fourth quarter, introducing it online. And as far as the stores, we’re really talking about next year, and I can’t tell you the timing. A part of that is going to be based on how strong the claims are, how excited the retailers get and the timing and when they’re doing their planograms, there’s a number of variables out of our control.
But the potential for this is huge. And I just want to know there’s long-term potential with Equivir, because immune defence products, really good immune defence products, that’s a great business in a dietary supplement category. If you come out with a great immune defence product like Equivir, I think it could be very valuable. And historically, that was our business. And so we have a whole infrastructure for making that a very successful product. But again, first step is in the preliminary results so we can get some claims on the packaging and start selling that to consumers online. And then the bigger push will be in stores. Interestingly, we actually have some other countries that are potentially interested in distributing that as well. But I don’t want to get too much into that on this call. All right. Having said that thanks.
Dennis Waldman
That’s it. Thank you.
Ted Karkus
You’re quite welcome. Vaishnavi next call [Indiscernible]
Operator
Okay. Our next call question comes from Yi Chen with H.C. Wainwright. Please go ahead.
Yi Chen
Hi, Ted. Thank you for taking my questions. My first question is, so for the second quarter within the second quarter revenue, is there any significant revenue actually coming from Nebula Genomics? Let’s say, over $1 million coming from Nebula Genomics?
Ted Karkus
Oh, yes, of course. Yes. We’re at a one, right now the problem is and I probably said this in the last quarter too, it gets complicated and we sorted this out. We have two sources of revenue when we sell a whole genome sequencing test. There is selling the test itself for which we do the sequencing. But then also, there’s the sale of a subscription to our library. And so of course, when we sell a test we get that money upfront and we recognize that as revenue immediately. When we sell a subscription to a library, the SEC is really tough where even though we’re getting the cash upfront and accountants are very tough on this. They want us to recognize that revenue over the course of the subscription.
So if it’s a three year subscription or a lifetime subscription, they want us to recognize that revenue over three years even though we get it upfront. So if we sell a subscription today and we collect $200, they want us to recognize that $200 over three years, even though we collected that $200 today. So what we’ve done is we expect months now with our attorneys working out the language in terms of what we offer to the consumer so that it’s recognized as a setup fee as opposed to an ongoing subscription. We think we have perfected that language. As we perfect that language, we will be able to recognize the revenues in the quarter in which they’re generated as opposed to having spread it out.
So there are some timing issues there right now but our revenues are significant. I don’t want to be quoted with numbers, but off the top of my head, ballpark, I guess we’re on a shareholder conference call. Off the top of my head, we’re at like a $15 million plus run rate at Nebula right now, but that’s probably a non-GAAP number. But that number is growing. And it all depends on how quickly we ramp up our Garden City lab. But as soon as we ramp up the Garden City lab, our profitability for selling these test goes up significantly. We’ll also be able to drop our pricing even further for the whole genome sequencing, which will drive even more volume and with the higher volumes, the bigger the volume, the more subscriptions we sell in the subscriptions of where the margins are.
So it’s actually good for us if we drop price because it drives volume, which in turn drives more subscriptions, more revenue and more profit. And we’re literally in the infancy of growing this business right now. And again, for the others out there that are listening, there are genomics companies out there with no revenues with $50 million and $100 million valuations that are years behind us in development. And so we’re already a revenue-generating company, but the run rate of those revenues, I believe, besides growing dramatically year-over-year, they’re growing every day.
I mean the numbers we got just in the last couple of weeks from some new ads that we ran, the volumes were significant. Some of the largest volumes, in fact, I think the largest volumes we ever received on a daily basis. So there’s no question. This business is growing by leaps and bounds, and we haven’t even started in a significant way with the B2B business, and that’s all coming. Hope that answers.
Yi Chen
Actually, that’s related to my second question. So as you wrap up the volume of sequencing services going forward, will your main target customer be consumers or businesses or both?
Ted Karkus
There’s sort of an internal debate going on. It’s a great question because if you ask George Church, he’ll tell you, and we’re working very closely with George Church at Harvard and Russ Altman at Stanford and George’s vision has always been for every single person in the country and on the planet to be tested, and that’s what in the UAE, in Abu Dhabi, that’s what they’re doing with the Emirati Genome Programme it’s testing 1 million residents. That’s 1 million residents out of 9 million residents in the UAE.
So think about if we did the same percentages here, we’re talking about 35 million people testing. We’re a multibillion-dollar company. If we committed to the same type of program here. But the point is we’re literally just testing the surface. And then the question is, how much of that is direct to consumer where it can see? I still think only 1% of consumers even know what personalized precision medicine holds genome sequence are. I didn’t know what whole genome sequencing was two years ago before we acquired Nebula. And I think most of the country doesn’t even know what it is.
So the question is how quickly they learn, consumers in the United States and around the world learn about whole genome sequencing to learn how important it is and learn how important the differences between whole genome sequencing and what the ancestry companies do, where they test less than 1% of your genome, which is great for ancestry information, but pales in comparison, if you want health-related information. And so it’s only a matter of time. I think the consumer business is literally it’s in its infancy. It’s where the Internet was 20-years ago.
But then on the business side, and with academic institutions and other types of businesses, they can bring enormous business to us right now. And so this really is what I was talking about earlier in this conference call is now that we’ve built this lab, we’re starting to get inquiries that are scary large. And I have the utmost confidence that we build a larger capacity lab, we will fill it with an enormous amount of business. So you can focus on whatever business we’re doing now. I think I put in the press release what our capacity is in our current lab of Nebula. It’s around $40 million. I want to build a lab that potentially is the capacity to do 5 times or 10 times that. And I believe if we do, I believe we’ll fill it.
So we’re talking about an opportunity with Nebula to be a multibillion dollar company, and we’re in the right place, right time. We’re already in the business. We’re already growing quickly. We already have all of the relationships. We have everything. We have the entire infrastructure, the entire relationships to build an incredibly successful genomics business. And so you can focus on our current revenues. But again, I mentioned there may be ways that we could bring out value in Nebula. And I think it would be substantial, and that would just be the starting point.
Yi Chen
My next question is could you comment, could you provide a rough time line with respect to the BE-Smart esophageal cancer test in terms of when it could be commercialized?
Ted Karkus
Sure. Okay. So there’s a difference between commercializing without CPT codes as commercializing with the CPT codes. There’s a major conference in the first quarter of next year. We have an expert consultant who is confident that we will get the CPT codes at that conference. So first quarter next year, we’re looking for CPT code. We can commercialize without it.
And so basically, our lab here and again, we have a world-class lab team working here and headed by Alice Lioi and Alice said, as soon as we do these next 300 specimens, 200 of which we’re doing right now, 100 supposed to come in the next couple of weeks. So within the next month or two when we complete those 500 specimens, that should be enough data to then do a validation for what’s called research use only, and this would not be reimbursed by insurance companies. This would be a cash-based test.
And I’m not really focused on it as a cash-based test right now. But once we get the CPT codes, the key is to get the key opinion leaders and the cancer institutions behind you. And then that brings in the physicians wanting to order the test. So there’s a whole ramp-up we can do where this could build up into an incredibly valuable test very quickly. But this is really a 2024 project. But as 2024 projects that could be very big.
And I’ll also tell you there’s a possibility that there are very large companies out there who might love to have our esophageal cancer test become a part of their portfolio as opposed to us building out the infrastructure ourselves. So the opportunities here are enormous next year once we get the CPT codes. Actually it’s not even so much CPT codes once we complete the current studies and STATKING does their independent analysis to show that we have studied enough specimens and it’s all based on confidence levels that it’s a 95% confidence level or sensitivity and specificity or the following numbers.
And the bottom line is, so far, our numbers have been fantastic, much better than most of the other cancer tests on the market. And so I’m very confident that we’re going to get commercialized and ultimately get the CPT codes. And once we do, I’ve outlined this previously, there’s a potential multibillion-dollar market out there. And then Phase 2 is to develop this test where it doesn’t have to be performed on people who got adopt these. Then it becomes an even exponentially larger business because ultimately, if you go into a doctor’s office with a brush technology, you take a brush down your throat, it picks up cells. It picks up the proteins that we need to test in order to tell you whether you’re at high risk or low risk of esophageal cancer, whether you have esophageal cancer right now.
And so that test, then it becomes everybody going to a GI before you even get an endoscopy, just everybody go into GI that has GERD, and say, hey, what’s going on? And the physicians would say, “Hey, let’s do this quick test to see if you have esophageal cancer right now or if you’re at high risk or low risk. And based on that, we can determine the next steps what do you need in the past to be so forth. And our test is more, yes, okay, I’m sorry. Go ahead and your next question.
Yi Chen
Yes, thank you. My last question is, I wonder if you can comment on more be the baseline level of diagnostic revenue if COVID testing is completely gone?
Ted Karkus
So we are not yet doing clinical lab testing. And so just very, very quickly, we’ve developed and this, again, was led by Jason, who is the President of our Diagnostics business, and he built a multi-hundred-million-dollar COVID business. And we have significant relationships in the industry. We are dying to exploit those relationships to build out our clinical lab. The gating issue or factor is getting in network with insurance with COVID testing. You didn’t have to be in network especially during the public health emergency. So now it’s a completely different business. It turns out the lab business is somewhat of a monopoly. It’s really incredible. I’ve never seen such anti-competitive practices. It’s really disappointing and I don’t want to pick fights with anyone.
But if you’re not in network with some of the major insurance providers, then the physicians don’t want to send you the specimen because if they send you the specimen, then the patient is going to have to pay out of pocket and then the patient complains to the physician. So it’s all linked between the physicians want to see that the lab is in network. And meanwhile, the insurance companies are like if you weren’t a big customer of ours, we don’t want to let your network. And so you have insurance companies that for the exact same test, two labs will perform these, three labs will perform the exact same test from the exact same patient, one level gets $300 of that test. The second lab, we’ll get $100 for the test and third lab won’t get reimbursed as well for the exact same work.
And so it’s really important to be a network. So we have some opportunities right now to get in network by and I’m looking for the right small lab but we have some opportunities right now. I don’t want to get too much into it, but I am optimistic that we will get in the network for acquisition and then not too difficult future that as soon as we do, we will build out our clinical lab business in a significant way. But for now, I would say the main focus of our revenues is going to be our Nebula Genomics business and Pharmaloz.
Yi Chen
Got it. Thank you very much.
Ted Karkus
Yes, sure. And why don’t I just throw out there, you didn’t really ask the question. Nebula Genomics, again, the capacity overlap is $40 million, I’m telling you that we’re thinking about building out a significantly larger lab. It gives you the kind of idea of what the revenue run rate should be for Nebula Genomics for next year, just from our lab. And I think that our demand is going to be significantly greater than what’s in our lab. We also have the ability to outsource specimens, which is what we’ve been doing that. So we built up the lab anyway. So without even building another lab or building more capacity, we have the potential to be at a run rate of more than $40 million in revenues for Nebula next year. And then, of course, once we build out more capacity, those numbers could only go up from them. So that’s on the Nebula side.
On the Pharmaloz side, I think I’ve mentioned previously that we want to build our capacity to $25 million or $35 million, and I think that we would have no problem filling most of that capacity when we do so. So there’s equipment that we’re bringing in right now short term to increase the capacity and then a whole new lozenge line. Essentially, we might want to bring in two more lozenge lines. There’s room for it. And so building our capacity of $25 million, $35 million next year, seems like should be straightforward and quite funky. It might be more than that next year.
And again, our pretax profits on the new business that we’re talking about bringing in could generate $10 million of profit by itself next year. So I’m really looking for Nebula and Pharmaloz the revenues to be really quite substantial next year and the earnings associated with both to be in place for next year. And I’m sorry, it’s really just the next six months figuring out the ramp-up. And it really has more to do with ramp-up the capacity, ramping up the businesses coming into Nebula and how quickly we ramp up Pharmaloz in terms of the capacity and increasing prices and so forth. Thank you so much, Yi I appreciate you on the call. And let’s try and get to the last questions as quickly as possible. I thought this was going to be a shorter call.
Operator
Alright. The next question comes from Lee Alper with [indiscernible] Please go ahead.
Unidentified Analyst
Hi, Ted. Thanks, the last couple of calls, you were excited about what was happening over the UAE. You did not mention anything today. Can you give us some color?
Ted Karkus
Here’s what’s interesting about UAE. So a couple of things. I have to weigh that’s actually a great question. Yes, there’s a lot potentially going on in UAE. I’m trying to be careful to not talk about things until they’re sort of set and strong. So we have some major companies that are very interested in Nebula Genomics and potentially interested in joint venture opportunities for us to actually build a Nebula Genomic laboratory in their country. Most countries don’t want to send their specimens outside the country. It’s one of the reasons why we built a lab in New York, even though we had access to relatively inexpensive whole genome sequencing abroad. Now of course, we can offer even lower pricing doing it in our lab because we’re getting, I believe, some of the best prices in the world for the consumables.
So we have opportunities. And then it’s a question of how then do we want to spread ourselves? The opportunity in our own lab is so huge. I really want to focus on that more than abroad. The other aspect of this is joint venturing or esophageal cancer test. And we already have a clinical research organization that’s excited and ready to go. There’s a Mayo Clinic and a Cleveland clinic actually in the UAE that wants to work with us. We have assessments lined up. But I’ll only do that if there’s a joint venture or partner upfront. Otherwise, I could do a study over there. And then all these companies over there will jump on and want to commercialize it. But I think we’ll make a lot more money that we commercialize in the United States first and then have them come scrambling for us.
But on the Nebula side, yes, there’s lots of opportunities over there. I just don’t want to get too far ahead of myself. There is so much opportunity with what we’re doing right in the United States, and I can touch it, taste and feel it, and that’s what we’re building. But in parallel, we are working with investor. I don’t want to under promise and over deliver. And so there’s definitely opportunities. We’re definitely following up on them. But the other thing I’ve just noticed, and this is true of all small-cap companies, they will move slowly. And so in the UAE the biggest companies they move even slower. So they’re a little interested they all want to do deals, but I don’t have time. There’s an enormous opportunity right now with Nebula Genomics today.
And that’s why literally, we had one of the world-class genomics manufacturers in our laboratory, just literally a few business days ago, and we were discussing, hey, we got to build out something 10 times side. There’s just too much demand down there. There’s just too many large players out there that want to bring us business. So why don’t I have to go build a lab and even a joint venture, even if I have a $1 billion company abroad that says, hey, we’ll pay for the lab, you build it, we’ll pay for it. We’ll joint venture in the process. I’m interested in doing that. But Nebula Genomics could be $1 billion company pretty quickly right here in the United States. So I just have to weigh opportunities and how attractive they are today versus down the road. I know that was sort of a long-winded answer to your question. Yes, I’m so excited about the UAE, but I have other opportunities at the same time that I can touch, taste and feel today.
Unidentified Analyst
Okay, thanks.
Ted Karkus
Yes. Alright you’re quite welcome. And I think we have one more question.
Operator
Yes. We have a follow-up from Adam Waldo with Lismore Partners.
Adam Waldo
For the follow-up, I should have asked it on the front end. But during the quarter, you made an unsolicited all-cash offer for a business unit of NAVB NNavidea Biopharma. Can you say anything publicly about where that stands? Is that a dead letter at this point? Or could that still come back around? And in a general sense, are you still looking at other opportunities with your resource base? Or are you really focused on the five you have and bridging the liquidity you have to really get to strong revenue and cash flow generation from those in 2024?
Ted Karkus
I really like your question was A or B, I really like B. really like the latter. That’s really what I’m doing. I want to focus on our assets. And to some extent that dovetails into the last caller who just asked about the UAE, we have lots of opportunities over in the UAE. I don’t want to spread elf to and I don’t want to spread our company to sell. So I want really great opportunities or I don’t want to focus on them because I have great opportunities. If we do nothing but just focus even forget about Linebacker, okay? Forget about Equivir, right? If we just focus on Nebula Genomics, Pharmaloz and esophageal cancer, we could be a blockbuster company other than that’s one, two years. We could be a unicorn in a couple of years, all right? And so that’s my focus.
Having said that there are opportunities. So with the company you talked about, I really don’t want to talk about that company, except that they happen to have in assets that is underutilized that we could commercialize. We happen to have these phenomenal relationships in the U.S., and we can commercialize it today, and it happens to be an asset that fits in perfectly with the MENA region in that region. So it just happens to be a perfect fit. It’s still a perfect fit. I don’t want to say more about it.
But the one thing I will say in general, in small-cap companies in general, most of the managements perform, and I’m not saying anything about this company, but in general, I looked at hundreds of acquisitions over the last couple of years. They’ve settled out two or three. They were based on how great the assets were and the opportunity was, but it was also partially based on whether or not we can work with the management team.
So the question is, can we work with this management team. And I don’t know why a management team wouldn’t want to exploit the assets that they have, unless there’s ulterior motives that the shareholders don’t know about. So that’s all I can say about that. But the bottom line is they have assets that I think that we could exploit to be worth an awful lot of money very quickly. But if we don’t acquire the assets, we don’t acquire them.
So am I open to it? Yes. What I particularly like about it is it fits in really well. My scientific team at ProPhase, could be able to handle it. So wouldn’t have to hire other people and the relationships we have are already developed, and I think we can roll out very quickly. And that’s why I looked at that opportunity. In general, I’m not looking for acquisitions. Unless it builds upon and accelerates the growth of the subsidiaries we already have.
So for example, if I can find a small lab to get this in-network for insurance so that we can accelerate the development of our clinical lab, I’ll do that because we have the fantastic clinical lab that’s ready to go. So that’s a perfect example.
Adam Waldo
Right. No, that makes sense. So again, for all intents and purposes, should we assume NAVB is a dead letter? Or I mean given that the company continues to have significant cash burn, their financing options look to be increasingly limited. Could that potentially morph into a more advantageous deal down the road or we’ll just have to wait and see.
Ted Karkus
You said it perfectly. I couldn’t have said it better myself. We’ll do that. Look, I certainly don’t control the company. I don’t know what they are thinking. And we’ll just have to play it for a year. I don’t know if you have an investment there. If you have an interest there. I don’t know if you do it or not. You don’t have comments on that. The bottom line is there’s an opportunity, and that’s the only reason why ProPhase Labs got involved and made the offer letter in the first place.
Adam Waldo
We’re not involved in the stock, but it just obviously came across your press releases and I looked at the financial like this company’s Cat Farmway is not very long. So I don’t know what we were doing, right?
Ted Karkus
Yes. Well, look, we acquired the esophageal cancer test under similar circumstances, the company that owns it couldn’t finance it. We were in a bear market, and they couldn’t finance the company. And they were under a lot of pressure, but they were a great management team to work with. In fact, the gentleman who was the acting CEO at the time that we acquired esophageal cancer test, Jed Latkin is working for us as a senior consultant. He’s very involved with our company and with the development right now. That deal worked out great, but a part of it was because the management was amenable to working with us and the asset is fantastic.
I mean since we acquired esophageal cancer, I’m so excited about it as the development or not. It’s a lifetime opportunity, quite frankly. Of course, there’s nothing in our market cap for, but it’s a lifetime opportunity, and it’s all systems go. So I’m just excited about that for the future. And again, some people don’t like it when I make this reference because it’s night and day. But Exact Sciences.
I’ve been talking about them since they were $10 billion, $11 billion company. I don’t know they’re a $15 billion company. Their primary business is Cologuard as a colon. It’s a test for colon cancer. We have a test for esophageal cancer, right? They just require you to make a bowel movement. Ours right now are on people that are already getting endoscopes anyway, so they don’t have to do anything extra. And ultimately, maybe a test where you put a brush inside.
And we believe that our sensitivity and specificity may be greater than Cologuard. And so I’m not looking for our company to be esophageal cancer to be a $15 billion company, even a $1 billion company, all right? What if its $100 million of revenues that would still triple the value of our company. So the opportunity there is enormous. Anyway, I think I pretty much answered your question.
Adam Waldo
You did. I think the Exact Sciences analog, Cologuard analog is a pretty interesting one. Thanks for the answer to my question on ABB though.
Ted Karkus
You’re quite welcome. Have a great day. I really appreciate everybody joining the call today. Obviously, I’m really excited about the future of the company. And I thank you all for joining today. I’m looking forward to a lot of progress in the next three, six, nine and 12 months.
Operator
Thank you. This concludes our Q&A session and the call as well. Thank you for participating today.
