PulteGroup Q2 2024 Earnings Call Transcript

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August 7, 2024

There are 8 speakers on the call.

Operator

Good day, and welcome to the OptuHealth Second Quarter 2024 Financial Results Conference Call. All participants will be in listen only mode. Please note, this event is being recorded. I would now like to turn the conference over to Yvonne Briggs. Please go ahead.

Speaker 1

Thank you, operator, and good afternoon. This is Yvonne Briggs with LHA. Thank you all for joining today's call to discuss Opco Health's financial results for the Q2 of 2024. I'd like to remind you that any statements made during this call by management other than statements of historical fact will be considered forward looking and as such will be subject to risks and the company's SEC filings, including the annual report on Form 10 ks for the year ended December 31, 2023, and in subsequently filed SEC reports. The conference call contains time sensitive information that is accurate only as of the date of the live broadcast, August 7, 2024.

Speaker 1

Except as required by law, OpCoat undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances after the date of this call. Before we begin, let me review the format of today's call. Doctor. Philip Frost, Chairman and Chief Executive Officer, will open the call. Doctor.

Speaker 1

Elias Serhouni, Vice Chairman and President, will then provide an overview of BioReference Health, followed by OpCo's Pharmaceutical business. After that, Adam Loegel, OpCo's CFO, will review the company's Q2 financial results and then we'll open up the call to questions. Now I'd like to turn the call over to Doctor. Frost.

Speaker 2

Good afternoon and thank you for joining us today. We recently made a few announcements focused on optimizing our balance sheet and enhancing shareholder value. We entered into a $250,000,000 note purchase agreement with Healthcare Royalty that is secured by the gross profit share arrangement we have with Pfizer, our global commercial partner for angenla. The transaction allows us to retain a significant portion of the near term profit share payments and also provide substantial upside opportunities long term. We maintain rights to the full $100,000,000 of remaining potential milestone payments from Pfizer.

Speaker 2

The proceeds provide financial flexibility to advance our R and D efforts MODEX and its multi specific antibody programs, other OpCo programs and the option to repurchase shares of our common stock and convertible notes. As you know, our Board authorized a 100 $1,000,000 share repurchase program, which at present prices represents approximately 10% of our shares outstanding. This share buyback program represents an attractive investment opportunity given our confidence in the business and our strategy. Ingenva, our long acting growth hormone therapy continues to gain traction as Pfizer expands its launch with the product now being sold globally. Ingeneluk competes in a large and expanding global market opportunity.

Speaker 2

As mentioned on our last conference call, the IND for MODEX 2,001 was cleared by the FDA for us to proceed to a Phase 1 clinical trial to treat solid tumors. Our goal is to develop a 1st in class tetra specific antibody that activates T cells and survival enhancement receptors to optimize sustained cancer treatment. The first patient is expected to be dosed in the coming weeks. In addition, we're on track to begin clinical trials of our Epstein Barr vaccine candidate with our partner Merck later this year. Elias will provide more detail on these and other MODEX pipeline programs in a moment.

Speaker 2

As for BioReference Health, we're making steady progress on the return to profitability, which will accelerate when we close the announced transaction with LabCorp. We are continuing to progress our collaboration with Entera Bio to develop oral tablet formulations of our proprietary long acting GLP-two peptide and oxintomodulin analogs using Entera's proprietary nTAB oral delivery technology. Entera recently announced in vivo PK results for oral GLP-two tablets to treat short bowel syndrome and other GI disorders. Plasma levels compared favorably with those reported for teguglutide agatex product. Pharmacology and incremental pre K are expected early in the second half of twenty twenty four.

Speaker 2

With that brief overview, I'll turn it over to Elias. Elias?

Speaker 3

Thank you, Phil, and good afternoon, everyone. To echo Phil's comments, we're well positioned to execute on our strategy. This includes advancing our multi specific pipeline at MODEX and streamlining BioReference Health operations to return to profitability. Let me start with BioReference Health. We're on track to close our transaction with LabCorp in late September or early October.

Speaker 3

After this transaction closes, our ongoing diagnostic operations will include our national oncology and urology franchises and our full suite of testing services in New York and New Jersey. This transaction will streamline our remaining diagnostic business by enhancing our focus on core testing operations and supporting our efforts to reestablish profitability. As an ongoing initiative, we continue to improve BioReference's performance and in turn build value. Our goals remain clear and that is to reduce costs, to improve efficiency and to enhance productivity as well as to drive top line growth. For instance, at the end of Q2, our FTE number at BioReference was 2,697 and this will drop to approximately 2,100 following the transfer of FTEs to LabCorp at closing of the transaction.

Speaker 3

This geographic refocusing of our operations will help further reduce our cost structures in coming quarters. Now oncology remains a growing and high value segment of the diagnostics business. In the 2nd quarter, testing volume increased 8% and revenue overall increased 6% versus the year ago quarter due to demand for our innovative platform and competitive turnaround times. As I mentioned last quarter, the growth in this segment is being driven by collaborations with large cancer centers and mid level health systems. We continue to expand these relationships as it is a costly proposition for a health system to run these specialty oncology tests in house.

Speaker 3

Additionally, we grew our oncology menu in the Q2 with the addition of IHC stains for neuroendocrine, rhabdoid and gastric markers and move some of our somatic markers to new advanced testing platforms. This enables us to stay best in class with our portfolio and brings value to our clients and the patients they serve. Our 4 ks score test for prostate cancer continues to perform well. Now moving to our Pharmaceutical segment, I'd like to start with MODX programs and specifically the MDX-two thousand and one program that was mentioned by Phil, which has been approved by FDA to progress into the clinical stage. We expect to dose our first patient in the Phase 1 trial for our tetraspecific laser program for solid tumors in the coming weeks.

Speaker 3

This Phase 1 open label trial is expected to enroll 45 cancer patients with a variety of solid tumors, including lung, breast, prostate and pancreatic cancers, with the goal to focus on certain tumor types that are responding to treatment and then expand the trial accordingly. We anticipate a total of 6 clinical sites to evaluate safety, tolerability and pharmacokinetics as well as early anti tumor activity. 2 sites are already enrolling patients and 4 more I will come online very promptly. In addition, we look forward to advancing our other immuno oncology programs through IND enabling studies and expect to enter the clinic next year with an immune modulator multi specific antibody known as MDX-two thousand and four that could potentially be used in a large number of oncology and non oncology indications. We continue to actively evaluate possible partnerships for our portfolio assets seeking non dilutive funding for several of our programs.

Speaker 3

Another program we expect to enter the clinic this year or early next year is MDX-two thousand two hundred and one which is our Epstein Barr virus multivalent nano particle vaccine. Merck is our collaboration partner who funds all preclinical work performed by the MEDEX team until IND, at which time Merck will assume all development and commercialization aspects of this novel vaccine for EBV. Pending regulatory clearance, our goal is to begin studies in mid 2024, early 2025. We also have a very active collaboration with BARDA to develop our multi specific antibodies against known variants of SARS CoV-two for the treatment and prevention of COVID-nineteen. This program is also progressing very well and is entering the pre IND enabling stage of development.

Speaker 3

BARTA, as we mentioned before, granted us $59,000,000 to fund R and D and clinical evaluation through Phase 1. Additional funding of up to $109,000,000 may be available to accelerate the COVID program and target other biodefense threats as well as develop a platform with gene based delivery methods for use against future pandemics. Now switching gears to angenla, Pfizer has launched the pediatric long acting growth hormone drug in all major global markets and we expect Pfizer to continue to penetrate markets and gain share for this once weekly drug as patients shift from the daily products. We're working with Pfizer on 2 additional indications including growth hormone deficiency in adults and other pediatric applications. As you know, UPCO is entitled to an additional $100,000,000 in potential milestone payments related to these two indications.

Speaker 3

Finally, RAYALDEE continues to perform as expected with new evidence showing its potential to improve outcomes in chronic kidney disease 3 and 4 stage patients with secondary hyperparathyroidism. So in summary, I think we've made significant progress in both segments of the business as we get closer to returning I will now turn the call over to Adam Logal to discuss our Q2 financial results. Adam?

Speaker 4

Thank you, Elias. As Phil and Elias have discussed, the first half of twenty twenty four was transformational for our balance sheet as we position ourselves to realize and demonstrate the inherent value of our assets for our shareholders. We initiated and completed 5 significant transactions, which Phil and Elias have already discussed in part, including the refinancing of our convertible notes in January, which allowed us to extend the maturity of our notes, repurchase 55,000,000 shares of common stock and added approximately $25,000,000 of cash to our balance sheet, while working to realize the significant value of our underlying asset. We then announced as well as demonstrate the value of the remaining business of BioReference. We announced the healthcare royalty financing transaction recently, pulling forward $250,000,000 of cash while maintaining significant upside in the gross profit share payments and all remaining milestone payments.

Speaker 4

4th, we announced an additional common stock buyback of up to $100,000,000 And finally, we've begun to monetize a portion of our holdings in GeneDx. We look at all options of enhancing shareholder value and will continue to execute operational through strategic transactions like the ones I just mentioned. This includes opportunity to realize the inherent value of our assets and through the return of capital to shareholders through our stock buyback program as well as repurchasing our convertible notes as market conditions allow. We expect to have a significant cash balance, which we'll use to invest in our highest priority R and D programs and to fund prudent equity repurchases. Before I move to the financial results for the quarter, I wanted to summarize the key terms of our recent healthcare royalty transaction.

Speaker 4

Through this agreement, we've accelerated the value realization of a portion of our partnership with Pfizer, while retaining $100,000,000 of milestone payments. The agreement also allows us to retain near term upside and the long term potential of the collaboration at a cost of capital below our benchmarks. The transaction was structured as a royalty bond secured by the gross profit share payments we received from Pfizer. This will be accounted for as debt, meaning the balance sheet will reflect the cash and principal balance of what we received from healthcare royalty. Revenue, gross margin and operating income will continue to reflect the economics of our existing relationship with Pfizer.

Speaker 4

However, interest expense will increase as a result of this financing. For the 1st full years, if the payments received from Pfizer exceeds interest expense, all excess will be paid to OpCo. Shortfalls, if any, will be treated as payments in kind and increase the principal balance. After the 1st 4 years, all payments from Pfizer will be retained by Healthcare Royalty, 1st, repaying interest and any excess to pay down the principal, again, with any interest shortfalls being treated as payments in kind accruing to principal. When considering our internal forecast and base case model, we anticipate the royalty bond will be fully repaid within 8 years with our downside models showing repayment within 10 years.

Speaker 4

The interest rate is based on sulfur plus 7.5 percent with a 4% sulfur floor. Now moving to the financial results of our Diagnostics segment. Revenue increased 2 percent to $129,400,000 for Q2 2024 compared with $127,100,000 for the 2023 period. This increase was driven by strong volume and price growth in our Oncology segment, partially offset by declines in our women's health and clinical testing businesses. Costs and expenses decreased 9% or $15,300,000 to $156,000,000 for the Q2 of 2024 from $171,300,000 for the 2023 period.

Speaker 4

Operating loss for our Diagnostics segment narrowed by 40 percent to $26,600,000 for the Q2 of 2024 compared to the Q2 of 2023's $44,300,000 operating loss. Sequentially, we also saw an operating an improvement in operating loss of $7,800,000 reflecting the realization of the cost reduction programs outlined last quarter. Revenue from the assets being sold to LabCorp represented $25,500,000 of revenue and related costs and expenses totaled 30 $500,000 during the Q2 of 2024. Depreciation and amortization expense for the Diagnostics segment were $6,200,000 $8,600,000 for the 2024 and 2023 periods, respectively. The team at BioReference continues to work tirelessly to execute our plan to return this business to profitability and they continue to make significant strides towards that objective.

Speaker 4

I'll provide some additional clarity on the details and timing of these significant improvements when I provide guidance in a few moments. Moving to our Pharmaceutical segment, revenue was $52,800,000 for the Q2 of 2024 compared with $138,400,000 for the 2023 period. As a reminder, the 2023 period included a $90,000,000 milestone payment from Pfizer for the regulatory approval of Ingenla in the U. S. Revenue from products, including our international pharmaceutical businesses was $40,500,000 compared to $43,500,000 for the comparable period of 2023.

Speaker 4

Despite the challenging foreign currency environment, the profitability profile of the business approved against our expectations. Product revenue includes revenue from RAYALDEE of $7,200,000 which was similar to 2023's $7,700,000 reflecting a slight decrease in the number of bottles shipped, partially offset by increased pricing. Revenue from the transfer of IP was $12,300,000 for the Q2 of 2024 compared to $94,900,000 for the 2023 quarter, which as I mentioned included $90,000,000 from Pfizer for the U. S. Regulatory approval of Ingenma.

Speaker 4

Our U. S. Gross profit share from Pfizer was $6,300,000 during the Q2 of 2024 compared to $3,800,000 for the 2023 period. In addition, the Q2 of 2024 includes $5,000,000 of other IP revenue related to our BARDA agreement. Costs and expenses for our Pharmaceutical segment were $77,600,000 for the Q2 of 2024 compared with $74,700,000 for the 2023 period.

Speaker 4

Research and development expenses were $23,700,000 compared to 17,500,000 dollars a year ago. Research and development expense increased as a result of our activities for the MODEX development programs, including the recently commenced Phase 1 clinical trial for our first immuno oncology program. The resulting operating loss for the quarter ended June 30, 2024 was $24,800,000 compared with operating income of $63,300,000 for the Q2 of 2023. Depreciation and amortization expense for the Pharmaceutical segment related to intangible assets were unchanged at $17,900,000 $17,800,000 for the 2024 and 2023 second quarters. Turning to our consolidated financial results.

Speaker 4

For the Q2 of 2024, we reported a net loss of $10,300,000 or $0.01 per share compared with a net loss of $19,600,000 or $0.03 per share for the 2023 period. Net loss for the Q2 of 2024 included a non cash unrealized gain on our investment in GeneDx of $60,500,000 compared to a non realized loss of $19,900,000 for the 2023 period. In addition, as I've mentioned, the 2023 period benefited from the non recurring $90,000,000 milestone payment from Pfizer. As we look ahead, providing financial guidance with the following assumptions. For our Pharmaceutical segment, global sales of GENOTROPIN for the first half of twenty twenty reported by Pfizer, were $349,000,000 Pfizer has not separately reported sales of Ingenla.

Speaker 4

However, we continue to observe consistent prescription growth globally for Ingenla as reported by both IQVIA and Symphony. We were pleased to see that Pfizer has begun to realize the cost benefits of the increased manufacturing scale of Ingenla during the Q2. And as a result, we believe that the gross profit share payments beginning late in Q3 will reflect this improvement in gross profit for the product. As such, we expect to receive gross profit share payments from Pfizer of $7,000,000 to $9,000,000 in Q3 $15,000,000 to $20,000,000 for the full second half of twenty twenty four. We assume a stable foreign currency exchange rate for our ex U.

Speaker 4

S. Pharmaceutical business. And R and D expenses for the Q3 of 2020 4 will reflect higher activities related to our MODEX program, including CMC and efforts related to our immuno oncology trial. A portion of the increased activities will continue to be funded by our BARDA agreement. For our Diagnostics segment, we anticipate the closing of the LabCorp transaction to occur by the end of September or early October, but have included the results for the full quarter in our outlook.

Speaker 4

This significant milestone allows us to rationalize our fixed cost structure and provides the foundation for BioReference to return to profitability. We are continuing our multiyear, multi phase cost reduction program and this program is expected to include operational efficiencies and product portfolio rationalization. This program is focused on the reduction of fixed infrastructure costs and is expected to deliver annualized savings of approximately $25,000,000 the end of 2024, some of which we expect to begin realizing during the Q3 of 2024. The one time costs to achieve the savings with the near term phase of the program are expected to be approximately $40,000,000 and primarily includes severance and facility closure costs. These costs will be recorded primarily in 2024 with cash outlays expected through 2028.

Speaker 4

In addition, we have taken action on a number of our RCM programs, including implementing a price increase during the Q3 for certain testing modalities, including our oncology offerings, which are expected to result in an overall annual increase of revenue of $8,000,000 to $10,000,000 Before considering any nonrecurring costs that may result from our restructuring and other nonrecurring expenses, we expect costs and expenses in Q3 to decline approximately $3,000,000 to approximately $153,000,000 to $156,000,000 without giving effect to the approximately $33,000,000 of costs related to the assets conveying to LabCorp. We expect to realize a gain net of transaction expenses of approximately $114,000,000 to $120,000,000 related to the closing of the LabCorp agreement. As a result, we expect the following for the Q3 of 2024: total revenues between $180,000,000 $185,000,000 with revenue from services between $125,000,000 $129,000,000 including $24,000,000 to $25,000,000 from the assets which will be sold to LabCorp. Revenue from product sales of $40,000,000 to $43,000,000 and other revenue between $10,000,000 $14,000,000 inclusive of the Pfizer gross profit share, which is estimated to be between $7,000,000 to $9,000,000 We expect 3rd quarter costs and expenses to be between $238,000,000 $245,000,000 excluding the nonrecurring expenses I previously mentioned.

Speaker 4

R and D expense is expected to increase to be between $24,000,000 $28,000,000 with the range being dependent on certain CMHC activities for our MODEX programs. And we expect depreciation and amortization expense to be approximately $24,000,000 This concludes our prepared remarks. Thank you all for your attention. And now operator, let's open the call for questions.

Operator

Thank you. We will now begin our question and answer session. And the first question will be from Maury Raycroft from Jefferies. Please go ahead.

Speaker 5

Hi, thanks for taking my questions and congrats on the progress for the quarter. Maybe first one just on Ingenla. So it seems like the guidance for second half of this year is narrowing and lowering a little bit. Just checking if anything changed commercially since last quarter or is this related to just getting experience with the gross profit share economics Or is it due to inventory or anything else commercially that Pfizer could be seeing?

Speaker 4

Yes. No, this is tied into the inventory adjustment that we talked about last quarter, we had hoped it would We had hoped it would be earlier in Q3. It looks like it's going to be late Q3 based on our internal factors. So that's why the annual range came down to kind of the mid-30s from potentially Size 40.

Speaker 5

Got it. Okay. That's helpful. And then is it possible to book end timing for when Pfizer could aim to refile for the adult growth hormone opportunity? And is there more you can say in the status and plan for the additional pediatric indications?

Speaker 4

So on the pediatric indications, so Pfizer is planning their registration studies to bring those forward for the global launch for those additional indications. We haven't provided any specific timelines for those trials to be completed yet, Maury, but I think more to come. They're definitely actively working on the programs. As it relates to the U. S.

Speaker 4

For the adult, they're still working with their team to formulate their strategy for the U. S. Approval.

Speaker 5

Understood. Okay. And then last question, I'll hop back in the queue. Just for the deal closing with BioReference, thanks for providing the clarity into when you expect that to happen. Is there anything else you can share about where you're at with the process and what are specific gating factors to the closing?

Speaker 4

Yes. So right now it's really focused heavily on the integration steps between the clients and LabCorp. So those are the main gating items. There's a couple of minor regulatory filings that just need to get cleared up. But all of the major hurdles are behind us, which is why we have pretty certain clarity that this transaction will get closed late September, early October.

Speaker 5

Got it. Okay. Thanks for taking my questions.

Speaker 6

And the

Operator

next question will be from Yale Jen from Laidlaw and Company. Please go ahead.

Speaker 7

Good afternoon and thanks for taking the questions. My first one is that in terms of closing the record deals and you mentioned some of the savings, should that all be realized? Could you give us some sort of quantitative look in terms of how far from that to breakeven and cash breakeven? And then we have a follow-up.

Speaker 4

Yes. So Yale, I think if you step through the numbers and the cost savings plan and the realization of the price increases coupled with the closing of the LabCorp transaction, that will put us to a point where the business is breakeven to slightly profitable. So we only gave the initiatives that we expect or we have in hand that we'll initiate upon the closing of the LabCorp transaction. A handful of those are not dependent on the LabCorp transaction closing. Some of the larger ones are as it relates to some of the facility closures.

Speaker 4

However, we feel highly confident in our ability to deliver the savings that we walked through and the price increases have already been put into effect. So we feel very confident on those numbers being realized and our run rate numbers by the end of the year, which is where we had previously guided to.

Speaker 7

Okay, great. That's very helpful and congrats on that. And just one more question on the MDX thousand and one, which is the first part, have you guys reviewed what the specific target for the TEGAFABATI was on the antibody was against? And the second one actually is on the SISER study, which you mentioned about 45 patients. Is that just only the Phase 1a, 1b or that's more I understand the full study also has the IIa portion Phase IIa portion.

Speaker 7

So would you be able to clarify a little

Speaker 3

bit more on the specific and thanks. Yes, I can do that. Elias here. Thanks for the question. On the target, I think it's something we have now shared.

Speaker 3

So I think it's no problem sharing it with you. So it's a quadraspispecific antibody that has for tumor targeting has 2 targets, 1 is TROP-two and the other one is c MET. These are the 2 targets we chose because they're present on about 14 different tumors in oncology. So that's the answer to that. The size of the study really reflects what you typically do is what we do, we call it basket trial, where you really try different tumor types.

Speaker 3

We have 11 months identified and you try to get signals about the most promising one, which we believe is going to be non small cell lung cancer, breast cancer, the solid tumors, pancreatic cancer, we don't know. So that's the first phase of the study. That's what you call the 1a phase. Once we do that, then we'll narrow down to 1 or maybe 2 tumor types which is contained within the patient volume that we identified for the patient number. And then we'll expand that depending on the results, obviously, the side effects.

Speaker 3

And so that's clinical development. We need to learn from the basket trial and then decide how we go. And yes, indeed, we have a 1a or 1b phase or go straight to a 2a. That's to be determined by the close of

Speaker 7

the year. Okay, great. And maybe just to tap one more here, which is, was there any timeline we can start to get some top line or initial readouts? Okay.

Speaker 3

So typically when you do an immuno oncology trial, you have a first phase, which is safety. So we are escalating the dose. We hope that this will take about 6 months, if everything goes well. And then we'll go into a more efficacy type trial with a cohort of patients, about 3 patients per dose ascending dose. So it's hard to predict really because you can't really tell how many patients are going to show up at what time it is 6 sites.

Speaker 3

We have 2 sites right now and we have 4 more, 2 are imminently going to get activated and 2 more after that. And so it's really hard to tell, but I think that by 20 25 Q1, we will know if we have a drug that is safe and that can be increasingly dosed, okay. So that's step 1. And we don't know that at this time. Immuno oncology is always a very powerful therapies, but they also have side effects we need to understand and manage.

Speaker 3

So that's what where you would get a readout as to the viability of the program is probably the first half of 'twenty five. And then we will know what targets to go after within 2025 depending on results.

Speaker 7

Okay, great. That's very, very helpful. And again, congrats on the progress.

Speaker 3

Thank you.

Operator

And the next question will be from Michael Petusky from Barrington Research. Please go ahead.

Speaker 6

Yes. Good afternoon, guys. So I guess, the first question, at the end of this year, it seems like a lot of things are sort of converging, sort of going in the right direction. Presumably, you'll have approximately $240,000,000 just under $240,000,000 coming in from the LabCorp. Obviously, you just did something a couple of weeks ago that gives you additional financial flexibility in terms of the 250 $1,000,000 You'll have a lab business that presumably by the end of the year won't be losing much money if losing money at all.

Speaker 6

Can you just talk about capital allocation priorities as you sort of end this year and look towards the future? I mean what matters the most as far as the sort of unprecedented financial flexibility you guys will have going forward? Thanks.

Speaker 4

Elyse, you want to kick us off and I can fill in.

Speaker 3

I'll talk about capital allocation in terms of some R and D and bio reference. So when we look at bio reference, it's clear that we will need to grow the business once it becomes profitable. And whether or not we need to allocate capital to that is unclear. But it's clearly true that if you look at the market in New York and New Jersey, it's still very fragmented. And so, definitely accelerate the growth in BioReference for increasing revenues.

Speaker 3

The second is MODEX. I mean MODEX has a rich portfolio and we're going to do 2 things. We're going to explore partnerships as we've done with Merck and BARDA and others are in the hopper. But because we have some capital, we can get better economics with a partner than we do with that capital being available. So for example, if you look at certain assets, you get a much higher inflection points in value if you can progress the program to proof of concept.

Speaker 3

And that may be actually the best way to achieve greater economics for the portfolio. So it's going to be depending upon results obviously, depending upon partnerships because we think that we're not going to take the risk, I believe, unless we have exceptional results of allocating the capital to completely carry the development program all the way to approval. I don't think we have enough of that and it will not be hedging, not be reasonable to do that unless you have outstanding exceptional results. But the best path forward right now is to really try to get a bigger share of the economics of our portfolio by very judicious and very limited capital allocation. You're not talking about 100 of 1,000,000 of dollars.

Speaker 3

But if you can advance a program to a park, a feasibility stage, then it really increases in value for potential strategic partners or other moves. I don't know if I'm making myself clear. Now in terms of the other uses of capital, I'll let Adam comment on that.

Speaker 4

Yes. So Mike, I think the other components, we announced $100,000,000 share buyback. I think we've talked a little bit about potentially taking out portions of the convertible notes that are outstanding as well. But I think we're going to be allocating that capital based on the market conditions for both of those items. We'll provide longer term guidance as it relates to the R and D budget and other items in upcoming calls.

Speaker 4

But we're sitting here today working through all of those different pulls and pushes on creating that shareholder value and are committing significant dollars already to returning capital to shareholders through those 2 repurchase programs.

Speaker 6

Is there Adam, if I could ask, is there any sort of targeted timeframe on sort of achieving or executing most of the share repurchase or what and whatever notes you might decide to repurchase?

Speaker 4

So we haven't set a timetable to it, Mike.

Speaker 6

Okay. And then, I guess, on RAYALDEE, you guys have been, maybe for the last few quarters sort of suggesting, hey, we think we've got some data that could be interesting to nephrologists in terms of the efficacy for these CKD patients. Hasn't really shown up in the numbers. I think we're flat year over year for the first half versus first half of 'twenty three. I mean, is there anything anecdotal that you're getting back from sales in terms of this data that you guys are trying to argue, hey, this should matter to you guys?

Speaker 6

I mean, is there anything to say on that, that would be encouraging or does it just missionary and it takes a while? Thanks.

Speaker 3

I don't know if Charlie is online, Doctor. Bishop. He is not. Okay. So let me take it.

Speaker 3

So when you look at the issue of growth for RAYALDEE, the number one request from nephrologists is, does it have a good outcome impact? And that's defined as delaying dialysis and delaying the onset of total renal failure. Now one of the factors that drives that is when your hyperthyroid is producing a large amount of hormone because the kidney itself is no longer producing vitamin D. And the only drug that really has been shown to raise to the to be able to raise the levels of Vitamin D to the levels where the parathyroid hormone goes down is royalty. We've shown that before, so it's not new.

Speaker 3

However, what we haven't shown and thus we this is where we are hoping that the nephrology world, which has been supportive, would like to what we would like to show is in fact that there is an impact. Now there are publications that are coming out that Doctor. Bishop is pushing and obviously the guidelines will have to be changed. So that takes time as you know medical practice is not something you can change overnight. But we're optimistic now is this going to be a short term big bang for RAYALDEE?

Speaker 3

I don't think so honestly. I think it's going to take time to sink in into the practice world.

Speaker 6

Can I ask one last question that sort of links both of the questions I've already asked so far? Is there any rationale for trying to buy maybe a commercial product that could be marketed to nephrologists just to give the RAYALDEE sales team just another arrow in the quiver. I mean would something like that make sense or is there just nothing out there that really would fit like that in terms of potentially looking at that as a source of capital allocation priority? Thanks.

Speaker 2

I'll answer that. And your question is a good one. It's perfectly rational. And I will tell you that we have been looking for opportunities of that sort. And if you come across 1, please let us know.

Speaker 6

Fair enough. All right. Thank you.

Operator

And ladies and gentlemen, this concludes today's question and answer session. I would like to turn the conference back over to Doctor. Frost for any concluding remarks.

Speaker 2

Well, I just want to thank everybody for your participation and for your good questions. And we look forward to meeting with you again after our next quarter's results. Thank you and have a good evening.

Operator

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker 3

Thank you.

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