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Monday, September 28, 2020 12:39am

OPKO Health, Inc. (OPK) Presents at H. C. Wainwright 22nd Annual Global Investment Conference (Transcript)

OPKO Health, Inc. (NASDAQ:OPK) H. C. Wainwright 22nd Annual Global Investment Conference Call September 15, 2020 10:00 AM ET

Company Participants

Steven D. Rubin – EVP, Administration

Jon Cohen – Senior Vice President

Conference Call Participants

Stephen Bersey – H.C. Wainwright

Stephen Bersey

Hello. My name is Stephen Bersey. I’m an equity research associate here at H.C. Wainwright. Our next presenters are Steven D. Rubin, who’s Executive Vice President of OPKO Health; and Jon Cohen, Senior Vice President of OPKO Health. OPKO Health is focused on first-in-class products, comprehensive diagnostic laboratories, robust research and development, and unique pharmaceutical business solutions. So, please join me in welcoming Steven D. Rubin and Jon Cohen of OPKO Health.

Steven D. Rubin

Thank you, Stephen. Good morning, everyone.

So, OPKO Health is a diversified healthcare — diversified pharmaceutical company. I have a hard time driving the slides here. Anyway, just move on without them. So, we have diversified assets across several businesses. We have marketed pharmaceuticals. We have a pipeline of pharmaceuticals and diagnostics, and one part of Jon’s side, which he is Executive Chairman of BioReference Laboratories.

Within our pipeline, we have — on the pharmaceutical side, we have an exciting long-acting growth hormone, which we have partnered with Pfizer. We expect Pfizer to submit that for FDA approval in the coming weeks. And in the marketed pharmaceuticals, we have a drug for chronic kidney disease called Rayaldee, which had revenue of about $8.6 million in prior quarter. It’s been stable since this COVID, though the growth trajectory like everything else in this environment is certainly slowed. The opposite is true on a diagnostic and laboratory side, of course, as John will speak about how BioReference Lab is becoming a leader and front runner in response to COVID.

So, let me talk briefly about our long-acting growth hormones with the somatrogon. We announced last year that we had achieved our primary endpoint in a Phase 3 study. That is a once a week product versus the dailies that are on the market. We were able to achieve non-inferiority to the daily. We achieved all secondary endpoints, which had height velocity that was 10.12 centimeters a year versus the daily, which was 9.78. We also successfully completed a Japanese registration study. On that data we showed 9.65 centimeters meters a year versus the daily at 7.87 meters a year. And that study also me all of its primary and secondary endpoints and we expect to file for approval in Europe — I’m sorry, in Japan in the first half of next year.

Somatrogon is a very interesting technology we use to make the drug last longer. We use actually use a native sequence that all of us have, which is a terminal peptide we attach several of those to the growth hormone, native growth hormone. And that enables us to safely make extend the half-life of the drug in the system. So, we’re able to safely reduce the injection frequency in both, adults and children from once a day, down to down to weekly. It was a global study. 106 clinical sites across 22 countries is a very big study, in large part because it is a rare disease and a lot of these sites just gave one or two, maybe three patients. But, it’s important to show that we have a global reach. Because when you seek approval, a lot of countries require that you actually have patients enrolled from their country before they’ll approve. So, with Pfizer in designing the study, we have a very broad reach and we expect to have very-broad approvals once we submit.

So, what’s left? As I mentioned, the BLA submission in the U.S. is anticipated in the coming weeks. We have presented some of this data already, two abstracts were at the ENDO Online in June. We talked about the Phase 3 results and also interpreted an important measurement of insulin-like growth factor, IGF-1. What’s key to that is maintaining safe levels of IGF-1 through the entire treatment period. So, if you get — you give someone a bolus of drug, if their IGF levels really spike and then they come down, those could be considered unsafe. So, you try to keep a range of no higher than 2, no less than negative 2. And we stayed within that range through our study. So, we’re very pleased with those results. There is a tendency when you try to give someone a week’s worth of drug to have those levels strain, which again could be considered dangerous.

On the nephrology side, I’ll speak again about Rayaldee, which I did mention that is it’s the only drug for the stage 3 and 4 criteria disease that’s on the market to basically reduce levels of parathyroid hormone, and at the same time, increase levels of 25-D without increasing levels of phosphate or calcium. So, it’s a very safe drug. We have proven our studies and it’s been on the market and we’re able to elevate these blood levels of vitamin D without any adverse side effects.

We are studying in stage 5 or the end stage renal disease or patients on dialysis. We did an initial study. About 44 patients treated for 26 weeks. We released interim data in March that shows that again, even in stage 5, dialysis patients were able to again lower the levels of parathyroid hormone safely and increase their levels of Vitamin D. So, top-line data for that study is expected first half of next year. And we shared the costs of that study with our partners, Vifor Fresenius and JT, or Japan Tobacco.

So going back to our progress, we do expect Vifor which has submitted for Rayaldee in Europe, to get those approvals and launch the product in Europe this year.

We also importantly announced this morning a study we are conducting for Rayaldee in COVID-19 patients. There’s been a lot of anecdotal evidence and a fair amount of studies showing the positive effects of Vitamin D on the symptoms — reducing the severity of symptoms for COVID-19 patients. So, we are — we’ve been trying the clinical study for a little bit of time. It’s a little more difficult logistically because this is an outpatient study. So, a patient would go in and test positive for COVID-19 and not be admitted to the hospital. And therein lies the problem because a lot of places not set up to run clinical studies on infected patients outside of hospital setting. So, we’ve resolved most of that with few sites. We expect to begin enrollment perhaps as early as this month or early October. It will be 160-patient study in mild to moderate COVID-19, randomization of one to one against placebo. And what we’re trying to show is that we can prevent more serious symptoms and show faster recovery. It’s about a 40-day study per patient. So, we should have top-line data before the end of this year.

With that, I’m going to — still have little of bit time. I’m going to turn it over to let Jon speak on very exciting [Technical Difficulty] in the BioReference Laboratories and diagnostic side. Jon? Jon, you’re on mute.

Jon Cohen

So, are you going to run the slides, or we don’t have them?

Steven D. Rubin

I don’t have them.

Jon Cohen

Okay. So, just briefly on the — so, on the BioReference to make sure everybody understands. BioReference is the BioReference Commercial Laboratories, which we serve all 50 states. We have — included in the BioReference is a subsidiary of GeneDx, which is located in Maryland. Our other labs located in California, Houston — Houston, Texas, Florida and the major lab in New Jersey. All five of our labs are actually doing COVID testing.

Briefly, we’re in — we’ve structured the company around three verticals. The first is the physician expertise, which there are really four; then, there’s the strategic partnerships; and the last is the patient empowerment, which is really the areas related to customer/patient engagement.

Of the areas related to we consider the usual physician verticals, we have expertise in women’s health, oncology, urology with a special test called 4K, and then genetics is related to GeneDx.

If we look at our strategic partnerships, that’s the area includes federally qualified health centers, ACOs, IPAs, large physician office groups, health systems, hospitals and prisons to name several.

And then, finally on the patient empowerment side, we have the patient portal, we have direct-to-consumer, which we launched last fall, and then some other areas where we’re fully engaged patients and the consumers, more of a digital [Technical Difficulty].

So, I was talking about strategic partnerships, I want to mention a couple. One of the more interesting ones we announced several months ago is with Westchester Medical Center Health. It’s a large 10 hospitals across the Hudson Valley, where we’ll be managing all 10 hospitals, will be managing their reference laboratory work and have begun to look at managing their outpatient work relative to their employees, physicians.

So, it’s just an example of some of our new strategic partnerships. We also are doing — we also have relationships with several very large physician office laboratories in the area and in Texas, and we’ll have several more to announce within the next couple of months.

I mentioned briefly, we have our live portal, which is now actually over 1 million patients have signed up, partially as a result of COVID where people could go on, get their results, track the results. And then, we’ve announced our direct-to-consumer testing, which is called mylabology, which offers thyroid testing, wellness testing, and infectious transmitted diseases. That will launch a whole multitude of other tests within the next several months.

So, if you move to the next slide, let me talk briefly about COVID. The COVID, since we started testing for COVID on March 13th, we are now the third largest provider of COVID testing in the country. We’re doing still in the order of 40,000 to 50,000 tests a day. We have a capacity of about 60,000 to 70,000. The reason there is a difference there is because there are multiple issues that impact on our ability to run full capacity, machine, performance, supply chain, what comes in the door every day relative to how much testing is actually coming in, based on certain volumes, and then there’s staffing. So, essentially, we’re still doing somewhere in the order of 40,000, 50,000. We expect to scale — in the process now of scaling to 100,000 a day, within the next somewhere in the order of six to eight weeks, if not sooner. We also have run several hundred thousand antibody tests, a lot of debate about antibody testing going forward. But, we are still running multiple antibody tests every day.

Our major partnerships are with New York, New Jersey, Michigan, Florida, multiple other cities. We’re doing over 500 sites to the general public with Rite Aid and with the CVS, and then through our multiple other drive-throughs as I mentioned, which are still ongoing around the country. We continue to see enormous interest from the side of the employers. So, we have multiple employers that are contracted with us. We also have multiple universities. We also have many public school systems. So, several that we are about — that we will announce within the next couple of weeks.

And then, finally, hopefully most of you may seen, we are the exclusive provider for Major League Soccer, the NBA and the Orlando Bubble, and then of course we are the exclusive provider for the National Football League for all 32 teams in 30 cities around the country.

We continue to see a fairly significant appetite for more testing on the COVID side. I would say that in general, the U.S. is doing still about 800,000 a day. The need is somewhere in the order of probably 5 million to 6 million. Those numbers will continue to change as more different types of testing become available.

A lot of discussion around the point of care testing, I’ll give you our view on point of care testing. It will have a role at some point as well other types of specimen acquisition. What I mean by that is, most of the testing is still low nasal swab. There has been a lot of interest in saliva. We are continuing to evaluate saliva. A lot of the interest has fallen off for a variety of reasons, mostly because the low nasal swab is very well tolerated now. It’s actually probably easier than people trying to get enough saliva to put into tube. But we are actively looking at it and evaluating it.

On the point of care side, I want to make sure I mention that there are lot — enormous amounts of publicity around point of care. There are some significant issues with point of care testing. We are currently using it as backup for a couple of our larger sports franchises. But, I would say, it’s not ready for prime time relative to large screen programs for the following reasons. One is, you can’t scale it. No matter what the point of care device is, you can’t do thousands of patients a day using point of care yet. It takes 15 minutes to run each of them. You need lots and lots of staff to run it and it’s just — it’s just not doable. The reliability is still not the same as it is for testing within the lab. The rates are anywhere from 80% to 97%. The laboratory testing is still 90% to 100%. The reportability is a problem, meaning they’re not connected. Some of them have some ability to barcode and scan. But right now, all of the data has to be reentered by hand to provide it to state agencies for reporting issues. And then, finally, nobody knows about reimbursement. A lot of talk about how — what the cost is to buy the test? But, right now, the Medicare and all of the payers are not paying for point of care testing reimbursement for COVID testing. So, that’s high level.

Next slide, Steve? So, I talked about Westchester, talked about multiple medical groups, and I talked about the municipalities for the COVID. All of these entities are attested [ph] from us, physicians, large medical groups, hospitals, et cetera. We’ve seen actually no decrease in any of that ordering across any of those groups.

Next slide? And I think, I’ve mentioned most of this, except for the flu. There has been a lot of discussion around the flu season. I would personally recommend everybody to get a flu shot. As a physician, it’s going to have a possible huge impact on how people appear at the physician’s office. We believe that, most people who go to their physician, hospitals, et cetera, for symptoms of the flu this season will probably want to have a COVID test done first. That’s going to be hard for me to imagine that people with symptoms of the flu are not going to get the COVID testing. What we’re going to end up doing as been discussed is we will probably end up doing COVID testing and flu testing for people this season, depending on how the flu outbreak looks like. So, I will stop there. Steve, I don’t know if we have time yet for questions on this format or we’re just waiting for the questions for the one-on-ones.

Steven D. Rubin

Yes. The questions are for the one-on-one. We’ll briefly talk about our financial information. We have plenty of cash. Our last quarter was a profitable quarter. So, we expect this quarter to be profitable as well. So, we ended last quarter with $21.6 million of cash. We have unutilized $100 million of unsecured credit facility from JP Morgan Chase facility, which is more than $136 million in capital available. And we have is convertible notes, which are net at $216.5 million. So, we think we are perfectly set with everything we have, our spend, R&D and alike, without the need to raise any additional capital. Consolidated revenue is again more than $300 million, compared to last quarter, which were $226 million in revenues for services, which is mostly the lab services or $251 million compared to $178 million. So, you can see the growth trajectory. And net income of course, which I mentioned is we were profitable. So, we have $33.7 million in net income compared with the net loss for the prior quarter of $59.8 million. So, we expect another strong quarter, this ongoing quarter.

So, with that we’ll end it, and thank you all for listening to us. We apologize for the technical difficulties in the beginning. Thank you.

Question-and-Answer Session

End of Q&A

Thank you.

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