OPKO Health, Inc. Price & Performance (OPK)

Before we begin, let me review the format for today's call. Doctor. Philip Frost, Chairman and Chief Executive Officer, will open the call. Doctor. Elias Serhune, Vice Chairman and President will then provide an overview of Opco's pharmaceutical business and BioReference Health, as well as discuss progress with the MODEX pipeline. After that, Adam Local, Opco's CFO OPKO, will review the company's fourth quarter financial results. And discuss this year's financial outlook. And then we'll open up the call for questions. I'd like to turn the call over to Doctor. Frost. Good afternoon.

And thank you for joining us today. 2024 was a transformative year for OPKO and I'm confident about our prospects for the year ahead.

MODEX made great strides to advance its pipeline as two programs entered Phase one clinical trials. We believe Monnex's proprietary technology multi specific antibody technology and its nanoparticle vaccine platform. Elias will provide more detail on the specific programs a moment. Our product development pipeline also includes our once weekly injectable dual group one glucagon agonist, alpha eighty eight thousand and six, which continues to show encouraging clinical pharmacology data in diabetic and metabolic mice models. A promising orally bioavailable once daily form has been an animal test by our partner Antero Bio, We expect both subcu and orally delivered forms to be IND ready by the end of the year. Pfizer continues to make progress on its global commercialization of 42 countries. Elias and Adam will address in more detail. [indiscernible] is anticipating a strong launch during 2025. From a financial point of view, we realigned our Op capital structure to me in a strong position With the infusion of cash from various transactions, we are adequately funded to advance our pharmaceutical pipeline and to return capital to our shareholders through common stock and convertible note repurchases. We're executing our strategy and achieving significant milestones. As I mentioned last quarter, we are managing segments of our business to drive value for our through additional partnerships, business development initiatives and asset sales.

We're confident that our current business prospects and strategy will continue to add value as we execute on this strategy. We expect 2025 to be a year of progress in all aspects of our business and all a good year. With that overview, I'll turn the call over to Elias. Well, thank you, Phil, and good afternoon, everyone. As Phil mentioned, it was it has been a transformative year for OpCo OPKO. Starting with our Pharmaceuticals segment, last month, we announced that in collaboration with Merck, our Epstein Barr virus multivalent nanoparticle vaccine entered the and this investigational vaccine based on MDX-two thousand two hundred and one is being evaluated with selected adjuvants for safety and tolerability in up to 200 healthy adults. And so with the start of this Phase one study going forward, Merck will assume all development activities of the EBV vaccine candidate through commercialization. For this development milestone, we achieved one of our milestone payments and this is in addition to an upfront payment of $50,000,000 we received upon the signing of the collaboration, we're also eligible for additional milestone payments of up to $860,000,000 associated with progress in the development and commercialization of the EBV virus vaccine as well as royalties on global sales.

The Phase one trial with our tetra specific antibody MDX-two thousand and one continues to enroll patients at increasing doses this open label trial at four sites is expected to enroll forty five patients with a variety of solid tumors including lung, breast, prostate pancreatic and others.

The Phase one portion Phase 1a portion of this study is primarily designed to evaluate the safety and immunogenicity of ascending doses of MDX-two thousand and one and to establish a biologically active dose in humans. The trial is progressing well with safety and tolerability data hopefully available in the second half of this year and early efficacy data towards the later part of 2025 or early twenty twenty six. These programs utilizes a next generation enhanced T cell engager that stimulates dual signaling to CD3 and CD28. And this tetra specific antibody engages T cells through CD3, and to activate the T cells and promote their expansion and survival by binding to CD28, a very unique combination. The other two arms bind to two tumor antigens, TROP2 and CMAT, both of which are validated targets found on the variety of solid tumors. We have two other immunology programs including MDX which a tetra specific antibody for hematologic tumors and autoimmune diseases and this molecule is in the pre IND stage expected to enter the clinic late this year or early next year. In addition, we're developing the immune modulator MDX-two thousand and four to rejuvenate and strengthen the immune system in patients who are immune impaired or in patients who are aged by stimulating the profound proliferation of T stem cells to rejuvenate and and improve the immune function of these patients.

And this program is also in the pre IND stage aiming for IND finalization and perhaps Phase one entry in the fourth quarter of this year. Now switching gears, to our antiviral programs, we were awarded $51,000,000 of additional funding by BARDA including a $35,000,000 supplement to accelerate our development of the COVID multi and $16,000,000 of existing contract to develop broadly neutralizing influenza multi specific antibodies using our proprietary MSTAR antibody platform. And to date, dollars 110,000,000 of non dilutive funding has been committed by BARDA with a potential total of $2.00 $5,000,000 if all options and milestones are executed. So if granted, this additional funding will be used to accelerate the COVID and flu programs, to develop novel manufacturing methods to target other biodefense threats as well as to develop a platform with gene based delivery methods for use against future pandemics. Our lead anti COVID multi specific antibody, MDX2 trial 2,301 is progressing to IND and Phase one entry planned also for the fourth quarter of this year.

So we continue to be active on the business development front as we explore significant interest in our various platforms [indiscernible] And we believe these partnerships will assist in advancing our pipeline in an accelerated and cost efficient manner, with the opportunity to further expand our programs. And so we're actively pursuing these conversations and interactions with hopefully some results to in fact further validate our platforms. For our commercialized products, EnGenLai is performing well with Pfizer global commercialization ongoing, Pfizer's work involves converting existing patients from daily administration to our once weekly drug and securing new patients for treatment with our pediatric long acting growth hormone drug and we continue to advance our additional pediatric and adult indications associated with up to $100,000,000 in potential milestones. Within our long acting biologics portfolio, we have several other molecules in development including GLP-two, for short bowel syndrome And as mentioned by Phil, a dual agonist GLP-one glucagon which is an analog of oxymorulin, Now GLP-one agonists have been successful in treating diabetic and obese patients and several clinical stage dual GLP-one glucoma agonists have also reported efficacy in the treatment of non alcoholic fatty liver disease with improvement in liver fibrosis score.

In parallel, we have a collaboration underway with Entera Bio as mentioned by Phil, develop an oral formulation of this molecule using their ENTYP technology. In vivo proof of concept studies in rodents and pig models, have shown that a single oral dose resulted in a desirable pharmacokinetic proof and bioavailability. So we're actively working to reach the IND stages soon as possible for both the injectable and oral forms of oxintomodulin in analog that we have developed. As discussed briefly in our last quarterly conference, Let me cover by reference health for you. We completed the sale BioReference Health lab testing businesses focused on clinical diagnostics and women's health nationwide but retain operations in New York and New Jersey, as well as oncology and the corrections business nationwide. This was a significant part of the restructuring we are undertaking to improve BioReference' financial and operational performance. Including reducing expenses along with headcount.

We right sized the workforce down to 2,000 from 3,300 previously. We closed underperforming facilities and streamlined operations. Our restructuring efforts are ongoing as we optimize our performance. In addition, we are focusing on our areas of strength which include our specialty testing in oncology, and urology as well as our comprehensive clinical diagnostic services in New York and New Jersey. On a comparable basis, meaning excluding the assets acquired by LabCorp, overall testing volume grew by 1% in Q4 twenty twenty four as compared to Q4 twenty twenty three. Our National Oncology Testing segment another favorable quarter, finalizing nine new hospital reference account contracts including a large academic center in New York and finishing the quarter with a 5% growth in net revenues compared to Q4 twenty twenty three. Additionally, we continue to expand our oncology testing menu focusing on cancer genomics hereditary cancers.

As for our urology segment, the four ks core continued to see strong performance growing 16% in test volume and revenue for 2024 as compared to 2023. Furthermore, our Latin America and Europe pharmaceutical divisions continue to perform well with 9% growth compared to 2023 and a positive EBITDA trend despite ForEx headwinds due to the strong dollar. The royalty sales continue at same levels with new evidence published this year that show that the use of royalty for patients with secondary hyperprioterrorism we've delayed the need for dialysis.

So in conclusion, overall, we are encouraged by the performance of our biopharmaceutical and diagnostic business segments, and our confidence in our prospects for positive results across these two segments this year.

With that, I'll turn the call over to Adam to discuss our financial results. Adam?

Thank you, Elias. The fourth quarter of twenty twenty four reflects meaningful progress in enhancing shareholder value. The team at BioReference has continued to reduce costs and improve operating efficiency and we have a clear path toward profitability excluding non cash and non recurring charges, well as positive cash flow, 2025. While the work at BioReference continues, the improved focus geographically and on high value, high margin testing resulted a meaningful improvement in operating results. Particularly after considering the non recurring expenses [indiscernible] [indiscernible] Global Health business within our Pharmaceutical segment continued to deliver revenue growth and operating income expansion while our R and D pipeline continue to make progress as Phil and Elias have discussed. Advanced our efforts during the fourth quarter to realize the value of our assets and exited one of our liquid investments and redeployed some of that capital to buying that common stock and convertible notes. Turning to our operating results and starting with our Diagnostics segment. Revenue was $103,100,000 for Q4 twenty twenty four compared to $124,200,000 for the 2023 period. This decrease was primarily the result of the LabCorp transaction, closed in September.

During the fourth quarter of twenty twenty four, cost and compared to $166,400,000 for the comparable period of 2023. The Q2 twenty twenty four figure included approximately $4,500,000 of non recurring costs and expenses For severance and facility closures, all incurred as expenses as expected as we realign our business to ensure sustainable growth and profitability. During the fourth quarter of twenty twenty four, operating loss was $21,700,000 $42,300,000 for the twenty twenty three quarter.

Depreciation and amortization expense for the Diagnostics segment was $6,000,000 and $8,100,000 for the 2024 and 2023 periods respectively. Moving to our Pharmaceutical segment, revenue was $80,500,000 for the fourth quarter of twenty twenty four compared to $57,700,000 for the comparable period of 2023. Revenue from products, including our international pharmaceutical businesses, was $37,400,000 compared to $43,000,000 for the 2023 period. Despite the challenging foreign currency environment, has impacted revenue, the profitability of the business continues to improve above our Product revenue includes revenue from RAYALDEE of $9,100,000 which was similar to twenty twenty three's $9,300,000 Revenue from the transfer of IP was $43,100,000 for the fourth quarter of twenty twenty four, compared to $14,700,000 for the same quarter of 2023. Earned for the initiation of our EBV clinical trial and $10,200,000 of commercial milestones for our Irgin Our gross profit share from Pfizer was $9,500,000 during the fourth quarter compared to $12,200,000 for the 2023 period, which included a catch up payment related to the Q3 twenty twenty three launch of Ingenla in The United States.

In addition, the fourth quarter of twenty twenty four includes $11,000,000 in R and D funding related to our BARDA agreement compared to $1,200,000 for the 2023 period.

Cost and expenses for our Pharmaceuticals segment were $82,600,000 for fourth quarter of twenty twenty four compared to $73,800,000 for the 2023 period. [indiscernible] search and development expenses were $29,800,000 compared to $18,700,000 a year ago. R and D expense increased as a result of the activities for our MODEX development including the Phase one clinical trial for our first oncology program, as well as our BARDA supportive activities. The resulting operating loss for the quarter ended 12/31/2024 was $2,100,000 compared with an operating loss of $16,100,000 the 2023 quarter.

Depreciation and amortization expense for the fourth quarter of twenty twenty four increased slightly to $18,100,000 from $17,900,000 for the twenty twenty three quarter. Turning to our consolidated financial results. Net income for the fourth quarter of twenty twenty four was fourteen million dollars