OPKO Health Q1 2025 Earnings Call Transcript

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April 30, 2025
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Operator

Good afternoon and welcome to the UpcoHealth First Quarter twenty twenty five Financial Results Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Yvonne Briggs.

Operator

Please go ahead.

Yvonne Briggs
Investor Relations and Corporate Development Executive at Alliance Advisors

Thank you, operator. Good afternoon. This is Yvonne Briggs with Alliance Advisors IR. Thank you all for joining today's call to discuss OpCo Health's financial results for the first quarter of twenty twenty five. 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 uncertainties that could materially affect the company's expected results.

Yvonne Briggs
Investor Relations and Corporate Development Executive at Alliance Advisors

Those forward looking statements include, but without limitation, the various risks described in the company's SEC filings, including the annual report on Form 10 ks for the year ended 12/31/2024, and subsequently filed SEC reports. Furthermore, this conference call contains time sensitive information that is accurate only as of the date of the live broadcast on 04/30/2025. Except as required by law, OpCo 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 for today's call. Doctor.

Yvonne Briggs
Investor Relations and Corporate Development Executive at Alliance Advisors

Philip Frost, Chairman and Chief Executive Officer, will open the call Doctor. Elias Zerhouni, Vice Chairman and President, will then provide an overview of BioReference Health as well as OpCo's Pharmaceutical business. After that, Adam Logel, OpCo's CFO, will review the company's first quarter financial results and discuss OpCo's financial outlook and then we'll open up the call to questions. Now, I'd like to turn the call over to Doctor. Frost.

Phillip Frost
Phillip Frost
Chairman & CEO at OPKO Health

Good afternoon and thank you for joining us today. We continue to advance our strategic initiatives to drive value for OpCo Health. In March, we announced the sale of BioReference's health oncology and related clinical testing business to LabCorp. BioReference will continue to offer urology diagnostic services nationwide as well as maintain its core clinical testing operations in New York and New Jersey, which collectively represented approximately $320,000,000 in revenue for 2024. This transaction is our second with LabCorp and then unlocks additional value in our Diagnostics segment and enhances BioReference's path to profitability.

Phillip Frost
Phillip Frost
Chairman & CEO at OPKO Health

Our dual GLP-oneglucagon IGNOPCO-eighty eight thousand and six administered subcutaneously has demonstrated encouraging outcomes in animal models of obesity and NASH. The positive improvements of metabolic parameters, hepatic pathology and non alcoholic fatty liver disease activity score including fibrosis stage support our decision to develop OPK-eighty eight-six as a once weekly subcutaneous injectable treatment of NASH. In March, we entered into a collaborative agreement with Entero Bio to advance the development of an oral tablet form of OPKO-eighty eight thousand and six using Entera's proprietary NTAP technology, oral bioavailability studies in several animal models suggest that therapeutic levels can be achieved for human use. MODEX has two programs in Phase I clinical trials. Our Epstein Barr virus vaccine candidate in collaboration with Merck and MDX-two thousand and one a tetra specific antibody for the treatment of solid tumor cancers.

Phillip Frost
Phillip Frost
Chairman & CEO at OPKO Health

We look forward to keeping you updated on the progress of these trials. Our Latin American business and AeroGen Pharma, our Irish contract pharmaceutical development and manufacturing unit continue to show revenue and profit growth. As we continue to advance our strategy for each business segment, we're confident in our ability to drive value for OpCo shareholders. In addition to the buyer reference asset sale, the Board approved a $100,000,000 increase to our common stock repurchase program bringing the total to $200,000,000 We believe OpCo shares continue to be significantly undervalued and our strong cash position provides the ability to return capital to shareholders while adequately funding our pharmaceutical programs. In addition, we entered into a note exchange agreement to bolster our capital structure.

Phillip Frost
Phillip Frost
Chairman & CEO at OPKO Health

Adam will provide details on the agreement and related benefits in a moment. Now, I'll turn the call over to Elias.

Elias Zerhouni
Elias Zerhouni
President & Vice Chairman at OPKO Health

Well, thank you, Phil, and thank you all for joining today. Let me start with the Diagnostics segment, where our restructuring efforts are continuing. First, as mentioned by Phil, we signed a definitive agreement with LabCorp to sell the oncology and related clinical testing assets of BioReference Health. The transaction includes the sale of BioReference's laboratory testing businesses focused on oncology and oncology related clinical testing services for up to $225,000,000 including $192,500,000 payable at closing and up to $32,500,000 in an earn out based on performance. Although our oncology business has grown over the years, its scale was not sufficiently large to support its costs.

Elias Zerhouni
Elias Zerhouni
President & Vice Chairman at OPKO Health

Hence our decision to divest from this line of business, which will improve profitability of the remaining business of BioReference. BioReference will continue to offer urology diagnostic services, including our proprietary 4Kscore tests for prostate cancer assessment nationwide and our corrections clinical services nationwide, as well as maintain its core clinical testing operations in New York and New Jersey, which represented approximately $320,000,000 in revenues for 2024. And the transaction is anticipated to close in the second half of twenty twenty five. Overall, business volume at BioReference, excluding oncology, grew modestly Q1 twenty twenty five versus Q1 twenty twenty four, while our 4Kscore test reported another impressive quarter with 14.5% growth year over year. BioReference continues to make progress in driving efficiencies and aligning operations with current volumes.

Elias Zerhouni
Elias Zerhouni
President & Vice Chairman at OPKO Health

In Q1 twenty twenty five, we made great strides in continuing both the reduction of employee costs and footprint consolidation. Specifically, during this quarter, the first quarter, BioReference eliminated an additional 136 positions, which represents about a 7% workforce reduction. Total cost savings from actions initiated during Q1 are estimated at approximately $19,000,000 on an annualized run rate, dollars 14,000,000 for employee costs and $5,000,000 in footprint consolidation.

Elias Zerhouni
Elias Zerhouni
President & Vice Chairman at OPKO Health

Our current headcount now stands at nineteen sixty two, which is down from a high of 3,099 in Q1 twenty twenty four. And once the oncology transaction is closed in Q3, Q4, our headcount will stand at about 1,600 with revenue of about $320,000,000 We continue to reengineer operations in our main laboratory with automation and other approaches for greater efficiency and service levels. Our stated objective, as we have mentioned before, remains to reach profitability within this year. On the commercial front, BioReference strategically expanded its patient access service center locations during the first quarter in the New Jersey, New York area, adding infrastructure in key geography in the New York, New Jersey market. And this will not only add revenue to the organization, but will also improve the patient and client experience in the region.

Elias Zerhouni
Elias Zerhouni
President & Vice Chairman at OPKO Health

In addition, BioReference continued its work to enter new clinical markets by enhancing its service levels and test offerings, including for example respiratory pathogens and recently FDA approved self collection options for sexual health. Now, let me go to the therapeutic segment. MODEX continues its advances in clinical development. As you heard, from Phil, enrollment and dosing are well underway by our partner Merck in the Phase one Epstein Barr virus vaccine trial. This investigational vaccine based on Modex's ferritin nanoparticle vaccine platform is being evaluated for safety and tolerability in up to 200 healthy adults and commencement of this study triggered a milestone payment to MODEX in Q4 twenty twenty four.

Elias Zerhouni
Elias Zerhouni
President & Vice Chairman at OPKO Health

In addition, MODEX continues to advance its immuno oncology and immunology portfolio with four potential clinical candidates progressing in the pipeline. The MDX-two thousand and one, which is a c Met TROP2 CD3CD28 tetra specific antibody as advancing Phase one clinical trials to its fourth dose level. With additional continuing Phase one and additional Phase 1b studies in selected solid tumors expected in early twenty twenty six. The MDX-two thousand and three products CD19, CD20, CD3, CD28 tetraspecific antibody for lymphoma and leukemia and the MDX-two thousand and four, which is an immune rejuvenator for multiple oncology and immunology indications are both expected to begin human trials in late twenty twenty five, early '20 '20 '6. The development of multi specific antibodies for immune impaired patients at risk for COVID and Influenza A and B continues to progress with support from BARDA, which increased its previous commitment of $59,000,000 by another $51,000,000 in Q4 twenty twenty four for a total of $110,000,000 to advance these programs and the related multi specific antibodies platform.

Elias Zerhouni
Elias Zerhouni
President & Vice Chairman at OPKO Health

There's a remaining $95,000,000 commitment dependent upon reaching some milestones, which is still committed by BARDA. I'd like to add here that to date, we have not received any indication that BARDA will defund these grants and these programs as we stand here today. And we're hopeful that they will not because COVID antibodies are different than COVID vaccines and COVID antibodies are needed for the immune impaired population. As Phil mentioned, we have advanced into the pre IND stage with our injectable proprietary GLP-one glucagon long acting OXYNTomodulin analog OPK ADA-six. Even very promising preclinical data, for example, the study in male gendo mesh mice demonstrated improved metabolic and biochemical parameters and hepatic pathology with improved non alcoholic fatty liver disease activity score called NASS by over two points supported by quantitative liver histology for steatosis, inflammation and fibrosis showing improvements.

Elias Zerhouni
Elias Zerhouni
President & Vice Chairman at OPKO Health

We also entered into a collaboration agreement with Entera Bio to advance an oral tablet of the OPK88006 GLP-oneglucagon agonist into the clinic to treat obesity and the thrombotic disorders using Entera's NTAP technology. Under the terms of the agreement, OpCo and Entera will hold 6040% ownership interest respectively in the orally administered product and be responsible for 6040% respectively of the program's development costs. In connection with the execution of the agreement, OpCo purchased approximately 3,700,000.0 ordinary shares of Anterra for a purchase price equal to $2.17 per share for about $8,000,000 Entera agreed to utilize the proceeds from this share purchase to fund its 40 share of the program's development costs through the completion of Phase one. Our royalty team continued to produce new analyses in peer reviewed publications suggesting that RAYALDEE in CKD patients with secondary hyperparathyroidism may significantly delay the need for dialysis relative to other vitamin delay products, potentially increasing its utilization in this group of patients.

Elias Zerhouni
Elias Zerhouni
President & Vice Chairman at OPKO Health

In summary, we believe BioReference is now in a position of strength with a clear focus on its core testing capabilities, streamline operations and expectations of profitability later this year. In addition, we're pleased with the progress of our Pharmaceutical segment in advancing our therapeutic and vaccine candidates through the clinic. Let me now turn it over to Adam Logal for our financial report and further information. Adam?

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

Thank you, Elias. Starting with operating results from our Diagnostics segment. Revenue was $102,800,000 for Q1 twenty twenty five, including $25,100,000 from the assets being sold to LabCorp compared with $126,900,000 for the 2024 period. This decrease was primarily the result of the first LabCorp transaction that closed in September 2024. During the first quarter of twenty twenty five, costs and expenses totaled $126,800,000 including $32,400,000 related to the assets being sold to LabCorp.

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

This compares with $161,300,000 for the comparable period of 2024. Q1 '20 '20 '5 also includes approximately $7,200,000 in non recurring costs and expenses for severance and facility closures, all incurred as expected as we realign our business to ensure sustainable growth and profitability. As Elias mentioned, the actions taken to date will result in annualized cost savings of more than $19,000,000 which we will benefit from starting in May. During the first quarter of twenty twenty five, operating loss was $23,900,000 compared with an operating loss of $34,400,000 for the twenty twenty fourth quarter. Depreciation and amortization expenses for the Diagnostics segment were $5,700,000 and $7,900,000 for the 2025 and 2024 periods, respectively.

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

Moving to our Pharmaceutical segment. Revenue was $47,100,000 for the first quarter of twenty twenty five compared with $46,800,000 for the 2024 period. Revenue from products, including our international pharmaceutical businesses, was $34,800,000 compared with $38,100,000 for the comparable 2024 period. In response to the challenging foreign currency environment that has impacted revenue, the profitability of this business continues to meet our expectations through disciplined operating expense constraints. Product revenue includes revenue of RAYALDEE of $6,300,000 which was slightly lower than twenty twenty four's '6 point '9 million dollars The Inflation Reduction Act has resulted in challenging environment for RAYALDEE.

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

However, we have realized an increase in the operating margins for RAYALDEE as a result of the improved net pricing through lower government rebates, partially offsetting the volume decrease. Revenue from the transfer of IP was $12,300,000 for the first quarter of twenty twenty five compared to $8,700,000 for the same quarter of 2024. Our gross profit share from Pfizer was $4,500,000 during the twenty twenty five quarter versus $5,600,000 for the 2024 period. We continue to follow the publicly available prescription data reported by third party services and remain encouraged by the growth rates. However, we are working with Pfizer to better understand some of the underlying dynamics that have negatively impacted the first quarter profit share payments.

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

The first quarter of twenty twenty five also includes $7,000,000 in R and D funding compared to $2,200,000 for the 2024 period, reflecting increased activities under our program supported by BARDA. Cost of expenses for our Pharmaceutical segment were $81,900,000 for the first quarter of twenty twenty five compared with $74,500,000 for the 2024 period. Research and development expenses were $30,200,000 compared to $21,200,000 a year ago. R and D expense increased as a result of our MODEX development activities including the Phase one clinical trial for our first oncology program as well as our BARDA supported programs. The resulting operating loss for the quarter ended 03/31/2025 was $34,800,000 compared with an operating loss of $27,700,000 for the twenty twenty four quarter.

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

Depreciation and amortization expense for the twenty twenty five quarter decreased slightly to $17,800,000 from $18,000,000 for the twenty twenty four quarter. Turning to our consolidated financial results. Net loss for the first quarter of twenty twenty five was $67,600,000 or $0.10 per share compared with a net loss of $81,800,000 or $0.12 per share for the 2024 period. Turning to our balance sheet. We continue to work on our capital structure and allocate capital as we laid out during our last call.

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

We ended Q1 twenty twenty five with approximately $450,000,000 in cash, cash equivalents and restricted cash. And as we noted, we fully exited our position in GNDX during the first quarter, adding approximately $51,000,000 to our cash balance. We closed on our convertible debt exchange on 04/01/2025, which used approximately $65,000,000 in cash, and we issued approximately 121,000,000 shares of common stock and eliminated $159,200,000 of the company's outstanding convertible notes, including accrued and unpaid interest. We intend to continue to reduce our remaining convertible debt and through our recently expanded share repurchase authorization, we plan to continue to reduce the number of shares outstanding in the most capital efficient way possible. Under our share repurchase authorization, we have approximately $159,000,000 remaining, which at yesterday's closing price represents more than 113,000,000 shares or more than 14% of our currently outstanding shares.

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

As Elias mentioned, we anticipate closing our second transaction with LabCorp later this year and we'll receive $192,500,000 at closing and up to $225,000,000 in total. As we look ahead, the following assumptions influence our financial guidance. For our Pharmaceutical segment, we expect Pfizer to continue to grow sales of ANJENLA and the overall HGH franchise. We assume a stable foreign currency exchange rate for our ex U. S.

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

Pharmaceutical businesses, which has recently been challenged with the large swings in certain territories. Our teams have been definitely navigating those challenges through disciplined expense control and expect that going forward. R and D expenses will reflect higher activities related to our MODEX programs including CMC efforts related to our first oncology trial as well as furthering our GLP-oneglucagon development program. A portion of the increased MODEX activities will continue to be funded through our BARDA agreements. For our Diagnostics segment, we are executing our multiyear, multiphase program to reach and improve profitability.

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

This program continues to be focused on operational efficiencies and the reduction of fixed infrastructure costs. We expect to incur an additional $5,000,000 in non recurring costs during the second quarter, which primarily reflect severance costs. We have established an additional cost reduction initiative targeting a further $10,000,000 of annualized cost savings on top of the $20,000,000 we discussed in our last call. As a result of our recently announced transaction with LabCorp, once closed, the remaining BioReference will be cash flow positive and profitable as measured before non recurring and non cash items. In addition, we expect to realize a gain on the LabCorp transaction of approximately $100,000,000 which will be reflected as a reduction to operating expenses and an increase in operating income.

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

Due to the uncertainty of the timing of closing, we are including revenue costs and expenses for the full year and will adjust the total revenue costs and expenses once the closing date is certain. As a result, we expect the following for the full year 2025. Total revenues between $675,000,000 and $685,000,000 revenue from services between $4.00 $5,000,000 and $425,000,000 including the revenue from the assets being sold to LabCorp of 95,000,000 to $105,000,000 revenue from products between 165,000,000 and $175,000,000 and other revenue between 75,000,000 and $85,000,000 inclusive of the revenue from our Pfizer gross profit share, which is estimated to be between 30,000,000 and $40,000,000 from 35,000,000 to $45,000,000 and BARDA revenue of $38,000,000 to $44,000,000 which was previously guided from 40,000,000 to $48,000,000 We expect costs and expenses to be between $825,000,000 and $875,000,000 excluding the nonrecurring expenses related to the restructuring activities for BioReference, which are currently estimated to be between 10,000,000 to $14,000,000 for the full year and inclusive of costs and expenses related to the assets being sold to LabCorp of $125,000,000 to $135,000,000 R and D expense is expected to be between 120,000,000 and $130,000,000 down from 120,000,000 to $140,000,000 which depends on the rate of enrollment of our clinical trial and the timing for certain activities for our MODEX programs, including CMC, with 37,000,000 to $43,000,000 being offset from funding by BARDA.

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

Depreciation and amortization expense is expected to be approximately $90,000,000 While we don't typically provide non operating income and expense guidance, As a result of our convertible debt exchange, we are providing guidance as we anticipate a non recurring other expense item related to that exchange of approximately $90,000,000 during the second quarter of twenty twenty five, which is comprised of interest expense from debt discount, debt issuance fees and inducement expense. That concludes our prepared remarks and thank you all for your attention. Now operator, let's open the call for questions.

Operator

We will now begin the question and answer session. The first question comes from Raycroft with Jefferies. Please go ahead.

James Stamos
James Stamos
Analyst at Jefferies

Hi, this is James on for Maury. Thanks for taking our questions. Just to start off, what are some possible explanations for the negative dynamics for ENGENLA? Is it more likely competition access issues or something commercial related to Pfizer?

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

Yes. So we've seen the growth rates of the prescriptions to continue along both for Ingenla and Junotropin. So we think it's more likely to do with some of the commercial environments. We don't have color further from Pfizer just yet on the dynamic there. But we expect this to be a first quarter only event, which is why we've only slightly reduced the guide.

James Stamos
James Stamos
Analyst at Jefferies

Got it. And could just to add on to that, could you also please comment on why you think Pfizer withdrew their EU application for the adult setting? When was the last time you met with Pfizer regarding plans to expand the franchise? And what are those plans for expansion into additional settings?

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

Yes. So I'll try to expand on this and then Elias or others could jump in as well. So Pfizer has been working on a strategy to expand the label for Anjenla for some time. We do know that they're expecting to kick off some trials for the additional pediatric indications. Within Europe, the dynamics are slightly different and I think the Pfizer chose to be more focused on the pediatric indication given the size of the overall market for the pediatric indications in comparison to the adult and wanted to focus their efforts there.

James Stamos
James Stamos
Analyst at Jefferies

Got it. Thanks for taking our questions. I'll hop back in the queue.

Operator

Thank you. The next question comes from Yi Chen with H. C. Wainwright. Please go ahead.

Yi Chen
Managing Director & Senior Analyst at H.C. Wainwright & Co., LLC

Thank you for taking my question. Could you please provide a rough timeline about development program of the GLP-oneglucagon tablet candidate? When can we expect to see some clinical results? And also what could be the dosing frequency in the clinical trial? Thank you.

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

Thanks, Yi. So the timeline for the development program, we expect to have an IND filed later this year or by the end of this year or early next year with the trial to commence thereafter and could get results from a Phase one trial by the end of twenty twenty six. As it relates to dosing, it's expected to be a once weekly dosing.

Elias Zerhouni
Elias Zerhouni
President & Vice Chairman at OPKO Health

Sorry, I was on mute. I couldn't answer before Adam took in and give you a perfect answer.

Yi Chen
Managing Director & Senior Analyst at H.C. Wainwright & Co., LLC

So apart from being an oral tablet candidate and once a week dosing, is there any other differentiating factor for this candidate compared to semaglutide or tzepatide?

Elias Zerhouni
Elias Zerhouni
President & Vice Chairman at OPKO Health

Yes. So let me take that one. First of all, for the oral formulation, it's once a day. For the subcu, it's once a week, all right? Now GLP-one and glucagon are a pair of agonist, if you will, of oxyntomodulin.

Elias Zerhouni
Elias Zerhouni
President & Vice Chairman at OPKO Health

It's an analog of oxyntomodulin. And it's really, really interesting because it does glucagon acts on the liver on the metabolism of the liver. And so it's really focused on whether or not this compound can be of use in NASH and if all of our preclinical works indicates that it is. So if you're looking at the niche, which we think GLP-oneglucagon will be superior is really the NASH fatty liver disease group. So that's really where we're going and that's what we're going to try to develop over the next year.

Yi Chen
Managing Director & Senior Analyst at H.C. Wainwright & Co., LLC

Okay. Thank you.

Elias Zerhouni
Elias Zerhouni
President & Vice Chairman at OPKO Health

Another way to say that we're not going into all markets that relate to GLP-oneglucagon, we're focusing our entry indication is going to be in the liver, diseases that are affected by fatty liver disease patients who are affected by fatty liver disease and then we'll expand from that depending on the results we see in Phase I and Phase Ib.

Operator

Thank you. The next question comes from Jeffrey Cohen with Ladenburg Thalmann. Please go ahead.

Jeffrey Cohen
MD - Equity Research at Ladenburg Thalmann & Co. Inc

Good afternoon. Thanks for taking our questions. Adam, can you comment Can you give us a sense of if anything is left on the convertible notes as well as the secured notes and number of shares pro form a?

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

Sure. So let me just make sure I heard you right. So on the number of shares, on a pro form a basis, it went from at March 31, it was about $671,000,000 shares. As part of the convertible note exchange, we increased that by $121,000,000 So you get to just about $790,000,000 shares, a little bit more than $790,000,000 shares outstanding at on a pro form a basis. On what's left on the convertible notes, have approximately 129,000,000 remaining of principal that's outstanding, on an ongoing basis.

Jeffrey Cohen
MD - Equity Research at Ladenburg Thalmann & Co. Inc

Okay. Got it. That's super helpful. I appreciate it. Can you give us a sense of the Diagnostic business and BioReference, I know you outlined some numbers for the year.

Jeffrey Cohen
MD - Equity Research at Ladenburg Thalmann & Co. Inc

So we should think of that as a $300 ish million base loan business for the second half of this year as far as thinking of it on an annual basis?

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

Yes. On an annualized basis, the kind of remaining business sits between $310,000,000 and $320,000,000 That's right, on an annualized basis.

Jeffrey Cohen
MD - Equity Research at Ladenburg Thalmann & Co. Inc

Okay. Got it. And timing on the queue will be today or tomorrow?

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

Tomorrow evening, yes.

Jeffrey Cohen
MD - Equity Research at Ladenburg Thalmann & Co. Inc

Okay. And I got all the metrics. So I think that does it for us. Thanks for taking the questions.

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

Thanks, Jeff.

Operator

Thank you. The next question comes from Eric Joseph with JPMorgan. Please go ahead.

Billy Smith
Billy Smith
Equity Research at JP Morgan

Hi, this is Billy on for Eric. Thanks for taking our questions. Quick one on the EBV trial, if that's okay first. With the 200 healthy volunteers looking to be read out, are there any sort of efficacy or biomarker signals you might look for in that readout that might derisk the asset from an efficacy perspective?

Elias Zerhouni
Elias Zerhouni
President & Vice Chairman at OPKO Health

So the 200 patients are divided in different cohorts because we're also using adjuvants. Merck is using adjuvant testing, different adjuvants for the vaccine, and that's what is going to be measured. We will get an idea of the immunogenicity of the vaccine with biomarkers. It's not the intent of Phase one, it's mostly tolerability and safety. So, by the end of that trial, we'll have a good idea of potential efficacy to indirect measures.

Billy Smith
Billy Smith
Equity Research at JP Morgan

Thanks. And then just quick one if you might, just squeeze in on the TCE candidate, 2,001. Is there any update on timelines as to when that safety readout might come out? And then kind of how many dosing cohorts you might expect for that first safety readout?

Elias Zerhouni
Elias Zerhouni
President & Vice Chairman at OPKO Health

So we the first phase was six levels. We're in the fourth. We've accomplished the fourth. We're going to fifth and sixth. Hopefully, we'll have that initial six levels, which are really important because at the end of the six, we get to what we think is the beginning of the efficacy range, even though we're observing whether or not we have results within these levels that we have now.

Elias Zerhouni
Elias Zerhouni
President & Vice Chairman at OPKO Health

And as I said before, we should be able to complete that phase before the end of this year and then enter the efficacy part of the trial probably with still a basket trial, a few different cancers, solid cancers that where we have seen some signals and then eventually come down in Phase 1b to one, possibly two cancers that are the most promising. So that's the way the trial is designed.

Billy Smith
Billy Smith
Equity Research at JP Morgan

Thanks for taking the question.

Operator

Thank you. The next question comes from Edward Tenthoff with Piper Sandler. Please go ahead.

Edward Tenthoff
Edward Tenthoff
Sr. Research Analyst at Piper Sandler Companies

Great. Thank you very much. I just want to confirm and make sure I'm getting this right. But what are the next steps for the subcu obesity program, NASH program? And then what is sort of the differential development plan, for oral?

Edward Tenthoff
Edward Tenthoff
Sr. Research Analyst at Piper Sandler Companies

How do you anticipate differentiating those? And what do you think the timing is for the study? Thank you.

Elias Zerhouni
Elias Zerhouni
President & Vice Chairman at OPKO Health

So both of them, we're working diligently to enter Phase I. So we're in the pre IND phase for both of them, CMC phase for both of them and have been manufactured. Will have our GMP material ready. We're completing and interacting with the FDA about the design of these trials. Initially, it would pretty much be safety, as you know, with Phase I trials, side effects, measuring dose range and so on.

Elias Zerhouni
Elias Zerhouni
President & Vice Chairman at OPKO Health

So it's a prep work, if you will, in view of a more advanced development in Phase IIa and IIb. But what we're talking about here is Phase Ia and B. To answer that question that you're just asking, what is the right PKPD and pharmacological behavior that we need to measure before we go further in Phase II.

Edward Tenthoff
Edward Tenthoff
Sr. Research Analyst at Piper Sandler Companies

Okay. Thank you.

Operator

The next question comes from Yale Jen with Laidlaw and Company. Please go ahead.

Yale Jen
Senior Managing Director & Senior Biotech Analyst at Laidlaw & Company

Good afternoon and thanks for taking the question. I have two here. The first one is that you mentioned a little bit earlier on in terms of tariff situation at this point. Could you elaborate a little bit more in terms of whether you see something more negative or positive at this point? And then I have a follow-up question.

Elias Zerhouni
Elias Zerhouni
President & Vice Chairman at OPKO Health

Could you repeat the question? I'm not sure I got

Elias Zerhouni
Elias Zerhouni
President & Vice Chairman at OPKO Health

it.

Yale Jen
Senior Managing Director & Senior Biotech Analyst at Laidlaw & Company

Government tariff situation, would you that there

Elias Zerhouni
Elias Zerhouni
President & Vice Chairman at OPKO Health

yes. Thank you. I'll let Adam answer for operations overseas and then I'll answer for R and D.

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

Sure. Thanks, Aliyah. So for CARiFCL, we're obviously monitoring it. We're looking throughout our supply chain for mostly for bio reference. We do buy most of our products here from The U.

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

S. Some of it is manufactured internationally. So we're looking at all the different alternatives to minimize any impact. But as we sit here today, we think it's a manageable risk, but we'll continue to monitor it. As it relates to our pharmaceutical products, we do import both RAYALDEE and we know Pfizer sells Ingenla and Genotropin and they're manufactured in Ireland.

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

Continue to monitor those. Obviously, The U. S. Market or the cost of goods is a minor component of the total cost structure. So we wouldn't expect it to have a significant impact.

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

And obviously, HGH the HGH franchise is global franchise. So it only impacts The U. S. Market.

Elias Zerhouni
Elias Zerhouni
President & Vice Chairman at OPKO Health

And for R and D, we primarily depend on European and also Chinese CROs and CDMOs. That has been essentially a minor amount of services that we need to obtain outside of The U. S. And as far as we can tell, we don't see a significant impact on R and D operations from tariffs.

Yale Jen
Senior Managing Director & Senior Biotech Analyst at Laidlaw & Company

Okay, great. Thanks. And maybe the follow-up in terms of the mesh product mesh development, sorry. Do you anticipate this drug as sort of target for the earlier stage of mesh or much more the later stage in the fibrosis part of it? And thanks.

Elias Zerhouni
Elias Zerhouni
President & Vice Chairman at OPKO Health

Right. That's a great question. So we're still thinking through it. Obviously, we are inclined to really use the product where it's most needed and that is F3 or F3 NASH or F4 early F4 NASH pre cirrhotic NASH at the beginning. We do not believe there's as much of a need for F2 and F3, early F3 because of the alternatives that you have on the market right now.

Elias Zerhouni
Elias Zerhouni
President & Vice Chairman at OPKO Health

So that's where we are focusing our efforts, but we haven't yet decided that.

Yale Jen
Senior Managing Director & Senior Biotech Analyst at Laidlaw & Company

Okay, great. Thanks a Appreciate the response.

Operator

Thank you. The next question comes from Michael Petusky with Barrington Research. Please go ahead.

Michael Petusky
Managing Director at Barrington Research Associates

Hi, good evening. Adam, could you repeat, I'm sorry, I've got a little garbled on my end, revised guidance for BARDA revenue?

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

Yes. It's 38,000,000 to 44,000,000 which is down from 40,000,000 to 48,000,000

Michael Petusky
Managing Director at Barrington Research Associates

Okay. All right. And then on ANGENLA and just the idea that, hey, we think this is a one quarter issue. I mean, that based on sort of the script data? Or is it based on any kind of conversations with Pfizer, at least preliminary conversation with Pfizer sort of suggesting that?

Michael Petusky
Managing Director at Barrington Research Associates

Or can you just sort

Michael Petusky
Managing Director at Barrington Research Associates

of I

Michael Petusky
Managing Director at Barrington Research Associates

guess dig into that a little bit for me?

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

Sure. So we talked to Pfizer at least once a quarter just to get general updates. They haven't indicated that there were anything in first quarter conversation. We haven't spoken with them since we've received these results. But we do look at the script data and the script data continues to indicate a growing franchise so and no significant changes.

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

So we're not certain if it was anything on a gross to net basis that impacted it or on the manufacturing side if there were any charges that came through there that impacted the gross profit share. I'll note that last year, the first quarter was the low quarter of the year and we would expect, as I guided, that this was a nonrecurring issue for us and it will rebound to historical norms.

Michael Petusky
Managing Director at Barrington Research Associates

Okay. All right. And then just on the diagnostics business. If and I understand that the oncology will be sold. But if that business if that asset had not been sold, would you have been able to get to sort of cash flow breakeven this year or not?

Adam Logal
Adam Logal
SVP & CFO at OPKO Health

Yes. So we part of our plans Mike were we had a couple of different ones. One was to work to find a way to monetize it through a transaction like we entered into with LabCorp. The other was to continue to exit certain lines of testing and certain clients that have high demands for service that our scale just wouldn't allow us to reach. So we had fully expected to get there and certainly could.

Michael Petusky
Managing Director at Barrington Research Associates

Okay. All right. Very good. Thanks, guys.

Operator

Thank you. This concludes our question and answer session. I would like to turn the conference back over to Doctor. Philip Frost, Chairman and Chief Executive Officer for any closing remarks.

Phillip Frost
Phillip Frost
Chairman & CEO at OPKO Health

I want to thank you all for your participation, for your good questions and we look forward to talking to you again at the end of the next quarter. Thank you again.

Operator

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

Executives
    • Phillip Frost
      Phillip Frost
      Chairman & CEO
    • Elias Zerhouni
      Elias Zerhouni
      President & Vice Chairman
    • Adam Logal
      Adam Logal
      SVP & CFO
Analysts
    • Yvonne Briggs
      Investor Relations and Corporate Development Executive at Alliance Advisors
    • James Stamos
      Analyst at Jefferies
    • Yi Chen
      Managing Director & Senior Analyst at H.C. Wainwright & Co., LLC
    • Jeffrey Cohen
      MD - Equity Research at Ladenburg Thalmann & Co. Inc
    • Billy Smith
      Equity Research at JP Morgan
    • Edward Tenthoff
      Sr. Research Analyst at Piper Sandler Companies
    • Yale Jen
      Senior Managing Director & Senior Biotech Analyst at Laidlaw & Company
    • Michael Petusky
      Managing Director at Barrington Research Associates
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Key Takeaways

  • OpCo Health agreed to sell BioReference’s oncology and related clinical testing assets to LabCorp for up to $225 million, allowing BioReference to focus on urology diagnostics and core testing with approximately $320 million in 2024 revenue.
  • BioReference implemented a 7% workforce reduction (136 positions) and footprint consolidation in Q1, delivering an estimated $19 million in annualized cost savings and targeting segment profitability by year-end 2025.
  • OpCo’s lead candidate OPKO-88006, a dual GLP-1/glucagon analog, showed positive preclinical effects on metabolic parameters and NASH, and OpCo entered a collaboration to develop a once-weekly oral tablet formulation.
  • MODEX advanced its pipeline with a Merck-partnered Epstein-Barr virus vaccine in Phase I trials and multiple tetra-specific antibody programs progressing through early clinical stages for oncology and immunocompromised indications.
  • OpCo bolstered its balance sheet with a $200 million share repurchase authorization, a convertible note exchange eliminating $159 million of debt, and ended Q1 with approximately $450 million in cash and equivalents.
AI Generated. May Contain Errors.
Earnings Conference Call
OPKO Health Q1 2025
00:00 / 00:00

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