OPKO HEALTH, INC. Q3 FY2024 earnings call

• Dr. Phillip Frost noted positive developments in diagnostics and pharmaceutical segments, including BioReference on a path to profitability after asset sales, ModeX technology progress, Pfizer's NGENLA launch, and progress on once-weekly injectable dual-GLP-1 program.
• Dr. Elias Zerhouni discussed BioReference's progress post-LabCorp sale, ModeX therapeutic programs (Phase 1 trial for MDX-2001, INDs upcoming for other programs), BARDA funding for COVID and flu programs, collaboration with Merck on EBV vaccine, and Pfizer's NGENLA growth.
• Adam Logal reviewed financial results, highlighted share repurchases, and provided guidance on diagnostics (cost savings, revenue cycle improvements) and pharmaceutical (Pfizer sales growth, R&D activities).

Diagnostics Segment: Revenue was $121.3 million in the third quarter of 2024, down from $131.7 million in 2023, primarily due to lower testing volumes and LabCorp transaction impacts. Costs and expenses totaled $184.2 million in 2024 vs. $160.8 million in 2023, including ~$30M in non-recurring costs. A gain of $121.5M from the LabCorp transaction led to operating income of $58.5M in 2024 vs. an operating loss of $29.1M in 2023. Pharmaceutical Segment: Revenue was $52.4 million in 2024 vs. $46.9 million in 2023. Product revenue was $39.1 million vs. $40.7 million in 2023. R&D expenses were $28.2 million in 2024 vs. $18.9 million in 2023, driven by ModeX programs. Operating loss for the pharmaceutical segment was $32.2 million in 2024 vs. $25.4 million in 2023.

• Diagnostic segment: Continues multi-year program to improve profitability with $25M annualized savings by end 2024, $14M in Q4 non-recurring costs, and revenue cycle actions expected to increase 2025 revenue by $8-10M. Targets gross margin >27% and positive cash flow in 2025.
• Pharmaceutical segment: Expects Pfizer to grow NGENLA sales, stable foreign currency for ex-U.S. businesses, and higher Q4 R&D for ModeX programs.
• Fourth quarter 2024 expected revenues $155-160M, costs $200-210M, R&D $28-34M (with $5-8M BARDA funding offset), and depreciation $22-23M.

• Forward-looking statements subject to risks outlined in SEC filings, including uncertainties in clinical trial outcomes, market adoption of products, and regulatory approvals. Opko undertakes no obligation to revise forward-looking statements after the call date.

Q: What are the next steps for OPK-88006, the duo agonist peptide?

A: Elias Zerhouni stated they are progressing the oral form with Entera Bio and preclinical work on the subcutaneous form, actively pursuing partnerships and preclinical development.

Q: When can we expect data update from MDX-2001 study?

A: Elias Zerhouni said the first feasibility toxicology phase readout is expected in the first half of 2025, with a basket trial readout around mid-2026.

Q: Who decides on the progression of the Merck collaboration for the EBV vaccine?

A: Elias Zerhouni said Merck, as the sponsor, will make the decision on moving the program forward.

Q: What's the outlook for BioReference's profitability?

A: Adam Logal noted non-recurring costs are key to achieving profitability, with no significant new investments needed, focusing on infrastructure reduction in NY/NJ.

Q: What would it take for Rayaldee to reach $50M in annual revenue?

A: Phil Frost mentioned new data on PTH lowering in CKD patients and a new marketing program could drive growth, depending on data validation.