OPKO HEALTH, INC. Q4 FY2024 earnings call

ModeX Pipeline

• Two programs entered Phase 1 clinical trials.
• OPK-88006, a once-weekly injectable dual-GLP-1 glucagon agonist, showed encouraging clinical pharmacology data in diabetic and metabolic mice models, with both injectable and orally-delivered forms expected to be IND-ready by the end of 2024.

Commercialized Products

• NGENLA was performing well with Pfizer's global commercialization ongoing, with efforts to convert existing patients to once-weekly administration and secure new patients, and advancing pediatric and adult indications with potential up to $100 million in milestones.

BioReference Health

• Completed the sale of certain lab testing businesses, retained operations in New York, New Jersey, oncology, and corrections. The workforce was right-sized from 3,300 to 2,000, and underperforming facilities were closed.

BARDA Funding

• Awarded $51 million of additional funding, including a $35 million supplement to accelerate the development of a COVID multispecific antibody and $16 million for influenza multispecific antibodies using the proprietary mSTAR antibody platform, with a potential total of $205 million if all options and milestones are executed.

Business Development

• Actively pursuing external pharma collaborations to advance the pipeline in an accelerated and cost-efficient manner, exploring significant interest in various platforms

Diagnostic Segment

• Revenue for Q4 2024 was $103.1 million, compared to $124.2 million in 2023, primarily due to the LabCorp transaction.
• Costs and expenses totaled $124.8 million in Q4 2024, including approximately $4.5 million of non-recurring costs for severance and facility closures.
• Operating loss was $21.7 million in Q4 2024, compared to $42.3 million in 2023.

Pharmaceutical Segment

• Revenue was $80.5 million in Q4 2024, compared to $57.7 million in 2023.
• Product revenue including International Pharmaceutical businesses was $37.4 million, with revenue from RAYALDEE being $9.1 million, similar to $9.3 million in 2023.
• IP transfer revenue was $43.1 million in Q4 2024, which included a $12.5 million milestone payment for the initiation of the EBV clinical trial.
• Operating loss for the Pharmaceutical segment was $2.1 million in Q4 2024, compared to an operating loss of $16.1 million in the 2023 quarter

2025 Outlook

• Total revenues are expected to be between $675 million and $700 million, including services revenue of $405 million to $425 million, product revenue of $165 million to $175 million, and other revenue of $80 million to $95 million.
• Costs and expenses are expected to be between $825 million and $875 million, excluding non-recurring restructuring expenses.
• R&D expense is expected to be between $120 million and $140 million, with $40 million to $48 million offset by BARDA funding.
• BioReference Health is expected to achieve breakeven in the first quarter of 2025 and then become profitable.
• The Pharmaceutical segment expects Pfizer to continue growing sales of NGENLA and stable foreign currency rates for ex-U.S. pharmaceutical businesses

• Potential impact of government policy changes on vaccine and other funding for projects, including uncertainty regarding the continuation of BARDA funding.
• Uncertainty in achieving milestones under partnerships, which could affect revenue and program progression

Q: Maury Raycroft inquired about BioReference's timeline to profitability and balancing spend while expanding oncology testing menu.

A: Adam Logal stated that Q4 results showed meaningful improvement, expecting breakeven in the first quarter of 2025 and profitability thereafter, with a few charges in the first quarter for restructuring, and no significant investment in test menu spend.

Q: Maury Raycroft asked about the EBV Phase 2 milestone and timing of data update.

A: Dr. Elias Zerhouni and Dr. Phillip Frost mentioned that results from the 200-patient study could be available in the second quarter, analysis in the third quarter, with a decision to proceed to Phase 2 likely in the third quarter, and milestones triggered on progression, but specific milestone numbers were not disclosed until earned.

Q: Jeffrey Cohen asked about details of the dual agonist, RAYALDEE launch in China, and BARDA funding timeline.

A: Dr. Elias Zerhouni said the dual agonist had an injectable (weekly) and oral (daily) form, RAYALDEE's launch in China would start small and expand, and BARDA funding for the COVID program was expected to last 1.5 to 2 years with the goal of entering the clinic with the first molecule in the third or fourth quarter of 2025, and the total BARDA budget potential was $205 million.

Q: Edward Tenthoff asked about ModeX data and the hematologic cancer program.

A: Dr. Phillip Frost said MDX2001 (for solid tumors) was in the clinic for dose escalation, with safety/tolerability data expected in the fourth quarter of 2025, and the hematologic cancer program (MDX2003) was in the pre-IND stage, expected to enter the clinic late in 2025 or early in 2026.

Q: Yale Jen asked about the impact of government changes on vaccines and funding.

A: Dr. Phillip Frost stated there was no indication of negative impact on the EBV vaccine clinical trial so far, and BARDA funding programs still had interest in supporting despite potential policy changes.

Q: Eduardo Martinez-Montes asked about the HIV monoclonal, BARDA funding sufficiency, and MDX2001 biomarker selection.

A: Gary Nabel said the HIV monoclonal second generation was optimized, about to declare a lead candidate, BARDA funding was sufficient to progress current trials to an inflection point, and MDX2001 was taking all comers without excluding based on biomarkers as a high percentage of tumors had relevant expression