On May 11, 2015 OPKO Health, Inc. (NYSE:OPK), a multi-national biopharmaceutical and diagnostics company, reported operating and financial results for its first quarter ended March 31, 2015 (Filing, Q1, Opko Health, MAY 11, 2015, View Source [SID:1234506585]).
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Business Highlights
Pfizer Collaboration Agreement for Long Acting Human Growth Hormone Closed in January 2015; OPKO Received Up-Front Payments Totaling $295 million for Global Commercialization Rights to hGH-CTP: In connection with the collaboration, OPKO received up-front payments of $295 million and will receive an additional $275 million upon achievement of development-related milestones. In addition, OPKO will receive initial royalty payments upon the commercialization of hGH-CTP for Adult growth hormone deficiency (GHD). Upon the launch of hGH-CTP for Pediatric GHD, the royalties will transition to gross profit sharing among all indications for both hGH-CTP and Pfizer’s Genotropin. OPKO will lead clinical development and will be responsible for funding the development programs for Adult and Pediatric GHD and growth failure in children born small for gestational age (SGA). Pfizer will be responsible for all development costs for additional indications as well as all post-marketing studies. In addition, Pfizer will fund the commercialization activities for all indications and lead the manufacturing activities covered by the global development plan.
hGH-CTP for Pediatric GHD Data Presented at 2015 ENDO; Adult Phase 3 Clinical Trial Continues to Advance: OPKO presented positive twelve-month data from its ongoing Phase 2 clinical trial for pediatric GHD at the 97th Annual Meeting of the Endocrine Society (ENDO) on March 5th, 2015 in San Diego, California.
Acquired EirGen Pharma; A Growing, Profitable Specialty Pharmaceutical Developer and Manufacturer: OPKO acquired EirGen Pharma, Ltd., a growing, profitable and cash flow positive specialty pharmaceutical company focused on the development and commercial supply of high potency, high barrier to entry pharmaceutical products for sale in the U.S., Canada, Japan, Australia, most European countries, and more than 40 others around the world. EirGen, based in Waterford, Ireland, was founded by two former executives of IVAX Pharmaceuticals, Tom Brennan and Patsy Carney. The company, situated in a state of the art high containment research and development and manufacturing facility, is approved by the FDA, EMEA (European Health Authorities) and the PMDA (Japanese Health Authorities). To date, EirGen and its commercial partners have filed 10 product applications with the FDA and 5 each in Europe and Japan. EirGen has a strong research and development portfolio of over 20 niche, high barrier to entry drugs. EirGen will rapidly expand its drug portfolio with access to additional capital from OPKO, together with the benefits of Irish government programs encouraging research and development in Ireland. EirGen also offers significant synergies and benefits to OPKO through its ability to manufacture OPKO’s current and future products.
Rayaldee Met Primary Endpoints in Both Pivotal Phase 3 Trials; NDA Submission Scheduled Later in May: OPKO announced successful top-line results from both of its pivotal Phase 3 trials with Rayaldee in September 2014. These trials were identical randomized, double-blind, placebo-controlled, multi-site studies intended to establish the safety and efficacy of Rayaldee as a new treatment for secondary hyperparathyroidism (SHPT) in patients with stage 3 or 4 chronic kidney disease (CKD) and vitamin D insufficiency. OPKO has scheduled submission of NDA to the FDA later in May.
Positive Rayaldee Results Presented at the National Kidney Foundation Spring Clinical Meetings and 2015 ENDO Conference: The presentations of positive Rayaldee Phase 3 trial data were entitled "Modified-Release Calcifediol Is Effective for SHPT in Both Stages 3 and 4 CKD" (March 2015 in Dallas TX) and "Modified-Release Calcifediol Controls Elevated iPTH, Corrects 25(OH)D Levels and Reduces Bone Markers in CKD Patients" (March 2015 in San Diego, CA).
IND for Long Acting Factor VIIa-CTP for Hemophilia Filed and Accepted: In March 2015, the FDA accepted OPKO’s IND application to Initiate a Phase 2a Trial for its Long-Acting Coagulation Factor VIIa-CTP to Treat Hemophilia. Clinical Trials are expected to commence shortly.
Clinical Studies for Long Acting Oxyntomodulin for Obesity and Diabetes Expected to Begin During 2015; OPKO expects to commence studies for its long acting Oxyntomodulin for diabetes and obesity in the second half of 2015.
Launched 4Kscore Test in Mexico and Expects Further Latin American Launches in 2015; Adoption of 4Kscore Test Continues to Grow in the U.S. and Europe: OPKO launched the 4Kscore Test in Mexico in January 2015. OPKO also expects to launch the 4Kscore Test in additional Latin America markets through its subsidiaries during 2015. OPKO is working to obtain reimbursement for the 4Kscore Test by payers in the U.S. and abroad and expects adoption to rapidly increase once reimbursement is received.
Announced Publication of a Study Entitled "Predicting High-Grade Cancer at Ten-Core Prostate Biopsy Using Four Kallikrein Markers Measured in Blood in the ProtecT Study.": The ProtecT study is a prospective randomized controlled trial conducted in the UK for the purpose of evaluating the cost effectiveness of conventional treatments in PSA-detected, clinically localized prostate cancer. Of the 82,428 men recruited for the trial, a total of 6,129 men with elevated PSA (≥3.0 ng/mL) who underwent prostate biopsy and provided an adequate blood sample were tested for the four kallikreins and their 4Kscore results were determined. The study showed that the four kallikrein panel enhanced aggressive prostate cancer detection compared with PSA and age alone. The area under the curve (AUC) for the 4K model was 0.820 (95% CI = 0.802 to 0.838) while the PSA model was 0.738 (95% CI = 0.716 to 0.761) for high-grade cancer. The ProtecT study is the latest in a series of peer-reviewed publications demonstrating the superior clinical value that testing with four kallikrein markers adds to risk prediction for aggressive prostate cancer.
Rolapitant NDA Filing Submitted in September and Accepted for Review by FDA in November: OPKO’s partner, TESARO, submitted a NDA to the FDA for approval of oral rolapitant, an investigational neurokinin-1 (NK-1) receptor antagonist in development for the prevention of chemotherapy-induced nausea and vomiting (CINV). The NDA is supported by data from four controlled studies covering a spectrum of patients receiving chemotherapy that commonly causes nausea and vomiting. The top-line results of three of the Phase 3 studies were previously announced by TESARO and were presented in detail at the American Society for Clinical Oncology (ASCO) (Free ASCO Whitepaper) annual meeting in June 2014. On November 5, 2014, TESARO announced the FDA accepted its NDA filing for rolapitant, with a PDUFA date of September 5, 2015. Upon approval and following commercialization, OPKO will receive up to $110 Million in additional milestones and tiered, double digit royalties.
"We began 2015 with a number of significant activities including the closing of the Pfizer transaction, the initiation of our clinical development program for Factor VIIa-CTP and the imminent submission of our NDA for Rayaldee," said Phillip Frost, M.D., Chairman and CEO. "The 4Kscore Test continues to gain acceptance in the US, Mexico and Europe and we are pleased with the recently published studies further supporting the long-term outcomes of using this potentially revolutionary blood test. With the EirGen acquisition, we added a growing, profitable, cash flow positive business to our complement of operating companies which we believe will lead to further growth and profitability of our other businesses," Dr. Frost continued.
Financial Highlights
Cash, cash equivalents and marketable securities were $348.2 million as of March 31, 2015.
Reflects receipt of Pfizer upfront payments of $295.0 million, partially offset by a non-recurring $25.9 million payment to the Office of the Chief Scientist in Israel related to the Pfizer transaction.
Consolidated revenues increased to $30.1 million during the three months ended March 31, 2015 from $22.3 million in the comparable period of 2014. Revenue for the three months ended March 31, 2015 included $12.5 million of revenue resulting from OPKO’s collaboration agreement with Pfizer. OPKO is recording revenue in connection with the Pfizer transaction on a straight-line basis over the expected development period.
Net loss for the three months ended March 31, 2015 included increased operating expenses including a $4.5 million increase in research and development expense to $25.5 million, and non-recurring and non-cash charges, such as:
$25.9 million of non-recurring operating expense related to the repayment of a grant to the Office of the Chief Scientist in Israel related to the Pfizer transaction; and
$49.8 million in non-cash charges related to the change in value of embedded derivatives which are part of our January 2013 convertible senior notes due in 2033 (the "2033 Senior Notes"). This non-cash charge is principally a result of the increased market price of our common stock since December 31, 2014.