On November 9, 2015 OPKO Health, Inc. (NYSE:OPK), a multinational biopharmaceutical and diagnostics company, reported financial and operating results for the three and nine months ended September 30, 2015 (Press release, Opko Health, NOV 9, 2015, View Source [SID:1234508144]).

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Business Highlights

Completed the Acquisition of Bio-Reference Laboratories on August 20, 2015: Bio-Reference Laboratories is the third largest full-service clinical laboratory in the United States and is known for its innovative technological solutions and pioneering leadership in the areas of genomics and genetic sequencing. Through GeneDx, Bio-Reference Laboratories’ genetic sequencing laboratory, and GenPath Diagnostics, its Oncology and Women’s Health business units, Bio-Reference Laboratories has accumulated a vast array of genetic and genomic data that OPKO will make available to industry and academic scientists to enhance their drug discovery and clinical trial programs. Since closing, OPKO has begun to leverage the national marketing, sales and distribution resources of Bio-Reference Laboratories to enhance sales of OPKO’s 4Kscore test, a blood test that provides a personalized risk score for aggressive prostate cancer, and plans to further leverage the Bio-Reference capabilities with OPKO’s other diagnostic products under development.

4Kscore Recommended in National Comprehensive Cancer Network Guidelines for Prostate Cancer Early Detection: The National Comprehensive Cancer Network (NCCN) included 4Kscore as a recommended test in their 2015 Guidelines for Prostate Cancer Early Detection. The panel making this recommendation concluded that the 4Kscore, as a blood test with greater specificity over the PSA test, is indicated for use prior to a first prostate biopsy, or after a negative biopsy, to assist patients and physicians in further defining the probability of high-grade cancer.

Rayaldee PDUFA Date is March 29, 2016: In late 2014, OPKO announced successful top-line results from both pivotal Phase 3 trials with Rayaldee. These trials were identical randomized, double-blind, placebo-controlled, multisite 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.

Completed Enrollment in Ongoing Phase 3 Trial in Growth Hormone Deficient Adults: The trial is designed to evaluate the safety and efficacy of hGH-CTP with a primary endpoint of superiority compared with placebo in decreasing fat mass in adults with GHD. The trial is a randomized, double-blind, placebo-controlled, multicenter, global study in adults with GHD. The study is divided into two treatment periods: a 26-week, double-blind, placebo-controlled period, followed by a 26-week, open-label extension period. The study is expected to conclude in the second half of 2016; with positive results, a regulatory submission to the FDA will follow study completion.

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 intravenous coagulation Factor VIIa-CTP to treat hemophilia. Clinical trials are expected to commence during Q4 2015.

Clinical Studies for Long-Acting Oxyntomodulin for Obesity and Diabetes Expected to Begin During 2016: OPKO expects to commence studies for its long-acting subcutaneous oxyntomodulin for diabetes and obesity in Q1 2016.

VARUBITM (Rolapitant) was Approved by the FDA on September 2, 2015 and Commercial Launch is Expected to Commence this Month: OPKO’s partner, Tesaro received FDA approval of oral VARUBI, a neurokinin-1 (NK-1) receptor antagonist, in combination with other antiemetic agents in adults for the prevention of delayed nausea and vomiting associated with initial and repeat courses of emetogenic chemotherapy. Tesaro expects to commence commercial sales in the U.S. this month. VARUBI has been included in the NCCN Guidelines as a recommended option in combination with other antiemetic agents for patients receiving both high emetic risk intravenous chemotherapy (HEC) and moderate emetic risk intravenous chemotherapy (MEC). Category 1, the highest level category of evidence and consensus, was granted to VARUBI for both HEC and MEC chemotherapy. Following commercialization, OPKO is eligible to receive up to $110 million in additional milestones and tiered, double-digit royalties.

"OPKO has already achieved numerous important milestones during 2015," said Phillip Frost, M.D., Chairman and CEO. "We believe that the Pfizer transaction for hGH-CTP and the acquisitions of EirGen and Bio-Reference Laboratories have had a positive impact on our financial operations and will provide significant revenue opportunities and an expanded commercial platform for us going forward. The addition of our 4Kscore Test to the NCCN guidelines was an important step toward obtaining reimbursement from healthcare payors, a key factor for obtaining broad access to men for the test. Our NDA filing for Rayaldee continues to advance through the FDA drug approval process and we have high expectations for our new treatment option for patients with stage 3 or 4 chronic kidney disease and secondary hyperparathyroidism. Our clinical development programs for Factor VIIa-CTP and oxyntomodulin, each with great commercial potential, are advancing on plan and we expect to initiate human trials for both products in the near future," continued Dr. Frost.

Financial Highlights

Consolidated revenues increased to $143.0 million from $19.8 million for the three months ended September 30, 2015 compared to three months ended September 30, 2014, and increased to $215.5 million from $65.6 million for the nine months ended September 30, 2015 as compared to the 2014 period. The 2015 periods include revenue from Bio-Reference and EirGen beginning with their acquisitions in August and May 2015, respectively. Revenue for the three and nine months ended September 30, 2015 also includes $17.7 million and $47.8 million, respectively, from OPKO’s collaboration with Pfizer.

Net income for the three months ended September 30, 2015 was $128.2 million compared with net loss of $48.7 for the 2014 period and net losses for the nine months ended September 30, 2015 decreased to $31.6 million compared and $118.7 million for the 2014 period. The 2015 three and nine month periods include significant non-recurring and/or non-cash activities, including:
$93.0 million and $87.2 million of income tax benefit reflecting the release of valuation allowances against all of OPKO’s U.S.-based deferred tax assets as a result of the Bio-Reference acquisition in the three and nine month periods of 2015, respectively;

17.3 million gain related to the deconsolidation of OPKO’s previously consolidated variable interest entity, SciVac, in the three month period of 2015 as SciVac completed an initial public offering by merger with Levon Resources Ltd. in July 2015;

$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 in the nine month period of 2015; and
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Other income and (expense) of $32.2 million and ($34.1) million related to the change in fair value of derivative instruments in the three and nine months of 2015, respectively, compared with $3.3 million and $3.8 million in the 2014 periods. The change in fair value is principally related to an embedded derivative in our January 2013 convertible senior notes due in 2033.

Cash, cash equivalents and marketable securities were $212.1 million as of September 30, 2015.

This reflects receipt of Pfizer upfront payments of $295.0 million, partially offset by a $94.7 million cash payment for the acquisition of EirGen (net of EirGen’s cash on hand) and a one-time $25.9 million payment to the Office of the Chief Scientist in Israel related to the Pfizer transaction.