OPKO Health Inc.

Earnings Release • May 7, 2020

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 30, 2020

OPKO Health, Inc.

(Exact Name of Registrant as Specified in its Charter)

(State or Other Jurisdiction

of Incorporation)

Delaware 001-33528 75-2402409

(Commission File Number)

(IRS Employer Identification No.)

4400 Biscayne Blvd. Miami, Florida 33137

Registrant's telephone number, including area code: (305) 575-4100

Not Applicable

Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value \$0.01 per share	OPK	NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

(Address of Principal Executive Offices) (Zip Code)

ITEM 2.02. Results of Operations and Financial Condition.

On May 6, 2020, OPKO Health, Inc. (the "Company") issued a press release announcing operating and financial highlights for the quarter ended March 31, 2020. A copy of the press release is attached hereto as Exhibit 99.1.

The information included herein and in Exhibit 99.1 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended ("Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 as amended ("Securities Act") or the Exchange Act, except as expressly set forth by specific reference in such a filing.

ITEM 7.01. Regulation FD Disclosure.

On April 30, 2020, the Company issued a press release announcing that it will hold a conference call to provide a business update and discuss its first quarter ended March 31, 2020 financial and operating results, as well as discuss financial guidance. A copy of the press release is attached hereto as Exhibit 99.2.

The information included herein and in Exhibit 99.2 shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such a filing.

ITEM 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
99.1	Press Release of the Company dated May 6, 2020
99.2	Press Release of the Company dated April 30, 2020
104	Cover Page Interactive Data File-the cover page XBRL tags are embedded within the Inline XBRL document

Exhibit Index

Exhibit No.	Description
99.1	Press Release of the Company dated May 6, 2020
99.2	Press Release of the Company dated April 30, 2020

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

OPKO Health, Inc.

By: /s/ Adam Logal

Date: May 6, 2020 Name: Adam Logal Title: Senior Vice President, Chief Financial Officer

OPKO Health Reports 2020 First Quarter Business Highlights and Financial Results

Conference call begins at 4:30 p.m. Eastern time today

MIAMI (May 6, 2020) – OPKO Health, Inc. (NASDAQ: OPK) reports business highlights and financial results for the three months ended March 31, 2020.

Business Highlights

• BioReference Laboratories launched COVID-19 testing nationwide: On March 13, 2020, BioReference Laboratories launched a Real-Time Reverse Transcription Polymerase Chain Reaction assay with an approximate 24-72 hour turnaround time to promote earlier diagnosis of the SARS-CoV-2 virus to aid in limiting the spread of infection. In addition to its nationwide COVID-19 test offering, BioReference announced testing partnerships with the New York State Department of Health, New York City Health and Hospital Corporation, the State of New Jersey, the State of Florida and the cities of Detroit and Miami, among others. Additionally, Rite Aid Corporation selected BioReference to provide COVID-19 laboratory testing to its drive-up locations with the goal of flattening the curve through widely accessible diagnostic testing. To date, BioReference has run approximately 700,000 COVID-19 tests and currently has a COVID-19 testing capacity of 35,000 tests per day. As of April 27, 2020, BioReference Laboratories started offering COVID-19 antibody testing, a semi-quantitative immunoassay that measures SARS-CoV-2 specific IgG antibody levels, correlating with the patient's immune response after COVID-19 infection. Within the next two weeks, BioReference expects to expand its capacity to be able to process up to 400,000 tests per day.
• Somatrogon abstract to be presented at Endocrine Society's ENDO Online 2020: On April 22, 2020, OPKO announced the data from its two abstracts regarding the global Phase 3 pediatric trial evaluating somatrogon dosed once weekly in pre-pubertal children with growth hormone deficiency will be combined into a single presentation at ENDO Online 2020, a virtual event being held June 8 through 22 featuring on-demand and live programming. The results of the pivotal Phase 3 study will be delivered on June 8, 2020 at 11:00 a.m. Eastern time by Dr. Cheri Deal, the Principal Investigator of the pediatric study. The two abstracts entitled "Somatrogon Growth Hormone in the Treatment of Pediatric Growth Hormone Deficiency: Results of the Pivotal Phase 3" and "Interpretation of Insulin-like Growth Factor (IGF-1) Levels Following Administration of Somatrogon (a long-acting Growth Hormone-hGH-CTP)" will be published online in the April-May supplemental issue of the Journal of Endocrine Society.
• Somatrogon global regulatory submissions: Somatrogon regulatory submission in the U.S. is anticipated to occur in the second half of 2020. In Europe, regulatory submission will follow completion of the open-label study demonstrating benefit and compliance with reduced treatment burden, which is expected to be completed in the third quarter of 2020. The registration study in Japan for pediatric growth hormone deficiency patients was completed in early March and topline data is expected in mid-2020.
• RAYALDEE total prescriptions reported by IQVIA increased 78% in the first quarter of 2020 compared with the first quarter in 2019: Total prescriptions for the three months ended March 31, 2020 increased to approximately 18,327, compared with approximately 10,307 during the comparable period of 2019.
• Interim results from two ongoing RAYALDEE studies reported: On March 25, 2020, OPKO announced positive preliminary data from the ongoing Phase 4 comparative trial, which suggest that RAYALDEE may be more effective in raising serum total 25-hydroxyvitamin D to the level required to effectively suppress elevated plasma intact parathyroid hormone (iPTH) in stage 3 or 4 chronic kidney patients. Final results are expected in the second half of 2020. In addition, OPKO announced positive proof-of-concept data from the ongoing Phase 2 trial in patients with stage 5 chronic kidney disease demonstrating RAYALDEE may be useful in treating secondary hyperparathyroidism in dialysis patients. The Phase 2 trial in hemodialysis patients is on track to complete enrollment in the third quarter of 2020 with full topline data expected in the first quarter of 2021.
• Nearly 16,000 4Kscore® tests performed during the first quarter of 2020: Novitas Solutions issued its final Local Coverage Determination for Medicare payments for the 4Kscore test with defined coverage criteria, effective December 30, 2019. With Medicare reimbursement in place, the Company began its salesforce expansion for the 4Kscore during the first quarter of 2020; however, COVID-19 impacted utilization during the month of March.

Financial Results

• Consolidated revenues for the first quarter of 2020 were \$211.5 million compared with \$222.5 million for the comparable period of 2019. The net loss for the first quarter of 2020 was \$59.1 million, or \$0.09 per share, compared with a net loss of \$80.8 million, or \$0.14 per share, for the comparable period of 2019.
• Diagnostics: Revenue from servicesin the first quarter of 2020 was \$170.8 million compared with \$178.9 million for the comparable period in 2019. Although revenue from services was positively affected by increased reimbursement amounts and improved operational procedures, in the last two weeks of March 2020, the Company experienced a decline in testing volumes net of COVID-19 testing services due to the COVID-19 pandemic. Total costs and expenses were \$189.0 million in the first quarter of 2020 compared with \$212.5 million for the comparable period in 2019 with the reduction primarily attributable to lower selling, general and administrative expenses due to cost-reduction initiatives. In addition, the 2019 period included a \$10.6 million legal accrual. As a result, operating loss was \$18.1 million in the first quarter of 2020 compared with \$33.6 million in the first quarter of 2019.
• Pharmaceuticals: Revenue from products in the first quarter of 2020 was \$31.1 million compared with \$25.3 million in the first quarter of 2019 with the increase primarily attributable to higher sales of RAYALDEE of \$9.9 million in the first quarter of 2020 compared with \$5.8 million in the prior year period. Revenue from licensing and intellectual property was \$9.6 million in the first quarter of 2020 compared to \$18.3 million in the first quarter of 2019 with the reduction primarily due to a decrease in the amortization of payments received from Pfizer, OPKO's commercial partner for itslong-acting human growth hormone product, Somatrogon. Total cost and expenses were \$54.8 million in the first quarter of 2020 compared with \$73.0 million for the prior year period, with the decline primarily attributable to lower research and development expenses due to the completion of the pediatric Phase 3 study for somatrogon. The operating loss was \$14.1 million in the first quarter of 2020 compared to \$29.5 million in the first quarter of 2019.
• Cash and equivalents: Cash, cash equivalents and marketable securities were \$34.5 million as of March 31, 2020. In addition, the Company has an unutilized \$100 million credit facility which provides the company with access to incremental capital on a non-dilutive basis. In April 2020, the Company also accessed additional capital available under the CARES Act which provided the company with approximately \$30 million of short-term liquidity through various provisions under the Act.

CONFERENCE CALL & WEBCAST INFORMATION

OPKO's senior management will provide a business update and discuss results in greater detail in a conference call and live audio webcast at 4:30 p.m. Eastern time today, May 6, 2020. The conference call dial-in and webcast information is as follows:

DOMESTIC DIAL-IN:	(877) 783-8475
INTERNATIONAL DIAL-IN:	(614) 999-1827
PASSCODE:	9095275
WEBCAST:	OPKO 1Q20 Results Conference Call

For those unable to participate in the live conference call or webcast, a replay will be available beginning approximately two hours after the close of the conference call. To access the replay, dial 855-859-2056 or 404-537-3406. The replay passcode is 9095275. The replay can be accessed for a period of time on OPKO's website at OPKO 1Q20 Results Conference Call.

About OPKO Health

OPKO Health is a diversified healthcare company. In diagnostics, its BioReference Laboratories is one of the nation's largest full-service clinical laboratories; GeneDx is a rapidly growing genetic testing business; the 4Kscore® test is used to assess a patient's individual risk for aggressive prostate cancer following an elevated PSA and to help decide about next steps such as prostate biopsy; Claros® 1 is a point-of-care diagnostics platform with a total PSA test approved by the FDA. In our pharmaceutical pipeline, RAYALDEE is our first pharmaceutical product to be marketed. OPK88003, a once-weekly oxyntomodulin for type 2 diabetes and obesity - reported positive data from a Phase 2 clinical trial. It's among a new class of GLP-1/glucagon receptor dual agonists. OPK88004, a SARM (selective androgen receptor modulator) is currently being studied for various potential indications. The Company's most advanced product utilizing its CTP technology, a once-weekly human growth hormone for injection, successfully met its primary endpoint and key secondary endpoints in a Phase 3 study and is partnered with Pfizer. OPKO also has research, development, production and distribution facilities abroad.

Cautionary Statement Regarding Forward Looking Statements

This press release contains "forward-looking statements," as that term is defined under the Private Securities Litigation Reform Act of 1995 (PSLRA), which statements may be identified by words such as "expects," "plans," "projects," "will," "may," "anticipates," "believes," "should," "intends," "estimates," and other words of similar meaning, including statements regarding expected financial performance and expectations regarding the market for and sales of our products, expectations about COVID-19 testing, our capacity for testing and expected turnaround time, our ability to expand our capacity to be able to process up to 400,000 antibody tests per day, our product development efforts and the expected benefits of our products, whether our products in development will be commercialized, the possibility of unfavorable new clinical data and further analyses of existing clinical data, the risk that clinical trial data are subject to differing interpretations and assessments by regulatory authorities, whether regulatory authorities will be satisfied with the design of and results from our clinical studies, whether the two Rayaldee studies or our other ongoing and future clinical trials will be successfully enrolled or completed on a timely basis or at all and whether the data from any of our trials will support submission or approval, validation and/or reimbursement for our products, whether RAYALDEE prescriptions will continue to increase, expectations regarding timing for commencing and concluding our clinical trials and releasing data, the timing of our regulatory submissions, including for somatrogon, our ability to market and sell any of our products in development, and expectations about developing RAYALDEE for dialysis patients, as well as other nonhistorical statements about our expectations, beliefs or intentions regarding our business, technologies and products, financial condition, strategies or prospects. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those described in our Annual Reports on Form 10-K filed and to be filed with the Securities and Exchange Commission and under the heading "Risk Factors" in our other filings with the Securities and Exchange Commission, as well as the ongoing effects of the COVID-19 pandemic, the continuation and success of our relationship with Pfizer and our other partners, liquidity issues and the risks inherent in funding, developing and obtaining regulatory approvals of new, commercially-viable and competitive products and treatments, that earlier clinical results of effectiveness and safety may not be reproducible or indicative of future results, that somatrogon, the 4Kscore, RAYALDEE, and/or any of our compounds or diagnostic products under development may fail, may not achieve the expected results or effectiveness and may not generate data that would support the approval or marketing of products for the indications being studied or for other indications, that currently available over-the-counter and prescription products, as well as products under development by others, may prove to be as or more effective than our products for the indications being studied. In addition, forward-looking statements may also be adversely affected by general market factors, competitive product development, product availability, federal and state regulations and legislation, the regulatory process for new products and indications, manufacturing issues that may arise, patent positions and litigation, among other factors. The forward-looking statements contained in this press release speak only as of the date the statements were made, and we do not undertake any obligation to update forward-looking statements. We intend that all forward-looking statements be subject to the safe-harbor provisions of the PSLRA.

Contacts:

LHA Investor Relations Yvonne Briggs, 310-691-7100 ybriggs@lhai.com or Bruce Voss, 310-691-7100 bvoss@lhai.com

—Tables to Follow—

OPKO Health, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) (in millions)

	As of
	March 31, 2020		December 31, 2019
Assets:
Cash, cash equivalents and marketable securities	\$	34.5	\$	85.5
Other current assets		239.9		238.5
Total Current Assets		274.4		324.0
In-process Research and Development and Goodwill		1,259.8		1,262.1
Other assets		698.3		723.2
Total Assets	\$	2,232.5	\$	2,309.3
Liabilities and Equity:
Current liabilities	\$	245.1	\$	249.1
Convertible Notes		213.8		211.2
Deferred tax liabilities, net		118.6		118.7
Other long-term liabilities, principally contract liabilities,
contingent consideration and lines of credit		106.4		115.5
Total Liabilities		683.9		694.5
Equity		1,548.6		1,614.8
Total Liabilities and Equity	\$	2,232.5	\$	2,309.3

OPKO Health, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) (in millions, except share and per share data)

	For the three months ended March 31,
		2020		2019
Revenues
Revenue from services	\$	170.8	\$	178.9
Revenue from products		31.1		25.3
Revenue from transfer of intellectual property		9.6		18.3
Total revenues		211.5		222.5
Costs and expenses
Cost of revenues		140.3		144.0
Selling, general and administrative		76.1		95.2
Research and development		21.8		36.5
Contingent consideration		(0.9)		4.8
Amortization of intangible assets		14.9		16.6
Asset impairment charges		0.0		0.7
Total Costs and expenses		252.2		297.8
Operating loss		(40.7)		(75.3)
Other income and (expense), net		(17.1)		(2.8)
Loss before income taxes and investment losses		(57.8)		(78.1)
Income tax provision		(1.2)		(0.8)
Loss before investment losses		(59.0)		(78.9)
Loss from investments in investees		(0.1)		(1.9)
Net loss	\$	(59.1)	\$	(80.8)
Loss per share, basic and diluted	\$	(0.09)	\$	(0.14)
Weighted average common shares outstanding, basic and diluted		640,578,794		586,344,207

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OPKO Health to Report First Quarter 2020 Financial Results on May 6, 2020

MIAMI (April 30, 2020) – OPKO Health, Inc. (NASDAQ: OPK) plans to report operating and financial results for the three months ended March 31, 2020, as well as discuss financial guidance, after the close of the U.S. financial markets on Wednesday, May 6, 2020.

CONFERENCE CALL & WEBCAST INFORMATION

OPKO's senior management will provide a business update and discuss results in greater detail in a conference call and live audio webcast at 4:30 p.m. Eastern time on Wednesday, May 6, 2020. The conference call dial-in and webcast information is as follows:

DOMESTIC DIAL-IN:	(877) 783-8475
INTERNATIONAL DIAL-IN:	(614) 999-1827
PASSCODE:	9095275
WEBCAST:	OPKO 1Q20 Results Conference Call

For those unable to participate in the live conference call or webcast, a replay will be available beginning approximately two hours after the close of the conference call. To access the replay, dial 855-859-2056 or 404-537-3406. The replay passcode is 9095275. The replay can be accessed for a period of time on OPKO's website at OPKO 1Q20 Results Conference Call.

About OPKO Health

OPKO Health is a diversified healthcare company. In diagnostics, its BioReference Laboratories is one of the nation's largest full-service clinical laboratories; GeneDx is a rapidly growing genetic testing business; the 4Kscore® test is used to assess a patient's individual risk for aggressive prostate cancer following an elevated PSA and to help decide about next steps such as prostate biopsy; Claros® 1 is a point-of-care diagnostics platform with a total PSA test approved by the FDA. In our pharmaceutical pipeline, RAYALDEE is our first pharmaceutical product to be marketed. OPK88003, a once-weekly oxyntomodulin for type 2 diabetes and obesity - reported positive data from a Phase 2 clinical trial. It's among a new class of GLP-1/glucagon receptor dual agonists. OPK88004, a SARM (selective androgen receptor modulator) is currently being studied for various potential indications. The Company's most advanced product utilizing its CTP technology, a once-weekly human growth hormone for injection, successfully met its primary endpoint and key secondary endpoints in a Phase 3 study and is partnered with Pfizer. OPKO also has research, development, production and distribution facilities abroad.

Contacts:

LHA Investor Relations Yvonne Briggs, 310-691-7100 ybriggs@lhai.com or Bruce Voss, 310-691-7100 bvoss@lhai.com