OPKO Health Inc.

Earnings Release • Nov 11, 2018

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): November 8, 2018

OPKO Health, Inc.

(Exact Name of Registrant as Specified in Charter)

(State or Other Jurisdiction of Incorporation)

(Commission File Number)

Delaware 001-33528 75-2402409

(IRS Employer Identification No.)

4400 Biscayne Blvd. Miami, Florida 33137

(Address of Principal Executive Offices) (Zip Code) 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:

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

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

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

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

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 companyo

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. o

ITEM 1.01. Entry into a Material Definitive Agreement.

Private Placements of Common Stock

On November 8, 2018, OPKO Health, Inc. ("OPKO" or the "Company") entered into stock purchase agreements with certain investors pursuant to which the Company agreed to sell to such investors in private placements (the "Private Placements") an aggregate of approximately 26.5 million shares of the Company's Common Stock (the "Shares") at a purchase price of \$3.49 per share, which was the closing bid price of the Company's Common Stock on the NASDAQ Global Select Market ("NASDAQ") on such date, for an aggregate purchase price of \$92.5 million. The closing of the private placements is subject to obtaining requisite approval from NASDAQ for the listing of the Shares. The investors in the private placements include an affiliate of Dr. Phillip Frost, the Company's Chairman and Chief Executive Officer (\$70 million), and Dr. Jane Hsiao, the Company's Vice Chairman and Chief Technical Officer (\$2 million).

The Company intends to use the proceeds from the private placements for general corporate purposes.

The private placements are being conducted in reliance on the exemption of the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), pursuant to Section 4(a)(2) of the Securities Act, based upon the representations made by the investors that they are "accredited investors" and that they are purchasing the Shares without a present view toward a distribution of the Shares. In addition, there was no general advertisement conducted by the Company in connection with the sale of the Shares.

Credit Agreement

On November 8, 2018, the Company entered into a credit agreement (the "Credit Agreement") with an affiliate of Dr. Frost pursuant to which the lender committed to provide the Company with an unsecured line of credit in the amount of \$60 million. Borrowings under the line of credit will bear interest at a rate of 10% per annum and may be repaid and reborrowed at any time. The credit agreement includes various customary remedies for the lender following an event of default, including the acceleration of repayment of outstanding amounts under line of credit. The line of credit matures on November 8, 2023.

ITEM 2.02. Results of Operations and Financial Condition.

.

On November 9, 2018, the Company, issued a press release announcing operating and financial highlights for the quarter ended September 30, 2018. 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 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information regarding the Credit Agreement set forth in Item 1.01 of this Current Report on Form 8-K under the heading "Credit Agreement" is incorporated in this Item 2.03 by reference.

ITEM 3.02. Unregistered Sales of Equity Securities.

The information regarding the private placements set forth in Item 1.01 of this Current Report on Form 8-K under the heading "Private Placements of Common Stock" is incorporated in this Item 3.02 by reference.

ITEM 7.01. Regulation FD Disclosure.

On November 8, 2018, the Company issued a press release announcing that it will hold a conference call to provide a business update and discuss its third quarter financial and operating results, as well as provide guidance on expected revenues and operating expenses for the fourth quarter of fiscal year 2018. 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 November 9, 2018
99.2	Press Release of the Company dated November 8, 2018

Exhibit List

Exhibit No.	Description
99.1	Press Release of the Company dated November 9, 2018
99.2	Press Release of the Company dated November 8, 2018

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.

Date: November 9, 2018 Name: Adam Logal

By: /s/ Adam Logal

Title: Senior Vice President, Chief Financial Officer

OPKO Health Reports Third Quarter 2018 Financial Results

Conference Call begins today at 4:15 p.m. Eastern Time

MIAMI (November 9, 2018) – OPKO Health, Inc. (NASDAQ: OPK) reports financial results and business highlights for the three months ended September 30, 2018.

Financial Highlights

• Net loss for the three months ended September 30, 2018 decreased by 23% to \$27.7 million or \$0.05 a share compared to net loss of \$35.9 million or \$0.06 per share for the comparable 2017 period. Total revenues improved to \$249.8 million during the three months ended September 30, 2018 compared to \$246.0 million for the comparable period of 2017.
• Revenues from products during the three months ended September 30, 2018 include \$5.8 million from RAYALDEE and revenues from services were \$202.8 million for the 2018 period compared with \$200.9 million for the corresponding 2017 period.
• During the three months ended September 30, 2018, costs of revenue and selling, general and administrative expenses decreased by approximately 8%, or \$19.5 million, compared to the 2017 period. Research and Development expenses were \$30.2 million compared to \$32.5 million for the corresponding 2017 period.
• On November 8, 2018, OPKO secured approximately \$150 million of additional capital, consisting of a private placement of common stock resulting in proceeds of \$92.5 million, and an unsecured credit line of \$60 million.

Business Highlights

• RAYALDEE total prescriptions reported by IMS for Q3 2018 increased 222% compared with Q3 2017 and 18% compared with Q2 2018: As of November 1, 2018, approximatley 79% of patients have access to RAYALDEE under their insurance plans.
• Initiated the Phase 2 clinical trial to study the safety and efficacy of RAYALDEE as a new treatment for secondary hyperparathyroidism (SHPT) in adults with vitamin D insufficiency and stage 5 chronic kidney disease (CKD) requiring hemodialysis. The trial will be conducted at multiple dialysis centers in the U.S. in two sequential cohorts. The first cohort of approximately 44 patients will be treated for 26 weeks in a randomized, open-label fashion with

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either RAYALDEE or placebo to identify the appropriate dosing to be studied in the second cohort. Data readout for this first cohort is expected in 2019. The second cohort of more than 200 patients will be treated for 26 weeks in a randomized, doubleblind fashion with one of three different doses of RAYALDEE or placebo. The primary efficacy endpoint will be correction of vitamin D insufficiency and control of SHPT. Patients will then be treated with RAYALDEE for another 26 weeks in an openlabel extension.

• 4Kscore utilization in Q3 2018 was approximately 18,700 tests compared to 18,900 during Q3 2017. Utilization of the 4Kscore remains strong while we continue to work with our Medicare administrator, Novitas, on their proposed local coverage determination. During this process, Novitas has continued to provide coverage of the 4Kscore to Medicare beneficiaries.
• Completed the enrollment of a Global Phase 3 study of somatrogon (hGH-CTP) in Growth Hormone Deficient Children: The somatrogon Phase 3 trial is a randomized, open-label study comparing once-weekly somatrogon to once daily Genotropin®. This study has enrolled 228 treatment naïve children with growth hormone deficiency (GHD) in 21 countries. The primary endpoint of the trial is height velocity at 52 weeks. Secondary endpoints are safety and pharmacodynamics.
• • Enrollment in Japanese Phase 3 registration trial of somatrogon in growth hormone deficient children expected to complete by year end: The global and Japanese pediatric studies utilize the multiple dose pen device that will be launched commercially upon approval.
• Completed the enrollment of a Phase 2b clinical trial for our once-weekly oxyntomodulin dual GLP1-Glucagon agonist to treat type 2 diabetes and obesity: In a previous Phase 2 trial in 420 overweight patients with type 2 diabetes, the drug was shown to be safe and effective. The current trial is to study a new dosing schedule to achieve even greater weight loss and topline results are anticipated during 1Q 2019.
• Advanced the Phase 2b trial for our SARM (selective androgen receptor modulator) to treat benign prostatic hyperplasia (BPH): Enrollment of approximately 110-120 patients in this dose ranging study of our orally administered SARM is expected to be completed by the end of this year.
• Premarket Approval (PMA) application for Claros® point-of-care PSA test under review by FDA; decision anticipated during 1H 2019: OPKO has completed a PMA submission to FDA for Sangia, our point of care PSA test utilizing the Claros 1 immunoassay analyzer. This is the first test on our proprietary diagnostic platform that can provide rapid, quantitative blood test results in the physician's office with only a finger stick drop of whole blood. Several biomarkers and biological meaningful chemistry tests such as testosterone and Vitamin D utilizing the Claros platform are advancing toward a 510(k) submission to the FDA.

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 4:15 p.m. Eastern time today. The conference call dial-in and webcast information is as follows:

WHEN: Friday, November 9, 2018 at 4:15 p.m. Eastern time DOMESTIC DIAL-IN: (866) 634-2258 INTERNATIONAL DIAL-IN: (330) 863-3454 PASSCODE: 3487296 WEBCAST: www.investor.opko.com/events

For those unable to participate in the live conference call or webcast, a replay will be available beginning November 9, 2018 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: 3487296. The replay can be accessed for a period of time on OPKO's website at www.investor.opko.com/events.

About OPKO Health, Inc.

OPKO Health is a diversified healthcare company. In diagnostics, its BioReference Laboratories is the nation's third largest clinical laboratory; GeneDx is a rapidly growing genetic testing business; the 4Kscore® prostate cancer test is used to confirm an elevated PSA to help decide about next steps such as prostate biopsy; Claros® 1 is a point of care diagnostics platform with PSA and testosterone as the most advanced in development. In our pharmaceutical pipeline, RAYALDEE is our first pharmaceutical product to be marketed. OPK88003, a once weekly oxyntomodulin for type 2 diabetes and obesity in Phase 2 clinical trials, is among a new class of GLP-1 – glucagon receptor dual agonists. OPK88004, a SARM (Selective Androgen Receptor Modulator) for treating BPH (Benign Prostatic Hypertrophy), urinary incontinence, and other conditions, is in clinical trials. The Company's most advanced product utilizing its CTP technology, a once weekly human growth hormone for injection, is in Phase 3 trials, and is partnered with Pfizer. OPKO has research, development, production and distribution facilities abroad. More information is available at www.opko.com.

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, our product development ef orts and the expected benefits of our products, including whether our 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 Novitas will continue to provide coverage of the 4kscore test for Medicare beneficiaries, whether OPK88004 will improve the symptoms of BPH by reducing prostate size and increase muscle mass and bone strength and decrease body fat, whether OP88003 will be shown to be safe and ef ective and achieve even greater weight loss, the expected timing for launch of our products in development, the expected timing of commencing and concluding our clinical trials, expected enrollment in clinical trials, the timing of our regulatory submissions, our ability to market and sell any of our products in development, and expectations about developing RAYALDEE for dialysis patients, as well as other non-historical 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 dif er 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 in our other filings with the Securities and Exchange Commission, as well as the success of our relationship with Pfizer and our other partners, integration challenges for Bio-Reference, EirGen, Transition, and other acquired businesses, liquidity issues and the risks inherent in funding, developing and obtaining regulatory approvals of new, commerciallyviable and competitive products and treatments, that earlier clinical results of ef ectiveness and safety may not be reproducible or indicative of future results, that the 4Kscore, RAYALDEE, hGH-CTP, OPK88003, OPK88004, and/or any of our compounds or diagnostic products under development may fail, may not achieve the expected results or ef ectiveness 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 ef ective than our products for the indications being studied. In addition, forward-looking statements may also be adversely af ected 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 safeharbor provisions of the PSLRA.

CONTACTS:

Investors

LHA Investor Relations Miriam W. Miller, 212-838-3777 MMiller@lhai.com or Bruce Voss, 310-691-7100 bvoss@lhai.com

—Tables to Follow—

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

	As of
	September 30, 2018		December 31, 2017
Assets:
Cash, cash equivalents and marketable securities	\$	43.7	\$	91.5
Other current assets		246.1		257.4
Total Current Assets		289.8		348.9
In-process Research and Development and Goodwill		1,360.0		1,364.4
Other assets		831.2		876.7
Total Assets	\$	2,481.0	\$	2,590.0
Liabilities and Equity:
Current liabilities	\$	286.9	\$	316.5
2033 Senior Notes and 5% Convertible Notes		87.6		29.2
Deferred tax liabilities		134.1		148.7
Other long-term liabilities, principally deferred revenue, contingent consideration and lines of credit		183.8		240.0
Total Liabilities		692.4		734.4
Equity		1,788.6		1,855.6
Total Liabilities and Equity	\$	2,481.0	\$	2,590.0

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

	For the three months ended September 30,			For the nine months ended September 30,
		2018	2017	2018	2017
Revenues
Revenue from services	\$	202.8	\$200.9	\$630.2	\$	663.3
Revenue from products		25.4	22.8	81.8		74.0
Revenue from transfer of intellectual property		21.6	22.3	56.4		67.7
Total revenues		249.8	246.0	768.4		805.0
Costs and expenses
Cost of revenues		150.9	151.3	455.1		463.5
Selling, general and administrative		84.1	103.2	263.2		318.7
Research and development		30.2	32.5	92.3		92.2
Contingent consideration		1.2	(11.20)	(12.40)		(4.50)
Amortization of intangible assets		16.9	18.0	51.4		53.9
Total Costs and expenses		283.3	293.8	849.6		923.8
Operating loss		(33.50)	(47.80)	(81.20)		(118.80)
Other income and (expense), net		(3.90)	(8.50)	5.4		1.0
Loss before income taxes and investment losses		(37.40)	(56.30)	(75.80)		(117.80)
Income tax benefit (provision)		11.6	24.4	10.4		42.3
Income (loss) before investment losses		(25.80)	(31.90)	(65.40)		(75.50)
Loss from investments in investees		(1.90)	(4.00)	(11.60)		(11.80)
Net loss	\$	(27.70)	\$ (35.90)	\$ (77.00)	\$	(87.30)
Loss per share, basic and diluted	\$	(0.050)	\$ (0.060)	\$ (0.140)	\$	(0.160)

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OPKO Health to Announce Third Quarter 2018 Financial Results on November 9, 2018

MIAMI (November 8, 2018) – OPKO Health, Inc. (NASDAQ: OPK) plans to announce its operating and financial results for the three and nine months ended September 30, 2018 after the close of the U.S. financial markets on Friday, November 9, 2018.

OPKO's senior management will provide a business update and discuss its financial results for the quarter ended September 30, 2018, as well as provide guidance on expected revenues and operating expenses for the fourth quarter 2018 in a live conference call and audio webcast beginning at 4:15 p.m. Eastern time on Friday, November 9, 2018.

Conference Call & Webcast Information

WHEN: Friday, November 9, 2018 at 4:15 p.m. Eastern time DOMESTIC DIAL-IN: (866) 634-2258 INTERNATIONAL DIAL-IN: (330) 863-3454 PASSCODE: 3487296 WEBCAST: www.investor.opko.com/events

For those unable to participate in the live conference call or webcast, a replay will be available beginning November 9, 2018 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: 3487296. The replay can be accessed for a period of time on OPKO's website at www.investor.opko.com/events.

About OPKO Health, Inc.

OPKO Health is a diversified healthcare company. In diagnostics, its BioReference Laboratories is the nation's third largest clinical laboratory; GeneDx is a rapidly growing genetic testing business; the 4Kscore® prostate cancer test is used to confirm an elevated PSA to help decide about next steps such as prostate biopsy; Claros® 1 is a point of care diagnostics platform with PSA and testosterone as the most advanced in development. In our pharmaceutical pipeline, RAYALDEE is our first pharmaceutical product to be marketed. OPK88003, a once weekly oxyntomodulin for type 2 diabetes and obesity in Phase 2 clinical trials, is among a new class of GLP-1 glucagon receptor dual agonists. OPK88004, a SARM (Selective Androgen Receptor Modulator) for treating BPH (Benign Prostatic Hypertrophy), urinary incontinence and other conditions is in clinical trials. The Company's most advanced product utilizing its CTP technology, a once-weekly human growth hormone for injection, is in Phase 3 trials and is partnered with Pfizer.

OPKO has research, development, production and distribution facilities abroad. More information is available at www.opko.com.

CONTACTS:

Investors LHA Investor Relations Miriam Weber Miller, 212-838-3777 MMiller@lhai.com or Bruce Voss, 310-691-7100 bvoss@lhai.com

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