On February 29, 2016 OPKO Health, Inc. (NYSE:OPK), a multinational biopharmaceutical and diagnostics company, reported financial and operating results for the three months and year ended December 31, 2015 (Filing, Q4, Opko Health, 2015, FEB 29, 2016, View Source [SID:1234509286]).

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Business Highlights

Clinical Utility Study Demonstrates 4Kscore Test Reduces Unnecessary Prostate Biopsies While Improving Risk Prediction for Aggressive Prostate Cancer: The results of a 611 patient peer-reviewed study, "The 4Kscore Test Reduces Prostate Biopsy Rates in Community and Academic Urology Practices", written by Badrinath Konety, MD, et al. (Reviews in Urology, January 2016), indicated that the 4Kscore test led to 65% fewer prostate biopsies being performed among participating patients and influenced approximately 89% of decisions about performing a prostate biopsy. A higher 4Kscore test result was significantly associated with a greater likelihood of having a prostate biopsy.

4Kscore Blood Test to Identify Risk of Aggressive Prostate Cancer Assigned a Level 1 CPT Code: The American Medical Association (AMA) Current Procedural Terminology (CPT) Editorial Panel granted a Category I CPT code which will be effective in January 2017 for OPKO’s 4Kscore Test, the only blood test that accurately identifies an individual patient’s risk for aggressive prostate cancer. A Category I CPT code is a designation reserved for established diagnostic tests, and will provide broader access to the 4Kscore Test to urologists and their patients across the United States.

Rayaldee PDUFA Date Remains on Track for 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.

Topline Phase 3 Results for hGH-CTP in Adults Expected 2H 2016; Pediatric Phase 3 Initiation Anticipated in 2H 2016: The Phase 3 trial in adults 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 growth hormone deficiency (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. A Phase 3 trial in pediatric patients is anticipated to commence in 2H 2016.

First Patient Dosed in Phase 2a Clinical Trial of Long Acting Factor VIIa for the Treatment of Hemophilia: In February 2016, the first patient was dosed in OPKO’s Phase 2a clinical trial of its long acting Factor VIIa, a dose escalation study to determine safety and explore efficacy endpoints of OPKO’s long acting form of coagulation Factor VIIa (Factor VIIa-CTP) for the treatment of bleeding episodes in hemophilia A or B patients with inhibitors to Factor VIII or Factor IX. The study will enroll 24 patients in the United States.

Clinical Studies for Long Acting Oxyntomodulin for Obesity and Diabetes Expected to Begin: 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 Commenced in November 2015: 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 commenced commercial sales in the U.S. in November 2015 and expects to submit its Marketing Authorization Application to the European Medicines Agency for oral VARUBI in Q2. 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. OPKO is eligible to receive up to $95 million in additional milestones and tiered, double-digit royalties.

Varubi (Rolapitant) IV Formulation NDA Submission. TESARO expects to submit NDA for IV formulation of Varubi in Q1.

"We made great progress during 2015," stated Phillip Frost, M.D., Chairman and Chief Executive Officer of OPKO. "We have recently begun to expand the marketing and sales of our 4Kscore Test utilizing the commercial infrastructure of Bio-Reference, with very promising results. As we obtain broad reimbursement for the 4Kscore Test, we believe patients, providers and insurers will realize the benefits of this test in 2016 and beyond. We are now preparing for our launch of Rayaldee for treatment of SHPT in patients with stage 3 or 4 CKD later this year. Our commercial partner, TESARO, launched VARUBI late in 2015 and the launch is progressing as expected. Our collaboration with Pfizer is on track and we expect to have topline data for our ongoing Phase 3 clinical trial for hGH-CTP in adults later this year and expect to initiate the pivotal clinical trial for the pediatric indication later this year. We continue to pursue other development programs as well and, earlier this month, initiated a clinical study utilizing our CTP platform technology for our long-acting Factor VIIa project. We expect to begin a Phase 1 clinical trial for long acting oxyntomodulin next month," Dr. Frost continued.

Financial Highlights

Consolidated revenues increased to $276.2 million from $25.5 million for the three months ended December 31, 2015 compared to the 2014 period, and increased to $491.7 million from $91.1 million for the year ended December 31, 2015 as compared to 2014. The 2015 periods include revenue from Bio-Reference and EirGen beginning with their acquisitions in August and May 2015, respectively. Revenue for the three months and year ended December 31, 2015 also includes $17.7 million and $65.5 million, respectively, from OPKO’s collaboration with Pfizer. The 2015 periods also include a $15.0 million milestone payment from TESARO related to the launch of VARUBI in November 2015.

Net income for the three months ended December 31, 2015 was $1.6 million compared with a net loss of $53.0 million for the 2014 period and net losses for the year ended December 31, 2015 decreased to $30.0 million compared to $171.7 million for the 2014 period. In addition to the revenue related items, the 2015 three month and year periods include significant non-recurring and non-cash activities, including:

• $26.5 million and $113.7 million of income tax benefit, respectively, 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 2015;
• $15.9 million gain related to the deconsolidation of OPKO’s previously consolidated variable interest entity, SciVac, in the year ended December 31, 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,
• Other income and (expense) of ($15.9) million and ($39.5) million primarily related to the change in fair value of derivative instruments as well as a ($7.3) million temporary impairment charge of an available for sale investment in the three months and year ended December 31, 2015, respectively, compared with ($20.9) million and ($25.2) 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 $193.6 million as of December 31, 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 and cashed used by operations, principally related to our research and development expense.