On November 8, 2022 OPKO Health, Inc. (NASDAQ: OPK) reported that business highlights and financial results for the three months ended September 30, 2022 (Press release, Opko Health, NOV 8, 2022, View Source [SID1234623396]).
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Business highlights for the third quarter of 2022 and subsequent weeks include the following:
Pfizer’s NGENLA (somatrogon) launched in Japan, Germany and other global markets; Pfizer seeking pricing approvals in additional European countries and continuing to work with FDA to obtain approval in the U.S. NGENLA treats pediatric patients with decreased growth due to insufficient growth hormone and reduces the injection frequency from once daily to once weekly. NGENLA is the first once weekly product approved for the treatment of pediatric growth hormone deficiency in Japan, Canada, Australia, Taiwan, UAE and Brazil. Its European Union marketing authorization is valid in all EU Member States as well as Iceland, Norway and Liechtenstein. In Australia, NGENLA is now offered through the Pharmaceutical Benefits Scheme, Australia’s national drug subsidy program.
ModeX Therapeutics, Inc. (ModeX) progresses proprietary immunotherapy pipeline. ModeX continues to advance its pipeline of antiviral and immune-oncology products utilizing its next generation multispecific antibodies. In addition, ModeX is pursuing potential licensing and collaboration arrangements with strategic partners for certain of its early stage pipeline candidates.
Innovation and cost cutting efforts continue at BioReference Laboratories (BRL). BRL continues significant cost reduction and business rationalization efforts following the decline of COVID testing volume. These efforts have resulted in a reduction of more than $100 million in annualized costs to date. Furthermore, BRL is exploring other revenue sources to work toward returning BRL to profitability.
Third Quarter Financial Results
Pharmaceuticals: Revenue in the third quarter of 2022 decreased to $32.4 million from $36.9 million in the third quarter of 2021, driven by foreign currency exchange and lower sales of RAYALDEE. During the third quarter of 2022, OPKO received gross profit share and royalty payments from Pfizer related to sales of NGENLA. We expect these payments to increase as Pfizer receives additional pricing approvals and launches the product in other geographies. Revenue from sales of RAYALDEE in the third quarter of 2022 was $6.9 million compared with $8.5 million in the prior-year period; however, we also began to receive royalty payments from sales of RAYALDEE by CSL Vifor in Germany and Switzerland during the third quarter of 2022. We expect these payments to increase as CSL Vifor launches RAYALDEE in additional territories throughout Europe. There were several significant events that positively impacted third quarter 2021 results, and should be considered when comparing those results to 2022. Revenue from the transfer of intellectual property was $4.5 million in the third quarter of 2022 compared with $8.8 million in the 2021 period. The third quarter of 2021 also included $4.9 million related to an exclusive license agreement with CAMP4 Therapeutics Corp. and $1.0 million due to the joint venture with LeaderMed Health Group Ltd. Total costs and expenses were $65.2 million in the third quarter of 2022 compared with $17.0 million in the prior-year period, which included a $31.5 million gain on the sale of OPKO’s fill-finish manufacturing facility in Ireland to Horizon Therapeutics. In addition, the increase in total costs and expenses in the third quarter of 2022 was primarily attributable to higher amortization expenses related to the reclassification of NGENLA’s in-process research and development upon its approval in Europe and Japan, higher employee expenses associated with the ModeX acquisition and higher research and development costs for somatrogon, partially offset by foreign currency exchange. The operating loss of $28.3 million in the third quarter of 2022 compared to operating income of $28.6 million in the third quarter of 2021 reflects these events.
Diagnostics: Revenue from services in the third quarter of 2022 was $142.8 million compared with $340.1 million in the prior-year period, the decrease primarily due to lower COVID-19 testing volume. BRL processed approximately 0.2 million COVID-19 PCR tests in the third quarter of 2022 versus 2.2 million tests in the third quarter of 2021. Total costs and expenses were $192.3 million in the third quarter of 2022 compared with $320.5 million in the third quarter of 2021, resulting in an operating loss of $49.5 million compared with operating income of $19.7 million in the 2021 period. BRL continues to implement significant cost-reduction initiatives and scaled back digital health investments as it looks to return to profitability following the buildup and then decline of COVID-related testing. The third quarter of 2022 included $5.1 million in severance costs as the company reduced employee costs on an annualized basis by over $46 million.
Consolidated: Consolidated total revenues for the third quarter of 2022 were $179.7 million compared with $385.8 million for the comparable period of 2021. Operating loss for the third quarter of 2022 was $87.8 million compared with operating income of $37.8 million for the 2021 quarter. Net loss for the third quarter of 2022 was $86.1 million, or $0.11 per share, compared with net income of $28.7 million, or $0.04 per diluted share, for the 2021 quarter. Net loss for the third quarter of 2022 included a non-cash expense of $30.6 million due to a decrease in the fair value of OPKO’s Sema4 investment, while the comparable quarter of 2021 included a $31.5 million gain on the sale of the facility in Ireland.
Cash and cash equivalents: Cash and cash equivalents were $180.8 million as of September 30, 2022.
Conference Call and Webcast Information
OPKO’s senior management will provide a business update, discuss third quarter financial results and answer questions during a conference call and live audio webcast today beginning at 4:30 p.m. Eastern time. Participants are encouraged to pre-register for the conference call using this link. Callers who pre-register will receive a unique PIN to gain immediate access to the call and bypass the live operator. Participants may register at any time, including up to and after the call start time. Those unable to pre-register may participate by dialing (833) 630-0584 (U.S.) or (412) 317-1815 (International). A webcast of the call can also be accessed at OPKO’s Investor Relations page and here.
A telephone replay will be available until November 15, 2022 by dialing (877) 344-7529 (U.S.) or (412) 317-0088 (International) and providing the passcode 5757952. A webcast replay will be available beginning approximately one hour after the completion of the live conference call here.