On May 9, 2022 OPKO Health, Inc. (NASDAQ: OPK) reported business highlights and financial results for the three months ended March 31, 2022 (Press release, Opko Health, MAY 9, 2022, View Source [SID1234613922]).

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Business Highlights

Business highlights for the first quarter of 2022 and subsequent weeks include the following:

Acquired ModeX Therapeutics, Inc. (ModeX), gains proprietary immunotherapy technology, new executives and Directors. ModeX is a privately held biotechnology company focused on developing innovative multi-specific immune therapies for cancer and infectious diseases. In connection with the acquisition, Dr. Elias Zerhouni joins OPKO as President and Vice Chairman of the Board of Directors, Dr. Gary Nabel joins as Chief Innovation Officer and a member of OPKO’s Board of Directors, and Alexis Borisy joins OPKO’s Board. OPKO acquired ModeX for $300 million in OPKO common stock.

Completed sale of GeneDx LLC (formerly GeneDx, Inc.) to Sema4 Holdings Corp. (Sema4). Sema4 acquired GeneDx for an upfront payment of $150 million in cash, subject to adjustments, plus 80 million shares of Sema4 Class A common stock, with up to an additional $150 million in revenue-based milestones over the next two years (payable in cash or Sema4 shares at Sema4’s discretion). Based on the closing price of Sema4’s Class A common stock on April 29, 2022, the date the transaction closed, the total upfront consideration is approximately $322 million and the total aggregate consideration including potential milestones is approximately $472 million.

Pfizer launched NGENLA (Somatrogon) injection in Germany, Japan and additional markets. NGENLA was granted marketing authorization by the Ministry of Health, Labour and Welfare in Japan and by the European Commission in January and February of this year, respectively. With the achievement of these milestones, OPKO earned an aggregate of $85 million in milestone payments. NGENLA is a once-weekly injection to treat pediatric patients with growth disturbance due to insufficient secretion of growth hormone. NGENLA provides pediatric patients, their caregivers and healthcare providers with a new treatment option for growth hormone deficiency that reduces the frequency of required injections from once-daily to once-weekly. Pfizer is OPKO’s global commercial partner for Somatrogon.

Vifor Fresenius Medical Care Renal Pharma (VFMCRP) launched RAYALDEE in Germany, and subsequently in Switzerland. VFMCRP initiated the commercial launch of RAYALDEE (extended-release calcifediol) in Germany, the first launch of RAYALDEE outside the U.S. VFMCRP is OPKO’s commercial partner for RAYALDEE in Europe and selected markets outside the U.S. VFMCRP has received marketing authorizations for RAYALDEE in 11 European countries and expects to launch the product in additional markets.
First Quarter Financial Results

Diagnostics: Revenue from services in the first quarter of 2022 was $286.6 million compared with $507.0 million in the prior-year period, with the decrease primarily due to lower COVID-19 testing volume and related reimbursement, partially offset by an improvement in genomic test reimbursement and an increase in clinical and genomic test volumes. BioReference processed approximately 2.0 million COVID-19 PCR tests in the first quarter of 2022 versus 4.1 million in the first quarter of 2021. Total costs and expenses were $330.1 million in the first quarter of 2022 compared with $439.9 million in the first quarter of 2021, resulting in an operating loss of $43.5 million compared with operating income of $67.0 million in the 2021 period. Operating income decreased primarily due to a decline in the volume of COVID-19 tests.

Pharmaceuticals: Revenue from products in the first quarter of 2022 increased to $36.6 million from $33.9 million in the first quarter of 2021, with the increase primarily attributable to accelerating growth of OPKO’s international pharmaceutical businesses. Revenue from sales of RAYALDEE in the first quarter of 2022 was $5.1 million compared with $5.8 million in the prior-year period. Revenue from the transfer of intellectual property was $6.0 million in the first quarter of 2022 compared with $4.3 million in the 2021 period. During the first quarter of 2022, OPKO recognized a $3.0 million sales milestone from VFMCRP triggered by the first commercial sales in Europe. Total costs and expenses were $60.7 million in the first quarter of 2022 compared with $57.4 million in the prior-year period. The increase was driven by the amortization of NGENLA, which received approval in Europe and Japan during the first quarter of 2022, offset by a reduction in inventory reserve, legal expenses and selling expenses related to RAYALDEE. In addition, research and development expenses decreased reflecting reduced spending on the NGENLA development program. The operating loss was $18.1 million in the first quarter of 2022 compared with an operating loss of $19.2 million in the first quarter of 2021.

Consolidated: Consolidated total revenues for the first quarter of 2022 were $329.2 million compared with $545.2 million for the comparable period of 2021. Operating loss for the first quarter of 2022 was $72.4 million compared with operating income of $38.5 million for the 2021 quarter. Net loss for the first quarter of 2022 was $55.4 million, or $0.08 per share, compared with net income of $31.1 million, or $0.05 per diluted share, for the 2021 quarter.

Cash and equivalents: Cash and cash equivalents were $102.3 million as of March 31, 2022. In addition, OPKO has $64.8 million available under its line of credit with JP Morgan. Subsequent to the close of the quarter, OPKO received $150 million gross proceeds from the sale of GeneDx to Sema4. Also, OPKO expects to receive $85 million in milestone payments from Pfizer during the second quarter of 2022.
CONFERENCE CALL & WEBCAST INFORMATION

OPKO’s senior management will provide a business update, discuss first quarter financial results and the ModeX acquisition, 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 be given a unique PIN to gain immediate access to the call and bypass the live operator. Those unable to pre-register may participate by dialing (866) 777-2509 (U.S.) or (412) 317-5413 (International). A webcast of the call may also be accessed at OPKO’s Investor Relations page and here.

A telephone replay will be available until May 16, 2022 by dialing (877) 344-7529 (U.S.) or (412) 317-0088 (International) and providing the passcode 6587528. A webcast replay will be available beginning approximately one hour after the completion of the live conference call here.