Opko Health Inc. (OPK) Announces 3Q:17 Financial Results; Shares Tumble

Opko Health Inc. (NASDAQ:OPK) reports operating and financial results for the three months ended September 30, 2017.

Business Highlights

  • RAYALDEE commercial activities continue to progress:  Total prescriptions for RAYALDEE, as reported by IMS, increased 66% during the three months ended September 30, 2017 compared to the three months ended June 30, 2017.  OPKO expanded its field based sales force from 35 to 71 as of October 1st.  The commercial and medical science liaison teams now total more than 80 professionals.  In early November 2017, OPKO participated in the American Society of Nephrology meeting, the largest nephrology meeting of the year, and presented four posters highlighting the impact of RAYADEE in Stage 3 and Stage 4 chronic kidney disease patients.
  • Exclusive Agreement with Japan Tobacco (JT) to Develop and Commercialize RAYALDEE in Japan:  Under the terms of the agreement, JT made an upfront payment to OPKO of $6 million with another $6 million payment to be made upon initiation of OPKO’s planned phase 2 study of RAYALDEE in U.S. dialysis patients. In addition, OPKO will be eligible to receive up to an additional $31 million in development and regulatory milestones and $75 million in sales based milestones. JT will also pay OPKO tiered, double-digit royalties on net product sales. JT will be responsible for all regulatory approvals and commercial activities pertaining to RAYALDEE in Japan.  According to JT, an estimated 13.3 million people in Japan have CKD and more than 300,000 are undergoing dialysis, with both patient populations increasing due to the aging population.
  • 4Kscore® utilization increased 19% in Q3 2017 compared with Q3 2016:  OPKO has undertaken a number of initiatives to drive utilization of the 4Kscore test, the Company’s blood test that gives a man with elevated PSA levels a personalized prediction of his chance of having or developing an aggressive form of prostate cancer.  In addition to developing a small urology-focused sales force to complement BioReference Laboratories’ efforts, OPKO will launch regional television ads in the Northeast for the 4Kscore test beginning on November 21, 2017.
  • PMA filing for Claros PSA test submitted November 6, 2017; Claros POC testosterone test trials and 510(k) filing expected to follow in 2018: OPKO completed its analytic and clinical validation studies and submitted a PMA for a PSA test utilizing the Claros 1 immunoassay analyzer, a novel diagnostic instrument that can provide rapid, quantitative blood test results in 10 minutes in the physician’s office with only a finger stick drop of whole blood.  OPKO expects to begin an additional multi-center study of its POC testosterone test in 2018 followed by a 510(k) submission to the FDA.
  • Global pediatric Phase 3 hGH-CTP in 220 growth hormone deficient children is underway and we continue enrolling patients:  This is a pivotal, non-inferiority study comparing a single weekly dose of hGH-CTP with daily injections of a currently marketed growth hormone.  A registration trial in pediatric patients is also underway in Japan. These studies are using the to-be-marketed pen device and formulation that will be launched commercially upon approval.  The pediatric segment represents approximately 80% of the commercial market for treatment of hGH deficiency.
  • Phase 2a trial for intravenously administered Factor VII-CTP and Phase 1 trial for subcutaneously administered Factor VII-CTP ongoing:  These long acting forms of Factor VII utilizing OPKO’s CTP technology are expected to better support prophylaxis to prevent bleeding episodes, provide easier administration and decrease dosing frequency for hemophilia patients.
  • Initiation of four Phase 2 clinical trials anticipated in late 2017 and early 2018
    • RAYALDEE line extension in dialysis patients with secondary hyperparathyroidism (SHPT):  Together with its partner, Vifor Fresenius, OPKO is developing RAYALDEE for Stage 5 chronic kidney disease (CKD) patients with SHPT undergoing dialysis and anticipates initiating a Phase 2 trial shortly in dialysis centers around the country and abroad.
    • OPK88004, orally administered selective androgen receptor modulator (SARM): OPKO plans to initiate a Phase 2b dose ranging study in Q4 2017 to evaluate its use to treat men with benign prostatic hypertrophy (BPH).  It is expected to improve symptoms of BPH by reducing prostate size and, on the basis of data from a previous trial in 350 men, increase muscle mass and bone strength and decrease fat mass.   BPH affects approximately 50 million men in the U.S.
    • OPK88003, once weekly oxyntomodulin dual GLP1-Glucagon agonist for type 2 diabetes and obesity:  In a 420 patient phase 2 diabetes trial,  OPK88003 treatment reduced HbA1c levels to a similar extent as Exenetide Extended Release (Ex ER). The drug also showed statistically significantly greater weight loss, and lowering of cholesterol and triglycerides compared to once weekly Ex ER. The drug has a good safety profile and is expected to enter a phase 2b dose escalation study in early 2018.
    • OPK88002, NK-1 antagonist to treat pruritus (itching) in Stage 5 CKD patients undergoing dialysis:  Approximately 50% of renal dialysis patients experience difficult to control pruritus.  An IND was approved and plans are now being finalized to begin a single dose Phase 2a trial of OPK88002.

Financial Highlights

  • Consolidated revenues for the three months ended September 30, 2017 were $263.5 million compared to $298.0 million for the comparable period of 2016.
  • During the three months ended September 30, 2017, operating expenses included significant investment in the commercial activities supporting the launch of RAYALDEE of $8.3 million,  as well as continued investment in the Company’s pharmaceutical pipeline with R&D expense increasing to $32.3 million.
  • Cash, cash equivalents and marketable securities were $100.3 million as of September 30, 2017.

Shares of Opko Health are down nearly 12% to $5.78 in after-hours trading Wednesday. OPK has a 1-year high of $12.15 and a 1-year low of $5.85. The stock’s 50-day moving average is $6.77 and its 200-day moving average is $6.59.

On the ratings front, OPK stock has been the subject of a number of recent research reports. In a report issued on October 25, Cantor analyst Louise Chen assigned a Buy rating on OPK, with a price target of $20.00, which represents a potential upside of 205% from where the stock is currently trading. On October 20, Jefferies’ Brandon Couillard reiterated a Hold rating on the stock and has a price target of $6.50.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Louise Chen and Brandon Couillard have a yearly average loss of 10.3% and a return of 27.9% respectively. Chen has a success rate of 38% and is ranked #4620 out of 4707 analysts, while Couillard has a success rate of 78% and is ranked #20.

OPKO Health, Inc. is a diversified healthcare company. It operates through the Diagnostics and Pharmaceuticals segments. The Diagnostics segment comprises clinical laboratory operations which acquired through the Bio-Reference and point-of-care operations. The Pharmaceuticals segment includes the pharmaceutical operations acquired in Chile, Mexico, Ireland, Israel, and Spain; and pharmaceutical research and development operations.

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