OPKO Health Q2 2024 Highlights and Financial Results

OPKO Health, Inc. (NASDAQ: OPK), a multinational biopharmaceutical and diagnostics company, recently released its business highlights and financial results for the three and six months ended June 30, 2024. Key developments during the second quarter and recent weeks are as follows:

The company has commenced enrollment in the MDX2001 Phase 1 trial for treating solid tumor cancers. MDX2001 is a tetraspecific antibody designed to enhance T-cell function, promoting tumor regression while minimizing antigen escape. This open-label Phase 1 trial aims to enroll 45 cancer patients across six clinical trial sites to assess safety, tolerability, pharmacokinetics, and early anti-tumor activity.

In collaboration with Pfizer, OPKO continues the global commercial launch of NGENLA®, which has now been released in all major markets. OPKO benefits from gross profit sharing based on sales of both NGENLA and Pfizer’s Genotropin®, a daily growth hormone product. Additionally, OPKO stands to earn up to $100 million in milestone payments contingent on approvals for an adult indication for growth hormone deficiency and further pediatric indications.

OPKO has also entered into a $250 million note purchase agreement with HealthCare Royalty, secured by profit share payments linked to NGENLA. This agreement allows OPKO to retain a substantial portion of profit share payments from Pfizer in the near term, with potential long-term upside. The company is also entitled to the full $100 million in potential milestone payments.

Further, OPKO’s Board of Directors has approved a $100 million share repurchase program. This allows the company to buy back shares of its common stock through various methods, including open market purchases and privately negotiated transactions, in compliance with applicable laws. As of June 30, 2024, OPKO had approximately 697 million shares outstanding, with the new authorization representing roughly 10.1% of the shares at the announcement's stock price.

The sale of certain assets of BioReference Health is anticipated to close towards the end of the third quarter. OPKO agreed in March 2024 to sell BioReference Health’s laboratory testing businesses focused on clinical diagnostics and women’s health, except for operations in New York and New Jersey, for $237.5 million. BioReference Health will continue offering oncology and urology diagnostic services nationwide and maintain full operations in New York and New Jersey. In 2023, the continuing operations accounted for over $400 million in net sales. This transaction is expected to streamline BioReference Health's laboratory services business, better positioning the division for sustained growth and profitability.

Second Quarter Financial Results:

In the Pharmaceuticals segment, revenue from products in Q2 2024 was $40.5 million, down from $43.5 million in Q2 2023, mainly due to lower international sales affected by currency exchange fluctuations. Revenue from Rayaldee was $7.2 million, compared to $7.7 million in the same period in 2023. Revenue from the transfer of intellectual property and other sources was $12.3 million, including $5.0 million from the BARDA contract, a significant decrease from $94.9 million in Q2 2023, which included a $90.0 million milestone payment from the FDA approval of NGENLA. Gross profit share and royalty payments for NGENLA and Genotropin increased to $6.3 million, up from $3.8 million in Q2 2023. Total costs and expenses rose to $77.6 million from $74.7 million in the prior year, due to higher R&D expenses. The operating loss for Q2 2024 was $24.8 million, including $17.9 million in depreciation and amortization, compared to an operating income of $63.6 million in Q2 2023.

In the Diagnostics segment, revenue from services in Q2 2024 was $129.4 million, up from $127.0 million in Q2 2023, primarily due to higher clinical test reimbursements, offset by lower test volumes. Total costs and expenses decreased to $156.0 million in Q2 2024 from $171.3 million in Q2 2023, reflecting ongoing cost-reduction efforts. Operating loss improved to $26.6 million in Q2 2024 from $44.3 million in Q2 2023.

Consolidated total revenues for Q2 2024 were $182.2 million, down from $265.4 million in Q2 2023. The operating loss was $61.7 million, compared to an operating income of $7.0 million in Q2 2023. Net loss for Q2 2024 was $10.3 million, or $0.01 per share, compared to a net loss of $19.6 million, or $0.03 per share, in Q2 2023.

As of June 30, 2024, cash and cash equivalents stood at $40.6 million, with investments holding a market value of $101.5 million, primarily from GeneDx holdings. Subsequent to the quarter, OPKO entered a $250 million note purchase agreement secured by profit share payments from Pfizer related to NGENLA. The company is also due to receive $237.5 million upon the expected closure of the Labcorp transaction by the end of Q3 2024.