OPKO Health, Inc. (OPK) Management Presents at Jefferies Virtual Healthcare Conference (Transcript)
OPKO Health, Inc. (NASDAQ:OPK) Jefferies Virtual Healthcare Conference June 3, 2020 3:00 PM ET
Company Participants
Jon Cohen - Senior Vice President
Steve Rubin - Executive Vice President
Conference Call Participants
Maury Raycroft - Jefferies
Maury Raycroft
Hi. My name is Maury Raycroft. And I'm one of the Biotech analysts at Jefferies. It's with great pleasure that I'd like to introduce the management team from OPKO here today. It's an exciting time for OPKO. They've got Phase 3 data from their growth hormone program and coming up pretty soon, this is with Pfizer today. And then there's also a lot going on in the COVID space with some of the diagnostic has seen that they're developing and launching.
So, without further ado, I'd like to turn it over to Jon Cohen and also Steve Rubin from OPKO.
Steve Rubin
Hey. Thank you, Maury, and thank you everyone for attending. This is Steve Rubin, Executive Vice President of OPKO. And some of the statements that Jon and I will be making today, of course, are forward looking, and we avail ourselves of this entire laundry list of fine print.
So, as Maury mentioned, we are a diversified company. We have some exciting things going on with both the -- on the pharmaceutical side as well as the diagnostic side. On the marketed pharmaceutical side, we have a market product called RAYALDEE, which is for chronic kidney disease; have revenues of almost $10 million in the first quarter of 2020.
We have partnered that asset with Vifor Fresenius in Europe and our entire other parts of the world. And on top of that, $837 million in milestones, and also double-digit royalties upon launch, which we expect sometime later this year. We’re also partnered in Japan with Japan Tobacco, that licensing agreement with OPKO give us about $112 million in milestones and tiered double-digit royalties.
On the pipeline side, as Maury mentioned, our most advanced compound is our long-acting human growth hormone that we have partnered with Pfizer. We created a successful Phase 3 study. We announced that back in October. We're actually presenting two abstracts at a Virtual Endocrine Society meeting in the third week of June. We also have various other drugs in under development in multiple stages of development.
On the diagnostic side, Jon Cohen will take the lead here, but it is been a pretty exciting time for us and we've done everything we can to get out on the forefront of COVID-19. It's a significant laboratory; it's the third largest reference laboratory in the U.S. at about $170 million in revenue in Q1 of 2020.
But what's been most, I think, impressive and something we're all proud of is the significant response that we've had to the COVID-19 pandemic. We've had over 1.25 million tests performed to-date. We are a leader in establishing mobile testing sites in both federal, state, and local partnerships.
And while -- certainly the COVID-19 has impacted our general lab business, quarter-to-date our volume is actually up, up actually about 10% compared to last year and for the month of May is up more than 35% higher than May of last year.
Now, we hope that continues to improve as physician's offices are reopened and people leaving the house, go back to regular testing. So, with our regular lab business and obviously the increase in COVID testing is a pretty exciting time.
So, I'll turn first of our long-acting growth hormone which is somatrogon, as I mentioned we've achieved our primary endpoints. This study was designed to be a head-to-head study against the daily -- ours is a once a week growth hormone replacement therapy and our endpoint which we’ve achieved was approved non-inferiority to the daily with respect to height velocity over a 12-month period.
So, at 12 months, our height velocity was higher in our long-acting somatrogon group, which is 10.12 centimeters year than in the genotropin or somatrogon group of 9.78 a year. We also met all of our secondary endpoints, which was changing height standard deviation at six months and 12 months change in height velocity compared to the short-acting at six months and was well-tolerated study comparable and safety in severity of any adverse events that of the current market and daily product.
We have partnered this with Pfizer. Pfizer is highly committed to maintaining its global franchise in GENOTROPIN, which is the daily -- which in 2019 sold about $498 million globally. So Pfizer is our commercial partner. They're in charge of commercializing the product, as well as manufacturing product.
Technology itself is interesting. It's a long acting. What makes it long acting is a natural peptide sequence that we all have. And so we take the native growth hormone, we add a small C-terminus peptide, which is a 28 chain amino acid, which came from the human chorionic gonadotropin hormone.
Why that's important, at least in our theory, is that it is a natural peptide which is found in the body. One of the issues that you always pay through modifying proteins is that of immunogenicity, and the body recognizes how we're modifying it. Obviously, it recognizes the native growth hormone. And we believe it will recognize the natural peptide, that’s found in human body as well. We think we can have less instances of mutagenicity.
We did very rigorous and widespread clinical trial and this is when you'll often see with Pfizer as a partner and wanting to have as much widespread commercial opportunity as possible. We did it in 83 clinical sites across 21 countries. And why is that important? Because a lot of these countries, if you want to get drug approval, you have to run some portion of your study and use some patients from that particular territory. And so as you can see from the map, that we've accomplished that a very wide geographic footprint.
A little bit on the study design, it was a one-to-one randomization. 224 subjects were rolled, we use as an open label 52 week or one-year study. We used our product at 0.66 mg per kg versus the GENOTROPIN daily 0.034 mg per kg.
And then after the trial -- and then if you had -- actually had a year of therapy, you had the opportunity to roll over into purely our drug, the study drug Somatrogon. Over 95% of the subjects you see there below have actually continuing our study and continue today. That will continue until drug approval.
Next step for approval. We expect to submit the BLA in second half of this year, hopefully late summer. One of the pending there, besides just the various amount of work on preparing BLA, is completion of the analysis of immunogenicity and safety from a pivotal Phase 3 and the open label extension.
As I mentioned earlier, we are also presenting data from two abstracts on June 8, one of which will be a summary of our results. The second will be interpreting the insulin-like growth factor, which are important from measuring both from a safety measure that can't go too high and an effective measure in normalizing insulin-like growth factor.
So the purpose again in hormone placement is actually to normalize what your body would have done. So insulin-like growth factor is a key measurement of human growth hormone, so you want to keep it at a level that shows that it's working, not going too high or too low over the one week period, and our drug is administered.
Other territories, we expect to submit in Europe. We’re completing an open label study, which is more of a questionnaire style, to demonstrate benefit of compliance with reduced treatment burden and we expect to complete that third quarter this year. And then we expect to submit for approval in Japan in the first half of 2021.
On the market today we have a nephrology product. It’s for chronic kidney disease. Chronic kidney disease is the ninth leading cause of death, ahead of both breast and prostate cancer and is continuing to rise in prevalence due largely to obesity, diabetes and hypertension.
What happens when you have chronic kidney disease, you get elevated blood levels of intact parathyroid hormone, which arise from vitamin D insufficiency? What those do is it typically from a vascular calcification because your parathyroid ask for more vitamin D, doesn't get it, it tries to take it from the bones and that is actually the major cause of morbidity and mortality.
Updating our guidelines show that you don't -- what you use today, you don't use, so we don't have a drug for dialysis patients. Those are our activated hormones, or you have a nutrition vitamin D and neither of those are proven effective in the actual drugs that are used -- dialysis can actually be dangerous.
So, what is our product is the only extended release prohormone of the active form vitamin D. So, once you have the formulation is approved by the FDA to treat secondary hyperparathyroidism in patients with Stage 3 and 4 chronic kidney disease, vitamin D insufficiency, it reduces the plasma parathyroid hormone levels which I mentioned and increases serum 25D with the safety profile very similar to placebo. And that means basically as minimal adverse effects, it doesn't increase serum calcium or phosphorus which are the key drivers of vascular calcification.
It's continued to grow nicely. Total prescriptions increased 78% in Q1 this year compared to Q1 of 2019. And it showed continual sequential growth with a 3.5% increase compared with Q4 last year despite the COVID-19 restrictions, which basically kept our salespeople at home and doctors out of the offices.
This shows a chart -- graphically shows our growth, we have over 90% cumulative annual growth rate. As you can see, even on quarterly basically continued to show increases, as I mentioned, we expect -- that we expect some impact from COVID-19, we actually had been pleasantly surprised with making so much progress.
Our commercial organization is about 80 salespeople. We have about 86% of lives covered by access insurance and Medicare without prior authorization restrictions. As I mentioned, my startup we expect Vifor Fresenius at European approvals and launch in the second half of this year.
We're also working on label expansions and this is a very important one, we have a Phase 2 open label study to study RAYALDEE in patients with dialysis or Stage 5. We commenced that in September 2018, we even roll approximately 44 patients treated for 26 weeks. We released positive interim data in March this year; we expect top line full data in the second quarter of next year. Again, of course this trial is shared with our partners Vifor Fresenius and Japan Tobacco.
Quickly I'll show growth for some of our pipeline. This is a small slide, it shows the products that are within our rare disease portfolio, which is where growth hormone came from, growth hormone deficiency is top and beyond that we have a in fact a long-acting Factor VII for hemophilia that's in the Phase 1/2, and then preclinical products for one for Acromegaly, which is too much growth hormone.
IGF-1 deficiency and that's for patients who have chosen that the receptors are damaged so you can't give them growth hormone, it's ineffective. And third is for short bowel syndrome. All significant markets, but very rare diseases we expect a little -- at least one as products in the clinical data to share next year.
With that, I’m going to turn it over to Jon to a little exciting part of today's talk that we going on, on COVID to talk about our reference lab. Jon?
Jon Cohen
Thanks Steve. Thanks everybody. So, just in terms of move by references, again, we are one of the very few national commercial laboratories serving all 50 states. We were doing 40,000 requisitions daily. I believe we'll see those numbers begin to go up from there related to COVID testing. We have about 4,000 employees. We're serving about 11 million patients annually with the -- about 1.5 pickups a year and 475 plus fleet -- cars in our fleet.
Next slide Steve. So I want to reiterate what we've talked about before, what I've talked about before relative to our focused areas and tell you where we are with those. One is the targeted expertise for physicians. Second pillar is our strategic partnerships. And the third is, what are we doing with -- how we relate better to patients and empowering patients. Next slide.
So if we look at the target areas for physicians, we continue to make significant investments and continue to really lean-in on the areas of oncology, cancer diagnostics, urology, which of course includes 4k score, and women's health. The fourth is genetics as related to GeneDx, which I've talked about in the past. But if you look at those four areas; oncology, urology, women's health and genetics, in addition to being a full service laboratory those are the areas of concentration.
Next slide. So the second area which I talked about; Strategic Collaborations, I've alluded to the fact that we have several in the pipeline during my last discussions and we just recently announced though, one of our largest deals ever, where we're going to be the partner with Westchester Medical Center Health Network -- Health System. It encompasses 10 hospitals within the Hudson Valley, serves millions of people up in the Hudson Valley and conservatively between the Westchester County Medical Center and its other hospitals including a pediatric hospital does have a conservatively about 10 -- 7 million tests a year.
What our relationship with them is, is we're going to provide administrative services for the laboratory, which will help them really make the laboratory much more efficient.
Look at how they are delivering services in the past and see how much we can improve them. In addition, we will have a major impact on what laboratory equipment and supplies they purchase, which platforms they use. And again, how do we drive a significant efficiency through the laboratory services.
As part of this arrangement with the Westchester County Medical Center in their hospitals, we will be looking at -- taking over much of their reference testing, which is the testing as you know that we that is - sent out by hospitals to core laboratories like ourselves. That's the second part of this.
And the third part of this is, what we refer to as outreach services. And that's really the clinical services provided by their physician network, which is really their outpatient physician services, both their employee docs and their affiliate physicians that refer into their hospitals. So there are three components is helping to administer the laboratory, equipment, and supplies, reference testing, which includes reference testing and their clinical outreach services.
The other I'll mention in a couple of minutes is some of our other new partnership deals that are in the pipeline. In terms of patient empowerment, we've talked about before our patient portal as a result of the COVID pandemic, which I'll talk about again in a minute; we use the patient portal frequently to drive patients into getting their results. So when patients had COVID-19 testing first on the diagnostic side, which is the detection of the virus and/or the antibody side, which determines the level of antibodies, which may relate it to immunity, those patients are frequently were signed up through the registration system through our patient portal through, which they then receive the results. So the result of that is we've had a significant uptick in our patients going through our patient portal for results.
The others are consumer initiated testing that we had just launched at the end of last year, as we got into Q1, the pandemic hit. We did see significant interest in the direct-to-consumer. And we are now offering COVID-19 antibody testing through our direct-to-consumer application. This is where patients go online. We have a -- it's called the PWN, physician network, which does the ordering, patient in order gets the antibody tests or other tests ordered.
We then provide them with a place to get those testing, which is frequently, in this case our patient service centers. And then they sign up with the same thing to get the results from the portal. And then they get the results back. So the consumer initiated testing has been launched and has been very successful, next slide.
So what everybody, of course, really wants to hear about, is COVID response, I'll run through this because that gets you where we are as of today, when this is being taped. And my prediction is by the time this is broadcast, things will have changed again, because this is a moving target that really does change almost every day.
Our COVID response, in terms of testing locations, we are testing in our largest facility in Elmwood Park, New Jersey. We're testing in Melbourne, Florida. And we are testing in Gaithersburg, Maryland. We are looking at bringing a testing in Houston and Campbell. Campbell, California and Houston, Texas; but have not made that whole decision as of yet.
We are as I said we're doing a PCR testing in the New Jersey, Florida and Maryland areas. We -- one of our successes early on is we made the decision at the beginning of the pandemic to prioritize accounts. And what I mean by that is, all in-hospital patients, ICU patients, and medical frontline workers receive priority for PCR testing when we launched.
And the result of that was we were able to capture a significant amount of volume very early on because our turnaround time was capped at 24 hours or less and frequently 12 hours or less. That gave us the opportunity to get business from multiple different health systems and hospitals that were looking for very short turnaround time for their critically ill patients.
As of this day, we have performed over 1 million COVID-19 PCR tests. We have the capacity as of today to run 50,000. We are building on that capacity. And we'll increase that capacity within the next, several weeks and months.
On the antibody side, when we launched the antibody test, we went -- we originally launched with a couple of different platforms and now after two platforms, we have the capacity to run 260,000 antibody tests a day. We could build a capacity to 400,000 plus, depending on what the demand side is.
We have as you'll see, from the timeline that I'll discuss, partnering with multiple states, New York, New Jersey, Florida, multiple cities and municipalities and health systems as a result of the launch. And we were -- and are operating certainly at this time most, at least more significant drive-through locations than we believe any other laboratory in the country. That's a number of approximately 30 or plus, as we speak today.
Next slide. So this is a brief timeline of what happened. I had the opportunity to meet with the Vice President on March 4 of the 'recipe' for the CDC essay was released. Within that week time on the 13, we actually contracted with New York, at that time the Rochelle was the epicenter of the outbreak for New York State and actually second to Washington state for the country. We launched at that time, the PCR test for COVID-19 on the 13th.
On the 17, we also developed a partnership in New York City, where we were and are providing all COVID-19 testings all of their 11 hospitals at 78 acute care facilities. We then launched a relationship with the State of New Jersey to provide access to their first five drive-throughs, which then went up to 15. There's only 21 counties. We were doing 15 of the 21 counties in New Jersey. On the 23, we announced our collaboration with the City of Detroit to provide PCR testing. And then on the 24, we announced our collaboration with the City of Miami to do PCR testing.
Next slide. In April, we move forward with our specific entity relative to prioritizing patients that were in hospital and ICU’s. On the 20, we announced that we will open up testing at our Gaithersburg, Maryland facility, which is our GeneDx laboratory. The GeneDx lab moved from providing not only genetic services, but providing COVID-19 PCR testing.
On the 28, we announced our relationship with Rite Aid to provide COVID-19 through their laboratory, throughout their drive ups that were at their Rite Aid facilities. At the time of this, we're I think upwards of 50 Rite Aids facilities, and that's an increase every single week.
On the 29, we made an announcement to launch the antibody testing for COVID-19 through a collaboration with New York State, when New York State at the time furthered their contract with us to provide COVID-19 antibody testing to almost all of their employees. We then tested the MTA, the Metro Transit Authority and the corrections office in New York State and we're moving funds towards testing the state employees for antibodies as we speak.
On the 8, we also launched a new collaboration with New York City. New York City made a decision to screen 140,000 people for antibodies. We are in all five boroughs, as of today, testing literally thousands of patients every day for the next -- at least for the next several weeks.
On the 13, we had announced our specific offering to employers, which included both COVID-19 PCR testing and antibody testing to help employers make decisions about how to bring their employees back to work. And on the 18th, we announced a special relationship with MagnaCare to provide antibody testing to multiple labor unions and labor union members.
Next slide. In terms of leveraging our partnerships, I did mention, the Westchester, we have closed additional Medical Group deals with the large medical groups that made the decisions to stand up their own physician office laboratories, POLs.
So, we've been very successful in that also and as you've heard, we are leveraging our COVID-19 functionality with multiple municipalities and governments across the country. And, in fact, just announced, or we'll be announcing, but it's now public, our relationship with State of Michigan to provide COVID-19 PCR testing and antibody testing to multiple entities within the state of Michigan.
Next slide. And finally, a question I get asked a lot is, is what is this thing look like going forward? So in summary, hospitals have continued to really ask for most -- much more PCR testing as they bring their patients back to elective procedures, particularly outpatient procedures. There's all making decisions about what sort of PCR testing to provide their patients within a 24 to 48 hour window to bring those patients back for their elective procedures.
Hospitals are also continuing to test their employees for not just PCR; they're also testing their employees for antibodies. Physicians, as we noted in our base book of business continue to frequently test their patients for both antibodies and for PCR relative to their symptoms or no symptoms. And then of course there's issues around the general public, we know that they're continuously be a very significant appetite on part of the general public to know their status relative to whether or not they have antibodies to the disease or not.
The return of the flu season this fall and the winter will have a significant impact. We don't know if it will just be COVID-19 testing. We don't know how much the disease will re-emerge. We do know that it's been associated as it was in the past winter with a significant amount of other respiratory infections testing because of the unknown about whether people actually had the respiratory disease as a result of COVID-19 or other flu type entities.
And then finally, there's a continuing issue relative to employers. We've had -- as I said, as of today, multiple, multiple discussions with many, many different midsize and large employers. Many of them are developing the strategies around how they bring their patient, their employees back to work, whether that's a combination of PCR testing and antibodies, but if antibodies alone or whether it's PCR alone is really very much individual.
I think there's a role for all and every type of testing as employers begin to look at what their needs are. There are very different types of employers or employers which have a place that are pretty much office space. There are employers that have a lot of people who are actually public facing. There are certain types of employers that are very, very specific about the type of employee because one case can impact their entire ability to move forward in their strategic decisions of how they deliver the product that they're trying to develop and/or produce. So what we've seen is a lot of different strategies, a lot of different discussions and a lot more to happen on the employer and employee side.
Question-and-Answer Session
End of Q&A
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