Opko Health at BioConnect: Strategic Shifts and Financial Insights

On Tuesday, 20 May 2025, Opko Health (NASDAQ:OPK) presented at the H.C. Wainwright 3rd Annual BioConnect Investor Conference 2025. The company discussed strategic shifts and financial performance, highlighting both growth prospects and challenges. Key topics included LabCorp transactions, pharmaceutical sales, and their strong cash position, while addressing a decline in Q1 sales.

Key Takeaways

• Opko Health’s strategic LabCorp transactions aim to optimize operations and profitability.
• The company maintains a strong cash position with $450 million as of March 31, 2025.
• Pharmaceutical sales declined in Q1 but are expected to grow by year-end.
• The Modex tetra antibody program is advancing, with efficacy trials anticipated in the second half of 2025.
• Collaborations with Merck and BARDA highlight ongoing R&D initiatives.

Financial Results

• Cash Position: Ended March 31 with approximately $450 million in cash and cash equivalents.
• Capital Deployment:

- Planned use of $100 million for operations and another $100 million for capital, convertible note repurchases, and stock buybacks.

- Used $65 million to retire $160 million of convertible notes in April.

- Board authorized expansion of repurchase program up to $200 million.

• LabCorp Transaction: Expected to add $192 million in cash upon closing later this year.
• BARDA Collaboration: Received $51 million this year, with potential for an additional $95 million based on milestones.

Operational Updates

• BioReference Restructuring:

- Two transactions with LabCorp to reduce footprint and enhance profitability.

- Focus on retaining high-value businesses like oncology and corrections.

• Pharmaceutical Product Sales:

- Moderate decline in Q1, attributed to Pfizer profit share softness and Latin America tender timing.

- Expected growth for the full year.

• Modex Tetra Antibody Program:

- In Phase 1 trial for solid tumors, with efficacy trials anticipated in the second half of 2025.

• GLP-1 Glucagon Dual Agonist Program:

- Collaboration with Entera Bio for oral and injectable formulations, targeting obesity and liver disease.

• Epstein-Barr Virus (EBV) Vaccine Program:

- Collaboration with Merck, with Phase 1 data expected by year-end.

• BARDA Collaboration:

- Focused on COVID, flu, and other viral diseases, with clinical entry planned for the end of the year.

Future Outlook

• Revenue Growth Drivers:

- 5-10% growth expected for the Latin American business.

- Low single-digit growth anticipated for BioReference.

• Modex Program: Efficacy results expected in the latter half of 2025.

• Upcoming Catalysts:

- Developments in BioReference, Modex, EBV vaccine program, and BARDA-funded research.

Q&A Highlights

• LabCorp Transactions: Aimed at reducing overextension and focusing on profitable core businesses.
• Gross Profit Share with Pfizer: Positive trend with expected continued growth.
• Modex Technology Differentiation: Unique dual targeting and activation approach.
• Oral GLP-1 Tablet: Attractive market opportunity despite competition, focusing on disease-specific needs.
• FDA Guidance on Vaccine Development: Awaiting new guidance for approval processes.

Readers are encouraged to refer to the full transcript for a detailed account of the conference call.

Full transcript - H.C. Wainwright 3rd Annual BioConnect Investor Conference 2025:

Yi Chen, Equity Research Analyst, H. C. Wainwright: H. C. Wainwright’s Third Annual Bioconector Investor Conference at NASDAQ. My name is Yi Chen. I’m an equity research analyst at H.

C. Wainwright. For this session, we are delighted to have Mr. Elias Zahoni, president and vice chairman of OpcoHealth, and mister Evan Logo, senior vice president and chief financial officer of Opco join us for our fight Fireside Chat. Thank you for joining.

Elias Zahoni, President and Vice Chairman, OpcoHealth: Well, thank you for having us.

Yi Chen, Equity Research Analyst, H. C. Wainwright: To start, I know Apple House had two two transactions with LabCorp, one in second half of last year and the most recent one in the first quarter of this year. Can you explain to us what is the rationale behind these two transactions? And how is that going to affect the financial performance of BioReference Laboratories going forward?

Elias Zahoni, President and Vice Chairman, OpcoHealth: Well, so as you know, BioReference was acquired by Alco in 02/2015 or something, and then had a really run up for for testing during COVID. Right? So there was huge expansion, national expansion, and then the COVID wave stopped. And the, if if the efforts, the analysis that both Adam and I made was in fact that we were overextended for the volume that we covered. We had labs in California, Texas, Florida.

We really had a period of overextension with not but no none of the margins needed to support that business. You know, when you have to fly an airplane, you know, every night from California, it doesn’t make sense. So stage one was really to look at, you know, distance from the main lab in New Jersey was a factor in the efficiency of the services, right? So we decided that the first step was to really reduce the footprint, keep some of the high value, businesses like oncology and like, corrections. And that’s what we did in phase one, right?

So $237,000,000 is about $100,000,000 worth of revenue for the $540,000,000 total. And then the second phase, we looked at our future and the balance of, you know, operations within, OpCo, including MODEX, including other things. So we said, you know, the oncology business, the oncology diagnostic business is doing very well in terms of performance. So we had the best turnaround time. And then in liquid tumors, we’re really second to none.

And But again, scale matters. And this is where we were approached. Would you consider an oncology only, spin out? And we did with LabCorp again. So that’s our second transaction.

Now we have a reduced footprint, very close logistical links, you know, much easier to manage costs. And so we think that after this transaction, which will reduce again the infrastructure that we need, And we know the numbers show that that’s a profitable business. I don’t know if Adam wants to add a couple things. But No. I think

Evan Logo, Senior Vice President and Chief Financial Officer, Opco: you said it well, Elias. The the main focus for us has been driving growth and profitability into BioReference, and the two transactions that we did with LabCorp allow us to accelerate that process and and see a large, sustainable business going forward in in the markets that we remain in. Got it. Thank you.

Yi Chen, Equity Research Analyst, H. C. Wainwright: And I noticed that the sales of the pharmaceutical product had a moderate decline in the first quarter of twenty five. Do you expect sales to resume growth in the coming quarters?

Evan Logo, Senior Vice President and Chief Financial Officer, Opco: Yeah. So for the full year, we we expect growth. I think the quarterly decline in in the first quarter over compared to the fourth quarter of last year and in the first quarter of the prior year were really driven by two two main factors. One, there was a a softness in the, profit share payments coming from Pfizer, which we’ve learned have come primarily because of some, dynamics in the gross to net in The United States market. Broadly speaking, we continue to see growth in the prescription market for both both products in that franchise, which is, in general, the long acting form of growth hormone as well as in Pfizer’s daily genotropin.

So we’re we’re pleased with the progress that’s been made and expects and and really reiterated the the guidance that we have for the full year on on Anjema. The gross profit shares. The the pharmaceutical products business declined slightly. Really, it’s just a matter of timing for some specific government tenders in in our Latin American business, which we fully expect to recover throughout the remainder of the year. Okay.

Elias Zahoni, President and Vice Chairman, OpcoHealth: And also there’s a little bit of forex and, you know, forex impact.

Yi Chen, Equity Research Analyst, H. C. Wainwright: So the you are satisfied with the overall trend of the gross profit share with Pfizer. Right?

Evan Logo, Senior Vice President and Chief Financial Officer, Opco: Well, I think we’d always like it to be more, but I think Pfizer has done a great job with the global launch of the product. We we think they’ve got some plans to be competitive in in The US market as well as in a number of the other major markets, have have done a a nice job of building up some some programs to do that and have plans for label expansion, which will lead to future growth as well.

Yi Chen, Equity Research Analyst, H. C. Wainwright: So what would be the main drivers for the top line revenue growth from the next twelve to eighteen months? Is it BioReference? Is it in general sales profit share, or is it some other products?

Evan Logo, Senior Vice President and Chief Financial Officer, Opco: Yeah. It’s a you know, the Latin American business or or the products business that we have, you know, we’ve we’ve set a a growth rate of, you know, between 510%. I think our guidance in at the midpoint, it’s about 8% growth rate, over that time or through the rate remainder of this year. By reference, the the remaining business piece that we’re retaining, we expect to continue to grow at at low single digits in into the foreseeable future. On the financial statements, you’ll see a decline because of the businesses that we’ve sold there.

And once we close, those businesses will no longer report revenue. But on that remaining business, we expect sustainable growth going forward there. Got it. Thank you.

Yi Chen, Equity Research Analyst, H. C. Wainwright: I understand Modex is currently developing a tetra antibody, right, for immuno oncology. How does this technology differentiate from other approaches in immuno oncology space?

Elias Zahoni, President and Vice Chairman, OpcoHealth: No. It’s differentiated. There’s there’s nothing like that in the market at all. And this is not in the market. This is in the clinic.

And the reason is very simple, is that if you look at the physiology of cancer cells, cancer cells escape detection because if you if you attack one one marker, it will down regulate that marker and then up regulate others. And we know that, for example, in in the liquid cancers, it’s not just c d 19. If you just attack c d nineteen, c d 20 goes up and c d 19 goes down, the tumor escapes. So it’s what we call tumor escape. And the idea that we developed twelve years ago was that multi specific antibodies that could have not just one specificity, but two, three, four, even five or six would be desirable.

Our quadri specific is really the first one to reach the clinic. People are afraid of the the CMC, the inability to manufacture. We’ve proven that wrong. Our technology works extremely well. We have high yield.

And we are in the clinic right now with the first one, which is a c Metrop-two. Why did we pick c Metrop-two? Because there are 14 tumors that are enriched for these markers. And then on the other hand, we have a strategy of what we call enhanced T cell engagement with not just CD3, but CD3 and CD28 because those two signals, CD3 engage, you know, it engages the T cell, activates them, but the signal is not long lasting. CD28 makes the signal much longer and the proliferation much longer.

So that we expect and we are already in the fifth level of dose without too unusual side effects. We expect to get into the efficacy range by the end of this year, second half of this year. And we’ll see, you know. But it is differentiated in the sense that there’s nothing out there that I know of that has dual targeting on the tumors and dual activation on the T cells.

Evan Logo, Senior Vice President and Chief Financial Officer, Opco: Okay.

Yi Chen, Equity Research Analyst, H. C. Wainwright: So what is the current status of the phase one trial in solid tumor? How many patients are enrolled? When can we expect to see top line results?

Elias Zahoni, President and Vice Chairman, OpcoHealth: Yeah. So, you know, FDA is very careful about these tumors. I mean, these drugs are very potent, so we start low dose and go up by cohorts. And we are the fifth cohort right now. And then the sixth is when we get to the what we as we think is the efficacy range even though we’re seeing effects right now, but you can’t really report, anything but safety.

So we’re ongoing. We’re at the fifth one. There’s one more, and then we’ll start doing the what we call the basket trial. We’re going to get the tumors that we think are the most likely to respond because they have more Trop two, more c Met, and we’ll see. So it’s it’s really, really, really exciting because it’s never been done, and it’s really what the world needs because what you see the responses right now, they they’re they’re not long lasting.

So we think the responses here would be stronger and longer lasting.

Yi Chen, Equity Research Analyst, H. C. Wainwright: Got it. Thank you. I know Opco and and Terabile is having a collaboration on a GLP-one, glucagon peptide dual agonist, which is a once daily tablet for obesity and weight management. So how exactly does technology work and why is it better than GLP-one drugs currently on

Elias Zahoni, President and Vice Chairman, OpcoHealth: the market? It’s a good question. So you should know that OpCo has had a GLP one glucagon molecule, which was, you know, pegylated, and we did we didn’t we carried it all the way to phase two. The problem with that is that it required a high high dose, you know, seventy milligrams. So we decided to change that and to come up with a different technology, is acetylated molecule.

And then we looked at the molecule that we had, and we realized there were two amino acids that, you know, if we could change that, it would be much more, active. And that’s what we’ve proven in the preclinical stage. It’s a molecule that has the same coagonist combination as the one from Boehringer Ingelheim, and it’s very, very effective, especially in in liver disease because, as you know, GLP one’s receptors don’t exist or very little in the liver, but glucagon does, and it changes the metabolic balance. So that’s why we pursued that in injectable form. And so that’s pre IND right now.

We’re going to test it soon, in terms of the safety, but we know already the molecule was already in in clinical development. So we don’t we’re not worried about that. Now in terms of, what you’re saying about the oral form, Entera biology has a technology, which is a formulation technology, which protects the peptide as it goes through the stomach. And so you get a percentage into the bloodstream. And when we did the PK data, the PK studies with Entera, we realized that their TAB technology actually does protect our peptide and does allow it to go up into the bloodstream at a very good PK and PD.

So this is on preclinical models. So we thought that it was a good idea because when you look at the effect of GLP-one glucagon, yes, there is an effect on weight, but there’s also the issue sustaining the effect over a long time. The problem with GLP-1s is that you lose a lot of muscle. And so doing it, you know, where you have maybe a dual period, injectable first and then sustained through oral might actually make sense. There are clear regions of the world where injectables are not desired, and even in The United States.

So we think it’s a it’s an interesting molecule that really is not being tested. The other ones are, g l p one gip and so on. Now you ask the question, why is it better than just g l p one? Right? Well, the issue is what I said.

GLP-one, as it’s being tested, shows no effect really on the liver because there’s no receptor of GLP-one there, or very little. So that’s the idea, is that you’re really combining two effects, is what tirzepatide does, which is what really everybody thinks needs to be done. So we we we think that having an injectable and an oral that could be combined with other drugs may have a huge impact on fibrosis in the liver and other conditions and expand from there. Got it. Now that the Novo Nordisk and Eli Lilly are providing lower price cash pay access to semaglutide and tirzepatide, do

Yi Chen, Equity Research Analyst, H. C. Wainwright: you think there’s still an attractive market opportunity out there for dual agonist oral tablet?

Elias Zahoni, President and Vice Chairman, OpcoHealth: Yes. I mean, obviously, it’s always the same thing. Immuno oncology, I remember when people care about PD-one, what do you want to do with anything like PD-one again? I mean, the market is huge in obesity. If you just look around, you’re talking about a multiyear, multibillion dollar market.

And I think you’re going to have differentiation depending on the disease state. So a patient who has diabetes is not the same as an obese patient who doesn’t have diabetes. And so you’re going to see specialization and indications, specificities that will really be different in the future than they are today. And we’re seeing that already. I mean, you know, you talk about GLP-one, but people are saying, well, maybe we need more long acting, more self control, less muscle loss.

So you’ll see actually a lot of innovation because there’s such a market. And we are one of two or three in the in the GLP one glucagon category. So we think that there would be a market for us. Not well, it’s not a big company. We don’t need multibillion dollar drugs.

Yeah.

Yi Chen, Equity Research Analyst, H. C. Wainwright: Thank you.

Elias Zahoni, President and Vice Chairman, OpcoHealth: Opco also has a program for, Epstein Barr virus vaccine. What’s the current status of that program? For which? Epstein Barr e EBV. Right.

So that’s a collaboration with Merck. So we developed this technology, which is, again, a multi specific type of, vaccine based on our platform, which is different than the antibody platform. And so we were able to do four antigens for EBV, which had never been done also. And then when we showed the data to Merck, they were very excited because three things: one, it’s a very common infection ninety five percent of people eventually get exposed to EBV two, it’s responsible for mononucleosis, which is a disease that has long mono and so on. But it’s associated with two hundred thousand cancers.

So it’s a little bit like HPV. But the thing that really made a difference are the studies that show that multiple sclerosis, which affects millions of people around the world, has a connection to EBV. And so we decided to make a partnership, then they came over, and and, you know, we we had a a front of 50,000,000 and then 870 biobucks. We’re already in Phase one and it’s, we carried the molecule with the Phase one then Merck took it over and it’s running the Phase one data trial. It’s going well in the first cohort, and they’re doing the second one, and we should know by the end

Yi Chen, Equity Research Analyst, H. C. Wainwright: of this year. Got it. I read that the FDA is going to release a new guidance on vaccine development and approval? Do you think that will have a big impact on your

Elias Zahoni, President and Vice Chairman, OpcoHealth: vaccine that’s a good question. I mean, everybody is wondering, what is this new guidance going to be? Because it’s a big difference between what you call emergency use authorization, which is what COVID was authorized under, and normal use of the utilities. You know, the regular use or nonemergency use, it’s pretty known what you need to do. I mean, you you you know that you have to do your phase two, and phase two is about three to 5,000 people, and you know what the statistics of that should be.

Right? And the same is true. So I can’t tell. I really should not speculate because I don’t know what they mean by new guidance, right? Is it on the safety side?

Is it on the efficacy side? I don’t know. I don’t know. We’ll find out. You’ll find out.

Yi Chen, Equity Research Analyst, H. C. Wainwright: We’ll find out. So does the company currently have a strong cash position to fund all these programs?

Evan Logo, Senior Vice President and Chief Financial Officer, Opco: Yeah. So we we ended March 31 with about 450,000,000 in cash and cash equivalents. You know, we guided this year that we’d use about $100,000,000 of that in operations and then another $100,000,000 in capital, convertible note repurchases as well as acquiring common stock in the open market. So in April, we closed on the transaction to take out about $160,000,000 of our convertible notes that used about $65,000,000 in cash. And we’ve been actively buying back stock as well in connection with that.

Our Board did authorize an expansion of our existing repurchase program, increasing it up to $200,000,000 We haven’t changed how much cash we’re going to deploy this year. As you mentioned, we we’ve got a transaction closing with LabCorp later this year, which will add another hundred and $92,000,000 in cash at closing. So you would expect us to continue to be be active on both funding operations and r and d as well as deploying capital back to the balance sheet.

Yi Chen, Equity Research Analyst, H. C. Wainwright: Got it. That’s that’s really Lastly, can you provide a summary of the upcoming catalysts within the next twelve eighteen Well,

Evan Logo, Senior Vice President and Chief Financial Officer, Opco: one thing

Elias Zahoni, President and Vice Chairman, OpcoHealth: you didn’t mention is the work we do with BARDA, the government, on the platform that we have. They’re very interested in seeing this platform applied not just to COVID but to flu and other viral diseases, including pandemic flu. And so we received $51,000,000 additional this year, and we have another 95,000,000 depending on milestones achieved. And we’re doing very well. We should be in the clinic for the COVID, broadly specific by the end of the year.

We also have a second, immuno oncology molecule. So in terms of news flow, I think we’re going to have some flow in the, bio reference area And then you’re going to see some flows in the clinic. We’re in the clinic already with 02/2001 and with the EBV vaccine. So you’re to hear about that. And then entry into the clinic from our BARDA funded, research.

And other there’s tremendous amount of interest in our technology now. Now that we’ve reached the clinic and there’s no untoward effect. You know, people are always like, oh my god. A new molecule. Is it rejected by the human body?

No. It’s it’s okay. It’s fine. And so that really generates news flow. Hopefully, we’ll be able to announce things.

Got it.

Yi Chen, Equity Research Analyst, H. C. Wainwright: Well, let’s see if we have any questions from the audience. Maybe not. Well, thank you very much for joining us. You’re very welcome.

Elias Zahoni, President and Vice Chairman, OpcoHealth: Thank you. Thank you.

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