OPKO Health Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 7, 2024

There are 12 speakers on the call.

Operator

Hello, and welcome to the Opco Health First Quarter 2024 Financial Results Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to your host today, Yvonne Briggs.

Operator

Please go ahead.

Speaker 1

Thank you, operator, and good afternoon. This is Yvonne Briggs with LHA. Thank you all for joining today's call to discuss Opco Health's financial results for the Q1 of 2024. I'd like to remind you that any statements made during this call by management other than statements of historical fact will be considered forward looking and as such will be subject to risks and uncertainties that could materially affect the company's expected results. Those forward looking statements include without limitation the various risks described in the company's SEC filings, including the annual report on Form 10 ks for the year ended December 31, 2023, and in subsequently filed SEC reports.

Speaker 1

This conference call contains time sensitive information that is accurate only as of the date of the live broadcast, May 7, 2024. Except as required by law, OpCo undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances after the date of this call. Before we begin, let me review the format for today's call. Doctor. Philip Fraatz, Chairman and Chief Executive Officer, will open the call.

Speaker 1

Doctor. Elias Serhouni, Vice Chairman and President, will then provide an overview of BioReference Health, followed by OpCo's Pharmaceutical business. And after that, Adam Logel, OpCo's CFO, will review the company's Q1 financial results and then we'll open the call to questions. Now I'd like to turn the call over to Doctor. Frost.

Speaker 2

Good afternoon, and thank you for joining us today. In March, we announced an agreement to sell certain assets of BioReference Health to LabCorp for $237,500,000 The assets included BioReference's clinical diagnostics and women's health testing services outside of New York and New Jersey. The transaction was specifically structured in a manner so as to increase the likelihood of obtaining expedited clearance from antitrust regulators. We have also streamlined the remaining operations to advance the path to profitability for our Diagnostics segment. The transaction is expected to close in the second half of this year, pending FTC clearance.

Speaker 2

Ingenla, our long acting growth hormone therapy continues to gain traction as our global commercial partner Pfizer expands its launch of the product in over 40 global markets. This once weekly injection product to treat growth hormone deficiency is the 1st new chemical entity developed at Upko Biologics in Israel, where we now have other preclinical candidates under development. One is a long acting form of axintomodulin analog, which I mentioned in our last quarterly call. The PEGylated form of this active peptide has been shown to be effective and safe in treating diabetes and obesity in a Phase 2 study in over 4 50 patients. The new long acting form is expected to have the same pharmacology profile as the PEGylated form, but permits administering larger doses.

Speaker 2

We have in development a long acting HVH antagonist for the treatment of acromegaly caused by the excessive secretion of growth hormone and IGF-one. We are progressing our work with Entera Bio to develop oral forms of oxintomodulin and a GLP-two analog for short bowel syndrome and other disorders involving nutrient malabsorption. We look forward to keep you apprised of progress with these promising programs. MODEX continues to advance its development work and 2 programs are on track to enter the clinic this year. Our Epstein Barr vaccine licensed to Merck and our multi specific oncology antibody, which has received FDA clearance for a Phase I trial.

Speaker 2

Our collaboration with BARDA is moving forward and provides non dilutive financing to develop multi specific antibodies against COVID. As work progresses on this first indication, we will begin to explore alternative targets to tackle other biodefense threats such as influenza. With that brief overview, I'll turn it over to Elias. Elias?

Speaker 3

Well, thank you, Phil, and good afternoon, everyone. Let me start by apologizing if you hear background noise. I'm in a noisy environment at the airport. But as Phil said, we were very pleased to announce our agreement with LabCorp to sell certain assets of BioReference Health for a cash purchase price of $237,500,000 These assets generate approximately $100,000,000 of annual revenue and include patient service centers, certain customer contracts and operating assets associated with testing services focused on clinical diagnostics and women's health across the U. S, but outside of New York and New Jersey.

Speaker 3

We will retain our national oncology and urology franchises and our diagnostic services in New York and New Jersey. This complements our efforts to improve efficiencies and enhance the productivity of operations. This transaction will streamline us laboratory services business and support our work to reestablish profitability in the near future. As Phil mentioned, we expect the sale to close in the second half of 2024, subject to customary closing conditions and applicable regulatory approvals. As an ongoing initiative, we continue to improve BioReference's performance and in turn build value.

Speaker 3

Our focus remains on initiatives to reduce costs, improve efficiency and enhance productivity. In addition, we seek to bolster growth through the expansion of insurance coverage in our higher value specialty segments of oncology and neurology, with particular focus in our proprietary 4kscore test.

Speaker 4

As you

Speaker 3

know, the 4kscore test was first introduced in 2014 as a laboratory developed test. As you know, FDA published new rules to reform the regulation of lab developed tests. This will have a minimal impact on BioReference Health as all our tests are approved by New York State regulators or who are exempted from the announced FDA reform. In December 2021, I would like to remind you, Focus Core was approved by the FDA, supported by its analytical and clinical data. FDA concluded that the 4 kscore test was had the appropriate sensitivity of 96.9 percent and negative predictive value of 95.9 percent to contribute to an overall beneficial clinical decision as to whether a prostate biopsy should be performed and accordingly minimize excess risk of missing directly significant prostate cancers.

Speaker 3

In more than a 100 independent publications by urologists since then, the 4 ks score has ranked us a best performing biomarker test for the assessment of risk probability for aggressive prostate cancer. Our neurology team delivered strong growth in 4 ks cohort test volumes in the Q1 and we expect these volumes to build as the test is included now in various clinical guidelines for early detection of prostate cancer for follow-up after PSC screening for initial and repeat biopsy risk stratification. In regard to RAYALDEE, the program continues to enjoy stable demand, which we hope will grow with new data that RAYALDEE may delay the onset of analysis according to our most recent analysis. In oncology, we are pleased with GenPath performance due to its innovative testing platform with an expanded hematological malignancy panel and very competitive turnaround times. We continue to see strong growth in our oncology business with over 12% growth in volume Q1 2024 versus Q1 2023.

Speaker 3

Much of this growth was through collaborations with large cancer centers and mid level health systems. As health systems are challenged with cost and staffing in the oncology space, they are looking for a reference laboratory to work with for their testing, opening up possibilities for bio reference health. Genpact has been able to meet their needs with our enhanced and comprehensive menu across all stages of care. This includes the internalization of our hereditary cancer business in late Q4 2023, which now offers clients an internal solution with fast turnaround times for timely decision making. We continue to expand our testing portfolio and expect new tests in Q2 to complement our current OncoCyte advance and OncoRisk portfolio, which will enable GenPath Oncology to evaluate guideline recommended genetic components of Lufthansa cancer and keep us at the forefront of precision oncology.

Speaker 3

Similar to our New York, New Jersey Women's Health and Clinical Businesses, our National Oncology Testing segment will remain with BioReference Health under our Genpap Oncology brand upon closing of the transaction with LabCorp. We believe that BioReference Health is well positioned for further expense reductions and revenue expansion with a focus on the retained businesses in the New York and New Jersey markets after the divestiture. Complementing these efforts to boost performance, we will continue to improve our diagnostic division to further enhance profitability for OpcoHealth and best position us as an innovative biopharmaceutical company. Moving to our pharmaceutical segment, as you've heard, Ingevla has been launched in all major global markets like Pfizer. We believe this drug is well positioned for significant growth as long acting growth hormone products become the global standard in treating growth hormone deficiency for children.

Speaker 3

The launch is progressing as expected with an increasing and significant percentage of patients shifting from daily to the long acting once a week angela product. In addition, we expect our partnership with Pfizer to expand with additional indications, including growth hormone deficiency for adults and other pediatric applications. And combined, these approvals for these two indications will entitle OpCo to an additional $100,000,000 in milestone payments. Let me go to MODX. As for MODX, we're proud of the progress today.

Speaker 3

In March, we announced favorable results from the Phase 1 clinical study with our tri specific antibody against HIV. These clinical data are the first reported for a tri specific antibody in humans and strongly support further development of multispecific, multivalent antibodies against HIV. The antibody was found to be safe and well tolerated at all dose levels through both intravenous and subcutaneous routes with minimal antidrug antibodies observed with dosing ranging from 0.3 milligram per kilogram to 30 milligram per kilogram with up to 4 administrations and a pharmacokinetic which remain consistent and similar to standard monoclonal antibodies. We therefore believe and our partners at NIH believe that multi specific antibodies will offer a differentiated approach to long lasting preventive and therapeutic options against most HIV-one variants, with the possibility of activating the immune system against the latent virus population to effect a functional cure. We are partnered with NIH on this program.

Speaker 3

Our collaboration with Merck to develop MDX-two thousand two hundred and one, which is our Epstein Barr virus multivalent nanoparticle vaccine is advancing on plan. We received a $50,000,000 upfront payment upon licensing this vaccine with a potential $872,500,000 in development and commercial milestones, plus royalties on global sales ranging from single digit to double digit percentages. In terms of timing, we expect this program to enter the clinic in the later part of this year. Our collaboration with BARDA is also proceeding on schedule and represents another source of non dilutive funding for the company. We secured an initial $59,000,000 grant to fund R and D and clinical evaluation to a Phase 1 study of our multi specific antibodies against known variants of SARS CoV-two for the treatment and prevention of COVID-nineteen.

Speaker 3

Additional funding of up to $109,000,000 may be available from BARDA to develop multi specific antibodies and delivery approaches to target other biodefense threats such as influenza. The ultimate goal of this research program is to develop a platform with gene based delivery methods using mRNA or DNA vectors to supplement the body's natural protein production processes, which can then be used efficiently and effectively against future pandemics. Rounding out the MODEX pipeline is our immuno oncology program, which is focused on hard to treat solid tumors as well as certain liquid tumors such as leukemias and nephrolus. We believe our multi specific antibody candidates can simultaneously target several tumor antigens and enable better control of immune system activation. And we expect our tetraspecific laser program for solid tumors to enter the clinic this quarter as our first IND application as indicated by Phil focused on solid tumors was deemed acceptable to proceed by the FDA.

Speaker 3

Other immuno oncology products are advancing to IND enabling studies and are on target to enter clinical studies next year. So as you can see, it's an exciting time for OpCo as we execute our strategy to gain profitability for BioReference Health by rightsizing the diagnostic division to its most profitable areas of activities, while advancing our Bold Biopharmaceutical segment with several programs set to enter the clinic this year. I will now turn the call over to Adam Logau to discuss our Q1 financial results. Adam?

Speaker 5

Thank you, Elias. As Phil and Elias have discussed, we had a busy start to the year, realizing significant value from some of our underlying assets and strengthening our balance sheet. The convertible debt offering in January reduced our cash interest expense. This refinancing provided us the flexibility to align our cash needs for our research and development investments to debt maturities over the next 5 years. In addition, we used a portion of the proceeds to buy back 55,000,000 shares of our common stock, reducing our outstanding shares by over 7%.

Speaker 5

We also announced our agreement with LabCorp for the sale of select assets, which was a competitive process. And when completed, that will allow us to realign our business operations to focus on core markets and test offerings and to support our path to profitability at BioReference. While we are still within the review window with the Federal Trade Commission, we're diligently working on the profit plan for bio reference to ensure we get to breakeven and then profitability as quickly as possible. The LabCorp deal was the first large step in the multifaceted plan. Moving to our financial results for our Diagnostics segment.

Speaker 5

We reported revenue for Q1 2024 of 126 $900,000 compared with $132,400,000 for the 2023 period. Cost and expenses decreased to $161,300,000 for the Q1 of 2024 from $172,400,000 for the 2023 period. Operating loss for our Diagnostics segment of $34,400,000 included approximately $2,200,000 of non recurring costs related to employee severance and programs associated with our efforts to return to profitability. Depreciation and amortization expense were $7,900,000 $8,700,000 for the 2024 and 2023 periods, respectively. Revenues included approximately $27,800,000 related to the book of business that is subject to our sale agreement with LabCorp.

Speaker 5

The costs and expenses related to this business were approximately $34,800,000 As part of the transaction, LabCorp has agreed to offer employment to more than 700 of our impacted employees who support this business. Moving to our Pharmaceutical segment. Revenue decreased to $46,800,000 for the Q1 of 2024 from $105,200,000 for the comparable period of 'twenty 3. Revenue from products, including our intellectual property, our international pharmaceutical businesses decreased by $2,300,000 reflecting lower sales within our Israeli API business, partially offset by higher sales of RAYALDEE. Revenue from the transfer of IP was 8 $7,000,000 for the Q1 of 2024 compared to $64,800,000 for the 2023 quarter, which included an upfront payment of $50,000,000 from Merck as a result of our EBV vaccine agreement, as well as $9,500,000 of milestone payments from our partners for RAYALDEE.

Speaker 5

During the Q1 of 2024, Pfizer was able to substantially reduce the cost of manufacturing VINJETLA by obtaining approval for a significant scale up of their manufacturing process in order to support the global launch of INGENLA. In turn, Pfizer has revalued its inventory on hand at December 31 and amortized that difference in manufacturing costs during the 1st 4 months of 2024, which is their standard accounting policy. As a result, our anticipated gross profit share for the Q1 was less than we anticipated, and we reported gross profit share from Pfizer of $5,800,000 which compares to $3,100,000 for the 2023 period. Pfizer has obtained significant payer access in the U. S.

Speaker 5

In 2024 for Ingenla, and we look forward to the continued execution on their global commercialization plan. In addition, other revenue includes $2,200,000 from our underlying agreement with BARDA, which offsets R and D and underlying support expenses for that program. Costs and expenses for our Pharmaceutical segment were $74,500,000 for the Q1 of 2024 compared to $86,300,000 for the 2023 period. Research and development expenses for the Q1 of 2024 were $21,200,000 compared to 31,900,000 dollars for the 2023 period. The 2023 quarter included the non recurring $12,500,000 of expense related to our payment to Sanofi for their portion of our upfront payment from Merck.

Speaker 5

Partially offsetting this decrease were increased activities for our MODEX development programs. The resulting operating loss for the quarter ended March 31, 2024 was $27,700,000 compared to operating income of $19,000,000 for the Q1 of 2023, which I previously mentioned benefited from the 57 point $5,000,000 of milestone payments received in the quarter. Amortization expense related to intangible assets were unchanged at 16,400,000 dollars for both periods. Turning to our consolidated results, the Q1 of 2024 reported an operating loss of $71,500,000 compared with an operating loss of $30,600,000 for the 2023 quarter. Net loss for the 2024 period included approximately $26,200,000 related to the fair value change on an embedded derivative related to our convertible notes issued in January.

Speaker 5

For both periods, we recorded noncash unrealized gains on our investment in GeneDx of $22,700,000 the Q1 of 2024 was $81,800,000 or 0 point 0 point 0 $2 per share for the 2023 quarter. Looking ahead, we're providing the financial guidance with the following assumptions. For our Pharmaceutical segment, there are a number of factors that will continue to impact our gross profit share payments from Pfizer, including revenue from product sales from Genotropin and Ingenla. Global sales of Genotropin for the Q1 of 2024, as reported by Pfizer, were $130,000,000 and Pfizer has not separately reported sales of INGENLA. However, we have continued to observe consistent prescription growth globally for INGENLA, as reported by IQVIA and Symphony.

Speaker 5

After adjusting for the expected accounting impact for the improved gross margins associated with scale of Ingenla, we have revised our estimated gross profit share to be between $30,000,000 $40,000,000 versus our previous estimate of $40,000,000 to $50,000,000 We also assume a stable foreign exchange rate for our U. S. Ex U. S. Pharmaceutical businesses, which will allow for continued profitable growth.

Speaker 5

R and D expenses for the Q2 of 2024 will reflect higher activities related to our MODEX programs, including CMC and efforts to related to the initiation of our first immuno oncology clinical trial. A portion of these increased activities will continue to be funded through our BARDA agreement. For our Diagnostics segment, as the timing of our closing for our LabCorp transaction is not yet certain and is subject to FTC review, we have not adjusted our guidance to remove this business from our 2nd quarter estimates. As we've outlined, we're working to align the business to achieve cash flow breakeven run rate by the middle of 2024 and profitability run rate by the end of the year, which are both subject to the timing of closing of our LabCorp transaction. This work continues to include consolidating our geographic footprint and rationalizing our testing offerings as we expect our client mix to improve as our cost structure and our cost structure to appropriately support our go forward strategy.

Speaker 5

During this transition phase, we expect consistent core testing volumes with a slight increase in the average price per patient collection amounts due to our revenue cycle management initiatives. Before considering any nonrecurring costs that may result from our restructuring activities and other nonrecurring expenses, we expect our cost and expense in Q2 to decline by approximately $5,000,000 to approximately $154,000,000 to $157,000,000 without giving effect to the approximately $35,000,000 related to the assets as part of the LabCorp transaction. As a result, we expect the following for the Q2 of 2024: total revenue between $182,000,000 $187,000,000 revenue from services between $127,000,000 $130,000,000 including $26,000,000 to $27,000,000 from assets related to the LabCorp transaction revenue from product sales of $40,000,000 to $45,000,000 and other revenue between $10,000,000 $14,000,000 inclusive of the Pfizer gross profit share estimates, which are between $7,000,000 $10,000,000 We expect 2nd quarter costs and expenses to be between $234,000,000 $243,000,000 again, excluding any nonrecurring expenses and expenses related to our restructuring of BioReference. It will also include approximately $20,000,000 to $26,000,000 for R and D expense that range is based on the timing of certain CMC activities for our MODEX programs as well as depreciation and amortization expense of $24,000,000 That concludes our prepared remarks.

Speaker 5

Thank you for your attention. And now operator, let's open the call for questions.

Operator

Yes. Thank you. We And the first question comes from Maury Raycroft with Jefferies.

Speaker 6

Hi. Thanks for taking my question. I was going to start with a question related to BioReference. With the remaining BioReference Services business, it sounds like you plan to continue to streamline, optimize and grow that business with aim to get to profitability. Once the Lab deal closes, will you be able to provide more clarity into timing for getting to breakeven and profitability?

Speaker 6

And what's the longer term strategy for maximizing value for both the services and pharma parts of the company?

Speaker 5

So I'll take the first question, Maury. Thanks for the question. So the timing for us getting to breakeven is going to be tied to the LabCorp transaction. We're not we're certainly not waiting for that as it relates to the rest of the business, and we're actively working down our fixed cost base. We're exiting certain facilities currently, which will help bring our fixed overhead.

Speaker 5

We're also continuing to realign. Our stated goal was to have plans that would be executing to have us to run rate cash flow breakeven midyear. I think we're still looking towards that. Obviously, if FTC takes longer than expected, then that could take longer. But otherwise, that's the path we're on.

Speaker 6

Got it. Understood. And then for Ingenla, can you provide any more perspective or clarity into the revised guidance there and the change in gross profit there?

Speaker 5

Sure. So overall, we've seen Ingenla demand continue to be strong on a global basis where Pfizer has been in the market the longest. Obviously, it's continued to do the best. Really, the change to guidance has to do with an accounting consequence of their revaluing some inventory they had on books, and that flows through our gross profit share. It has no reflection on the strength of the program, just on the timing of when we're going to realize the benefits of that improved gross margin that's coming from their scale up.

Speaker 6

Got it. Understood. And maybe one question just on some of the MODEX clinical assets. If there are specific catalysts this year that we should be focused on, in particular for 2,001 moving into the clinic, I don't know if there's anything more you could say about that study and when we could see initial data from that?

Speaker 3

I'll let Gary, who is on the line, the CEO of Monnex answer that specific question. Gary?

Speaker 4

Yes. As Elias and Phil mentioned, we have the green light to go. So we're at the moment setting up sites and really looking to bring patients into the trial. I think the as Elias said in his comments, we're hopeful this should happen by the end of the quarter and we're working to make it happen sooner if possible. In terms of any clinical results, as you probably know with whenever you're taking a new immune therapy into the clinic, you started a low dose and you dose escalate really for safety reasons.

Speaker 4

And that's a plan that we've come to craft with the FDA. So I wouldn't be expecting to see any data on certainly efficacy at least for probably next year is the timeframe in which you might expect to see some type of results.

Speaker 6

Okay, understood. Thanks for taking my questions. I'll hop back in the queue.

Operator

Thank you. And the next question comes from Jeff Cohen

Speaker 4

with Ladenburg Thalmann and Company.

Speaker 7

Hi. Thanks A few from our end. I was wondering if you could talk about INGENLA and who will be paying for the additional studies as far as the couple of expanded labels that I mentioned, is that Pfizer or yourself?

Speaker 5

So the way our partnership works for those additional indications is we'll split the cost fifty-fifty with Pfizer.

Speaker 6

We're not for the adult,

Speaker 2

we're not necessarily expecting any additional studies. So just be the pediatric basket.

Speaker 7

Okay. Got it. And for full year 'twenty four, what should we anticipate from BARDA reimbursement? I know you called out $2,200,000 in the first quarter. Should we extrapolate that?

Speaker 5

We you'd expect that to continue to ramp up, Jeff. So that's part of the reason why the R and D number is going up. They're getting ready to do some CMC activities, which will bump that number up. And just as a reminder, there's $2,200,000 on the revenue line, the expense line is slightly less than that.

Speaker 7

Yes. Okay. Got it. That makes sense. And Adam, can you just clarify on the cash and debt?

Speaker 7

So it was 75.6 percent cash and $230,000,000 plus $71,100,000

Speaker 3

on the

Speaker 7

debt side? That's right.

Speaker 5

$301,000,000 Yes. That's right.

Speaker 7

$301,000,000 That's right. Okay. And the anticipated LabCorp closing you're expecting by end of year, it sounds like back half and that will be until we have the gross number, right? It's $237,000,000

Speaker 5

Yes. I mean the large unknown on the timing is just FTC. So once we clear the FTC, assuming we clear the FTC, we'll be working quickly with that Webcorp transaction.

Speaker 7

Okay, got it. You're feeling optimistic on the back half of the year?

Speaker 5

That's our expectation.

Speaker 7

Okay, got it. And then I think that does it for us. So thanks for taking the questions.

Speaker 8

Thanks, Jeff.

Operator

Thank you. And the next question comes from Edward Tenthoff with Piper Sandler.

Speaker 8

Great. Thank you for taking my question too. First, just a quick one, Adam. You had mentioned cost guidance for the Q2 of 2.34 to 2. And I was writing furiously, but I didn't get the number.

Speaker 8

2.43.

Speaker 5

43. 34 to 43.

Speaker 8

Okay, great. Super helpful. And then just kind of a higher level question, appreciating what Gary and Elias were saying about the multi specific antibody getting moving. I think the first one is for hematologic cancers, if I'm not mistaken or is that for solid tumors? And at a higher level, what do you ultimately expect to do with these different MODEX assets?

Speaker 8

The stuff under BARDA, could that be further partnered? Should we expect more partnerships like the Merck EBV deal? Do you expect to keep the cancer stuff and generate some clinical data next year? Higher level commentary on sort of what the plan is?

Speaker 3

Thank you. I'll be happy to do that and forgive the background noise. I think it's a solid tumor molecule that we're entering into the clinic this quarter. We do have a liquid tumor molecule, which we're actually discussing with several parties, which are who are interested. I think in the grand scheme of things, we are we have a platform, right, actually 2 platforms, a vaccine one and a multi specific one.

Speaker 3

And we are eliciting a lot of interest. We are interested in partnering and especially in research collaboration that will be funded by 3rd parties where we could develop more targets to enter a larger portion of the market than what we could afford on our own. So we want to leverage the platform with the ability for us to through results, through the results we've already had with the EBV with the Phase 1 tri specific data and hopefully with this I think it's going to generate a momentum for collaborations and partnerships and licensing that I think will increase our bandwidth. I'll stop here and Gary if you have what to say.

Speaker 4

Yes, I think you said it well, Elias. I say Ted that the we're open to whatever makes sense in terms of advancing these products to approval and getting them to patients. I think that the advantage of having a platform is that we can take individual products and partner them with 3rd parties. And then we can reserve some that may have higher value and your path forward for commercialization, we can take some of those internally as well. So at the end of the day, I would I suspect that we'll probably partner more than we will develop internally, but we're very open to collaborate.

Speaker 8

Well, I think that makes a lot of sense too when you think about all the different factors and agents that you can engineer into the multispecific antibody. A big oncology group who really is doing that multiplex combinatorial analysis makes a lot of sense. That's a lot for you guys to do on your own. And I think you'd really be able to empower some of the bigger players who are looking at ways to combine these different mechanisms. So I really appreciate what you're saying about the partnering potential for that platform.

Speaker 8

Thank

Speaker 7

you.

Operator

Thank you. And the next question comes from Yale Jen with Laidlaw and Company.

Speaker 9

Good afternoon and thanks for taking the questions. Two questions are all regards to the MODEX product to enter the clinic. The first one is for the EBV virus vaccine. And my question is there's also a competitor of Moderna also developing the vaccine against the same targets. So my question is that at least on theoretical grounds, how do you compare yours to that of Moderna's?

Speaker 9

And I have a follow-up question.

Speaker 3

Well, the answer is simple, then I mean, we're better, but I'll let Gary give you the specifics. I'm just kidding.

Speaker 4

Well, just to take a step back, Moderna actually is delivering through mRNA almost the same gene products that we've managed to engineer onto the ferritin nanoparticle. I'd say for the good of the patients, it's actually a good thing to have more than one product out there being tested because one never knows how they will perform in the real world. I think what we like about our platform is the fact that it's a protein platform and we're using adjuvant that are well described with a safety profile that looks favorable in humans. The preclinical data in non human primates and in our animal models is very strong. And so we're following a pretty well prescribed path with a nice set of immunogens where I think we and with great biomarkers when you're looking at viral loads and immune responses to the virus.

Speaker 4

So we feel pretty good about our product. I really don't want to get into the details of the alternative program. But what I will just say is the obvious, which is that they're using a different platform. They're using an mRNA platform that has some advantages in terms of going fast, but it has some unknowns, particularly with regard to side effects of the therapy. And as you begin to treat more and more patients with a vaccine, those issues become more and more important.

Speaker 4

And so there's no way to ordain or to have a crystal ball about which will work better. But we feel pretty good about the platform that we have and the partnership with Merck where they have a real deep bench of experts and knowledge for how to expand the trials and how to expand the reach of this vaccine to what we would ultimately like to address, which is the cause of cancer or the cancer aspect of the vaccine. So that's I think that's the best I can do for you right now.

Speaker 9

Okay, great. That's very helpful. That's a lot of details here. Maybe just one more one in terms of the 2,001. Is there any could you give us some detail about the study design and maybe what are the targets being pursued by this try target antibody?

Speaker 9

Thanks.

Speaker 4

Yes. We haven't formally disclosed the targets, but we will disclose them in the near future, probably within the next few weeks as we line up to enroll our first patients. But what I can tell you is that we've picked 2 cell surface markers that are found on a number of solid tumors. There actually is a list of about 13 malignancies that express these 2 antigens. And they include lung, breast, prostate, pancreatic and the list goes on.

Speaker 4

There's a fairly large number to be tested. And we will in the initial stages, look at a variety of those tumor types. And we'll be looking for signs of some tumor types where we might be seeing more efficacy. And then with time, if that bears out, we'll focus more on the tumor types where we're seeing efficacy and expand the trials in those tumor types.

Speaker 9

Okay, great. That's very helpful and congrats to move this program off the ground.

Speaker 4

Thank you. We're very excited to see it get to patients.

Operator

Thank you. And the next question comes from Yi Chen with H. C. Wainwright.

Speaker 10

Thank you for taking my questions. Just to follow-up on the MDX-two thousand and one, the Phase I solid tumor trial is an all comer solid tumor trial, correct? And how many patients do you intend to enroll for this trial?

Speaker 4

The trial is broken into parts. So we have the Phase 1a and then a Phase 1b. I'd say in the Phase 1a will be the group where we will look at multiple different types. And then after that point, we will begin to drill down on the ones where there's more activity. We expect to be able to make some decisions with approximately 40 or so patients in the first.

Speaker 4

But then that includes some dose escalation because we have to go slowly and we will do that again and agnostic to the tumor type. And then when we reach what we think will be close to a therapeutic level, assuming we don't see any side effects that would preclude further expansion, then we would treat the larger number.

Speaker 10

And just to clarify, did you say that the results from the Phase 1 trial won't be available until 2026?

Speaker 4

I didn't really say when they would be available because I said probably not before next year is what I said earlier and I would stand by that. It does take a while to get to the point where you think you're in a therapeutic dose and then you have to enroll sufficient patients and then you have to follow them for a period of time. So expecting to see even early efficacy data, we certainly will have safety data I think before the end of this year that tells us what doses and how well tolerated it is in patients. But I don't expect that we'll begin to start seeing signals until well into next year.

Speaker 10

Got it. And could you give us some idea that how many oncology candidates you intend to bring into clinical stage of development before the end of 2025?

Speaker 4

I would say that we have it will be in the range of 2 to 4. I think very likely there will be 2 that will be into the clinic by next year. Then depending on some partnerships, we may have opportunities to advance another 2.

Speaker 10

Okay. And for partnerships, is it likely that you will need to generate Phase 2 level proof of concept data to materialize a partnership, Dion?

Speaker 4

I think Elias, would you like to respond?

Speaker 3

No, no. I wanted to just clarify that it is very different in oncology than in other areas. In oncology you start with patients. So you don't need Phase 2 data to generate a partnership. You need to have a basket trial, some demonstrable results in a Phase 1b beginning of 2, but you don't need to do what you need to do in other areas where you need to do Phase 2 to attract a major partner who would like to be a strategic buyer.

Speaker 3

I don't know if you agree with that, Gary.

Speaker 4

No, I very much agree. I think that often in oncology you can begin to see signals in Phase 1. And then in instances where you don't, really just depends on the appetite of the partner and of our internal teams in terms of at what point we really want to make those transitions. So I'd say the safe answer is somewhere between Phase 1 and Phase 2. Got it.

Speaker 4

Thank you.

Operator

Thank you. And the next question comes from Michael Petusky with Barrington Research.

Speaker 11

I just want to ask about RAYALDEE and you guys have been indicating for the last few months at least or several months maybe that, hey, we've got some we think we've got some data, we've got some evidence that the product may slow CKD progression. And I'm just curious, I mean, are your sales folks able to share this data, this evidence with nephrologists? Or are there any even kind of anecdotal reactions that, hey, yes, this is really compelling, This may really matter. I mean, can you just give a sense of if there's any sense that this could really unlock this product going forward? Thanks.

Speaker 3

I can extend on that. I mean, it's clear that the data that we generated this year was very telling us from real world evidence as well as from our own data that you could delay the onset of dialysis by 6 months, if not more. Now in terms of the reception of that, we're publishing obviously, but presented to KOLs and nephrologists, it really makes a difference because no other therapy of secondary hyperthyroid has shown the ability to do that. And it shows also we have the biomarkers that really indicate which patients are the ones that really will be the royalty to delay the onset of the dialysis with their CKD4. So yes, the sales force is out there.

Speaker 3

Yes, it's talking to the pathologists you see a lot of late stage CKDs that are likely to go into dialysis, but we also think it's valid for CKD3 patients, not just 4. So a story in evolution, I think it reinforces the point that treating secondary hypothyroidism in these patients does have an impact on the evolution of the disease, which was one of the questions we always have, there's a change outcome. And this is the answer that we have so far. And the data has been reviewed and is going to be done. Can I

Speaker 8

just ask a follow-up

Speaker 11

to that? In terms of okay, so you get the data published and you start talking to docs about this. I mean, how long things sometimes seem to move much slower than they logically seem like they should in terms of changing behavior, prescribing behavior. I mean, is this the kind of thing that, hey, it's really a missionary effort and it's a matter of years rather than quarters or to really change behavior or if the data is that compelling?

Speaker 3

Absolutely. I think that's the right question. I mean, if you know medicine, medicine patterns and clinical guidelines take time to develop. I mean, you're talking about a year or 2 before they make it to the guidelines, like RYLD is in the guidelines now. So it's not a rapid process, depending on the strength and reception of the community of the colleges who deals with that may be faster or slower, but it's not a matter of a quarter or 2.

Speaker 3

It will take time to develop.

Operator

Thank you. And this concludes the question and answer session. I would like to return the floor back to Doctor. Philip Frost for any closing comments.

Speaker 2

I just want to thank everybody for participating and for your very good questions and discussion, and we look forward to being together with you again at the end of

Operator

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Powered by Quartr
Earnings Conference Call
OPKO Health Q1 2024
00:00 / 00:00