OPKO Health Q4 2024 Earnings Call Transcript

Quartr
Provided by Quartr
February 27, 2025

There are 6 speakers on the call.

Operator

Good day and welcome to the OpcoHealth Fourth Quarter twenty twenty four Financial Results Conference Call. All participants will be in a 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 Yvonne Briggs.

Operator

Please go ahead. Thank you, operator. Good afternoon. This is Yvonne Briggs with Alliance Advisors IR. Thank you all for joining today's call to discuss OpCo Health's financial results for the fourth quarter of twenty twenty four.

Operator

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. These forward looking statements include without limitation the various risks described in the company's SEC filings, including the soon to be filed annual report on Form 10 K for the year ended 12/31/2024, and in subsequently filed SEC reports. Furthermore, this conference call contains time sensitive information that is accurate only as of the date of the live broadcast, 02/27/2025. 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.

Operator

Doctor. Philip Frost, Chairman and Chief Executive Officer, will open the call. Doctor. Elias Serhouni, Vice Chairman and President, will then provide an overview of OpCo's Pharmaceutical business and BioReference Health as well as discuss progress with the MODEX pipeline. After that, Adam Locall, OpCo's CFO, will review the company's fourth quarter financial results and discuss this year's financial outlook.

Operator

And then we'll open up the call for questions. Now, I'd like to turn the call over to Doctor. Frost.

Speaker 1

Good afternoon, and thank you for joining us today. 2024 was a transformative year for Opcol, and I'm confident about our prospects for the year ahead. MODX made great strides to advance its pipeline as two programs entered Phase one clinical trials. We believe MODX's proprietary technology platforms hold tremendous promise and we look forward to continued progress with its multi specific antibody technology and its nano particle vaccine platform. Elias will provide more detail on the specific programs in a moment.

Speaker 1

Our product developed pipeline also includes our once weekly injectable dual GLUT1 glucagon agonist, ALKO880006, which continues to show encouraging clinical pharmacology data in diabetic and metabolic mice models. A promising orally bioavailable once daily form has been an animal test by our partner EnteroBio. We expect both subcu and orally delivered forms to be IND ready by the end of the year. Pfizer continues to make progress on its global commercialization of Angenla with sales presently growing in 42 countries. Elias and Adam will address in more detail.

Speaker 1

For Rialdi, our partner in China, Nicoya is anticipating a strong launch during 2025. From a financial point of view, we realigned our OpCo's capital structure to be in a strong position. With the infusion of cash from various transactions, we are adequately funded to advance our pharmaceutical pipeline and to return capital to our shareholders through common stock and convertible note repurchases. We're executing our strategy and achieving significant milestones. As I mentioned last quarter, we are managing segments of our business to drive value for OpCo through additional partnerships, business development initiatives and asset sales.

Speaker 1

We're confident that our current business prospects and strategy will continue to add value as we execute on this strategy. We expect 2025 to be a year of progress in all aspects of our business and all a good year. With that overview, I'll turn the call over to Elias. Well, thank you, Phil, and good afternoon, everyone. As Phil mentioned, it was it has been a transformative year for OpCo.

Speaker 1

Starting with our Pharmaceutical segment, last month, we announced that in collaboration with Mark, our Epstein Barr virus multivalent nano particle vaccine entered the clinic. And this investigational vaccine based on MDX-two thousand two hundred and one is being evaluated with selected adjuvants for safety and tolerability in up to 200 healthy adults. And so with the start of this Phase one study going forward, Merck will assume all development activities of the EBV vaccine candidate through commercialization. For this development milestone, we achieved one of our milestone payments and this is in addition to an upfront payment of $50,000,000 we received upon the signing of the collaboration. We're also eligible for additional milestone payments of up to $860,000,000 associated with progress in the development and commercialization of the EBV virus vaccine as well as royalties on global sales.

Speaker 1

The Phase one trial with our tetra specific antibody MDX-two thousand and one continues to enroll patients at increasing doses. This open label trial at four sites is expected to enroll forty five patients with a variety of solid tumors, including lung, breast, prostate, pancreatic and others. The Phase I portion Phase 1a portion of this study is primarily designed to evaluate the safety and immunogenicity of ascending doses of MDX two thousand and one and to establish a biologically active dose in humans. The trial is progressing well with safety and tolerability data hopefully available in the second half of this year and early efficacy data towards the later part of 2025 or early twenty twenty six. This program utilizes a next generation enhanced T cell engager that stimulates dual signaling through CD3 and CD28.

Speaker 1

And this different specific antibody engages T cells through CD3 and to activate the T cells and promote their expansion and survival by binding to CD28, a very unique combination. The other two arms bind to two tumor antigens TROP2 and CMAT, both of which are validated targets found on a variety of solid tumors. We have two other immunology programs including MDX-two thousand and three, a tetra specific antibody for hematologic tumors and autoimmune diseases and this molecule is in the pre IND stage expected to enter the clinic late this year or early next year. In addition, we're developing the immune modulator MDX-two thousand and four to rejuvenate and strengthen the immune system in patients who are immune impaired or in patients who are aged by stimulating the proliferation of T stem cells to rejuvenate and improve the immune function of these patients. And this program is also in the pre IND stage aiming for IND finalization and perhaps Phase I entry in the fourth quarter of this year.

Speaker 1

Now switching gears to our antiviral programs, we were awarded $51,000,000 of additional funding by BARDA, including a $35,000,000 supplement to accelerate our development of the ACOVID multispecific antibody and $16,000,000 under our existing contract to develop broadly neutralizing influenza multi specific antibodies using our proprietary nSTAR antibody platform. And to date, dollars 110,000,000 of non dilutive funding has been committed by BARDA with a potential total of $2.00 $5,000,000 if all options and milestones are executed. So if granted, this additional funding will be used to accelerate the COVID and flu programs to develop novel manufacturing methods to target other biodefense threats as well as to develop a platform with gene based delivery methods for use against future pandemics. Our lead anti COVID multi specific antibody MDX-two thousand three hundred and one is progressing to IND and Phase I entry plan also for the fourth quarter of this year. So we continue to be active on the business development front as we explore significant interest in our various platforms with external pharma collaborations.

Speaker 1

And we believe these partnerships will assist in advancing our pipeline in an accelerated and cost efficient manner with the opportunity to further expand our programs. And so we're actively pursuing these conversations and interactions with hopefully some results to in fact further validate our platforms. As for our commercialized products, Engenla is performing well with Pfizer global commercialization ongoing. Pfizer's work involves converting existing patients from daily administration to our once weekly drug and securing new patients for treatment with our pediatric long acting growth hormone drug and we continue to advance our additional pediatric and adult indications associated with up to $100,000,000 in potential milestones. Within our long acting biologics portfolio, we have several other molecules in development including GLP2 for short bowel syndrome and as mentioned by Phil a dual agonist GLP1 glucagon which is an analog of oxyntomodulin.

Speaker 1

Now GLP-one agonists have been successful in treating diabetic and obese patients and several clinical stage dual GLP-one glucagonists have also reported efficacy in the treatment of non alcoholic fatty liver disease with improvement in liver fibrosis score. In parallel, we have a collaboration underway with Entera Bio as mentioned by Phil to develop an oral formulation of this molecule using their NTAP technology. In vivo proof of concept studies in rodents and pig models have shown that a single oral dose resulted in the desirable pharmacokinetic profile and bioavailability. So we're actively working to reach the IND stage as soon as possible for both the injectable and oral forms of oxyntomodulin analog that we have developed. As discussed briefly in our last quarterly conference, let me cover BioReference Health for you.

Speaker 1

We completed the sale of BioReference Health's lab testing businesses focused on clinical diagnostics and women's health nationwide, but retained operations in New York and New Jersey as well as oncology and the corrections business nationwide. This was a significant part of the restructuring we are undertaking to improve BioReference's financial and operational performance, including reducing expenses along with headcount. We right sized the workforce down to 2,000 from 3,300 previously. We closed underperforming facilities and streamlined operations. Our restructuring efforts are ongoing as we optimize our performance.

Speaker 1

In addition, we are focusing on our areas of strength, which include our specialty testing in oncology and urology as well as our comprehensive clinical diagnostic services in New York and New Jersey. On a comparable basis, meaning excluding the assets acquired by LabCorp, overall testing volume grew by 1% in Q4 twenty twenty four as compared to Q4 twenty twenty three. Our National Oncology Testing segment had another favorable quarter, finalizing nine new hospital reference account contracts, including a large academic center in New York and finishing the quarter with a 5% growth in net revenues compared to Q4 twenty twenty three. Additionally, we continue to expand our oncology testing menu focusing on cancer genomics and hereditary cancers. As for our urology segment, the four ks score continued to see strong performance growing 16% in test volume and revenue for 2024 as compared to 2023.

Speaker 1

Furthermore, our Latin America and Europe Pharmaceutical Divisions continue to perform well with 9% growth compared to 2023 and a positive EBITDA trend despite ForEx headwinds due to the strong dollar. The royalty sales continue at same levels with new evidence published this year that show that the use of royalty for patients with secondary hyperparathyroidism, we delayed the need for dialysis. So in conclusion, overall, we are encouraged by the performance of our biopharmaceutical and diagnostic business segments and are confident in our prospects for positive results across these two segments this year. And with that, I'll turn the call over to Adam to discuss our financial results. Adam?

Speaker 2

Thank you, Elias. The fourth quarter of twenty twenty four reflects meaningful progress in enhancing shareholder value. The team that BioReference has continued to reduce costs and improve operating efficiency, and we have a clear path toward profitability excluding non cash and non recurring charges as well as positive cash flow in 2025. While the work at BioReference continues, the improved focus geographically and on high value, high margin testing resulted in meaningful improvement in operating results, particularly after considering the non recurring expenses that helped reduce fixed costs. Our global health business within our Pharmaceutical segment continued to deliver revenue growth and operating income expansion, while our R and D pipeline continued to make progress as Phil and Elias have discussed.

Speaker 2

We advanced our efforts during the fourth quarter to realize the value of our assets and exited one of our liquid investments and redeployed some of that capital to buying that common stock and convertible notes. Turning to our operating results and starting with our Diagnostics segment. Revenue was $103,100,000 for Q4 twenty twenty four compared to $124,200,000 for the 2023 period. This decrease was primarily the result of the LabCorp transaction, which closed in September. During the fourth quarter of twenty twenty four, costs and expenses totaled $124,800,000 compared to $166,400,000 for the comparable period of 2023.

Speaker 2

The Q4 twenty twenty four figure included approximately $4,500,000 of non recurring costs and expenses for severance and facility closures, all incurred as expenses as expected as we have realigned our business to ensure sustainable growth and profitability. During the fourth quarter of twenty twenty four, operating loss was $21,700,000 compared to an operating loss of $42,300,000 for the twenty twenty three quarter. Depreciation and amortization expense for the Diagnostics segment was $6,000,000 and $8,100,000 for the 2024 and 2023 periods respectively. Moving to our Pharmaceuticals segment, revenue was $80,500,000 for the fourth quarter of twenty twenty four compared to $57,700,000 for the comparable period of 2023. Revenue from products including our international pharmaceutical businesses was $37,400,000 compared to $43,000,000 for the 2023 period.

Speaker 2

Despite the challenging foreign currency environment that has impacted revenue, the profitability of the business continues to improve above our expectations. Product revenue includes revenue from RAYALDEE of $9,100,000 which was similar to twenty twenty three's '9 point '3 million dollars Revenue from the transfer of IP was $43,100,000 in the fourth quarter of twenty twenty four compared to $14,700,000 for the same quarter of twenty twenty three. This number includes a $12,500,000 milestone payment earned for the initiation of our EBV clinical trial and $10,200,000 of commercial milestones for our Urgent business. Our gross profit share from Pfizer was $9,500,000 during the fourth quarter compared to $12,200,000 for the 2023 period, which included a catch up payment related to the Q3 twenty twenty three launch of Ingenla in The United States. In addition, the fourth quarter of twenty twenty four includes $11,000,000 in R and D funding related to our BARDA agreement compared to $1,200,000 for the 2023 period.

Speaker 2

Composite expenses for our Pharmaceuticals segment were $82,600,000 for the fourth quarter of twenty twenty four compared to $73,800,000 for the 2023 period. Return, search and development expenses were $29,800,000 compared to $18,700,000 a year ago. R and D expense increased as a result of the activities for our MODEX development activities, including the Phase one clinical trial for our first oncology program, as well as our BARDA supportive activities. The resulting operating loss for the quarter ended 12/31/2024 was $2,100,000 compared with an operating loss of $16,100,000 for the twenty twenty three quarter. Depreciation and amortization expense for the fourth quarter of twenty twenty four increased slightly to $18,100,000 from $17,900,000 for the twenty twenty three quarter.

Speaker 2

Turning to our consolidated financial results, net income for the fourth quarter of twenty twenty four was $14,000,000 or $0.01 per diluted share compared to a net loss of $66,500,000 or $0.09 per share for the 2023 period. Net income for the fourth quarter of twenty twenty four included a realized gain of $54,100,000 from the sales of GDX as well as non cash other income of $21,400,000 compared to non cash other expense of $3,200,000 in the comparable quarter related to the change in fair value of the GDX shares. We ended 2024 with approximately $495,000,000 in cash, cash equivalents, liquid investments and restricted cash. We're allocating up to $100,000,000 for common stock repurchases under our previously announced buyback program as well as opportunistic convertible note purchases. We may accelerate or increase repurchases as market conditions change.

Speaker 2

In addition, we anticipate utilizing up to $100,000,000 of cash in operations including our anticipated research and development priorities that Elias discussed. After considering capital expenditures of approximately $15,000,000 we expect to end 2025 with at least $300,000,000 in cash and cash equivalents before any potential non dilutive financing transactions or third party collaborations. As we look ahead, we're keenly focused on delivering on the key objectives that Elliot laid out and the following assumptions influence our financial guidance. For our Pharmaceutical segment, we expect Pfizer to continue to grow sales of INGENLA and realize the benefits of the expanded gross margins due to the scale up of its manufacturing processes. We also assume a stable foreign currency exchange rate for ex U.

Speaker 2

S. Pharmaceutical businesses. R and D expenses will reflect higher activities related to our MODEX program, including CMC and efforts related to our ongoing oncology clinical trial, as well as furthering the development of our oxytocin to module and analog development program. A portion of the increased mode exit activities will continue to be funded through our BARDA agreements. For our Diagnostics segment, we are continuing our multi year, multi phase program to reach and improve profitability.

Speaker 2

This program is focused on operational efficiencies and the reduction of fixed infrastructure costs. We expect to incur an additional $4,000,000 to $8,000,000 in non recurring costs during the first quarter, which is primarily seventh and facility closure costs. We have established gross margin threshold targets that I laid out last quarter for the business to be above 27% and expect positive cash flow for the full year 2025. We have established an additional cost reduction program targeting a further $20,000,000 of annualized cost savings throughout 2025. In addition, we expect to further rationalize our test offerings and client mix during the first half of twenty twenty five, which will allow us to further focus bioreference and realize a profitable and growing business.

Speaker 2

As a result, we expect the following for the full year 2025. Total revenues between $675,000,000 and $700,000,000 including revenue from services of $4.00 $5,000,000 to $425,000,000 revenue from products between $165,000,000 and $175,000,000 and other revenue between $80,000,000 and $95,000,000 inclusive of the Pfizer gross profit share estimate between $35,000,000 and $45,000,000 and BARDA revenue of $40,000,000 to $48,000,000 We expect costs and expenses to be between $825,000,000 and $875,000,000 excluding the non recurring expenses related to our restructuring of bioreference. R and D expense is expected to be between 120,000,000 and $140,000,000 depending on the enrollment rate of our clinical trial and the timing for certain CMC activities for our MODEX program with $40,000,000 to $48,000,000 of that being offset by BARDA. We also expect depreciation and amortization expense to be approximately $90,000,000 This concludes our prepared remarks. Thank you all for your attention.

Speaker 2

And now operator, let's open the call for questions.

Operator

We will now begin the question and answer session. The first question comes from Maury Raycroft from Jefferies. Please go ahead.

Speaker 3

Hi. Thanks for taking my questions. I'll just start with BioReference. Just wondering if you can bookend timelines, providing more granularity on how the quarter you anticipate that you could reach profitability and maybe talk a little bit more about how you're currently thinking about balancing spend while you continue to expand your testing menu for oncology?

Speaker 1

Adam, you want to take that?

Speaker 2

Sure. So, Maury, I think we're we've talked about the fourth quarter results showing meaningful improvement. When you think about this quarter, the third quarter of the year, we were at about a $20,000,000 EBITDA loss. Q4 cut that in a little bit more than in half. So we see a pretty good glide path into the first quarter to achieve breakeven during the quarter and then profitability thereafter.

Speaker 2

So I think that's the best glide path for timing. We're going to have a few charges in the first quarter while we finish up that restructuring that we initiated last year, but see a pretty good pace to achieving that. And all signs say we'll get there. As far as the spend, we're not there's not significant investment being made into the test menu. The team is doing a good job of being efficient in bringing up those new modalities that Elliot laid out and I think there is not a significant push there to spend dollars.

Speaker 3

Got it. Okay. That's helpful. And that for EVB, you mentioned the $12,500,000 milestone for Merck. Can you say what the Phase II milestone will look like if Merck decides to advance the program?

Speaker 3

And then can you clarify if Merck would do a press release on a data update from this program? And what timing would look like for that?

Speaker 1

I can take that. So timing wise, Mori, it's a study for 200 patients, right? And so I cannot speak for Mark, obviously, but estimates would be results will be in because you can recruit quite quickly with these trials maybe second quarter and then the analysis will go through and then the decision will be to go not to Phase two, which will probably be taken in the third quarter. And so that does trigger a significant milestone. I don't know if we can give the number right now.

Speaker 1

I have to ask Mark, but or Adam, if you know. And at that point, obviously, there will be obviously an announcement of progression of the portfolio towards Phase II I mean the program.

Speaker 2

Yes. And we're not able to disclose the milestones under our agreement until they're earned.

Speaker 1

Got it. Okay.

Speaker 3

Well, thank you for taking my questions. I'll hop back in the queue.

Operator

The next question comes from Jeffrey Cohen from Ladenburg Thalmann. Please go ahead.

Speaker 1

I wonder if you could first elaborate on some of the initial comments from Doctor. Frost on the dual agonist with Entera Bio. Could you tell us a little bit more as far as what's being studied during this period? Is it oral or injectable? And is it weekly or daily?

Speaker 1

And are you aiming to go after type one diabetics? Is that the intention? So I'll start and then Doctor. Foss might complete my answers because what we've done is the dual agonist, there are two forms. There's an injectable form and through our partner an oral form.

Speaker 1

We're pursuing both. And the injectable rate is about once a week. It's a weekly injection. The oral is a daily regimen, if you will. So those are the two parameters, if you will, from the clinical point of view.

Speaker 1

Now in terms of the physiology of a GLP-oneglucagon, there are a few like that already in the market in development, which have shown that when you add glucagon, you actually increase metabolism, which has some potentially very beneficial effects for patients who are diabetics, obese and who may have also liver fat or what we call fatty liver disease or NASH or MASH. So those are the specific populations where this analog of oxytocinomodulin that we have developed can actually get applied. We're still in the pre IND phase. And the only thing I can say is and I'll let Doctor. Frost speak to it is that the results are quite, let's say, promising.

Speaker 1

I don't know, Phil, if you want to add to what I'm saying. No, I think you've covered it. Okay. Got it. That's helpful.

Speaker 1

And then secondly, could you talk a little bit about the launch of REALITY in China with the Nekoia? How large of the commercial organization are they anticipating? And what do we expect to hear out of the launch through 2025?

Speaker 2

Yes. So the size of the commercial team, I don't have the particular details on from the COIA. We would expect the initial launch to be fairly small that as they begin some sales out of one of the smaller territories of China. But throughout the year, once they achieve formal NDA approval, they'll go into a broader launch phase. It's a milestone and royalty driven transaction for us.

Speaker 2

So we'll report those out in due course.

Speaker 1

Okay. Got it. And then lastly for us, you did mention the $26,900,000 from BARDA followed by the $24,100,000 and indicated potential 110,000,000 Could you give us an indication of what time period that might be?

Speaker 4

I can try. I can Yes, go ahead.

Speaker 2

Yes. Yes, I was just going to say the dollars that we're expecting in 2025 is between $40,000,000 and $48,000,000 Elis, you could talk about some of the activities by all means.

Speaker 1

Yes. So, Jeff, if you recall, we received $59,000,000 for COVID developments and then we received an additional thirty five percent. And that is the COVID program at this time. And so fifty nine percent plus thirty five percent is eighty four percent. And so that program is going to basically last the next two years, a year and a half depending on how well we can recruit.

Speaker 1

The goal this year is to bring the first molecule to the clinic towards Q3, Q4 of this year and enter the clinic with that as soon as we can because it seems like it's really important to show that there is safety in these antibodies for patients. So we expect to have significant milestones passed this year. In the case where the milestones are passed and positive like what Bart has asked us to actually innovate in terms of manufacturing, which we have done and they are quite positive on that. And if we can prove that we can produce at a much reduced cost, if you will, and then we'll have an extension of our program. If on the other hand, we are also working on flu and we received $16,000,000 as a contract, a firm contract on flu and if we can meet the milestones not only for flu A and flu B, but also pandemic flu then that would be also increased.

Speaker 1

The total envelope, a budgetary envelope for this program with BARDA is about $2.00 $5,000,000 of which $110,000,000 essentially have been committed and about the rest $95,000,000 will be committed subject to milestones. Perfect. Thanks for the clarification. Next three years, next two point five years, three years, depends on how the milestones are met. Got it.

Speaker 1

Thanks for the clarification. Thanks for taking our questions.

Operator

The next question comes from Edward Tenthoff from Piper Sandler. Please go ahead.

Speaker 2

Great. Thanks. And if I may, just a quick housekeeping question. Adam, can you please repeat the product sales guidance you mentioned? And then I have a follow-up question.

Speaker 2

Sure. The product sales were 165 to 175.

Speaker 1

1 hundred and 60 5

Speaker 2

to 175, great. Thank you. And then when it comes to MODEC data this year with respect to the cancer program, what should we be expecting in terms of data this year? And what's the latest with respect to the hematologic lung cancer program? Thank you.

Speaker 1

So in terms of the MODX data, it's related to what we call MDX-two thousand and one, which is a multispecific antibody that has a target called FOP2 and a target called C MET, which attaches to solid tumors and then the CD3, CD28, which has a dual action activation and expansion of T cells that can kill the tumor. This one is in the clinic already and we're going to what we call the dose escalation. The primary purpose of that is to evaluate safety and tolerability of the molecule. We will get those results probably within this year towards the fourth quarter. And then you really want to see signals of efficacy, but you don't get those until you really reach what we call therapeutic safe therapeutic doses, which will occur and maybe we'll be lucky to have some this year, but primarily will occur in 2026, probably the first half of twenty twenty six.

Speaker 1

In terms of the CD19, CD20, which is what you're referring to, it is essentially going in the pre IND phase of development right now. CMC is being finalized. Files are being put together to go to the FDA towards the end of the year. So there will be no data on that one until next year.

Speaker 2

Have you disclosed what the targets are for the hematologic?

Speaker 1

CD19, CD20. Is it dual? Yes. Yes. Nice.

Speaker 1

Dual D cells.

Speaker 2

Thank you. Are you considering that for autoimmune disease as well or?

Speaker 1

No, that's a good question. And I can tell you're on top of the subject and yes, the answer is yes. The

Operator

next question comes from Yale Jen from Leila and Company. Please go ahead.

Speaker 4

Great. Thanks for taking the questions. Just a general sort of macro question, which is that with the recent government changes, do you guys worry about the vaccine? So the prospect of the vaccine as well as maybe the other funding in the future or that's probably not necessarily a concern?

Speaker 1

Yes, that's a great question. And we don't know. So far, I mean, basically remember, we're if you're talking about the EBV vaccine, I mean, so far, we haven't heard anything from our partner that would justify not progressing a major vaccine like this, which has a tremendous benefit to patients, especially that it relates to preventing not only mononucleosis, but cancer, secondary cancers and maybe, maybe multiple sclerosis. So that I don't think will be affected in terms of a clinical trial. Now you hear the things about vaccines in Washington and the potential controversy there.

Speaker 1

And so some people feel maybe that there will be less support for early development of new vaccines. We're not in that field. We're in the antibody field. We're in multispecifics. And we keep very close contact with our contracting officers.

Speaker 1

And so far, we haven't had any indication given the importance of being prepared for pandemics and residual endemic phenomena like COVID returning every year now and flu that in fact there's still continuing interest in supporting these kind of programs that we are leaders in.

Speaker 4

Okay, great. Thanks a lot. And I'll come back over to Paul.

Speaker 1

Let me just say I don't have a crystal ball about what's happening in Washington So we'll have to wait and see. But right now, no indication of no,

Speaker 4

we

Speaker 1

are not worried so far, let's say.

Speaker 4

That sounds good. And none of us have that as well. And thanks a lot. Appreciate it. And the best luck.

Speaker 4

Okay.

Speaker 1

Thank you.

Operator

The next question comes from Yi Chen from H. C. Wainwright. Please go ahead.

Speaker 3

Hi. This is Eduardo on for Yi. I guess related to that question about the impact of the Trump administration and government, specifically for the BARDA sponsored programs. If anything were to happen, this current funding kind of is it sufficient to progress the current kind of clinical trials that you want to conduct in 2025? Are you guys really counting on that $40,000,000 to $48,000,000

Speaker 1

No. I mean the money that has been committed to date with the supplemental $35,000,000 dollars can carry us through to developing a lead molecule and all the way through Phase I and at the edge of Phase II. We could also within that depending on how things go develop a backup molecule, but not carry it through Phase one, okay? And the plan that Barta has proposed to us and funded is that we would do the full development all the way through Phase one I and the beginning of Phase II. At which point, they may be interested in continuing it or they will say, great, you continue on your own or get a partner to continue it depending on the results that you get.

Speaker 1

So at this point, I feel pretty secure that the $110,000,000 that we have received from them are pretty safe and committed and can carry us through to an inflection point here. Now the second part, the one that is not committed, I have no guess and no indication of that being taken away or continued. I don't know.

Speaker 3

Got it. That's really helpful. Good to know. And also any update on the HIV monoclonal or has focus kind of shifted more towards EBV, COVID and flu? That's where the kind of incentives are right now.

Speaker 1

Yes. I'll let Gary Nabos on the line and he is the lead on that. So I'll let Gary respond to you.

Speaker 5

Thank you, Elliot. Yes. And thank you for the question. The short answer is we have made good progress with that molecule. As you know, we had a first generation HIV that went into multi specific antibody that went into clinical trials and it was well tolerated, low immunogenicity and good half life.

Speaker 5

We've now made a second generation that has been optimized for potency. So it's about 10 fold more potent than the first generation and it takes advantage of our proprietary nSTAR format. So we're basically at the point where we have we're about to declare a lead candidate. We have one that would be able to move forward and we are in discussions with various partners about how to advance that program. But the molecule itself looks good and we've been able to leverage our experience from the BARDA programs, both in terms of the CMC and the yields and the scalability.

Speaker 5

So we are optimistic about that molecule.

Speaker 3

Okay, great. That's encouraging. And then one final one regarding MDX-two thousand and one, your tetravalent antibody and the solid tumor trial. I'm curious, you guys are selecting, obviously, it's kind of a basket trial it seems with the different indications. What specific cutoff?

Speaker 3

I know you guys are selecting for elevated expression of C MET and TROP2. I'm curious what fraction of patients within I guess it's variable with each of the indications, but roughly meet that criteria for recruitment?

Speaker 1

It's a large proportion. TROP2 and CMET are quite widely distributed in multiple tumors at very significant levels of expression. So it doesn't seem to be a limiting factor and we haven't even used actually a selection criterion based on biomarkers because it's very high a very high percentage of tumors. At least the tumors we picked have demonstrated the high level of c MET TROP2 expression, lung tumors, gastric tumors, breast cancer. The most common solid tumors are really and we can provide you with more data if you want offline

Speaker 2

on the

Speaker 1

year because we know what that is. But Gary, you want to add something to that question?

Speaker 5

Yes, I can add a little bit. We have looked at the relative expressions and I would say that we've debated using like a 45% cutoff for surface expression. And with that 45% expression, you pick up a vast majority of the tumors that of those types. As you know, there's close to 13 different solid tumors that have both CNET and TRO2. But that might be as Elias is implying, that might be maybe overly conservative because when we look at cells that have low expression even 10% of the maximum levels that we see, you still get killing even when you have 10% expression.

Speaker 5

So I think our presumption is that it should work against the vast majority and it's likely in the trials that will take all comers. And then once we look at the efficacy data, we'll be able to sort out what the threshold might be for efficacious responses.

Speaker 3

Got it. So you are measuring expression levels, but you're not excluding based on those biomarkers?

Speaker 1

Right. That's correct. Yes. Go ahead, Gary.

Speaker 5

No, that's exactly right. At the moment, we're taking all comers.

Speaker 3

Okay. That's really helpful. Thanks. Those are all my questions.

Operator

This concludes our question and answer session. I would like to turn the conference back over to Doctor. Frost for closing remarks.

Speaker 1

I want to thank you all for your participation and for your good questions. We look forward to meeting with you again next time.

Operator

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

Speaker 1

Thank you.

Speaker 5

Thank you.

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Earnings Conference Call
OPKO Health Q4 2024
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