OPKO Health, Inc. (OPK) Earnings Call Transcript & Summary

Good morning, and welcome to the 2024 Annual Meeting of Stockholders of OPKO Health Inc. I'm Dr. Phillip Frost, Chairman of the Board of Directors and Chief Executive Officer of the company. I want to warmly welcome all of you virtually and express our appreciation for your support as we continue to build OPKO Health into a leading pharmaceutical and diagnostics company. I'm joined here by Dr. Elias Zerhouni, who is Vice Chairman of the Board and President; Dr. Jane Hsiao, who serves as Vice Chairman of the Board and Chief Technical Officer; Steve Rubin, who is a Director and Executive Vice President, Adam Logal, Senior Vice President and Chief Financial Officer; Dr. Charles Bishop, CEO of our Renal Division; Dr. Tony Cruz, CEO of our Transition Therapeutics subsidiary; and Dr. Gary Nabel, Chief Innovation Officer & Director and President and Chief Executive Officer of our ModeX Therapeutics subsidiary. Ms. Camielle Green will like as secretary for today's meeting and Mr. Rulfo Hernandez has been appointed the inspector of elections. We would also like to acknowledge our Board members who are here in person or joining us virtually today. Dr. Richard Krasno, Dr. Prem Lachman, Dr. Roger Medel, Mr. Roger (sic) John Paganelli, Mr. Richard Pfenniger, Dr. Alice Yu, all of these individuals have distinguished backgrounds in business and science, and our company is fortunate to have the benefit of their experience. We will conduct the business portion of the meeting first, and then there will be a designated question-and-comment period immediately following the formal portion of the meeting. Stockholders who have logged into the meeting may pose questions in the designated field on the meeting site. Please limit yourself to one question. We will do our best to provide a response to as many questions that pertain to the business of the meeting as possible. Our executive officers and representatives from our registered public accounting firm, Ernst & Young, are also attending today's meeting. They will be able to assist with questions during the Q&A portion of the meeting. The meeting is being recorded. However, no one attending via the webcast is permitted to use any audio recording device. With that, I will turn the meeting over to Ms. Green to make cautionary statements.

Thank you, Dr. Frost, and good morning. I would like to remind you that any statements made during this call by management other than statements of historical facts 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 limitations the various risks described in the company's SEC filings, including the annual report on Form 10-K for the year ended December 31, 2023, and in subsequently filed SEC reports. This meeting may also contain time-sensitive information that is accurate only as of the date of the meeting, March 28, 2024. Except as required by law, OPKO undertakes no obligations to revise or update any forward-looking statements to reflect events or circumstances after the date of this meeting. Dr. Frost?

Before we begin the formal part of today's virtual meeting, I'd like to say a few words about our company's performance over the past year. This morning, we announced the sale of certain segments of our BioReference Diagnostics Laboratory subject to meeting various requirements for closing. This is in keeping with our repeated statements about striving to realize the actual value of our assets. Elias will provide more detail about the transaction and how it fits in with our overall strategy. It was a busy year highlighted by the U.S. approval of NGENLA, which is now approved to market in over 40 countries around the world by our partner, Pfizer. NGENLA is now providing growing income to OPKO. This product was developed at our OPKO biologics unit in Israel. A new form of oxyntomodulin was recently developed by the same unit, and it's in very early preclinical development for the treatment of type 2 diabetes, hyperlipidemia and obesity. We will keep you posted on this one. Our OPKO, the [indiscernible], EirGen and [indiscernible] units continue to do well. Our ModeX unit is progressing rapidly, and again, Elias will provide more details. I'd like to now introduce Dr. Elias Zerhouni, who will say a few words.

Well, thank you, Phil and welcome, everyone. I'd like to start by just saying that this year has been a transformative year for OPKO Health. First, we've worked very diligently in terms of improving our performance at the BioReference Laboratories. And we did this by first understanding the complexity of the BioReference Laboratory at its geographic expense. And we realized that, in fact, there is a profitable core to BioReference situated primarily in New York and New Jersey. And so we've worked to lower our costs by essentially rightsizing the company to its capabilities and its productivity. This is why today we announced a transaction with LabCorp regarding clinical services and women's health services in the entire country, except for New York and New Jersey for a consideration of about of $237.5 million for a revenue stream of about $100 million. This is obviously subject to FTC review, and we hope to be able to close this transaction in the second half of this year. We continue to examine, as Dr. Frost said, ways of improving our value at BioReference and realizing that value by continuing to look for supplementary transactions that would lead the company to a footprint and an offering that, in fact, is in our view, likely to be more profitable and bring revenues to OPKO Health. In addition, I think that the progress at ModeX has been extraordinary. We've made -- we've out-licensed our vaccine for the Epstein-Barr virus to Merck. The collaboration is going extremely well. We hope that, in fact, the vaccine product will enter the clinic this year, the second half of this year. We've also submitted an IND for a cancer molecule, immuno-oncology molecule that hopefully will enter the clinic in the month of May of this year. And at the same time, we've worked with BARDA, which is an agency of the U.S. government, which has granted us a contract to develop multi-specific antibodies. First, against COVID and against other viruses, if the first phase of the contract, which is $59 million to support our research for the COVID vaccine to be expanded by another $108 million if we're successful in the first phase. All in all, I think the company has made progress across all fronts, as Dr. Frost said, we're continuing to explore our capabilities in the biologics area with the work that the Biologics division in Israel is doing around oxyntomodulin around GLP-2. And also, in our view, trying to build a molecule that will compete in the field of obesity and diabetes as well. I will stop here. And basically, thank all of the teams that have worked diligently to, a, rightsize the BioReference Laboratories and bring it to a sustained profitability level, encourage the development of new molecules in our portfolio and also support ModeX, which has really proven its value to the company at this point. Thank you very much.

Thank you, Elias. On behalf of OPKO's Board of Directors, I'd like to thank all of our employees for their outstanding effort and commitment and our investors for their continued support. And now I'd like to turn the meeting over to Ms. Green to begin the proceedings.

Thank you, Dr. Frost. There are 3 requirements for today's meeting, all of which have been met. First, the Board of Directors have adopted resolutions authorizing this meeting to be held today and establishing February 13, 2024, as the record date for determining stockholders entitled to notice of and to vote at the meeting. Second, we have received the mailing agent [indiscernible] certifying that notice of this meeting, together with the company's proxy statement, proxy cards, and 2023 annual reports were mailed on or about March 7, 2024, to each stockholder of record on the record date. And third, consistent with the company's bylaws, no advance notice has been given to the company regarding any other business to be conducted at this annual meeting. We have available for inspection online a certified list showing the stockholders of the company at the close of business on February 13, 2024, the record date. The stockholder list shows that there a total of 696,991,677 shares of common stock outstanding and entitled to notice of as we vote at this meeting. The split has also been available at the offices of the company for examination by stockholders for at least 10 days prior to this meeting. We are informed by the inspector of election that a total of 531,88,433 shares of common stock are present in person or were presented by proxy at this meeting. This represents approximately 76.2% of the outstanding shares of common stock as of the record date. Since this represents more than a majority of the voting power of all issued and outstanding stock entitled to vote on the record date, a quorum is present for purposes of transacting business. There are 4 proposals to be acted on at this meeting. Proposal 1 is the election of the following individuals to serve as directors of the company for a term ending at the 2025 Annual Meeting of Stockholders or until such time as their respective successors are duly elected and qualified. Dr. Phillip Frost, Dr. Jane Hsiao, Dr. Elias Zerhouni, Mr. Steve Rubin, Dr. Gary Nabel, Dr. Richard Krasno, Dr. Prem Lachman, Dr. Roger Medel, Mr. John Paganelli, Mr. Richard Pfenniger, Junior; and Dr. Alice Yu. Proposal 2 is the approval of an amendment to the company's amended and restated certificate of incorporation to increase the number of authorized shares of the common stock that may be issued from 1 billion shares to 1.25 billion shares. Proposal 3 is a nonbinding advisory vote to approve the compensation paid to the company's named executive officers as disclosed in our 2024 proxy statement. And Proposal 4 is the ratification of the appointment of Ernst & Young as the company's independent registered public accounting firm for the fiscal year ending December 31, 2024. At this time, the polls are open and we will conduct a voting on all matters to be presented. Each share of common stock is entitled to 1 vote. Any stockholder who hasn't yet voted or wishes to change their vote, please navigate back to the meeting portal used to access this meeting site and select vote. Stockholders who have sent in proxies or voted via telephone or Internet and who do not wish to change their vote, do not need to take any further action.

We will give a brief moment for anyone who wants to change the vote [indiscernible] this point. [Voting]

Now that everyone has had an opportunity to vote, I declare that the polls are now closed for vote. We will now pass back to Ms. Green, please share the preliminary voting results.

I am pleased to report that Proposal 1, 2, 3 and 4 have been duly approved by the requisite votes of the company's stockholders. Each of the company's director nominees has been elected to serve as a director until the 2025 Annual Meeting of Stockholders or until such time as their respective successors are duly elected. The amendment to accompany amended and restated certificate of incorporation to increase the number of the right shares of the common stock that may be issued. The nonbinding advisory vote on the proposal to approve the compensation of the company's named executive officers and the proposal to ratify the appointment of Ernst & Young LLP as the company's independent registered public accounting firm have also been approved. A full tally of the votes will be published in an appropriate filing with the Securities and Exchange Commission.

Thank you. There being no further business to come before the meeting, 2024 Annual Meeting of Stockholders of OPKO Health is not adjourned. As I understand, there are no questions at this point, so I will conclude our annual meeting again, and I want to sincerely thank all of you for attending this year's meeting and for the interest and support you have shown in the affairs of OPKO Health.